Entrepreneurship in Ireland - Coursework Example

Entrepreneurship in Ireland Introduction: In March 1999, the Northern Ireland administration produced Strategy (DED 1999), outlining an economic strategy for promoting entrepreneurship in the country. At the time of preparation of the report Northern Ireland was labeled the “fastest improving regional economy in the UK” ( Morahan, 1999) and in some aspects, macroeconomic performance was superior to the UK average. However, this was largely due to the fact that Northern Ireland remained unaffected by the 1990-92 recession that hit Britain. One of the factors cited in the report, while comparing Northern Ireland with the Republic of Ireland was the lower rate of tax on corporate profits, which is 12.5% for manufacturing activities. Strategy 2010 for economic development pushes for higher sustainable GNP growth rates and notes that at the time of preparation of the report in 199, 89% of firms could only afford one employee. Moreover, the volatility in the political and economic environment in Northern Ireland has inhibited industrial growth and does not attract new investors easily. Environmental forces: Several factors in the business environment influence new venture performance. Some of these factors are the availability of capital, suppliers and customers (Cooper, 1970). Availability of technically skilled labor (Draheim, 1972), plants and equipment with a supportive local culture (Mahar and Coddington 1965; Naumes 1978) and good universities (Shapero, 1972) are vital in ensuring that new ventures survive and are able to be successful. In a study that compared and assessed entrepreneurial behavior in Great Britain, New Zealand and Norway, the authors concluded that an unfavorable entrepreneurial environment that forces individuals to struggle actually appears to promote success in new ventures, since individuals starting such firms work harder to overcome the odds of an unfavorable environment. Hirish (1998: 32-33) has undertaken a study of factors inhibiting entrepreneurial activity in Northern Ireland and apart from the political turmoil, he identifies some other factors, such as (a) the decline of the three major industries – shipbuilding, farming and textiles) (b) lack of development of infrastructure (c) Irish culture which is non supportive of entrepreneurs, since the prevailing belief is that those who succeed do so abroad (d) the poor development of the export market, with Britain and the Republic of Ireland also being viewed as foreign countries and (e) the existing perception that Northern Ireland is a dangerous place to live and therefore lacking the stability necessary for success in entrepreneurial business. Political environment: Where Northern Ireland is concerned, the political climate is not conducive to starting up of new ventures. The volatile nature of the political environment functions as a significant inhibiting factor where new investment and start up ventures are concerned. Political identity is still fragmented and sectarianism grips Northern Irish society, so that there is a wide socio economic differential between Protestants and Catholics (Shirlow and Shuttleworth, 1999). With the reduction of political violence in the late 1990s and the 2000s, there is now some growth in capital investment with UK supermarket chains and expensive hotels spilling over into Belfast and Derry, promoting increased commercial activity and the possibility of economic health. (Shirlow and Shuttleworth, 1999). The Irish nationalists push for the need to end British rule, arguing that justification for this is posed in the augmentation of wealth creation in Northern Ireland and that the Northern Ireland economy can thrive and flourish only when release from the British yoke. On this basis Shirlow and Shuttleworth (1999) content that there is a need to end seclusion of and discrimination against Catholics in order to ensure that new enterprises are encouraged. Training for entrepreneurs: One area in which there is a significant difference between Britain and Northern Ireland is in the availability of training for entrepreneurs. Through the initiative of the Government’s TA (Training Agency), most business schools in Britain have been helping individuals and small business in start ups and growth of new ventures.(Brown 1990). Brown (1990) undertakes a study after a three year period of implementation of the GEP (Graduate Enterprise Program) which assists first time graduates to start their own business. This program has faced resistance from elements within and outside Government since the cost of training per participant is high, amounting to subsidizing by the Government. His study showed that the initiative to promote entrepreneurship was beneficial to the British economy in creating an average of 4.3 full time jobs for each surviving new venture. Most of the firms also showed growth and profits to the tune of 8 million pounds in sales and 835,000 pounds in profits. In a study conducted by Scott and Twomey (1988), factors influencing entrepreneurial aspirations through an examination of student career aspirations was undertaken in three countries – United States, England and Ireland. The major variables in the study were (a) predisposing factors (b) triggering factors and (c) possession of a business idea. This study showed that Ireland has a limited industrial history, as a result it has a history of decades of supporting multinational firms, therefore the transition to the promotion of a small business climate is a slow and painful one. However, this study also highlighted the importance of introducing entrepreneurial role models into educational programs and placing greater emphasis on the benefits of self employment. Moreover, supervised work placements in other small businesses are likely to be beneficial to those students interested in entrepreneurship. In the United States, there is already such a model in place – the Small Business Institute, while in great Britain, it is the “Gateway” scheme, however Ireland does not have any such portal available to students, which could partly serve to explain the reason for fewer entrepreneurs, especially in Northern Ireland where discrimination and political uncertainty further inhibit entrepreneurial activity, since profits are uncertain. Motivating entrepreneurs: Although motivation is the fuel powering almost all human activity in all spheres of life, it becomes a psychological concept at the