1. SHAHID ABBAS KAHLON
Table of Contents
Importance of entrepreneurship in global perspective ................................................................................ 2
Introduction ................................................................................................................................................... 2
International entrepreneurship and entrepreneurship opportunities .......................................................... 2
International versus Domestic Entrepreneurship ...................................................................................... 3
Cultural stories .......................................................................................................................................... 3
Cultural Environment................................................................................................................................ 3
Technological Environment ...................................................................................................................... 4
Local Foreign Competition ....................................................................................................................... 4
Embraces Change...................................................................................................................................... 4
High Tolerance for Ambiguity.................................................................................................................. 4
High Level of Integrity ............................................................................................................................. 4
The Importance of Global Business .......................................................................................................... 5
Attitudes towards Entrepreneurship in Participating GEM Countries ...................................................... 5
Entrepreneurship in Pakistan ........................................................................................................................ 8
Current Economic condition of Pakistan .................................................................................................. 8
Entrepreneurship in Pakistan: Challenges and Opportunities ................................................................... 9
Comparison of various entrepreneurial characteristics and framework conditions of Pakistan with Peer
nations, 2012. .......................................................................................................................................... 12
Significant of entrepreneurship in Pakistan............................................................................................ 14
Unemployment ....................................................................................................................................... 14
Downsizing ............................................................................................................................................. 14
Entrepreneurship Aids the Economy ...................................................................................................... 14
Entrepreneurship facilitates the rate of development of a country ......................................................... 14
Entrepreneurship helps in conserving the outflow of national wealth .................................................. 15
Entrepreneurship is not only an exercise in self-employment but it is employment generative. ......... 15
References .............................................................................................................................................. 16
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Importance of entrepreneurship in global perspective
Introduction
Never before in the history of the world has there been such a variety of exciting international business
opportunities. The movement of the once-controlled economies to more market-oriented ones, the
advancement of the Pacific Rim and the new markets in the Middle East provide a myriad of possibilities
for entrepreneurs wanting to start a new enterprise in a foreign market as well as for existing
entrepreneurial firms desiring to expand their businesses globally. The world is truly global. As more
countries become market oriented and economically developed, the distinction between foreign and
domestic markets is becoming less pronounced. What was once only produced domestically is now
produced internationally. For example, Yamaha pianos are now manufactured in the United States, and
Nestlé chocolate (started in Europe) is made all over the world. Invacare’s wheelchairs, once produced
only in the United States, are now made in Germany and China. This blurring of national identities will
continue to accelerate as more products are introduced outside domestic boundaries earlier in the life of
entrepreneurial firms.
International entrepreneurship and entrepreneurship opportunities
Such as the European Union and NAFTA (the North American Free Trade Agreement between Canada,
Mexico, and the United States) have emerged and are growing. Once-developing countries, like China,
are economic powers. These changes are well recognized by organizations that are investing trillions of
dollars in a world economy that includes emerging markets as some of the vehicles of future growth.
About 85% of the world’s population lives in developing countries, most of which are in need of major
investment in infrastructure development. Just ask the potato farmers in the Chuvash Republic of Russia,
who saw 26% of their crop rot because of inadequate distribution and warehousing, whether there is a
need for this investment in infrastructure. Or, ask the economics professor in the Czech Republic, who
had to leave the university to find other employment due to the low university wages, whether massive
investment in education is needed. The professor, like many human resources in these developing
countries, needs training and education to pro-vide the manpower required in the next century.
The globalization of entrepreneurship creates wealth and employment that benefit individuals and nations
throughout the world. International entrepreneurship is excit-ing because it combines the many aspects of
domestic entrepreneurship with other disciplines such as anthropology, economics, geography, history,
jurisprudence, and language. In today’s hypercompetitive world with rapidly changing technology, it is
essential for an entrepreneur to at least consider entering the global market. Many entrepreneurs find it
difficult to manage and expand the venture they have created, especially into the global marketplace.
