Alzaytoonah University 1 Entrepreneurship and Arab World
Alzaytoonah University/Amman-Jordan College of Economics and Management Sciences
The Tenth International Annual Conference Entrepreneurship within Knowledge Society
April/26-29/2010
Entrepreneurship and the Arab World By Dr. Naser A. N. Aboyassin Al-Zaytoonah University of Jordan College of Economics and Management Sciences
Department of Business Management Tell# 0096264291511
[email protected]
Alzaytoonah University 2 Entrepreneurship and Arab World Introduction Entrepreneurs are risk takers who innovate and find better ways to do things, improve productivity, fuel economic growth and create new jobs, in fact high percent of the wealth has been created by entrepreneurs and its spirit that leads the way to recovery. Throughout the region, labor forces are growing at a high rate posing a significant challenge for job creation. These graduate people face an exceptional series of challenges and numerous obstacles. New generations of entrepreneurs are the most convincing engine to drive the region forward out of global economic decline into a new era of prosperity. To create sustainable economy, knowledge entrepreneurship and socially responsible venture are the keys. To create entrepreneurs certain steps must be taken. A certain level of education can create value to the region. It is important that colleges and universities learn how to educate and train innovative entrepreneurs. Schools need to graduate more students who can identify opportunities and pursue can-do and risk-taking culture. Governments must create an environment in which entrepreneurs can prosper. Arab World to adopt the process of reform and to introduce incentive policies to reverse the pervasive brain drain. Utilizing the vast experience and knowledge of returning professionals to develop the economy and promote national interest harvest massive rewards. Availabilities of capital and the brilliant ideas can create economic developments.
Entrepreneurship and Knowledge Entrepreneurship arises when an enterprising individual purse a rewarding opportunity. It involves creating new systems, resources, or processes to produce new goods or services and/or serve new market. Entrepreneurs are quicker to act and actively manage risk. Entrepreneurs have built companies, succeeded personally, formed jobs, and made positive contributions to their communities through their business. Entrepreneurs do what they do by starting their business for the challenge, the profit potential, and satisfaction. They seek independence and feeling of being part of the action (Bateman & Snell, 2009). According to Keating (2008) entrepreneurs truly are the heart of the economy. Entrepreneurs are risk takers who innovate, introduce new products and services, and find better ways to do things, improve productivity, enhance competition and choice, fuel economic growth and create new jobs. The entrepreneur owns, operates and assumes the risks of a business. Successful entrepreneurs need to figure out what's needed or most wanted by others before satisfying their own demands (Keating, 2009). “Being an entrepreneur takes far more than capital, a few ideas and courage and for those who believe that it's all about the bottom line and profit -- that's an upside-down perspective” (Tonn, 2009). Entrepreneurship must start with a great idea, a great product, viable market and good timing and all are essential component in any steps for success. Entrepreneurs spot, create, and exploit opportunities in a variety of ways. To spot opportunities, entrepreneurs think about events and trends such as technological discoveries, demographic changes, lifestyle and taste changes, economic dislocation, calamities, and government initiatives and rule changes (Bateman & Snell, 2009). Knowledge entrepreneur is at the front of a new breed of entrepreneur, the goal here is to deliver the greatest possible benefit to society, while satisfying all stakeholders and creating enough additional wealth to sustain the process in a continually changing environment. The new knowledge entrepreneur seeks to balance sustainable growth with social responsibility (Murray, 2008). According to the Billion Minds Foundation as cited by Murray (2008), the socially responsible knowledge entrepreneur has the following recognizable traits: challenges the status
Alzaytoonah University 3 Entrepreneurship and Arab World quo; inspires a shared vision and needed change; invests in developing global knowledge-based manufacturing and clusters; and retools with new value-added skills and knowledge to become competitive in the global knowledge economy (Murray, 2008). The knowledge entrepreneurs’ apply leadership which means taking control of their destiny. Looking for strategic opportunities and capitalize on them, organizing by creating networks of teams of like-minded individuals who can swiftly respond to opportunities in a mutually valuable way. Never, stop learning, innovating, growing and creating value also, being a source of learning for others, by coaching and mentoring, and seek out others to help you grow in the same way and learn how to use technology. It is more exciting to have knowledge entrepreneur