UNU-WIDER Dilemmas in Entrepreneurship

The workshop entrepreneurship and economic development will consists of eight sessions, aimed to address eight specific dilemmas in entrepreneurship and economic development. These are:

1. What is the proper concept of entrepreneurship in developing countries and how and why do ‘entrepreneurship’ indicators differ so much between countries?

The notion of entrepreneurship is complicated by its multidisciplinary nature and the difficulty of measurement. The dilemma is that the notion and measurement of entrepreneurship may be sensitive to the stage of development that a particular economy finds itself in. The introductory session of the workshop will therefore critically examine the relationship between entrepreneurship and economic development from a global perspective, and investigate the concept and measurement of entrepreneurship in a developing country context.

2. Do we have a general and consistent theory of entrepreneurship in the economic development process?

Economic development theory and entrepreneurship theory should have a general theory that could encompass the wide variety of development outcomes that we observe. According to Naudé,^[1] ‘Such a general theory should be able to explain the role of entrepreneurs in the structural transformation of countries from low income, primary-sector based societies into high-income service and technology based societies. More broadly though, it should also be able to explain the role of entrepreneurs in the opposite poles of stagnating development (including war/conflict) and in accelerating growth (including high innovation) situations’. The dilemma is that there is currently no such a satisfactory general theory. The papers in this session will therefore propose ways forward, from modelling structural transformation to considering the role of entrepreneurship in welfare and inequality.

3. How do institutions and policies influence entrepreneurship?

There is a large and growing research literature that emphasizes the importance of institutions (the ‘rules of the game’) for the allocation of entrepreneurial ability, and which argue that good policies require good institutions. The dilemma in entrepreneurship is that these ideas are still in their infancy and not yet sufficiently formalized; there is also a frustrating lack of specificity, complicated by the variety of entrepreneurial responses under different institutional and policy regimes. In this session the focus will be to explore evidence on the relationship between institutions and policy and entrepreneurship.

4. Why and how should we be concerned about women entrepreneurs?

It is generally recognized that women have a vital role to play as entrepreneurs in development, and that they often face more obstacles in this role than men. The dilemma is that women’s challenges as entrepreneurs are tightly interwoven with the very fabric of their societies, so that perhaps more than any other topic, the role of women in entrepreneurship is a reflection of broader societal progress. This implies a dauntingly complex, but not insurmountable task for policy makers. This session will explore the role of women in entrepreneurship and some of these complexities.

5. Are we in danger of over-romanticizing entrepreneurs in poorer countries and regions?

Policy makers, international development institutions, and many researchers tend to approach entrepreneurs in poor countries and regions through rose-tinted lenses. The dilemma is that in many developing countries, entrepreneurship is often not a choice. Informal, survivalist, and indigenous entrepreneurship are just some of the terms which have been used to describe people who are perhaps entrepreneurs as a last resort. In this session these entrepreneurs, their role, and the usual policy responses are re-examined.

6. Is lack of finance the most universal of obstacles in the way of entrepreneurship?

Finance is widely believed to be one of the perennial constraints on entrepreneurship: perhaps even more so in developing countries. In recent years the phenomenon of micro-finance has become hugely popular, and many claims are made that micro-finance schemes can stimulate entrepreneurship. The dilemma is that empirical evidence is at best mixed, and the jury still seems to be out on the effectiveness of micro-finance for entrepreneurial development. Moreover, in theoretical circles doubts have been expressed about the desirability of subsidizing entrepreneurial finance. This session therefore critically explores key issues with regard to finance, in particular micro-finance, venture capital, and networks.

7. Can we learn lessons from cross-country comparisons of entrepreneurship?

It is often assumed that it is straightforward to learn lessons from countries’ experience in promoting entrepreneurship, and that general conclusions can be drawn from such an exercise. The dilemma is that entrepreneurship and entrepreneurial outcomes may be highly context specific. Nowhere is this perhaps more forcefully illustrated than in the contrasting cases of China and India, the two largest emerging economies of the past half century. In China there has been a surge of entrepreneurship following the country’s initiation of reforms in 1978, despite an adverse institutional environment. In India, despite much more solid institutions, there has been a more modest, and in some senses a more focused entrepreneurial drive. But in both countries the outcome has been a structural transformation and the lifting of millions of people out of poverty. In contrast to these two rapidly growing economies, many countries on the continent of Africa still seem to be stagnating, despite an apparent profusion of entrepreneurs. The papers in this section will therefore critically focus on entrepreneurship in China, India, and Africa.

8. How consistent are policies for strengthening entrepreneurship in developing countries?

Despite recognizing the need to promote entrepreneurship, entrepreneurship policies in many countries do not seem to be successful. One dilemma is the consistency of policies, given that most developing countries are in a state of transition and need to achieve multiple objectives with a limited number of policy instruments. Often, donor country support for entrepreneurship in developing countries is inconsistent with their own successes. Therefore, the papers in the final session of the workshop will be on three crucial aspects for the strengthening of productive entrepreneurship in developing countries: the role of the state; policy reform, and; the role of human and social capital in entrepreneurship.

During the workshop, 26 commissioned and contributed papers from eminent researchers in the field will be presented to deal with these eight dilemmas. It is envisaged that all of these papers will be made available on the UNU-WIDER website in due course as research papers. Furthermore, the aim is to publish at least two books on the relationship between entrepreneurship and economic development, and in so doing fill a gap in both the entrepreneurship and development economics literatures. Moreover, it is envisaged that these will also fill the demand from the growing number of MBA programmes where there is interest in the phenomenon of entrepreneurship in emerging economies.