They tend to forget a basic axiom in business: The only constant is change. Entrepreneurs who understand
this axiom will effectively manage change by continually adapting their organizational culture, structure,
procedures, and strategic direction, as well as their products and services in both a domestic and an
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3. SHAHID ABBAS KAHLON
international orientation. Entrepreneurs in developed countries like the United States, Japan, the United
Kingdom, and Germany must sell their products in a variety of new and different market areas as early as
possible to further the growth of their firms. Global markets offer entrepreneurial companies new market
opportunities. Since 1950, the growth of international trade and investment has often been larger than the
growth of domestic economies, even than those of the United States and China. Importance of
International Entrepreneurship A combination of domestic and international sales offers the entrepreneur
an opportunity for expansion and growth that is not available solely in a domestic market. The Nature of
International Entrepreneurship Simply stated, international
entrepreneurship is “the process of an
entrepreneur conducting business activities across national boundaries.” It may consist of exporting,
licensing, opening a sales office in another country, or something as simple as placing a classified
advertisement in the Paris edition of the International Herald Tribune .The activities necessary for
ascertaining and satisfying the needs and wants of target consumers often take place in more than one
country. When an entrepreneur executes his or her business model in more than one country, international
entrepreneurship is occurring. The term international entrepreneurship was introduced around 1988 to
describe the many untapped foreign markets that were open to new ventures reflecting a new
technological and cultural environment (Morrow, 1988). McDougall (1989, p. 389) defined international
entrepreneurship as “the development of international new ventures or start-ups that, from their inception,
engage in international business, thus viewing their operating domain as international from the initial
stages of the firm’s operation.”
International versus Domestic Entrepreneurship
Although both international and domestic entrepreneurs are concerned with sales, costs, and profits, what
differentiates domestic from international entrepreneurship is the variation in the relative importance of
the factors affecting each decision.
International entrepreneurial decisions are more complex due to such uncontrollable factors as economics,
politics, culture, and technology.
Cultural stories
While studying in Shanghai in the summer of 1995, I would routinely drive around the city in a taxi to get
to know the area and to chat with the taxi drivers (who were always very knowledgeable about the city).
One day, the driver asked me my English name. I told him it was “Phillip,” and he looked puzzled. I
asked him what
“Phillip” meant to him and he replied, “Good reception with many channels. So, I have that going for me
… which is nice.
Cultural Environment
The effect of culture on entrepreneurs and strategies is also significant. Entrepreneurs must make sure
that each element in the business plan has some degree of congruence with the local culture. For example,
in some countries point-of-purchase displays are not allowed in retail stores, while they are in the United
States. An increasingly important aspect of the cultural environment in some countries concerns bribes
and corruption. How should an entrepreneur deal with these situations? What is the best course of action
to take and still maintain the needed high ethical standards?
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4. SHAHID ABBAS KAHLON
Sometimes, one of the biggest problems is finding a translator. To avoid errors, entrepreneurs should hire
a translator whose native tongue is the target language.
Technological Environment
Technology, like culture, varies significantly across countries. The variations and availability of
technology are often surprising, particularly to an entrepreneur from a developed country. While U.S.
firms produce mostly standardized, relatively uniform products that meet industry standards, this is not
the case in many countries, making it more difficult to achieve a consistent level of quality. New products
in a country are created based on the conditions and infrastructure operating in that country. For example,
U.S. car designers can assume wider roads and less expensive gasoline than European designers. When
these designers work on transportation vehicles for other parts of the world, their assumptions need to be
significantly altered.
Local Foreign Competition
When entering a foreign market, the international entrepreneur needs to be aware of the strength of local
competitors who are already established in the market. These competitive companies can often be a
formidable force against foreign entry, as they are known companies with known products and services.
This can be particularly difficult when there is a “buy national” attitude in the country. A sustained effort
stressing the unique selling propositions of the entering product or service is necessary, including a
guarantee to ensure customer satisfaction, in order to compete.
Embraces Change
A global entrepreneur likes and even embraces differences in people, as well as situations. He or she
constantly seeks new and exciting things and likes to “break the mold” and challenge corporate
orthodoxies. Living in and learning about different cultures and ways of doing things is an exciting way
to live. New ways of doing things are encouraged. Employees are taught how to manage change.
