The Barbadian Entrepreneurship Context, A Youth Perspective

1
The Barbadian Entrepreneurship Context,
A Youth Perspective
By Keeley Holder
July 20th
, 2013
1. Entrepreneurship vs. Small Business
The topic of entrepreneurship is one of the most popular of our time and defining it can be
as complex as one wishes, or as simple as one desires.1
Even as it remains an ill-defined,
multi-dimensional concept2
, in the context of this proposal, the following definition of
entrepreneurship is most fitting:
“Entrepreneurship is a dynamic process of vision, change, and creation. It requires
an application of energy and passion towards the creation and implementation of
new ideas and creative solutions. Essential ingredients include the willingness to take
calculated risks—in terms of time, equity, or career; the ability to formulate an
effective venture team; the creative skill to marshal the needed resources; the
fundamental skill of building a solid business plan; and, finally, the vision to
recognize opportunity where others see chaos, contradiction, and confusion.”3
In terms of classification, "entrepreneur" and "small business owner" are often used
interchangeably, especially by policy makers, even though they are not synonymous4
. While
they may have much in common, particularly the fact that small businesses are certainly an
outstanding vehicle for individuals to channel their entrepreneurial ambitions5
, there are
significant differences between the entrepreneurial venture and the small business.
Typically, a small business owner views their business as a job e.g. shopkeepers and people
in professional occupations.6
Entrepreneurs on the other hand view and build their business
as an asset that will generate income on its own.
Indeed in Barbados’ case, former lecturer and author on entrepreneurship at the UWI, Cave
Hill campus (and current Minister of Foreign Affairs and Foreign Trade), Maxine McClean has
indicated that many of the small businesses in Barbados are “lifestyle businesses” which
allow self-employed persons to generate an income stream that is greater than if they were
employed traditionally to do the same job. In contrast, there are considerably fewer high
growth and sure profit; innovative businesses that swiftly create substantial wealth and net
1
Source: Therese Baptiste-Cornelis & Jonathan Lashley – Entrepreneurship and its Resulting Complexities in the
Caribbean (2010)
2
Source: Sander Wennekers & Roy Thurik – Linking Entrepreneurship and Economic Growth, Small Business
Economics 13: 27–55 (1999)
3
Source: Donald Kuratko – Entrepreneurship: Theory, Process and Practice (2008)
4
Source: Peter Drucker – Innovation and Entrepreneurship (1993);
5
Source: Martin Carree & Roy Thurik – The Impact of Entrepreneurship on Economic Growth (2002)
6
Source: Martin Carree & Roy Thurik – Understanding the Role of Entrepreneurship for Economic Development
(2005)

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positive employment in Barbados that would typically exemplify the actions of
entrepreneurs.7
Nevertheless, a small business owner and an entrepreneur are not mutually exclusive
individuals. A small business owner can undoubtedly become an entrepreneur by mastering
the process and skills necessary to grow their small business such that they develop a
competitive advantage which results in wealth creation instead of merely income
generation.
2. Employment & Entrepreneurship
There is growing scientific evidence that entrepreneurial activities matter for employment,
productivity and ultimately economic growth.8
For example, in the United States,
entrepreneurship has been the primary engine of job creation in its economy over the last
several decades. From 1980-2005, companies less than five (5) years old were responsible
for nearly all net job growth in America. In fact, without start-ups, net job creation for the
American economy would be negative in all but a handful of years.
However, while these are impressive statistics, they do not convey the whole story of job
creation – the turmoil and churn of new firm creation, young firm survival or failure, job
creation and destruction and the scale growth of some firms. Because not every startup
sticks around, the jobs that many firms create at birth will subsequently disappear, so part
of their positive contribution to jobs in one year will turn to subtraction in the next few
years. Undeniably, no economy could long survive if every year’s new jobs were simply
eliminated within such a short period.
In taking a closer look at these statistics, it is revealed that it is really those young
companies aged one to five (1yr-5yrs), that accounted for roughly two-thirds of new job
creation, averaging nearly four (4) new jobs per firm per year in 2007.9
Consequently, while there are no similar statistics for Barbados, the experience by
Barbadian business consultants and enterprising individuals is that a similar case exists for
Barbados. Therefore, these figures present a powerful case for business incubators that take
companies past that critical first year of existence.
3. Barbados’ Economic Development & Entrepreneurship
From the mid-1980s to the present day, there has been a marked increase in the attention
paid to the link between entrepreneurship and economic growth. However, in Barbados and
the Caribbean, small business has generally been seen as a “social good” that should be
maintained to provide employment and henceforth contribute to efforts of poverty
alleviation. Needless to say, this has negatively affected the image of entrepreneurship
where it is often considered a ‘last resort’ career option.
7
Source: Maxine McClean – Personal Communication (2013)
8
Source: Jean-Philippe Cotis, OECD – Entrepreneurship As An Engine For Growth: Evidence and Policy Challenges
(2007)
9
Source: John Haltiwanger et. al., Kauffman Foundation – Jobs Created from Business Startups in the United States
(2009)

