How entrepreneurship transforms lives
By some estimates, half of the world's poor make a living as micro-entrepreneurs in developing countries.
Crucially, that imagined stereotype will usually place the entrepreneur in the developed world.
Yet in truth, only a tiny proportion of the world’s entrepreneurs operates in the world’s richest countries. The vast majority are in emerging markets, and, the data shows, desperately poor. By some estimates, half of the world's poor make a living as micro-entrepreneurs in developing countries.
Business thinking, such as that being carried out at the Deloitte Institute of Innovation and Entrepreneurship (DIIE) at London Business School (LBS), is helping these entrepreneurs. It can also be applied to the services they and their communities use, such as healthcare, to generate innovative practices that improve delivery.
The combination of expertise in entrepreneurship and innovation is especially powerful in the context of solving social issues in emerging economies, where there are numerous challenges.
In many cases, there is limited access to essential resources, such as finance, information, and basic business skills. Research can suggest the most effective ways to meet the various challenges – both by better understanding the business lives of these entrepreneurs, and by offering policy-makers, governments, NGOs and large corporations entrepreneurial solutions to solve poverty.
This is not typical territory for research in business schools. “Traditionally, students have thought of ‘businesses’ as being big businesses,” says Rajesh Chandy, who holds the Tony and Maureen Wheeler Chair in Entrepreneurship at LBS and oversees the Deloitte Institute project ‘Transforming lives through entrepreneurship’. “But the most common type of business on earth is the micro-business. And business schools have not been very good at studying these sorts of businesses.”
There are very good reasons why multinational corporations can benefit from understanding the way that small-scale entrepreneurs operate and how they can be best helped: a company such as Procter & Gamble has more than 20 million businesses involved in distributing its products; these are its customers, and most are small-scale operations. Most of Nestlé’s cocoa suppliers are tiny businesses, as are most of its distributors in emerging markets. Helping these small-scale enterprises to survive is to everyone’s good. The relationship between multinational and micro-entrepreneur is symbiotic. Professor Chandy says: “Big businesses have a vested interest in making these things happen. For P&G to grow, it needs retailers who can stay in business, who can adopt new technologies and who can work more efficiently.”
But the work on micro-entrepreneurs is about more than helping multinationals sell more goods. Emerging economies have recently been growing more quickly than the developed world – itself a good reason to look at the businesses that play so important a role in those developing countries. Many countries in Asia, sub-Saharan Africa and parts of Latin America have been clocking annual growth rates of 6% or more. Emerging economies already account for more than half of global GDP.
“Too often, we have the wrong idea of what constitutes entrepreneurship. The Oxford English Dictionary defines an entrepreneur as a person who sets up a business or businesses, taking on financial risks in the hope of profit. In reality, in many cases, it’s simply what people do to survive. But they don’t live in a vacuum. We can make a difference,” says Professor Chandy.