A global entrepreneur needs to establish a vision that employees and customers understand. Employees
should feel that they are an important part of the global organization and essential to its success. A global
entrepreneur is very optimistic, assumes that everything is possible, and establishes a limited number of
short-term goals to obtain the vision. He or she focuses more on outcomes than processes, works long
hours, has a high energy level, and does not fear failure.
High Tolerance for Ambiguity
The passion for learning from a variety of sources and viewing uncertainty as an opportunity instead of a
threat allows a global entrepreneur to develop mental maps that will lead to achieving a vision.
Incrementally moving initiatives in a variety of areas without completing one regularly is not a problem.
This high tolerance for ambiguity makes utility a key virtue of any practice at the individual or company
level.
High Level of Integrity
A global entrepreneur has an extremely high standard for individual and company integrity. These
established standards are used inside and outside the company. The same high ethical standards are
expected from all employees and activities of the venture. A global entrepreneur focuses on the wellbeing of his or her employees and acts as a nurturing coach. He or she focuses on building and inspiring
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5. SHAHID ABBAS KAHLON
people and workseffectively with others in teams. Spending more time listening than talking, a global
entrepreneur values people—employees as well as customers—and wants to build a sustainable enterprise
in a particular culture and country.
The Importance of Global Business
Global business has become increasingly important to firms of all sizes in today’s hypercompetitive
global economy. There can be little doubt that today’s entrepreneur must be able to move in the world of
international business. The successful entrepreneur will be someone who fully understands how
international business differs from purely domestic business and is able to respond accordingly. An
entrepreneur entering the international market should address the following questions:
Channels vary significantly from country to country, each of these needs to be taken into account when
deciding to go global as discussed in the following summary. Change and communication are important
aspects of operating in a global environment, as are market selection and entry.
Attitudes towards Entrepreneurship in Participating GEM Countries
Participating
I personally know
There are good start up
I have the required
Country
someone who started
opportunities where
knowledge/skills &
a business in the
live in the next 6 months
experience to start
past 2 years
Fear of
failure
would prevent me
starting a business
a business
Innovation Driven Economies
Australia
30.33
45.69
53.16
36.32
Belgium
24.01
39.58
44.86
34.63
Denmark
41.67
46.42
40.75
35.17
Finland
43.67
51.13
39.53
32.14
France
47.83
33.87
37.27
42.96
Germany
29.99
28.48
41.63
44.41
Greece
39.96
15.91
52.18
60.13
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6. SHAHID ABBAS KAHLON
Iceland
48.76
48.74
48.99
35.15
Ireland
34.64
22.50
49.15
38.73
Israel
35.95
35.17
41.61
43.32
Italy
30.36
24.68
42.42
44.50
Japan
17.44
5.92
13.71
35.06
Korea
31.12
13.01
28.96
34.25
Netherlan
ds
38.06
44.80
45.51
25.64
37.82
49.75
40.45
29.86
33.12
20.25
52.08
39.26
49.04
26.80
56.34
32.54
32.42
18.84
50.20
44.80
53.92
66.10
42.43
35.02
Switzerlan 33.54
d United
Kingdom
34.24
33.33
43.85
30.73
29.24
51.82
38.91
United
States
34.79
59.52
32.22
Norway
Portugal
Slovenia
Spain
Sweden
Efficiency Driven
28.77
Economies
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7. SHAHID ABBAS KAHLON
Argentina
41.71
50.35
63.54
24.96
Brazil
43.41
48.12
57.94
37.69
Chile
49.48
65.05
65.60
26.75
China
59.70
36.17
42.33
32.71
Colombia
40.90
68.18
65.10
31.49
Costa Rica
58.30
46.38
68.80
33.79
Croatia
35.13
23.32
53.19
39.24
Hungary
32.78
33.33
43.36
48.98
Latvia
39.48
29.10
50.75
40.42
Macedonia
41.45
34.26
59.72
36.16
Malaysia
47.79
40.06
24.33
48.46
Mexico
54.61
55.56
64.65
35.72
Montenegro
59.93
36.07
70.88
41.12
Peru
63.90
71.39
76.48
32.96
Romania
39.05
17.52
38.18
45.99
Russia
34.02
21.65
22.69
37.52
South Africa
38.64
40.91
44.30
25.44
Taiwan
38.87
29.63
26.42
41.64
Turkey
36.43
36.14
54.18
32.52
Factor Driven -
Economies
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8. SHAHID ABBAS KAHLON
Entrepreneurship in Pakistan
Current Economic condition of Pakistan
Rank
27th (PPP)
47th (Nominal)
Currency
1 Pakistani Rupee (PKR)
Rs.1 = 100 Paisa’s
Fiscal year
1 July – 30 June
Trade organizations
ECO, SAFTA, ASEAN, WIPO and WTO
Statistics
GDP
$240 billion (nominal) (2012)
$514.6 billion (2012 est.)(PPP)
GDP growth
3.7% (2012
GDP per capita
$1,578 (nominal; 2012)
$3,876 (PPP; 2012)
GDP by sector
agriculture: 21.2%, industry: 25.4%, services: 53.4% (2010 est.)
