Entrepreneurship & other thoughts along the way

Posted on January 4, 2012

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Behind the steering wheel, inspired by conversations and observations during our drive  through Mexico, Central America and Colombia, my thoughts have returned to the concept of entrepreneurship – how it may be observed along the road and the potential drivers of the entrepreneurial process. For simplicity, I define entrepreneurship as all business start-ups and continued commercial activity. Along the Pan American highway, all kinds of business activities may be observed clearly indicating the importance of “the road” as a lifeline for markets as it circles through  the countryside, villages and towns. For this discussion it seems unimportant whether the motivation or objective for the mostly small businesses is to “maximize profits”, achieve growth or simply survival.   What all these small ventures have in common is that they provide services and goods to the local community. Thus it appears reasonable to consider anyone able to make a living based on her or his innovative and/or creative use of local resources an entrepreneur – a winner in the fight for survival. In this context, also the distinction between necessity- or opportunity as drivers of entrepreneurial action seems relatively unimportant and theoretical, though not infrequently it seems clear that necessity in fact often is a main motivation. With this lax definition of entrepreneurship in mind, I realize that most business activity might be included and that’s exactly what I intend. What I want to comment further on is some of the basic conditions required for business start-ups, innovation, creativity and business drive and illustrate by telling some some real life anecdotes.

There are many theoretical perspectives on entrepreneurship as academics try to describe what they observe practitioners do – there are successful entrepreneurs in every economy and probably any context. Some of the more interesting perspectives from a practical perspective is a focus on available resources and capabilities and how the entrepreneur optimizes not only the resources at hand, but also manages to access  resources and capabilities outside of his own particular context. This more cognitively oriented perspective focuses on how the entrepreneur perceives business opportunities and how she or he often uses networking and social skills to secure strategic resources. Now, all of this may be theoretically interesting, relevant for the teaching of entrepreneurship and even offer some guidelines from a policy perspective.

However, traveling through Mexico and Central America, observing varied business activities and conversing with practitioners, it has appeared to me that the theory describing the entrepreneurial process seems oddly irrelevant for what actually goes on. Theoretical concepts does not form part of a  conversation about the actual entrepreneurial process – that is a conversation about what people “along the way and in the markets” do to support themselves and their families. In many places , what is mostly needed, simplistically speaking, is access to resources, organization of how to use or manage the resources and support for what entrepreneurial thinking and action is all about; that is make a living and in the longer run, create employment and value. While it may be true that a successful business is based on good theory, it is important to keep in mind that theory usually emerges after the fact and often is put into words by a third party observer.

Example of latin ingenuity: outboard engine used as side-propeller

Example of latin ingenuity: outboard engine used as side-propeller

Before returning to some empirical anecdotes in form of storytelling, it is evident that a further strengthening of emerging democracies, political stability, legal systems  supporting business creation and the prevention of corruption will support entrepreneurship and business development. So also will social support of and public recognition that entrepreneurship is positive (including the notion that failing is acceptable), a reduction in bureaucracy combined with increased transparency in governmental processes, the formation of an entrepreneurial mindset and a belief that is possible for anyone to “make it”, and last but not least access to financial- and other resources including a basic education.

Now, I would like to share with you a few short stories I have prepared based on conversation with people I have had the pleasure to meet along the way. The stories hopefully also may serve as anecdotes and illustrations of a deeper social context which may, or may not, inspire entrepreneurship.

Fernando who I met on the ferry from La Paz to Mazatlan on mainland Mexico is about 30 years old. Fernando has experience from several years working for the German off-shore company Schlumberger who contracted him as a freelancer after he applied for a job on the internet. Fernando, an experienced mechanic, lost his job in Germany as the economy weakened in line with the principle “last in first out” which often applies to  “foreign” employees of his category.  Being out of a job, Fernando reluctantly returned to Mexico City, where his farther during the 1980s had developed a thriving truck-transportation business until failing during the economic crisis in the 1990s. On his return, Fernando, following his father´s footsteps invested in a small truck. Fernando´s business – a one truck one man operation – is doing well and he is considering expanding his business with additional trucks and drivers. He´s currently pondering the optimal fleet size and possible downsides of growing, including administrative  demands on his time, complexities and dealings with the Mexican bureaucracy. He believes 4-5 trucks is optimal, but tells me it is literally impossible to raise funding through bank financing for a small and new operator like himself.  He has no assets to mortgage and feels the personal risks (Fernando has a 4 year old son who is diagnosed with cancer) of expansion is higher than the benefits. By choice he thus remains small,  while simultaneously feeling competent that he would do better with 3-4 additional trucks. He turns to me, asking if I would be willing to invest in a Mexican transportation start-up…..

