Recent Changes in the Attitudes to Entrepreneur Activity in the UK - Essay Example

Entrepreneurship 2006 Outline Introduction A. Rise of the problem B. Increase in Entrepreneur Activity C. Benefits to the Nation D. Attitudes to Entrepreneurship in UK E. Entrepreneurs and Young People F. Historical Background of Entrepreneural Education Conclusions Description In this paper we will investigate the question of changes of attitudes to entrepreneurship in the UK. We will research the causes of these changes and their results as well. In this paper we will investigate the changes in the attitudes to entrepreneur activity, which took place in UK not so long ago. We will provide some evidence showing that within recent years the term entrepreneur has lost its strongly negative connotation, which was typical in the last century. We will also show that now entrepreneurship becomes quite popular and more and more young people make their choice to become entrepreneurs and this process has positive effect on the British economy. In the last century it was rather offensive for a person to be called entrepreneur. Such people were viewed as ones having low level of education and morality. Even more offensive was for a person to gain considerable achievements in this sphere. Those people who made their living with the help of entrepreneur activity or make a good profit from it were considered as people able to deceive and derive benefit at the expense of others/ Younkins, 2000/. However, over the last decades the situation changed considerably and now more and more people become entrepreneurs. There are several reasons for this. One of them is liberalization of the public mind. Gaining profit with the help of ones mother wit, enterprise and riskiness are not a shame any more. This activity became a profession as many others, which appeared in the beginning of the new age /Milanovic, 1991/. The other cause of the rise in entrepreneurship is the policy of the government, which is interested in development of his kind of activity and motivates people to indulge in this type of business. How and why the government does this and whet actual results are already attained will be described further/ Younkins, 2000/. Director of GEM UK, Rebecca Harding – Chief Economist of The Work Foundation and Senior Fellow of the London Business School is sure that: “It is very clear that the UK is becoming increasingly entrepreneurial. Not only is entrepreneurial activity on the rise again, but people hold increasingly positive views about entrepreneurs and start up businesses” / UK Increasingly a Nation of Entrepreneurs, 2004 /. She also believes that it is due to great changes in this cultural shift and legal base that entrepreneurship activated through recent times. The change in the attitudes to this type of activity can be proved by the fact that previously people indulge to it mainly out of necessity and inability to gain their living through other professions. Now they are interested in this activity as in one, which gives prospects for future development and opportunity to try their forces and become profitable. This change and this process in itself are surely positive. However, it also created additional challenge for Government, which now has to support all the networks necessary for entrepreneurs / UK Increasingly a Nation of Entrepreneurs, 2004 /. In spite of the fact that in UK entrepreneurship develops very slowly, still in 2003 Global Entrepreneurship Monitor declared the increase in entrepreneurial activity in UK. As it appeared in the course of the research, UK is one of not numerous parts of developed countries, where we can observe an increase in entrepreneurship. Approximate numbers show the overall increase in total entrepreneurial activity from 5.4 % in 2002 up to 6.4% in 2003. This is 1 % per year and this number is not bad if compared with the same period in other European countries / UK Increasingly a Nation of Entrepreneurs, 2004 /. Particular interested was given to various kinds of social enterprises, which produce incomes for social goals. These organizations fund approximately 6.6% of all British population, which is occupied in this kind of work. One more particular feature of these organizations is that they are characterized by female activity / UK Increasingly a Nation of Entrepreneurs, 2004 /. If we look at the national characteristics we will see that not all ethnic and regional groups are similarly indulged in this king of activity. Particularly entrepreneurial are black minority group and different Indian sub-continent groups like Pakistani, Bangladeshi and Indians and others / Prowess Facts & Figures, 2006 /. This is reflected in the positive attitudes towards entrepreneurship that these groups have. Indians are usually three times more likely to start their own business than native British people. And black people are even more active in this profession, being almost 4 times more likely to indulge in entrepreneurship that white British / Prowess Facts & Figures, 2006 /. Patricia Hewitt, Secretary of State for Trade and Industry, states: “Britain has always been a great entrepreneurial nation, and we are committed to helping more people get the skills and confidence they need to start their own business” / UK Increasingly a Nation of Entrepreneurs, 2004 /. Government supports the increase in “self-employment” as this is a perfect way to development of the economy, and increase in employment and well-being of British citizens. This statement was also supported by Les Clifford, Head of Ernst & Young’s Entrepreneurial Growth Markets practice, who dwells that “the 2003 GEM report supports our own research which has seen a positive change in attitudes towards entrepreneurs over the past decade. The Government, the media, and British society at large are coming to recognise just how important entrepreneurship and innovation are to the 21st century economy” / UK Increasingly a Nation of Entrepreneurs, 2004 /. Increase in entrepreneurship is of particular value for UK government against the background of the general standstill or even decrease of this type of activity in the other countries of European