Inflation (CPI)
7.5% (Jan 2013
Population
below poverty line
14% (2013)
Labour force
60.36 million (2012 est.)
Labour force
by occupation
Agriculture: 43%, industry: 20.3%,services: 36.6% (2005 est.)
Unemployment
5.6% (2012 est.)
Main industries
textiles and apparel, processing, pharmaceuticals, construction
materials, chemicals, cement, mining,machinery, steel, engineering, softwareand
hardware, motorcycle and auto parts, electronics, paper products,fertiliser, shrimp
Ease of Doing
107th (2013)
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9. SHAHID ABBAS KAHLON
Business Rank
Entrepreneurship in Pakistan: Challenges and Opportunities
Historically, entrepreneurship in the sense of its modern definition7 has remained very limited in
Pakistan. The development of small-scale industrial sector measured through new firm entry rate,
if taken as proxy to reflect entrepreneurial activity in Pakistan, show the average annual firm
entry rate in Pakistan lower than most regional averages around the world8. There is, however, a
note of caution here that a large number of new firm entries remain unregistered in Pakistan's
significant small scale informal business sector. The Small and Medium Enterprise Development
Authority (SMEDA) estimates that in Pakistan, small and medium enterprises (SMEs) with less
than 100 employees constitute nearly 90% of all 3.5 million private firms that employ 80% of the
non-agricultural labor force; and their share in the annual GDP is 40%9 . Their firm structure is
dominated by sole proprietorship and most are family run businesses with no culture of taking it
to the pubic (IPOs).
A review of the past 6 decades of Pakistan’s development priorities reveals that entrepreneurship
has never been the focus of economic development planners. All these years of government
efforts clearly show a bias towards large scale industry and neglect of the small. The historical
evidence clearly
indicates that, in the context of Pakistan, when one talks about
industrialization, for most people it implies large plants and factories run by machines and
employing a large number of workers. It definitely comes as a surprise to people when they
discover the reality; that it is actually the informal sector and the small scale sector that
dominates the industrial landscape of Pakistan which have been continuously ignored in the
national economic policies.
However, in recent years, with the increasing realization of entrepreneurship and innovation as
engines of economic growth, there had a rise in interest in Pakistan to review its economic
policies by placing emphasis on entrepreneurial growth10.
As stated earlier, generally, the development of small-scale sector reflected the characteristics of
entrepreneurship however this sector had largely grown up as an informal sector. The informal
small scale sector has dominated employment in the construction, wholesale, retail trading,
hotels, transport, communications and storage industries in urban areas. Some of the issues
faced by the small and medium size firms located in different SME clusters in Pakistan are
reported as follows:
• Small businesses face a complex legal, tax and administrative environment in Pakistan
therefore most firms avoided the economic obligations associated with the registered status.
• Entrepreneurs generally are not tuned to conducting R&D as they believed that the high cost of
production and narrow margins did not give them the leverage to go for R&D. Major rationale
behind the high cost included high utility prices and minimum wage fixed by government.
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10. SHAHID ABBAS KAHLON
Another reason of lack of focus on R&D was the nature of industry, which was skill based
(imitation)rather than the knowledge based. Nevertheless, research was being undertaken to
explore new markets based on personal visits of entrepreneurs either privately or in some cases
in groups sent out by the government organizations to promote trade.