workplace that is primarily directed towards “increasing the strength and direction of people’s work-related behaviors to influence the quality and quantity of people’s performance output” (Hannagan, p. 314). According to Maslow’s Hierarchy of Needs Theory (1970), which is a five tier system, an individual has two kinds of needs – the lower order needs which are satisfied externally, such as physiological and safety needs, and the higher order needs which are satisfied internally such as social needs, esteem and self actualization needs. This is where entrepreneurs in Northern Ireland may be lacking because these social needs remain unsatisfied in an environment perceived as dangerous and discriminatory. The Equity Theory is based upon the principle that in a workplace situation, the degree to which an employee experiences satisfaction at his job is determined by the extent to which he feels that he is at an advantage or a disadvantage as compared to a “referent other”, who is actually a person that is in a position comparable to the employee. [Anderson and Bedini 2002]. It appears likely that entrepreneurs in Northern Ireland may be comparing themselves unfavorably to UK and/or the ROI, considered to be foreign countries. Moreover, cognitive theory also disputes the theory that reinforcement through reward systems may function as motivating factors for employees, since Kohn (1995) has shown that rewards may actually inhibit the natural joy and satisfaction an employee experiences in his/her job. On this basis, it appears that entrepreneurs may be motivated only through an improvement in the environment and increased Government initiative to identify and foster the entrepreneurial spirit among young graduates. Public policy may have to be geared towards eliminating the existing perceptions among the people that success and innovation are only to be found in foreign countries, as also the elimination of the perception of discrimination and isolation of Catholics. Conclusions: In a speech delivered to the Enterprising Britain Policy summit at London, England, Carl Schramm, CEO of the Marion Kaufmann Foundation, pointed out that a survey conducted by Lighthouse research for Ernst and Young in 2004 revealed that the single largest obstacle to entrepreneurship in the UK was the lack of capital. (Schramm, 2005). He pointed out that a positive environment for entrepreneurship must include availability of capital, reduction in government restrictions and red tape and a supportive environment, with larger firms being willing to seek collaboration with innovative smaller firms. In Northern Ireland, the political situation and the violence between Catholics and Protestants has resulted in a depression of the economy, adding to the perception that this area is a dangerous one to invest in. Furthermore, the country largely has an industrial base, albeit it is being eroded in recent years, therefore initiating and propelling the shift towards small business is a difficult exercise. The most important aspect that needs to be overcome is the negative perceptions existing in the population about the business and economic climate in the country as compared to neighbors Britain and the Republic of Ireland. In view of Britain’s success in promoting entrepreneurial activity through training of its student population, it appears that this trend may also be a good one for Northern Ireland to follow, in order to erode existing negative perceptions. Motivating students through the introduction of training programs at college and subsidizing and support of small business activity by the Government may be useful to reverse the negative trends in new ventures. The availability of capital could also serve to motivate more people to enter into new ventures. Bibliography: * Anderson, Denise M and Bedini, Leandra A, 2002: “Perceptions of workplace equity of therapeutic recreation professionals”. Therapeutic Recreation Journal. [Online]. Available at: http://www.findarticles.com/p/articles/mi_qa3903/is_200207/ai_n9096508/pg_2 . * Brown, Robert, 1990. “Encouraging Enterprise: Britain’s graduate enterprise program” Journal of Small Business Management, 28(4): 71 * Cooper, A, 1970. "The Entrepreneurial Environment," Industrial Research: 17-25. * Department Of Economic Development (DED) (1999). “Strategy 2010 Report by the Economic Development Strategy Review Steering Group”. DED, Belfast. Cited in Bernie, Esmond and Hitchins, David, 2000. “New Economic Strategies in Northern Ireland and the Republic of Ireland: Strategy 2010 and Enterprise 2010.” Regional Studies, 34(8): 788-793. * Draheim, K, 1972. "Factors Influencing the Rate of Formation of Technical Companies," IN “Technical Entrepreneurship: A Symposium”(ed. A. Cooper and K. Komives). Wisc.: Center for Venture Management. * Hirish, Robert D, 1998. “The entrepreneur in Northern Ireland: Characteristics, Problems and recommendations for the Future.” Journal of Small Business Management, 26(3):32-40 * Kohn, Alfie: (1995): Punished by Rewards: The trouble with Gold stars, Incentive plans, A’s, Praise and Other bribes. Houghton Mifflin Company. * Mahar, J., and D. Coddington, 1965. "The Scientific Complex: Proceed With Caution," Harvard Business Review (January-February):18-28 * Morahan T, 1999. “The fastest improving regional economy in the UK.” Labour Market Bulletin No. 13, Training and Employment Agency, Belfast. Cited in Bernie, Esmond and Hitchins, David, 2000. “New Economic Strategies in Northern Ireland and the Republic of Ireland: Strategy 2010 and Enterprise 2010.” Regional Studies, 34(8): 788-793. * Maslow, A.H, 1970. “Motivation and Personality” 2nd Edition. New Jersey: Prentice Hall. * Naumes, W, 1978. “The Entrepreneurial Manager in the Small Business” Mass: Addison-Wesley. * Scott, Michael G and Twomey, Daniel, F, 1998. “The long term supply of entrepreneurs: Students’ career aspirations in relation to entrepreneurship.” Journal of Small Business management, 26(4): 5-14 * Schramm, Carl J, 2005. “Closing the Enterprise Gap” Vital Speeches of the Day (New York, Jan 1), 71(6): 174-9 * Shapero, A, 1972. "The Process of Technical Company Formation in a Local Area," IN “Technical Entrepreneurship: A Symposium” (ed. A. Cooper and J. Komives). Milwaukee: Center for Venture Management. * Shirlow, Peter and Shuttleworth, Ian, 1999. “Who is going to toss the burgers? Social construction and the reconstruction of the Northern Irish economy.” Capital and Class, 69 (27): 27-47 Read More