Entrepreneurship Social Impact Mar 30, 2016
How to Foster Entrepreneurship in Emerging Markets
A Q&A with four entrepreneurs about the global startup landscape—and what governments can do to help.
Sorbetto via iStock
Emerging-market countries are invariably complex. On one hand, they are starting later—and often with fewer resources—than more established industrial economies. On the other hand, they often have unmet societal needs that can offer tremendous opportunities to companies that position themselves properly. Often, those are companies that have not yet been born.
We spoke with four entrepreneurs about the role of entrepreneurship in emerging markets, how women entrepreneurs are uniquely positioned in those markets, and the role governments can play in promoting global entrepreneurship. Their responses have been edited for length and clarity.
What opportunities do entrepreneurs in emerging markets have?
LINDA DARRAGH: The wealth of opportunities and problems to solve are an advantage, but generating innovative ideas that go beyond the norm is not so easy. It can be hard to convince people that they can do something different. That’s even hard in the United States, but when you add the layer of scarce resources and limited ability to rebound for failure, that can bring about caution that limits a venture’s ability to scale.
Entrepreneurs have to understand the context where they’re building, how to make things work on next to nothing for a long time, and that they have to become revenue positive as quickly as possible.
NELY GALÁN: In some parts of the world where there are caste systems and religious and cultural barriers, there are often more barriers to entry for women to rise up in corporations. Therefore, the choice to be an entrepreneur is easier—it is often one of the only options. That frees women to eliminate the 99 percent of other things that they absolutely will never do or can’t do. They know, “These are the three options I have left. Let me go rock those three options out.”
Bayrasli and Porges present at “New Worlds: Creating the Future,” the Kellogg Innovation Network (KIN) Global Summit, June 1-3, 2016 in Miami, Florida.
How do you see entrepreneurship fitting into the economic-development picture in emerging markets?
ELMIRA BAYRASLI: When I was in Bosnia, I had a conversation with a woman who said to me, “It’s very convenient for you to come from the United States and talk about human rights when your lives have been all figured out. But here, our sons, our daughters, our husbands have to leave in order to find employment, because there is no work here.” It dawned on me that the best thing we can do is help create jobs.
Because these markets have not been tapped into, there is a huge opportunity to launch a business in any number of areas, since nothing is yet established. Where there are greater challenges, there are greater opportunities to actually innovate and come up with unique solutions, to address challenges that we haven’t even thought of.
SHELLY PORGES: Many governments as well as multilateral organizations around the world are recognizing that entrepreneurs are job creators and that there is a great thirst among the next generation of young people everywhere to drive their own future. More and more resources are being focused on this pent-up demand. It is “the other revolution,” the entrepreneurship revolution.
How may women entrepreneurs break through barriers in emerging markets?
LINDA DARRAGH: You’ve got to have a system where people are allowed to have ideas and execute. Women can see what the problems are, but are they empowered to solve those problems for themselves and their families, or their village, or beyond their village?
In India, women are going off to Internet cafes and learning how to write code. All of a sudden, they’re doing work all around the world.
SHELLY PORGES: One of the really critical challenges that women face is the lack of access to traditional networks—in education, training, financing—compared with what’s available to men. So women-owned businesses have found great opportunities within cooperative organizations where they buy and sell from each other.
They’ve recognized that while they are waiting for Walmart to discover what they already know—that their companies offer the highest quality, or quickest turnaround—they are already operating in a successful network with other women. They know that if they buy what they need from each other, they represent a potentially big market right there.
ELMIRA BAYRASLI: Every place has a unique cultural perspective that entrepreneurs can tap into and build on to bring something new. Fashion is a great example. In the Middle East, women are starting to cater high-end products to affluent Middle Eastern women. Dolce & Gabbana just introduced a whole line designed for Muslim women, really going after that high-end market.
The beauty of being a woman in an emerging-market country is that we’re starting to see huge macroeconomic reforms that not only make it easier for venture capitalists to come in, but also for foreigners to come in and invest.
NELY GALÁN: I tell women that their brand is in their pain. I ask them, “What happened to you, and can you use it to solve a problem for other people?”—because women are problem-solvers in a family. When you shift that mindset from problem-solving to making money, they really get it.
How can governments—both in emerging and established economies—help create conditions necessary to sustain and scale businesses?
NELY GALÁN: Often, there are incredible programs out there for entrepreneurship—and incredible opportunities—but there is an information gap. That information is not marketed to the people who need it in order to apply for a contract or sell to a company. So no one gets the information, and opportunities pass.
SHELLY PORGES: Governments have come to realize that they cannot possibly meet their economic needs—that is, providing enough government or industrial jobs for young people—without promoting entrepreneurship and an entrepreneurial mindset. These economies have to allow for innovation and entrepreneurship, otherwise they fail. It’s very simple.
For most entrepreneurs, their experience with the government is not positive—whether it’s taxes, regulatory barriers, licensing, or processes that are obscure and difficult. Minimizing or eliminating those barriers helps.
But governments also have an important role in their ability to connect, convene, and catalyze what goes on in the entrepreneurial world.
Often it will be in partnership with the private sector, by facilitating and incentivizing investors or banks. They can get involved directly by engaging small businesses through the procurement process. In almost every country, the single biggest procurement source is the government. So if the government commits to setting aside part of that for small businesses, that’s a huge market.
LINDA DARRAGH: Governments can add incentives like tax credits to increase investment. They can promote stability, IP rights, and price transparency. And they can focus on more efficient transportation that will help small businesses’ potential to grow. If you’re a Colombian cattle farmer who has to pay four different brokers to transport a cow to market, that eats into your ability to scale.
ELMIRA BAYRASLI: Reforming laws and policies to include women will lift up women in emerging markets far faster than has been the case in the U.S. One of the primary reasons is that the global economy is so dynamic. Countries that are eager to keep up their economic growth are very interested in having successful women in the workforce and in making sure that those women not only have the necessary education, but are also getting the type of funding that’s going to allow them to start companies and scale them up.
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