• The small businessman, by and large, expected from the government to provide incentives and
subsidies, given the rent-seeking culture that has now been established, businessmen, instead of
focusing on their own innovation, expected help from the government most of the times.
• Businesses remained largely owner-operated and resistant to developing professional
management, as the business growth was traditionally dependent on policy favors rather than on
professional management and strategy. Moreover, in clusters, there was no expertise for
providing practical advice on key areas such as project feasibility, business operations, brand
establishment and marketing. Given the lack of market depth, input from research institutions,
universities and other forms of specialized knowledge, knowledge spillovers remained narrow
and imitative.
• Scarcity of skilled labor was considered as a major constraint for the development of
entrepreneurship. Like all less resourceful firms, the SMEs typically had skill deficiencies and
were unable to compete with larger firms' better-qualified manpower. Inter-firm transfer of
skilled labor was a usual phenomenon directly influenced by relative wage levels. In this game,
the larger firms had advantage over SMEs. Unfortunately, the technical skills were not
adequately rewarded by the employers. Even the society never respected people having bluecollared jobs.
• Over and above, lack of trust among the business community was a serious hindrance to
growth, impeded cooperation among entrepreneurs to develop the existing or explore the new
markets. The entrepreneurs in their attempts to hide business information used to maintain
mailing address and banks in other cities. Another serious complaint was that the labor trained by
one employer, either moved to another employer or opened up his own firm. Businesses
remained owner-operated owing to lack of trust on professional employees in the clusters as an
employee who gained knowledge easily replicated with stolen business information.
• Small businessmen had little recourse to bank financing. They believed that the banks lent only
to the big borrowers for non-commercial and political reasons. The biggest stumbling block was
the State Bank of Pakistan’s Prudential Regulations and documentation requirements, which
most SMEs were unable to meet. Cut-throat competition, willing to go for the solo flight, lack of
attitude towards delegation, lack of corporate culture, lack of knowledge/proper homework and
lack of relevant businessdevelopment systems provision in the industry had knocked down the
SMEs in Pakistan.
Despite these challenges, the two key potential areas of opportunity where entrepreneurship can
make significant contributions are:
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11. SHAHID ABBAS KAHLON
First, more than 2/3rd of Pakistan’s population is concentrated below the age of 30, which will
change the age structure of working age population over the next few years. Majority of the
youth entering the labor force over the next two decades will have little education and skills
catering to market demand12. Moreover, incessant shocks to the economy such as energy crisis,
international commodity price shocks, security issues, and flash floods of 2010/11 have left little
resilience in the economy and absorption capacity for growing youth labor force. This required a
rethinking about the sources of growth in Pakistan's context and entrepreneurship has the greatest
potential to fill this gap.
Second, in the area of indigenous technology transfer, various researchers have underscored the
need for establishing industry-university linkages. According to some estimates13 in eight years,
between 1999 and 2007, Pakistan had increased R&D investment by 600% which stood at 0.7%
of GDP or USD 1.176 billion. At the same time number of researchers in Pakistan has grown
from187 per million in 2005 to 310 in 2007. Though Pakistan suffered significant economic
challenges in the following years14, thereis still considerable R&D capacity in the nation's
universities and institutions, particularly in the science and technology focused programs15. This
new capacity can be converted into new entrepreneurship opportunities, economic growth and
wealth creation by linking it with better trained young entrepreneurs.
The above scenario leads us to believe that the country's underdeveloped small business and
entrepreneurial sector which is facing numerous economic challenges, can benefit from the
available manpower resource opportunity if mobilized through an entrepreneurially oriented
development approach envisaged by the GEM project.1.3 Entrepreneurship in Pakistan:
Challenges and Opportunities Historically, entrepreneurship in the sense of its modern
definition7 has remained very limited in Pakistan. The development of small-scale industrial
sector measured through new firm entry rate, if taken as proxy to reflect entrepreneurial activity
in Pakistan, show the average annual firm entry rate in Pakistan lower than most regional
averages around the world8. There is, however, anodeof caution here that a large number of new
firm entries remain unregistered in Pakistan's significant small scale informal business sector.
