The Harvard Journal of Economics broadly defines entrepreneurship as “the process of creating value by bringing together a unique package of resources to exploit an opportunity”.
The process is said to largely consist of identifying, developing a business concept, acquiring resources, implementing the concept and harvesting the venture.
Entrepreneurship has for years been the buzzword in development seminars across the world. All of us have often been told over and over again that it is the only way countries like Lesotho, which have the unenviable tag of being amongst the world’s least developed countries, can be able to create value and sustained economic growth over the long-term.
The 2008/2009 financial crisis and its ensuing recession and now the recent downgrading of the US credit rating has meant that the world economy has been in a state of flux and will continue to be so for the foreseeable future, according to analysts.
This state of uncertainty has almost become a norm, whereby on any given day the top financial bourses can make loses in double digit figures and within the same week make up this loss. In many parts of the world growth has staggered, none more so than in Lesotho. The consequences have been a rise in unemployment and social unrest.
It is in these times that the entrepreneur steps in and inevitably thrives, for he is a consummate lover of uncertainty as it provides opportunities for him.
Evidently, it is only correct that we revisit the topic of entrepreneurship and try to understand it further.
Joseph Schumpeter did one of the pioneering studies on the topic, and, according to him, entrepreneurship has three underlying dimensions:
Innovativeness, or the development of unique products or services; risk-taking, or a willingness to pursue opportunities having a reasonable chance of costly failure; and pro-activeness, or an emphasis on persistence and creativity in overcoming obstacles until the innovative concept is fully implemented.
It is important to distinguish between an entrepreneurial venture and a small business, because it is entrepreneurship which fosters innovation and growth, and which should be the focus of government support.
Schumpeter was among the first to identify the entrepreneur as an entity distinct from business owners and managers, describing entrepreneurs as individuals whose function was to carry out new combinations of means of production.
Thus, the fundamental concern should be: if entrepreneurial activity is a significant contributor to economic development distinct from small business activity, on what bases may entrepreneurs be separated from non-entrepreneurial
managers in order for entrepreneurship to be promoted? Based on our definition above, an entrepreneurial venture is motivated by profitability and growth and is characterised by innovative strategic practices.
You may have been thinking of starting your own business, but not yet, because you have not totally sold to the idea. Before you decide on what to do, it is important to take stock of your personality and ask yourself the difficult questions. Various studies have outlined the following as the key characteristics that separate an entrepreneur from the common folk: Risk taking appetite, self-confidence, high need for achievement, internal locus of control, human relations and technical knowledge.
An entrepreneur is really “acting man in regard to the changes occurring in the data of the market”.
This awareness and adaptation to the change in the market encompasses the process of discovery, which includes the discovery of information, correcting previous mistakes, an alertness to opportunities and an element of surprise at the discovery.
Without knowing what to look for, without deploying any deliberate search technique, the entrepreneur is at all times scanning the horizon, as it were, ready to make discoveries.
The above theoretical foundations lead to three main policy conclusions.
First, the government should be careful to foster entrepreneurship and not simply the small business sector, as there is a distinction between the two.
Second, as knowledge and information are crucial to the process of entrepreneurial discovery, education and an environment facilitating a free flow and availability of information should be promoted.
Third, the importance of competition in stimulating entrepreneurship suggests a need for policy instruments that would encourage competition and punish anti-competitive behaviour.
In drafting policy suggestions, one also needs to consider the constraints currently faced by small businesses.
In Lesotho these broadly include high tax burden, inefficient bureaucracy, fragmented policies, low level of competition, and a high early failure rate.
Entrepreneurship can be the means to stimulate creativity and innovation, create employment and drive economic growth.
To achieve this, government policies should focus primarily on developing the entrepreneurial spirit through education, thereby eliciting the vast human potential for entrepreneurship which exists in every society. It is important for developing nations and Lesotho in particular, to realise that people are the most valuable resource.
Psychologist Abraham Maslow once argued that “the most valuable 100 people to bring into a deteriorating society would not be economists, or politicians, or engineers, but rather 100 entrepreneurs”.
The focus, therefore, should be on developing human potential for entrepreneurship, recognising and embracing social and cultural differences between individuals. Developing, educating and inspiring the people of Lesotho from an early age should be the cornerstone of all policy initiatives.
Once the people are given an opportunity to think creatively and innovatively, employment and growth should follow.