acquiring, sharing, growing and using knowledge for the benefit of society than being referred to as a knowledge worker (Murray, 2008). In the United States since 1980, more than 95 percent of the wealth has been created by entrepreneurs (Bateman & Snell, 2009). As the global economy struggles to regain momentum, it will be the entrepreneurial spirit that leads the way to recovery through their vital contribution to the economy and society overall. Entrepreneurship and Situation in the Arab World Throughout the region, labor forces are growing at a rate of 3.5-4.0 percent annually, posing a significant challenge for job creation. Between now and 2020 to keep pace and bring the rate of unemployment down to the global norm World Bank estimates that the Arab world will have to generate 55-70 million jobs (Noland & Howard, 2008). According to the International Labor Organization (ILO) as cited by Lancaster (2009), an additional 100 million young Arabs will be cast onto the international job market within the next 20 years. “TalentRepublic.net report pointed out that around 70,000 Arab university graduates emigrate annually to search for jobs overseas, while about 54 per cent of Arab students studying abroad do not come back to their home country to seek job opportunities” (Anonymous, 2009). Further, according to statistics acquired from the Arab League, ILO, UNESCO and other Arab and international organizations, about 100,000 scientists, doctors and engineers leave Lebanon, Syria, Iraq, Jordan, Egypt, Tunis, Morocco and Algeria annually. About 70 percent of the scientists do not return home, while about 50 percent of doctors, 23 percent of engineers and 15 percent of scientists move to Europe, United States and Canada (Anonymous, 2009). These graduate people face an exceptional series of challenges to secure an opportunity in their society but perhaps the greatest test they will face as a group is that of securing employment. Number of obstacles standing between young Arabs and the decent jobs they need, obstacles include; lack of economic readiness, selection system readiness and workforce readiness. Which means a scarcity of good jobs, needing connections to get a job, or selection system readiness and lack of proper training, or lack of workforce readiness, is considered another barrier to achievement in the regional job market, those not finding work may still cause a political risk (Lancaster, 2009). In short, “the region faces a demographic urgent to create jobs. This is not a hypothetical predict; the members of this population are already going through school and the mass of unemployed, educated people represents a potential threat to political stability” (Noland & Howard, 2008). The region's reputation as a risky business environment, due in part to deep uncertainty about the future of many of the region's political regimes caused the process of successful globalization is kept back. Economic and political insecurity and risk thus be placed at the heart of the region's challenge (Noland & Howard, 2008). According to Theil (2007) in many
Alzaytoonah University 4 Entrepreneurship and Arab World Arab countries, there are numerous obstacles to starting a business this include punitive bankruptcy laws to lack of financing to the time and money it takes to set up a company. People lean to be more careful and uncertain to take financial risks, and there is a panic of failure. Many people are worried with job security, as offered by a public-sector job. According to the ongoing survey work at the World Bank as cited by Noland and Howard (2008), there is no reason to believe that the Arab world experience from a lack of entrepreneurs, there are some questions regarding the business environments in which they operate and their technical ability. Local entrepreneurs found to focus on sectors such as retailing and real estate which may reflects a lack of technological skill or whether it reflects aspects of local policies and practices that may effectively discourages high-value fixed investment, which could be subject to confiscation, formally or informally. On the part of investors, driven by a variety of concerns, the region as a whole appears to be characterized by relatively high subjective risk assessments also it requires complex decisions that involve uncertainty, innovation and discovery and business judgment (Noland & Howard, 2008). Many entrepreneurs are finding it hard to generate the cash needed to take advantage of the opportunities in the present environment or are having trouble getting the credit they need to simply run business as usual. The current economic decline poses troubles for all firms, and these successful entrepreneurs are no exception (Morse, 2008). Entrepreneurship and Arab World Economical Problems In the Arab World Creating sufficient jobs over the next two decades to allow young people to participate fully in their society is very vital and necessary. In moving forward it is essential that the voices of the young are heard and listened to. Therefore, allowing the voices of young Arab men and women to come through, contributing fresh perspectives are essential for growing success, confidence and optimism about the