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This view has often been supported by international development agencies, where the main
thrust of enterprise development strategies have been directed towards poverty alleviation
and the provision of employment. However, such an approach incurs a cost in terms of
foregone economic growth due to a lack of concentration on small business as a “vehicle for
entrepreneurship”.
Sadly, the commensurate economic growth, competitiveness and job creation results have
not been seen in Barbados or the rest of the Caribbean. Additionally, the promotion of
personal development and the resolution of social issues attributed to entrepreneurship
have not prevailed.
At the crux of this problem are two facts:
1. The type of entrepreneurship being promoted and supported is one where small
business is synonymous with entrepreneurship and promoted as a social good, and
2. The structural and cultural barriers inherited from a conservative colonial culture
have emphasised business in the commerce/non-traded sectors rather than industry
(production and value added). 10
Nevertheless, in recent times there has been a renewed interest by Barbadian and
Caribbean policymakers in entrepreneurship as an engine for economic growth and
employment as the Worldbank reported that that in high income OECD (Organisation for
Economic Cooperation and Development) Countries, 95% of all firms are small- and
medium-size enterprises and they employ 60% – 70% of the workforce.11
This revelation
and others like it are shifting policymakers’ view of small business as a social good to that of
a “vehicle for entrepreneurship” and sustainable economic growth.
3.1. Economic Development Phases & Entrepreneurship
If entrepreneurship is to be an effective agent for economic growth in Barbados, it is
imperative to understand where Barbados is positioned in terms of its phase of economic
growth and stage of entrepreneurship. For example, in seeking to implement
entrepreneurship strategies and policies for economic growth, selecting those best practices
that have worked in high income OECD countries may not yield the same results if those
countries are at a different stage in their economic development from Barbados.
With regard to Barbados’ phase of economic growth, figure 1 below shows the Global
Competiveness Index (GCI) three (3) phases of economic development of nations that have
been characterised based on twelve (12) pillars of competitiveness12
. It also identifies
Barbados, according to Professor Andrew Downes, as being in transition from the second
stage of economic development known as the efficiency phase, to the third stage called the
innovation phase.
10
Source: Jonathan Lashley – The Entrepreneurship Challenge in a Time of Change (2007)
11
Source: Meghana Ayyagari et. al., Worldbank – SMEs Across the Globe, A New Database (2003)
12
Source: Michael Porter & Klaus Schwab, World Economic Forum – Global Competitiveness Report 2008-2009

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Figure 1: Barbados’ Positioning in the 3 Phases of Economic Development
While the GCI has ranked Barbados as being the most competitive of the Caribbean nations,
and in the top 50 most competitive nations in the world since 200613
, what should be of
grave concern to Barbadian policymakers is the fact that the report also indicates the
following:
 The hardest transition is perhaps from technology importing, efficiency-based
development to innovation-based development. This requires a direct government
role in fostering a high rate of innovation, through public as well as private
investments in research and development, higher education, and improved capital
markets and regulatory systems that support the start-up of high-technology
enterprises.
 Many of the failures in economic development in recent years have been
hypothesised to involve countries getting stuck at critical junctures of economic
transition: Between Factor-Driven and Efficiency-Driven OR between Efficiency-
Driven and Innovation-Driven stages. The shift from one phase of development to
the next often requires new ways of organising governments, markets, and
enterprises, so it is not altogether surprising therefore that many countries fail at
making the appropriate transitions, or even fail to recognise that such a transition is
needed. Ironically, old strategies become the new weaknesses.14
Because entrepreneurship is an ill-defined concept, there is a need to explain how
entrepreneurship influences economic growth and this is done by using intermediate
13
Source: Andrew Downes, SALISES – A Caribbean Perspective on the Global Competitiveness Index and Report
(2009)
14
Source: Klaus Schwab et. al. , WEF – Global Competitiveness Report 2001-2002
BARBADOS
12 PILLARS OF COMPETITIVENESS 3 PHASES OF ECONOMIC DEV.