Union. The other characteristic feature of British entrepreneur activity is prevalence of male population, indulged in this type of activity. Their number is approximately 8.9%, while women account for only 3.8%. Within United Kingdom as well the temps and peculiarities of the increase in TEA is not the same. Thus, in the Eastern part of UK there is no such obvious rise as in the rest parts of the country / GEM UK 2003 Report Summary Total Entrepreneurial Activity, 2006 /. Increase in entrepreneur activity is much attributed to the general changes in attitudes to this type of activity. It was proved that during the last several decades population of UK developed a positive attitude to beginning their own business and regard the other people, who does this also positively. It appeared that almost 8 % of all British population are going to open their own business within the next three years, 39 % of people believe that now there are agreeable opportunities to start entrepreneur activity and 54 % of British are sure that they possess enough skills for opening their business. So, we can see that the majority of population in UK are quite not against entrepreneur activity and even see themselves as entrepreneurs. It is interesting to know that over 64 % responders believe that it is not disgraceful to begin their business and are even sure that entrepreneurs have a high status in society. Among all people, who were questioned, 63 % said that entrepreneur activity is a nice career choice / GEM UK 2003 Report Summary Total Entrepreneurial Activity, 2006 /. When speaking about the increase in TEA, we can’t but mention the governmental position in this process. Why is the UK Government interested in the development of this particular type of activity? First of all entrepreneurship creates new working places, which on the one hand creates new working places and help to fight unemployment and on the other hand contributes to the general welfare of the nation. Entrepreneur activity is mainly focused in the sector of the business services sector. This helps to develop this particular service and has a positive impact on the national service sector in general. The rise of the question of entrepreneurship on the political level began with the election of New Labour in 1997. Prime Minister Tony Blair always stressed the importance of entrepreneurship. However, even before that the problem was also considered the Conservative party during the Thatcherite ruling ideology. “…the political climate is important. Social entrepreneurs have been around forever but the idea of promoting a movement of social entrepreneurship - Thatcherism helped, the focus on the individual and the individual ability to change things, to achieve things, to take responsibility for themselves” /in Grenier, 2003/. Thatcherism desire to take control over inflation and unemployment brought government to realisation of importance of business and entrepreneurship. The income tax was reduced, while indirect consumption tax rates were raised. Due to this tax policy the tax burden on the high-income companies was eased and on the low-income individuals it was increased. This was made in order to promote the development of entrepreneurship and small business enterprises / Changhyun, 2005/. Governmental support of entrepreneurship was done step by step with the help of the following measures: introduction of holistic approaches, focusing on social and economic requirements; creation of companies, which are financially sustainable; stimulation of personal initiative on the public level /in Grenier, 2003/. “To create a new social welfare system we need a new breed of social entrepreneur…..Social innovation holds the key to our social ills. Social entrepreneurs are the people most able to deliver that innovation.” /Leadbeater, 1997/. One of the most positive aspects of the UK entrepreneurial businesses is that it is UK focused. Generally, only 19.2% of all entrepreneurs-beginners and 11.2% of all people engaged in this type of business possess 25% of their customers abroad. The other 75% are oriented on the domestic customer, which on the one hand creates better conditions for UK citizens and on the other hand helps to locate and retain business profits in the country and for the general benefit of it / The Enterprise Report, 2005/. However, some parts of the British population are less likely to start their own business. Surprisingly, it is not even a high-income group, but a low-income one. This can be explained by several reasons. First of all, lowest income groups of British have more pessimistic and more negative attitudes and self perceptions. Second, these groups quite often believe that entrepreneurship is more an activity belonging to a high status but they still fear to fail in it / The Work Foundation, 2006 /. Nowadays there is positive attitude to small business and entrepreneurship within the both groups: adults and youth. It was estimated that 93% of adults are enthusiastic about entrepreneurship, have a positive image of the people, who have their own business. 64 % even stimulate their friends and relatives to indulge in entrepreneur activity. iv Among the young group over 85% admire those people, who have their own business /Daves, 2002/. These numbers are not groundless. Positive attitudes can be supported by data. Recent researches showed that in comparison with the USA, in the UK more people consider entrepreneurship a high-status activity. The numbers show that in UK more than 71% admire entrepreneurship, while in the USA this number is 64% for US. This attitude is not the same even within different the regions of UK. For example, in the North East entrepreneurship is a high status profession, while in the South East it still experiences negative attitudes / Global Entrepreneurship Monitor, 2003/. In spite of the rise of positive attitudes to entrepreneur activity, still according to corporate opinion UK people have more negative connotations to this activity than in other countries. CEOs conducted an international research on the attitudes towards entrepreneurship / SBS Household Survey of Entrepreneurship, 2002/. CEOs made a survey among