The Small and Medium Enterprise Development Authority (SMEDA) estimates that in Pakistan,
small and medium enterprises (SMEs) with less than 100 employees constitute nearly 90% of all
3.5 million private firms that employ 80% of the non-agricultural labor force; and their share in
the annual GDP is 40%9 . Their firm structure is dominated by sole proprietorship and most are
family run businesses with no culture of taking it to the pubic (IPOs).
A review of the past 6 decades of Pakistan's development priorities reveals that
entrepreneurship has never been the focus of economic development planners. All these years of
government efforts clearly show a bias towards large scale industry and neglect of the small.
The historical evidence clearly indicates that, in the context of Pakistan, when one talks about
industrialization, for most people it implies large plants and factories run by machines and
employing a large number of workers. It definitely comes as a surprise to people when they
discover the reality; that it is actually the informal sector and the small scale sector that
Shahid Abbas Kahlon Jutt BC11-252

12. SHAHID ABBAS KAHLON
dominates the industrial landscape of Pakistan which have been continuously ignored in the
national economic policies.
Comparison of various entrepreneurial characteristics and framework conditions of
Pakistan with Peer nations, 2012.
Pakistan
Iran
Turkey
Saudi Arabia
Egypt
West Bank&
Gaza
TEA Rate
9.1
12.4
8.6
9.4
7.0
10.4
Nascent
Entrepreneurship rate
6.6
4.8
3.7
5.9
2.1
7.9
New
Business 2.7
Ownership rate
7.8
5.1
3.5
4.9
2.6
Necessity
driven 41%
Entrepreneurship
38%
37%
10%
53%
32%
Female to male TEA 1 to 4.5
ratio
n.a.
1 to 3.7
n.a.
1 to 2. 2
n.a.
Perceived capability 56.2 %
to carry out
65.7%
54.2%
69.3%
63.4%
57.0%
Entrepreneurship
Fear of failure
37.51%
32.52%
37.82%
34.43%
40.0%
Details
Entrepreneurial
Characteristic
27.73%
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13. SHAHID ABBAS KAHLON
Entrepreneurial Attitude in Pakistan: Respondents expressing the opinion and agreeing with the
statement
Statement
I personally know
someone personally
who
started
.a
business in the past 2
years
There will be good
startup opportunities
where
I live in the next six
months.
I have the knowledge,
skill and experience to
start a new business.
Fear of failure would
prevent me from
starting a business.
Most people consider
starting
a
new
business
a good career choice.
All
48.2%
Male
64.3%
Femail
30.6%
51.7%
62.0%
39.3%
56.6%
67.7%
44.0%
31.5%
32.0%
32.0%
77.3%
77.8%
76.7%
Entrepreneurial attitudes of the non-entrepreneurially active working age population in various
provinces of Pakistan are presented In above table. The key findings are as follows.
• The people of Punjab are more likely to agree with the statement “I personally know someone
who has started a business in the last two years” which is a proxy for networking than
respondents in any other region.
• In addition the people of Punjab had the highest proportion of the non-entrepreneurially active
population reporting that there were good start up opportunities in their local area in the next six
months.
• The people of Sindh were the most likely to agree with statement that “I have the knowledge,
skill and experience required to start a new business”.
• The people of Khyber Pakhtoon Khowa had the lowest fear of failure to start a business.
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14. SHAHID ABBAS KAHLON
Perceptions of entrepreneurship among non-entrepreneurially active working age population
towards entrepreneurship in various provinces of Pakistan
Significant of entrepreneurship in Pakistan
Unemployment
The high population growth in the past few decades has ensured that a very large number of young people are now
entering the labour market. Even though it is among the seven most populous Asian nations, Pakistan has a lower
population density than Bangladesh, Japan, India, and the Philippines. In the past, excessive red tape made firing
from "jobs", and consequently hiring, difficult Significant progress in taxation and business reforms has ensured that many
firms now are not compelled to operate in the underground economy.In late 2006, the government launched an ambitious
nationwide service employment scheme aimed at disbursing almost $2 billion over five years.Mean wages were $0.98 per
man hour in 2009. Rate of unemployment is 25%.High inflation and limited wage growth have drawn more women into
the workforce to feed their families, in spite of cultural resistance and domestic abuse over the issue.
