Impact of Entrepreneurship in a Globalized World - Essay Example

Impact of Entrepreneurship in a Globalized World Introduction Entrepreneurship has conventionally been and still continues to be one of the most fundamental drivers of the globalization all over the world. In the present age, in which the countries increasingly depend upon trade and business with other countries, the importance of entrepreneurship cannot be overemphasized. Since the mast decade, the role of an entrepreneur in the economic development has been emphasized upon a lot. A vast majority of the economists, theorists, and experts are of the view that entrepreneurship is a crucial element of prosperity and growth, and is a bold deviator from the traditional patterns and practices of business. This paper discusses the impact of entrepreneurship in a globalized world and compares the role of small and large entrepreneurial enterprises. Impact of Entrepreneurship on GDP Under the research project titled Global Entrepreneurship Monitor (GEM), the London Business School together with the Babson College has analyzed the activity of entrepreneurship in above 40 countries that include several developed and developing societies. According to the GEM estimates, about 9 per cent of the total adult population is trying to establish a new venture at every point in time (Gatewood and Boko, 2009, p. 124). The GEM studies have found a strong link between the level of GDP of a country and the entrepreneurial activity going on in it. GEM estimates note that countries that have low GDP levels generally have significantly higher levels of early-stage entrepreneurial activity and a high number of small enterprises whereas in the high income countries, there is a relatively low level of early-stage entrepreneurial activity. “Countries with highest levels of GDP show increasing early-stage entrepreneurial activity, especially opportunity driven activities, as more individuals have the resources to go into business for themselves in an economic environment that allows for the exploitation of opportunities” (Gatewood and Boko, 2009, p. 125). The huge impact of globalization on entrepreneurship can be estimated from the fact that in certain GEM countries, at least 40 per cent of the total number of early-stage entrepreneurs expected at least 25 per cent of their consumers to belong to foreign markets (Gatewood and Boko, 2009, p. 125). The European Economic Crisis The impact of entrepreneurship on globalization can be fairly understood from the effect of the European economic crisis on entrepreneurship in the US. The worst consequences of the European financial crisis are almost over as the leaders in different European countries have started to take measures to alleviate the panic that has affected Europe for about three years continuously. The emergency that the financial markets have seen over the high government debts in Europe has almost receded. As a result of this, politicians in the European countries have found room to address the remaining issues. Although Spain and Greece are still facing the effects of the European financial crisis and the economy is expected to get worse for some more time before it starts to recover. However, a breakup of the euro is unlikely to happen now, according to the analysts. A major economic crisis in Europe would result in a sharp decline in the imports from Europe in the US. Breakup in the eurozone in particular would pose hindrance in the trade of the US with Europe as it would cause the businesses to adapt to a new regime of money. As a result of this, many would close the plants in countries whose competitiveness was lost during the economic crisis. Although the ripple effects of the economic crisis in Europe are complex, yet its effects on the consumers in Europe are fairly understandable. Spending of the consumers has dropped as a result of climbing up of the rates of unemployment in the eurozone to as high as 11.2 per cent recently. “Surveys show that many Europeans, regardless of whether they have a job, have become increasingly uncertain about their economic future and are holding off on purchases of big-ticket items such as cars and appliances as well as splurges such as tech gadgets or an extra cup of coffee” (Cha, 2012). Cultural Integration with Entrepreneurship Let’s take the popular fast food chains like KFC and McDonalds for example. These chains emerged from the West and though they intrinsically promote the Western food culture and values, they have become an integral component of the cuisines in the countries all across the globe. Although the foods offered by these fast food chains have been slightly modified to suit the taste and comply with the food culture of the countries that have traditionally very different cuisines like India and Saudi Arabia, yet people in the non-Western countries consider the food items of these fast food chains a trademark of the Western food culture. This has promoted globalization both directly and indirectly. In the direct way, these fast food chains have introduced the Western food culture in the East and elsewhere and the people of the host countries have not only developed a better understanding of the Western food