the senior executive staff and it appeared in the result of this questioning that over 68% of them in UK believe that even now entrepreneurship has not a highly status within the country. This percentage is very high especially if contrasted with 41%, which are the average number in all world-wide countries. If compared with 23% of negative responses in the US, the UK numbers appear even more terrible.vii People believe that enterpreneurship impede the development of the national economy. Of course, this assumption has some background. Some researches of this question found out that entrepreneur activity has more positive effect on low-developed and transitional economy. When economy becomes more diverse the level of entreprenuership decreases / Acs, 2005/. Additional challenge to people, who made up their mind to start their own business, is a negative attitude of their surrounding, who still consider successful entrepreneurs are people of low morals and ethics and gain profit at the expense of others / SBS Household Survey of Entrepreneurship, 2002/. With the common efforts of government, economists and sociologists, there gradually appear considerable changes in the attitude towards entrepreneurship in the UK. Now there is created one of the best environments for development of business. Still there exist numerous obstacles and challenges to entrepreneur activity in UK, which are the main reason for lower level of entrepreneurship if compared with those in the USA. Research of the Business Dynamics stated that most positive attitude to self-employment is found within the group of young people. Most problems in the attitude to entrepreneurship are based on the actual fear of failure: this happens in 31.7 % of young people / SBS Household Survey of Entrepreneurship, 2002/. Among the other negative attitudes are based on the complexity of regulations and fear to loose current income as well as security. 47% of young people in the UK still consider that the main difficulty in starting entrepreneur activity is getting finance for one own business /A review of Research into Career Decision Making Among Young People, 1999/. However, it should be mentioned that there appears constant evolution in attitudes to young people career choices. This is the most flexible group of people and they often make their decision to start their business under the influence of general attitudes in society and images on the profession, entrenched in the public mind. Quite often other items and real facts appear for them irrelevant /Young Enterprise Northern Ireland, 2002/. So, in order to prompt people to start entrepreneur activity public actions should be undertaken. Among these public actions the most effective can be the following: education about the nature of entrepreneurship and about realistic role models. The other way to promote the development of entrepreneur activity with the young population of UK should be creation of the positive media image, which will create the conception of advantages of entrepreneurial activity. In order to promote the development and rise of prestige of the image of entrepreneurship. For this special educational programs were created. They focus mainly on importance of enterpreneurship to the national economy and also on its history of this activity. Of major importance is the study of interpretations of entrepreneur activity, proposed by many famous economists and philosophers. Improvement of the attitude to entrepreneurship was much due to Alfred Marshall, who in the famous theoretic work “Principles of Economics”, where he names four factors of production: labour, land, capital, and organisation. The later encompasses entrepreneurship as the driving principle of the organisation. Marshal was sure that entrepreneurs develop new goods or improve “the plan of producing an old commodity” /Marshall, 1994/. Just as Mill, Marshall is sure that skills of entrepreneurs are not common and even quite rare. Entrepreneurs should posses abilities, which are “so great and so numerous that very few people can exhibit them all in a very high degree” /Marshall, 1994/. Leibenstein also suggested that entrepreneurs are very important for the economy owing to the fact that they perform the function of gap-fillers. It means that they feel the necessity of items and produce new goods. So, according to Leibenstein th importance of entrepreneurs lies in ability to bind markets and fill the gaps in production /Leibenstein, 1995/. Due to these and the likewise issues the educators and authority try to create the positive image of entrepreneurship and stimulate young people to consider entrepreneur activity as one of the possible professions. The Minister for Trade and Commerce, Mr Michael Ahern TD, raised the problem of negative attitudes to entrepreneurship during the international conference in Dublin. He believes that “This negative perception must be addressed urgently and at all levels if the European Union is to have any chance of reaching the 10-year targets for employment and competitiveness set at the Lisbon Summit in 2000” / UK youth want to be entrepreneurs, 2006/. The EU Commissioner for Enterprise, Mr Jan Figel, mentioned that small and medium-sized businesses is now extremely important to EU, as they employ over two-thirds of total private sector. “Europe’s competitiveness depends strongly on our small businesses. They are a key source of jobs, a breeding ground for business ideas and a main driver of entrepreneurship” / UK youth want to be entrepreneurs, 2006/. So, we can conclude that in spite of all difficulties and numerous obstacles to the development of entrepreneurship in UK, there has been considerable improvement of the situation. Authorities recognises necessity of entreprenership to the national economy and now explores every avenue to increase the role of small and middle-size business. References A review of Research into Career Decision Making Among Young People. (1999) Central Office of Information. Davies. R.(2002) A review of Enterprise in Education and the Economy. GEM UK 2003 Report Summary Total Entrepreneurial Activity. 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