Downsizing
This downsizing has all but destroyed the long standing notion of job security in large corporations. As a
result employees of large companies after downsizing start their own business. Because they already have
the experience of doing business. In Pakistan this trend has been started because there are problems of
laodshading industries are doing downsizing, and employees are starting their own business. When they
start their business other unemployed people can do work there.
Entrepreneurship Aids the Economy
Most economists agree that entrepreneurship is essential to the vitality of any economy,
developed or developing. Entrepreneurs create new businesses, generating jobs for themselves
and those they employ. In many cases, entrepreneurial activity increases competition and, with
technological or operational changes, it can increase productivity as well. In the United States,
for example, small businesses provide approximately 75 percent of the net new jobs added to the
American economy each year and represent over 99 percent of all U.S. employers. The small
businesses in the United States are often ones created by self-employed entrepreneurs.
“Entrepreneurs give security to other people; they are the generators of social welfare,”
Carl J. Schramm, president and chief executive officer of Ewing Marion Kauffman Foundation,
said in February 2007. The foundation is dedicated to fostering entrepreneurship, and Schramm
is one of the world’s leading experts in this field.
Others agree that the benefits of small businesses go beyond income. Hector V. Baretto,
administrator of the U.S. Small Business Administration (SBA), explains, “Small businesses
broaden the base of participation in society, create jobs, decentralize economic power, and give
people a stake in the future.”
Entrepreneurship facilitates the rate of development of a country
Entrepreneurship facilitates the rate of development of a country by significantly contributing to the
following factors.
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15. SHAHID ABBAS KAHLON






By increasing the rate of growth in GDP of a country
Increasing productivity.
Growing employment opportunity.
Increasing economic diversification.
Optimum use of local resources
Continued innovation in techno – managerial practicesImproving in international
competitiveness.
Entrepreneurship helps in conserving the outflow of national wealth
The developing countries usually have a limited national wealth. However, they need to spend this
wealth to import goods and services. Also, to trade with other countries, they need foreign exchange.
Entrepreneurship helps in conserving the outflow of the national wealth in the following ways.
As entrepreneurship is a low-cost strategy of economic development, job creation and technical
innovation. Thus they enable the production locally and reduce the need of import.
Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product,
commercializing an invention, adopting a technology and enveloping a new market. They will even help
in generation of foreign exchange, thus conserving the outflow of national wealth.
o
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Entrepreneurship is an exercise in low-cost strategy.
Entrepreneurship is a low-cost strategy for Economic development.
Job creation.
Technical innovation
The entrepreneurs bear the costs and risks of launching a new venture, developing a new product,
commercializing an invention, adapting a technology and developing a new market, there by offering a
highly leveraged strategy of development.
Entrepreneurship alone results in generating wealth and employment, in increasing GDP and the overal
development of society. Governments need to spend a lot of money if they have to provide employment
and to establish enterprises. But by encouraging entrepreneurs and by supporting them government can
achieve these targets easily. So entrepreneurship is called an excercise in low-cost strategy.
Entrepreneurship is not only an exercise in self-employment but it is
employment generative.
It does not necessarily generate resources.
It can be organized only with existing usable wealth.
It has a strong tendency of self-saturation. So, once availed, it blocks the employment
opportunities for others for another 10 years assuming an average 3 promotions in a 30-year
service career.
Entrepreneurship or self-employment overcomes these problems as
Shahid Abbas Kahlon Jutt BC11-252

16. SHAHID ABBAS KAHLON
Adds to the GNP
It has unique characteristics of self-generation.
In other words, entrepreneurship offers employment to others. As it is economic activity, it also leads to
the emergence of other economic activities. This creates unending employment oppotunities.
Thus, Entrepreneurship is not only an exercise in self-employment, but it is employment generative.
References
www.gem.org
www.smeda.org
www.finance.gov.pk
www.viewpointonline.net
Shahid Abbas Kahlon Jutt BC11-252