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variables or linkages (such as innovation and entry and exit of firms i.e. competitiveness).
Hence, from an entrepreneurial perspective, each type of economy can be defined by
specific intermediate variables/linkages.
In factor-driven economies it is expected that there will be high levels of new business
activity with more necessity-driven small businesses because fewer employment
opportunities ‘push’ individuals into entrepreneurship especially after exogenous shocks.
Meanwhile, even as the proportion of new business activity is at a high level in innovation-
driven economies, the proportion of opportunity-driven entrepreneurs, operating on ‘pull
motives’ such as the desire for independence, income, challenge, status and recognition is
expected to be much greater than either factor-driven or efficiency-driven economies.15,16
In contrast, efficiency-driven economies such as where Barbados has been classified as
emerging from, something unusual occurs. It has been proposed that as the economy
becomes more stable and moves to more standardised products and processes,
entrepreneurial opportunities are initially reduced, leading to an era of low levels of small
businesses and entrepreneurial ventures.
However, as the economy develops at a low rate of growth and higher levels of education
coincide with changes in consumer tastes and rapid information diffusion through the use of
ICTs among other things, there is greater incentive for opportunity-driven entrepreneurs to
discover and exploit entrepreneurial opportunities.
As the economy develops to the innovation-driven stage, the role of the entrepreneur as the
persona causa of economic imbalance and the disruptor or the status quo becomes
important. In this case entrepreneurs are proactive, highly innovative and inventive, and
can use their higher levels of education to create their own endogenous entrepreneurial
opportunities. This all culminates to move the economy into an era of creative destruction
marked by high levels of economic growth.17
Figure 2 below shows a graphical representation of the empirical link between the number
of entrepreneurs in an economy and the level of economic development. It also draws on
the assumption that within an economy, a certain percentage of small business owners/self-
employed persons will be entrepreneurs, and state that as the level of economic
development increases, the two groups will converge, so that more small business
owners/self-employed persons will demonstrate the characteristics of the entrepreneur.18
However in this case, the stages of economic development correlate to three distinct
entrepreneurial types, (Stage I = Austrian entrepreneur; Stage II = Chicago entrepreneur;
Stage III = German/Schumpeterian entrepreneur). These types are influenced by the socio-
economic environment that brings to bear different demands and roles for the entrepreneur
as an agent of economic growth at each stage of development.
15
Source: Niels Bosma and Jonathan Levie, Global Entrepreneurship Monitor – 2009 Global Report, pg 10-11
16
Source: Siri Terjesena and Jose´ Amoro´s, IDB – Female Entrepreneurship in Latin America and the Caribbean:
Characteristics, Drivers and Relationship to Economic Development (2010)
17
18
Economics 13: 27–55 (1999)

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Figure 2: Stages of Entrepreneurship and Economic Development
Although it is not thought possible to neatly locate an individual economy within the three
stages, Dr. Jonathan Lashley of the Sir Arthur Lewis Institute of the UWI has indicated that
the Barbadian economy is more representative of the environment for the stage II
(Chicago) entrepreneur, where opportunities are exogenous, the economy is relatively
stable, and there is little incentive to participate in entrepreneurial activities. However, he
has also indicated that it is difficult to neatly categorise the economy in this manner as
elements of the environment for a stage III (German) entrepreneur are also seen in the
existence of a support infrastructure to support enterprise development.19
These conclusions coincide with Professor Downes analysis that Barbados is in transition
between the second and third stage of economic development and they cohesively
demonstrate the mutually reinforcing linkages between entrepreneurship and economic
growth.
Thus, these findings provide an essential context within which any national effort to
stimulate entrepreneurship, must factor in.
4. Factors that Influence Entrepreneurship at the Individual Level
The whole process of entrepreneurship concerns ‘the nexus of two phenomena: (a) the
presence of lucrative opportunities and (b) the presence of enterprising individuals’. This
explains why several factors, both intrinsic and external to the entrepreneur, affect the
entrepreneur’s ability to discover and take advantage of profitable opportunities.
4.1. Entrepreneurial Opportunities
The decision to take advantage of entrepreneurial opportunities is a function of (a) the
nature of the opportunity and (b) the nature of the individual. Making maximum use of the
19