region's young population which could then turn them from a potential liability to a bonus to their countries. Most research organizations favored the concept of new generations of entrepreneurs is the most convincing engine to drive the region forward out of global economic decline into a new era of prosperity. Solid majorities in nearly every country surveyed consider entrepreneurs help create jobs in their societies (Lancaster, 2009). To create sustainable economy, knowledge entrepreneurship and socially responsible venture are the keys. It requires the collaborative engagement of the world's most enlightened thought leaders, businesses, governments, universities, non-profit institutions and investors (Murray, 2008). According to Duening, as sited by Tonn (2009) “I believe in education as an economic driver. You provide value to a region by bringing them up to a certain level of education, this value is what uplifts a society” (Tonn, 2009). According to economist William Baumol, one of the top experts on entrepreneurship, remarked as cited by Keating (2009), that the economic importance of entrepreneurship is greatly underestimated and that it is important that colleges and universities learn how to educate and train innovative entrepreneurs. According to Queen Rania as cited by Theil (2007), our schools need to graduate more students who can identify opportunities and pursue them, create new ideas, take risks and recover from knocks along the way. It's about changing mentality by nurturing creativity, innovation and
Alzaytoonah University 5 Entrepreneurship and Arab World critical thinking in our classrooms. It’s about creating the entrepreneurs themselves because it's not just about creating an environment in which entrepreneurs can succeed. Success in Arab World can be generated also by changing the culture to be more innovative, can-do and risk-taking. According to Queen Rania this can be done by working with would-be entrepreneurs in schools, universities and training centers, by bringing entrepreneurs into the classroom and allowing them to inspire young minds, by encouraging students to set up and run their own creative projects and to share their successes and products with the community; by recognizing and rewarding entrepreneurship across society, and by creating an "if he or she can do it, so can I" mind-set. You aren't born with these skills and thoughts --you can learn and develop them along the way (Theil, 2007). For instance governments must create an environment in which entrepreneurs can prosper. Clear away high taxes, complex regulations, obstacles to trade and unsound financial policies, to introduce incentive policies to reverse the pervasive brain drain, (Keating, 2009). The process of reform in the Arab economies is very necessary but likely it will be delayed, with many people and groups making many incremental changes, rather than a program that can be implemented positively by a small group of technocrats (Noland & Howard, 2008). According to Talent Republic Net report, as cited by Anonymous (2009) some of the incentives that governments can introduce to prevent and reverse the pervasive brain drain include present relaxed regulations, improving living standards and public services, instituting better pension and reward plans, and investing in new infrastructure and development projects reorganizing and simplifying the process of establishing businesses and investment portfolios, support manufacturing endeavors. In light of the present economic realities, an opportunity has opened for talent-exporting countries within the Arab World to introduce incentive policies to reverse the pervasive brain drain. Such upbeat measures, mainly those targeting people with world-class skills as well as doing well entrepreneurs who can help create domestic jobs, can potentially increase the national income, strengthen the economy and even help the country catch up with established international job markets. A reversal of the brain drain, a development that could benefit Arab economies in two ways: First, returnees who received training or work know-how in more advanced institutions in a foreign country represent a possible link between local economies and the opportunities offered by the global economy. Second, even if returnees do not establish new high-technology organizations, simply reversing the brain drain, as has occurred in Ireland, for example, over the past generation, would amount to raising the social rate of return on educational investment, feasibly by a significant margin (Noland & Howard, 2008). According to Talent Republic Net report, as cited by Anonymous (2009) it is necessary for the talent-exporting Arab countries to find out from prior experiences such as the Indian government program that introduced during the past few years to draw Indian expatriates back home. Arab countries need to establish a network and communication line with immigrant communities abroad, which will let the governments of different Arab countries to propose their new incentive policies and eventually show to a larger number of expatriates that there are now various rewarding opportunities within their home countries (Anonymous, 2009).