Octavio, who I met in Mexico City, is the Mexican president of a large Spanish construction conglomerate. He has long experience in international business having worked as an expat in many countries including Alaska, Bolivia, Argentina, Venezuela Colombia and now Mexico. Octavio presents me with a new perspective of Mexico and the Mexican economy. With an investor´s strategic perspective, he emphasizes the mere size of the Mexican economy and its 100 million inhabitants – 28 million only in Mexico City. Octavio is optimistic – his company is currently constructing thousands of miles of new highways in Mexico and he feels confident that the Mexican and Central American economies will continue growing. Octavio´s optimism is contagious. His company´s expansion is simultaneously an excellent stimuli for budding entrepreneurs – where there are optimism things will happen and here “things” include  innovation, business creation and economic growth.

It is worth noting that Fernando and Octavio are actors within the same economy, but with widely different perspectives and type of knowledge due to their individual backgrounds and context – one is leading a small business start-up and the other a multinational.

Several places, both in Mexico and in other Central American countries have we observed many young workers – in the fields, in the roadside markets and even on construction sites.

Market in Guatemala: note the young girl in the center forming part of the sales-team

Market in Guatemala: note the young girl in the center forming part of the sales-team

This observation, naturally, is thought-provoking. Is this necessity-entrepreneurship or lack of control to protect their childhood?  Close to Fuentes Georginas in Guatemala, an area with rich agriculture, we had a conversation with a whole family working in the fields (mother, father and several young and older children). Our first reaction was almost romantic – it all looked very peaceful and picturesque. Also, in the market of Chichicatemango, reportedly the biggest indigean market in Latinamerica, we observed hundreds of young children forming part of the market´s  comercial activities. Striking up a conversation with some of the young salespersons, it struck me that they sometimes really did not appear too interested in making a sale – when told that we where not interested, they simply kept on conversing and asking us questions instead of searching for new clients (and here there were busloads of mainly french tourists). It appeared almost as if the young salespersons were as interested in the social interaction as in making a sale. Why could that be?

Young boy selling food

Young boy selling food

Whatever the reason, meeting all these young people in their context, has made me reflect on how important it is where you happen to be born. Many of these young workers are so deeply rooted in their cultural context, with probably little formal schooling, making it very difficult to them to break out of the local routines and culture. If they should desire an education, not to mention a higher education, would they get their chance? In Costa Rica we picked up a young man who had run out of gas and brought him to the nearest gas station. The young man asked where we were from and went on to suprise us by telling us that two of his older brothers were adopted by  respectively Swedish and Norwegian families and consequently growing up in videly  different contexts. Understandibly, the he uttered feeling certain difficulties in keeping in touch with his brothers…

At a street market in Panajachel, at the lake Atitlan, Guatemala, I bought a 1 Euro souvenir from a charming 5 year old girl and her 9 year old brother. They told me that they had traveled 1 hour on the bus to reach the market and had to make the same trip back alone at night. Their father had died and they had several new brothers and sisters – 7 in total. I am hopefully wrong, but I strongly felt that this little girl´s future was  very uncertain if not directly in jeopardy. In cases of lacking social infrastructure, I was left strongly feeling that  adoption is a very valid option if only it was available. Walking towards our car and tent, I felt very pleased with my souvenir – the little entrepreneur at least made one sale tonight – if only we could have made a more significant difference!

Reverting from the broader social context to the building blocks of entrepreneurship, maybe what is most lacking is the social recognition that entrepreneurship and business creation is positive. And  here education and policy initiatives may make an impact. I am, after all, optimistic. My feeling is that many people, if given a chance, would like to be independent, grow businesses and improve their lives. I also believe bureaucratic constraints and corruption will diminish both due to public attention and slowly through the political process. Naturally, business education and focus on entrepreneurship in the school systems will positively contribute to this process. And one should hope that economic growth eventually will lead to an improved social infrastructure protecting the weakest – like my little friend selling me a souvenir late at night in Panajachel.

Oyvin – 03.01.2012

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