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opportunity is conditional on the entrepreneur placing an expected value on entrepreneurial
profit at a level large enough to compensate for the opportunity cost of alternatives.
This explains why a performance advantage over other businesses is not a sufficient
measure of entrepreneurial performance, because it may be insufficient to compensate for
the opportunity cost of other alternatives, of time, of capital and of bearing uncertainty.
In particular skilful entrepreneurs will take up entrepreneurial opportunities where the (a)
expected demand is large, (b) profit margins are high, (c) the technology life cycle is young,
(d) competition density is moderate (profit and learning opportunities exist), (e) the cost of
capital is low, and (f) learning is available from other entrants.20
This is especially instructive when designing any national effort to stimulate
entrepreneurship because it must have value to the entrepreneur, if he/she is to consider it
favourably.
4.2. Enterprising Individuals
Personal traits and behavioural characteristics lie at the root of entrepreneurship. However,
a lack of understanding of the required traits and behaviours of the Barbadian entrepreneur,
have been inhibiting entrepreneurship’s contribution to economic growth in Barbados.21
Of
particular importance is the significant but complicated link between culture and
entrepreneurship. Six (6) cultural features that are supportive of entrepreneurship have
been identified:
1. Open-mindedness to other cultures
2. Curiosity, creativity and experimentation
3. Perseverance
4. Valuation of wealth and savings
5. Acceptance of risk and failure
6. Competitiveness22
However, in the Barbadian culture, the weight of each of these attributes varies and hence
the new Barbadian entrepreneur will have to have conquered such cultural features in order
to reap long-term success.
Secondly, while a standard entrepreneurial profile is hard to compile, this author believes
that they are twelve (12) key attributes that entrepreneurs in the Barbadian context must
have or be capable of acquiring:
1. Leadership and desire to disturb the status quo. The entrepreneur must be a
leader of change, whether it is of people or markets. Leaders do not focus on doing
things the right way, but rather on doing the right things to get the desired results.
Entrepreneurial leaders create inspiring visions, are powerful communicator, ask for
advice instead of favours, know how to lead themselves, are good at leading as well
as following, at “walking the walk” and at accepting responsibility.
20
Source: Shane & Venkataraman – The Promise of Entrepreneurship as a Field of Research (2000)
21
22
Economics 13: 27–55 (1999)

