Opinion Sur Joven

“There is nothing permanent except change”. Heraclitus.

Since last year, some old, traditional economy theories have been falling down. In such a scenario, the idea that economy needs to be truly at society’s service has gained importance, as well as the fact that certain trends of the market must be controlled by ethic rules.

Therefore, in this context entrepreneurship has a great chance to become a catalyzing factor in worldwide economies. Entrepreneurs’ innovation, flexibility and ability to take advantage of opportunities may turn into the cornerstone for the reactivation of the world’s economic system, which is now in recession.

The reconsideration of these paradigms creates a great opportunity to develop a fairer economy, whether from the quantitative point of view of income and domestic product, or from the qualitative one, that is, regarding the human being’s realization as a factor for transformation and wealth generation. Work dignifies us and contributes to real economy.

Global markets

“Future success depends on today’s decisions, and without decisions there’ll be no success or future”

Globalization helps integrate territories, cultures and economies, and markets aren’t the exception. Thus, the concept of region gains a different meaning. Markets are immersed in an internationalization process; horizontal integration of companies -boosted by strategic alliances and collaborative schemes- is in constant advance. In this sense, fluid geographic intercommunication generates infinite possibilities. Thanks to this growing flow of information, goods and people, penetrating international markets has become relatively easier. Growing global opportunities, produced by entrepreneurship, enable this integration.

As economy volatility grows, entrepreneurs have better chances to use their flexibility, adapt to changes and cope with the storm, thus diversifying the products or services they offer. Instead, large companies are slower to move, and to make important decisions they first need to resort to executive officers, managers, etc. Flexibility has gained relevance lately. In productive sectors, efficient company management, creativity and innovation are critical factors both for economy development and growth.

It is necessary to generate common projects. Associativism of people and companies shows some advantages: better possibilities to negotiate with suppliers, lower input prices, joint trading strategies among small companies, shared machinery, joint technological advance, know-how and even foreign trade coordinated actions.

So far, these are the advantages of any small company. But young entrepreneurs are also favored by being more open-minded and flexible to internalize the win-win scheme, described by Stephen Covey in his best-selling book, “The Seven Habits of Highly Effective People”.

Mónica Liendo and Adriana Martínez, Argentine researchers on this subject, state in a report: “Aimed at taking advantage of and boosting the strengths of each member, the associative model allows developing more efficient projects by minimizing individual risks. By implementing joint measures, the associated businesses improve their competitiveness and enhance their production through alliances between the different agents interacting in the market, thus increasing the opportunities to grow both individually and collectively”. [1]

A chance for personal growth

“There is a driving force more powerful than steam, electricity and atomic energy: the will”. Albert Einstein.

Fifty percent of technological and process innovations are generated by entrepreneurship. This percentage grows to ninety-five in the case of disruptive or radical technologies. Joseph Schumpeter, an Austrian economist of the beginnings of the 20th century, stated in his book “Capitalism, Socialism and Democracy” that “the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on. (…) This kind of activity is primarily responsible for the recurrent ‘prosperities’ that revolutionize the economic organism…”. [2]

This process requires attention to detect when it is possible to transform a human being’s physical or natural necessity into a feasible economic opportunity. The essential condition for the process to be successful is to take the initiative. Another important parameter in the entrepreneurial quest consists in detecting market niches: since the entrepreneurs’ available possibilities and resources are limited, it would be impossible for them to satisfy the necessities of mass markets. That’s why the constant development of sustainable, competitive advantages may be considered an essential activity of entrepreneurship; of course that, in time, the proper dynamics of competition causes those advantages to turn into commodities, that is, they’re eventually taken by all competitors. The main beneficiary of this competition is the customer, at least theoretically.

It is necessary to make use of the comparative advantages we are given by the geography of the place we live in, and both the natural and human resources, in order to turn them into tangible competitive strengths. A country’s wealth isn’t determined by its resources, but by its ability to productively transform said resource reality.

The roles of the State and non-governmental organizations

“Business cannot succeed in societies that fail”. Bjorn Stigson.

The importance of the State, universities and non-governmental foundations and organizations cannot be denied, since they are essential to promote entrepreneurial activities.

We might as well mention the case of business incubators, a program implemented at universities and technological entities all over Argentina, where the entrepreneur is provided a suitable environment to generate economic and social projects. The aim of these programs is to create a network between professionals, entrepreneurs and both public and private organizations to provide tools to enable the startup of high value added projects.

The Italian experience is also interesting; they have a strong small-entrepreneurship culture. The so-called clusters or industrial districts are very common in that country: they consist in a territorial group of industries that are vertically and horizontally related thanks to the integration of input suppliers and the strategic alliances established between companies of the same sector. Thus, the constant availability of inputs and production factors reduces transaction costs and startup obstacles. Rivalry stimulates competition in terms of product innovation, this being one of the main boosters of growth and competition.

The associative efforts of cooperatives and the synergy plans between the public and the private sectors have rendered positive results to include the smallest entrepreneurs. NGOs provide more dynamic and flexible management than the State. That’s why they may be considered boosting and advisory agents of the projects due to their management skills. It is also necessary that the State provides loans and non-reimbursable contributions for these types of projects in order to enable their development.

The economic crisis in the United States brought back to light an old discussion on the importance of the State action in terms of market regulation, and on the necessity to generate wealth by means of production and not strictly out of speculation. But avoiding short-sighted and extremely biased analyses is also important, because they lack the objectivity the subject requires. For instance, wrong-grounded criticism of capital markets must be also avoided, since they provide the necessary credit flow for economy growth. We must find an inclusive balance.

An economy’s sustainability is determined by the real possibility to provide, in time, opportunities for all citizens. As long as this condition isn’t met, we will continue to see incomplete achievements of the capitalist system. In this sense, initiatives such as corporate social responsibility (CSR), the UN Global Compact and microfinance are valuable.

All citizens must make a moral commitment to make all necessary efforts to end exclusion, a historic debt of humanity. Ultimately, we must move -as the economist Bernardo Kliksberg puts it- towards an economy with a human face.

Illustration: Guadalupe Giani