Alzaytoonah University 6 Entrepreneurship and Arab World To reverse the brain drain, potential returnees must be certain that they and their families will be safe and not subject to economic predation, also secure social and economic stability in place. Taiwan, where the modern high-technology sector was in significant part established by returnee scientists and engineers, actively sought to reverse the brain drain by providing overseas nationals incentives to return home and establish high-tech businesses. How would Arab governments today welcome an arrival of skilled people who had spent significant time abroad? Tap into the intellectual curiosity of this highly educated generation by engaging them in business challenges and offering incentives for good ideas (Noland & Howard, 2008). Utilizing the vast experience and knowledge of returning professionals to develop the economy and promote national interest harvest massive rewards but exporting countries must always be prepared to provide attractive incentives to retain local talent and attract non-resident nationals who have strong potential to contribute in building the national economy (Anonymous, 2009). Also, according to Noland and Howard (2009), “the key issues involve a nexus of microeconomic issues, policies and practices, centered on globalization, technology transfer, and local adaptation and diffusion of technological innovations from abroad”. Availabilities of capital and the brilliant ideas can create economic developments but, people should invest only in what they can afford to lose; they should start with what they know, who they are and whom they know. Embrace and weight uncertainty and change. Given all these principles, who you are, what you know and whom you know then you decide what types of economic and/or social project you should create? What types of ideas and opportunities should you (stress on) (Tonn, 2009). Recommendations As mentioned earlier, the global economy struggles to regain momentum, it will be the entrepreneurial spirit that leads the way to recovery through their vital contribution to the economy and society overall. To encourage and create entrepreneurial spirit at Arab world the following steps are recommended and must be taken: 1) Entrepreneurs must start with a great idea, great product, viable market and good timing. 2) Arab countries must clear the numerous obstacles to starting a business, such as creating a punitive bankruptcy laws and removing obstacles. 3) Encouraging people who lean to be more careful and uncertain to take financial risks. 4) Creating sufficient jobs over the next two decades to allow young people to participate fully in their society. 5) Allowing the voices of young Arab men and women to come through, contributing fresh perspectives. 6) Creating a collaborative engagement of the worlds most enlightened thought leaders, businesses, governments, universities, non-profit institutions and investors. 7) Providing value to the region by bringing people up to a certain level of education. 8) Colleges and universities must learn how to educate and train innovative entrepreneurs. 9) Schools need to graduate more students who can identify opportunities and pursue them, create new ideas, take risks and recover from knocks along the way.
Alzaytoonah University 7 Entrepreneurship and Arab World 10) Changing the mentality of people by nurturing creativity, innovation and critical thinking in classrooms. 11) Creating the entrepreneurs themselves and changing the culture to be more innovative, can-do and risk-taking one. 12) Bringing entrepreneurs into the classrooms in schools, universities and training centers and allowing them to inspire young minds. 13) Encouraging students to set up and run their own creative projects and to share their successes and products with the community. 14) Recognizing and rewarding entrepreneurship across society. 15) Creating an "if he or she can do it, so can I" mind-set. 16) Preventing and reversing the pervasive brain drain which includes presenting relaxed regulations, improving living standards and public services and instituting better pension plans and introducing incentive policies. 17) Creating reward plans, and investing in new infrastructure and development projects. 18) Reorganizing and simplifying the process of establishing businesses and investment portfolios and support manufacturing endeavors. 19) Targeting people with world-class skills as well as doing well entrepreneurs who can help create domestic jobs. 20) Getting returnees who received training or work know-how in more advanced institutions in foreign countries. 21) Arab countries to find out from prior experiences such as the Indian government program that introduced during the past few years to draw Indian expatriates back home. 22) Arab countries need to establish a network and communication line with immigrant communities abroad and informing them that now various rewarding opportunities within their home countries are available. 23) Potential returnees must be certain that they and their families will be safe and not subject to economic predation and secure socially and economically stable. 24) Taping into the intellectual curiosity of the highly educated generation by engaging them in business challenges and offering incentives for good ideas. 25) Making capital and the brilliant ideas available so they can create economic developments. 26) People should invest only in what they can afford to lose and should start with what they know, who they are and whom they know. 27) People should embrace and weight uncertainty and change. Given all these principles, who you are, what you know and whom you know then you decide what types of business or entrepreneurship you in.
Alzaytoonah University 8 Entrepreneurship and Arab World
References Anonymous. (2009). Government initiatives needed to lure Arab talent back home report. Al Bawaba, London, Sep/2009 Bateman, T.S., & Snell, S., (2009). Management leading & collaboration in a competitive world. McGraw-Hill- Irwin. Keating, R. (2009). Commentary: Entrepreneurship should be taught. Long Island Business News, Ronkonkoma, Oct/2009. Lancaster, P. (2009). Youth: the great 21st-century challenge. Middle East, London, (402)13-17 Morse, E. (2008). Entrepreneurs: Generating cash in a credit crunch. Ivey Business Journal Online, London, 72(6), 1-2 Murray, A. (2008). Goodbye, knowledge worker. Hello, knowledge entrepreneur. KM World, Camden, 17(6)20-22 Noland, M., & Pack, H. (2008). Arab economies at a tipping point. Middle East Policy, Washington, 15(1)-60-70 Theil, S. (2007). Don't Sniff at Money; Princess Rania pushes Arabs to train entrepreneurs. Newsweek, New York, 150(9)1-2 Tonn, R. (2009). Pathway to entrepreneurial wealth about creating value. The Colorado Spring Business Journal, Colorado, USA, Oct/2009