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2. Take calculated risks. Skilful entrepreneurs do not take crazy or foolish risks, but
they must take risks after appropriate research. They must have a strong ability to
combine existing concepts and information into new ideas that help them to
understand and solve problems in ways that create value.
3. High self efficacy and confidence, but “knowing what you don’t know”.
Entrepreneurs need to believe in their ideas to get others on board, but most
importantly they must know their weak spots. This helps them view challenging
problems as tasks to be mastered, anticipate problems before they arise, develop
deeper interest and form a stronger sense of commitment to the activities in which
they participate in, be willing to consider conflicting perspectives with objectivity,
and be able to recover quickly from setbacks and disappointments.
4. Strong work ethic, decisiveness and follow through. With a prevailing belief
among young enterprising Barbadians that owning a business means less work than
having a job, then entrepreneurs will need to possess a strong work ethic. Likewise
entrepreneurs must be able to prioritise, be decisive, take action and follow through
on decisions.
5. Reinvent yourself as often as necessary. Entrepreneurs must have a strong
locus of internal control that allows them to turn their failures into learning
opportunities and reinvent themselves especially in a culture that is not awfully
accepting of failure. They must have the ability to act in the face of scepticism of
others and look at their situation from an entirely different angle and switch gears.
When entrepreneurs respond to adversity by getting in touch with their existing
strengths, this creates a positive cycle of success and confidence and feelings of
accomplishment and fulfilment.
6. A commitment to purpose with passion. It is easy to lose momentum for a
business that is not really in your heart. Entrepreneurs must enjoy what they do so
that that passion for excellence can see them through the tough times. With
passion, entrepreneurs do not just sit around waiting for things to happen to them,
they are pro-active and they make things happen.
7. Know how to partner with others who have expertise or a skill-sets
needed. Entrepreneurs must know how to strategically leverage the knowledge of
others around them, network, and create great teams to get the job done well.
Entrepreneurs understand that successful businesses are built by many people and
not a single individual.
8. Ability to engender trust, confidence and respect to develop credibility.
Entrepreneurs must have empathy and integrity if they are to create an atmosphere
of trust and respect. In striving for success, entrepreneurs never lose sight of the
individual and this is now they are able to create and nurture a team of disparate
partners.
9. Have patience and tolerance for uncertainty. Entrepreneurs must have the
tenacity and patience to keep working through initial hiccups, and be tolerant of the
uncertainty inherent in any new venture.
10.Be flexible and adaptable. The ability to ‘roll with the punches’ is crucial for an
entrepreneur. Owning a business does not follow a predictable nine to five work
week, so entrepreneurs must have the ability to show ingenuity and flexibility as
their business progresses, often not according to plan.
11.Strong negotiating skills and ability to develop win/win results.
Entrepreneurs must have clarity and consistency of thought to articulate their
position to others. They must be able to understand the other party’s position and
serve them with solutions that they value.
12.Be laser focussed and single-minded. Entrepreneurs avoid being ‘the jack of all
trades and the master of none’. In this era of modern business, skilful entrepreneurs
have a set of highly developed specialised skills (e.g. agriculture) grounded in a solid

9
set of broad-related skills (e.g. business, tourism, health). Harnessing their short-
term concentration allows entrepreneurs to be single minded in acquiring this
combination of skills.
Of course, mere possession of competencies is not enough; they must be honed through
training, experience and guidance.
On the flip side, the dark side of entrepreneurship can frequently evoke profound
psychological responses: elation and depression can succeed each other so rapidly as to
induce emotional whiplash. In addition, entrepreneurs often suffer from intense and
enduring anxiety. These emotions, and their dreaded companion, fear, can shrink human
experience and any expansive sense of possibility. Entrepreneurship can also cause people
to become distrustful, disagreeable, less tolerant, more competitive, rigid, demanding,
short-tempered and hyper-critical. It takes extraordinary character and resilience to live
with that every day and remain unaffected.23
4.2.1. The Young Enterprising Barbadian
Three (3) separate analyses of young Barbadian small business owners (including clients of
the Youth Entrepreneurship Scheme (YES), non-YES clients and Barbados Youth Business
Trust (BYBT) clients) published in the last decade revealed the following24
:
 The mean age was between 27-28 years with an age range of 18-41 for YES clients
and an age range of 16-38 for BYBT clients, with only 25% between the age of 16-
24. Irrefutably, the 2003 study of YES revealed that “older clients have benefitted to
a greater extent than younger clients and show a greater acceptance of their role in
their business.” These findings suggest that Barbadians are more involved in
entrepreneurial activities in their mid-life than in their youth and support both of the
agencies’ decisions to be flexible with regard to age.
 More than 64% of businesses and (76% of YES clients) were operated as sole
proprietorships with only 16% operated as partnerships suggesting that young
Barbadians also have challenges working together because of (a) lack of trust and or
(b) limited understanding what it requires to form strategic partnerships. Effective
activities that foster trust, improve group dynamics skills and help youth to
understand how to build smart partnerships will be necessary to their development.
 More than 80% of YES clients employ 2 or less persons and the mean number of
persons that these young small business owners employed was less than 3. Thus,
these young small business owners have not been significant generators of
employment. Skills building particularly in capitalising on competitive and unfair
advantages will help move youth towards being entrepreneurial individuals.
 50% YES clients earned a monthly income of BBD $2000 or less and 75% of BYBT
clients earned a monthly income of BBD $2130 or less while 50% young
23
Source: Meg Cadoux Hirshberg, INC Magazine – Entrepreneurship Changes You, and Not Always for the Better
(2013)
24
Sources: Jonathan Lashley – Microfinance in the Caribbean, Experiences & Best Practice (2002); Jonathan Lashley
& Maxine McClean – Youth Entrepreneurship Scheme Socio-Economic Impact Assessment (2004); Jonathan
Lashley - The Entrepreneurship Challenge in a Time of Change (2007)