culture, but have also developed a taste and liking for it. In the indirect way, this has led to increase in the tendency of the people in the developing and the underdeveloped countries to migrate to and settle in the developed economies because not only now they can live upon the Western foods, but are also confident that introducing a foreign cuisine in a country can be a potential source of business, and thus they open restaurants that sell foods representing their cultures. Today, one can find a variety of restaurants selling foods belonging to a wide range of cuisines including Indian, Chinese, Thai, and continental foods in any busy shopping or public area in a vast majority of countries including the UAE, the US, and the UK. Small vs Large Entrepreneurs in a Globalized World Although a significant portion of the private spending related to research and development in the US has been found to come from a very small number of large firms, yet small entrepreneurial enterprises continue to make revolutionary breakthroughs as the large industry shows incremental improvements frequently to maximize the contributions (Baumol, 2009, p. 59). In addition to that, the small entrepreneurial enterprises distribute their innovative technology frequently and widely as a main source of revenue as well as to compensate for other firms’ technological property. Free competition has played a very important role in the capitalist economies’ growth. In this, the significance of the rivalry between large entrepreneurial enterprises can also not be overlooked. In the contemporary age, many large entrepreneurial firms have started to use innovation as their main tool to protect themselves against their competitors in the market. As a result of this, the large entrepreneurial enterprises lead the economy in innovation spending. Opportunities and Challenges for Entrepreneurs in a Globalized World In a global market, virtually all kinds of firms can participate. The omnipresence of new technology has made it very easy for even small enterprises to access new opportunities. While the business entrepreneurs have a lot of opportunities in the globalized world, globalization has also increased the competition for the entrepreneurs in many ways. When a new individual enters the world of business as an entrepreneur, he/she essentially dives into an ocean that has a lot of small fish that compete with one another in the search of food. There is a lot of fish already that is all set to consume the young one alive. “The big fish in the sea tend to be well-connected, multinational beasts taking full advantage of the perks of globalization – such as outsourcing, uneven exchange rates, and low-margin high-volume sales models – making them nearly impossible to compete against” (Sun, 2012). Globalization affects almost all aspects of economy and eventually alters the views of the world. The multifarious influences affecting business are a big concern of all economies in the present age. There is a general consensus among people that outsourcing aids economy along with enduring the speed bumps. Conclusion Entrepreneurship plays a very important role in the globalized world. Entrepreneurship is both a cause and effect of globalization. Although both small and large entrepreneurial enterprises have contributed to the globalization and economic empowerment of the countries all over the world, yet the former have outdone the latter generally. A country’s prosperity in the future to a large extent, depends on its tendency to cultivate and promote innovation, entrepreneurship, and effective adoption and implementation of advancements in the technology. In all such processes, small firms in general and the ones established in the recent years in particular play a big role in the growth and prosperity of a country. The specialty of the small entrepreneurial enterprises is that they make revolutionary breakthroughs This leads one to the conclusion that independent innovators and small entrepreneurial enterprises have provided many new and revolutionary ideas that have surfaced during the last two centuries. These independent innovators have primarily been the small business enterprises. Nevertheless, large entrepreneurial enterprises continue to contribute to the technical progress as well. References: Gatewood, EJ, and Boko, S 2009, “Globalization: Entrepreneurial Challenges and Opportunities in the Developing World” in The Role of SMEs and Entrepreneurship in a Globalised Economy, viewed 18 December 2012 at http://www.regeringen.se/content/1/c6/12/58/93/d614cc47.pdf. Baumol, WJ 2009, “Small Enterprises, Large Firms and Growth” in The Role of SMEs and Entrepreneurship in a Globalised Economy, viewed 18 December 2012 at http://www.regeringen.se/content/1/c6/12/58/93/d614cc47.pdf. Cha, AE 2012, European financial crisis has ripple effect on U.S. businesses, The Washington Post, viewed 18 December 2012 at http://articles.washingtonpost.com/2012-08-02/business/35493409_1_european-financial-crisis-mario-draghi-debt-crisis. Sun, L 2012, Impact of Globalization on Small Businesses, viewed 18 December 2012 at http://www.businessdictionary.com/article/583/impact-of-globalization-on-small-businesses/. Read More