About two decades ago, the Turkish Industry and Business Association [TÜSIAD] published a report on entrepreneurship that is worth revisiting to understand the contribution entrepreneurs make to the economy in emerging markets today. The report reiterates the importance of entrepreneurship for higher-than average economic growth. The small contributions made by many entrepreneurs drive the growth in the economy; scaling entrepreneurs push the boundaries of their environment, and through these efforts, the innovation they produce may contribute to poverty alleviation.
With more room to grow, the developing economies have a great potential for innovation: this is where the entrepreneurs come in. The entrepreneurs that scale capitalize on the potential of growth, diversifying the progress and operating as an extended arm of the government to drive industry specific innovation. This yields a strong positive relationship between entrepreneurship and innovation in such emerging economies.
The paper also highlights three main ways the entrepreneur ecosystem contribute and function like the extension of the government: (1) domestic resources are innovatively brought together to introduce new purpose; (2) currently used machinery and resources get used in new ways — introducing a cost-efficient growth strategy; (3) the competition and ‘survival race’ among entrepreneurs serve as a low cost experiment for financial models, marketing strategies, and innovative approaches — each company is a guinea pig in the laboratory of the economy.
Due to the small starting sizes of the start-ups, radical innovative changes are more affordable, feasible and appealing; the entrepreneurs want pursue opportunities with high risk innovation to win competitive lottery: the high growth opportunities. Therefore the start-ups with innovative technological products always, with some exceptions, lead the most successful team of start-ups in a country. With it’s hit-or-miss nature, technological start-ups, once on the right side of innovation, quickly become a high-impact company: (1) creating new industries; (2) increasing efficiency in the industries using their technology; (3) adding momentum to the economy due to their high growth nature.
In emerging economies, the social perception of entrepreneurs holds a very important role as well: in Turkey for example, study finds that the majority of the public considers entrepreneurs as corner-turners, trying to enter a higher socio-economic class.
Contributed by David Kebudi.