10
entrepreneurs interviewed earned a monthly income of BBD $5000 or less. If these
figures provided are truthful, then it suggests that most of these young firms are low
income earning “social good” small businesses and not entrepreneurial ventures and
there is a crucial need to make that transition.
 Approximately 55% of the businesses of both YES and BYBT clients were service
businesses while less than 5% were agricultural businesses. Additionally BYBT had a
large class of light manufacturing clients. This supports the view that the framework
for agriculture entrepreneurship is weak and is restricting youth entrepreneurship
even as there is considerable youth interest.
 Less than 40% of young enterprising individuals had prepared personal development
plans (PDPs). Whether formally written or informal thought through, a personal
development plan helps entrepreneurs to grow by stripping away accretions and
misperceptions about whom they really are. A PDP also prevent entrepreneurs from
wallowing in their existing weaknesses which can lead to feelings of anger,
petulance, despair, or other sour traits, especially when they are repeated beaten
down by disappointments. Communicating this powerfully and designing activities to
get greater youth adoption of PDPs will be essential.
 Less than 28% of BYBT, YES and non-YES clients were members of business and
social organisations. Furthermore 53% and as much as 79% of young entrepreneurs
had no knowledge or poor knowledge of the support infrastructure for enterprise
development such as the BYBT, Small Business Association (SBA), Barbados
Investment Development Corporation (BIDC), Enterprise Growth Fund Limited
(EGFL) and Fund Access. These tendencies have been seen to be due to (a) distrust
and irrelevance at one extreme to (b) complete lack of awareness at the other.
 69% of young entrepreneurs have no other source of income, indicating a reasonably
strong desire to work for themselves.
Interviews with an officer and trainers of the YES indicate that these statistics are still
relevant and are definitely reflective of the current set of youth entrepreneurs. Additionally,
with regard to entrepreneurial training, less than 25% of YES clients completed the training
course. BYBT seminars similarly tend to have less than 25 persons in attendance at most
sessions.25
What is most disconcerting however is that a large percentage of young entrepreneurs that
approach the YES believe that entrepreneurship will allow them to put in little effort and
make large sums of money in a short period of time.26
This author believes that this
erroneous mindset has been specifically enhanced by the explosion of multi-level marketing
(MLM) in Barbados in the last fifteen (15) years or so. These business models have been
seriously damaging to the entrepreneurial mindset of the population because they:
1. Promote a false sense of autonomy by making participants ‘independent
distributors’;
2. Encourage little effort instead of lots of work, since participants just have to work for
a ‘few’ hours every day;
25
Source: Richard Blades, BYBT Mentor – Personal Communication (2013)
26
Source: Paul Leach, YES – Personal Communication (2013)

11
3. Provide a business model that appeals to people’s sense of ‘fairness’ while ignoring
the reality of unfairness in business, by implying equal opportunity for success if only
persons would follow fixed training materials and meet and share their stories
regularly;
4. Showcase entrepreneurial success without ‘risk’ since participants can work from
home, avoid costly overheads and buy into a programme with a ‘proven’ track
record, all for a very small fee;
5. Promote the belief that success only needs to be reached once and not continuously
by showcasing successful participants who have retired early and receive very large
incomes each month, often in the millions;
6. Perpetuate the erroneous belief that entrepreneurship is easy and anyone can be
successful at it;
7. Collectively, they provide a simplistic but impractical model for widespread business
success that feeds false hope and ‘get-rich-quick’ thinking.
In conclusion, a new national entrepreneurial mindset is needed to overcome the ‘little
effort, lots of money” mentality and replace it with the “work hard, stay focussed and be
innovative” mindset if the Barbadian economy is to successfully transition into an
innovation-driven economy.

The Barbadian Entrepreneurship Context, A Youth Perspective

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