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Challenges of Services Sector SMEs in a Developing Country: A Case of Ghana

Challenges of Services Sector SMEs in a Developing Country: A Case of Ghana

Thursday, April 7, 2022, by Afia Serwaa Attrams & Makgopa Tshehla

School of Business Leadership, University of South Africa, College of Graduate Studies

 

Abstract

Small and medium-sized enterprises (SMEs) face diverse challenges that require solutions to enable the sector to thrive. The study used a sector-based approach to assess the challenges of SMEs from the financial institutions’ and SMEs’ points of view and suggested solutions to the challenges with a focus on the service sector in Ghana. The findings revealed that diversion of funds, inconsistencies in business, and lack of documentation prevail and are curbed by using mobile banking, improving relationship banking, and monitoring. From the analysis of 688 SMEs, high taxes and informal competitions are the highest-ranked challenges, while access to finance is ranked tenth. The policy recommendation is to reduce SME taxes and ban the importation of inferior goods.

 

Background

Small and medium-sized enterprises (SMEs) are the engines of economic growth in most developing countries. They contribute significantly to employment and the country’s Gross Domestic Product (GDP) and create incomes for individuals and households (Abor & Biekpe, 2006; Abor & Quartey, Abor and Quartey, 2010a). Due to their significant contributions to employment in most economies, they have proven that small businesses do really matter and developing economies especially cannot be without them (Radic, 2020). The service sector in Ghana is the largest of the three sectors (including manufacturing and agriculture). The trading (wholesale and retail trade) subsector constitutes the majority of business engagements in the services subsector according to the Ghana Statistical Service (GSS, 2018). The other subsectors include transport, information technology, hospitality, health, and education (among others). SMEs face diverse challenges (Asare, 2014; Ayyagari et al., 2017) that hinder their growth potentials (Abor & Quartey, 2010b; Ayandibu & Houghton, 2017). Although these challenges have been discussed in the literature extensively with diverse solutions (Donbesuur et al., 2020; Mamman et al., 2019; Quartey et al., 2017), they have mostly covered SMEs in general, but Seidel-Sterzik et al. (2018) have suggested a sector-based approach in tackling SME challenges. Some of the challenges identified include high cost of renting premises, high cost of income and property taxes, low investment capital (Mabe et al., 2013), access to credit (Brixiová et al., 2020), and the need for SMEs to improve on their internal ability to source for resources (Rita & Huruta, 2020). Oppong et al. (2014) contributes to the debate on SME challenges and suggests that there is a gap on how to plan, direct, control, and effectively market and strategize for their business on the part of SMEs which requires training interventions from government and non-governmental organizations.

 

SME owners are characterized with low capacity to manage their businesses, among other constraints (Abor & Quartey, Abor and Quartey, 2010a), and this requires the ability to understand their intellectual capital to enhance their performance (Demartini & Beretta, 2020) and invest in resources to build and maintain their networks to enhance their scope of business (Masiello & Izzo, 2019). They are further characterized by their owners who tend to lead their business operations when they are small family businesses but, as the business grows, the capacity to manage it by the family diminishes and reverts to nonfamily managers, depending on their intellectual orientation (Bauweraerts et al., 2021). Moreover, their financing decisions in terms of reinvesting in the business are affected by the local governance environment and the source of external financing (Nguyen, 2018). They are mostly financed by external sources (Beck & Demirgüç-kunt, 2008), mainly financial institutions (FIs) who, although challenged by SMEs information asymmetry, tend to use a relationship banking approach to still extend credit to them even in challenging situations (Calabrese et al., 2020). The challenges of SMEs presents an opportunity for research leading to policy directives especially for the benefit of developing economies.

Methodology

For the qualitative aspect of the study, seven FIs were interviewed using a semistructured interview guide to obtain information on their challenges in lending to SMEs and how they have been able to overcome those challenges. The qualitative study was followed by a quantitative study where data were collected from 688 SMEs, the majority of whom were in the service sector in the Accra and Kumasi localities in Ghana. The questionnaire was divided into sections, with section A on the demographics of the participants. To address the objective of the study, participants had to select from a list of 16 challenges the degree to which each was an obstacle to their business, using a five-point Likert scale from no obstacle to very severe obstacle. The views on how the challenges can be overcome were also obtained.

Findings

The FIs discussed the challenges they encounter when they grant credit to SMEs, and these have been outlined in this section. Furthermore, the challenges of SMEs in the service sector have been weighted and discussed with implications for theory and/or policy.

FIs’ challenges and way out with SMEs

The FIs identified six main challenges they encounter in their dealings with SMEs in the service sector. Diversion of funds has been identified as one challenge. According to FIs, SMEs easily change their minds about the purpose of credit facilities granted them once the funds have been disbursed and especially if it is in the form of working capital or overdraft. They further engage in multiple banking, where they borrow from one bank and move the funds into another bank for another purpose. Another challenge that leads to the diversion of funds is inconsistencies in business dealings by SMEs in the service sector. Because these businesses are small and the ownership is vested in mostly one man with little structure in place, they tend to make business decisions in an ad-hoc manner without recourse to their FIs who have extended credit facilities to them. They tend to acquire assets and enter into business deals with little consideration of the implications for their business. Furthermore, FIs are challenged by the lack of succession planning of SMEs such that in the absence of the main promoter of the business, the activities come to a halt and in some cases where death occurs, the business closes down with loans not being repaid. In addition, FIs are challenged by the lack of documentation by the SMEs, which tends to affect the financing decisions to extend or renew existing credit to these SMEs. Poor management capacity and the informal structure of SMEs in the service sector also pose a challenge to FIs as, in their financial inclusion approach, SMEs who can access banking services are those who have registered their businesses, have proof of addresses, and can be reached via mobile phones or e-mails. This, therefore, excludes some of the SMEs from being banked.

 

Despite the challenges FIs encounter with SMEs, they intimated that they do find SMEs profitable, as a majority of their bank portfolio is made up of SMEs. Hence, FIs have adopted some techniques in being able to lend to SMEs. These include the use of mobile banking, especially for traders who tend not to leave their shops. The mobile bankers visit them in their locations to both collect deposits or give credit. The use of insurance cover as part of securities when they lend to opaque SMEs, building closer relationships with their SME customers to reduce information asymmetry challenges, and developing basic financial information for the SMEs using their bank account operations to JOURNAL OF THE INTERNATIONAL COUNCIL FOR SMALL BUSINESS 3 determine ability to repay a credit are all approaches used by FIs to lend to SMEs. Finally, FIs have concluded that improving due diligence and bank account monitoring is one of the ways they can lend to SMEs successfully.

Service-sector SMEs challenges and the way out

For the quantitative aspect of the study, participants were given a list of 16 obstacles that SMEs face and asked to select their perceived level of severity of the obstacles to their businesses on a five-point Likert scale from no obstacle to very severe obstacle. The obstacles and the level of severity are listed in Table 1. The researchers then combined the percentage of participants who selected severe obstacle and very severe obstacle for each item and ranked the obstacles in Table 2 to determine how the obstacles had been rated by SMEs and the implications thereon. From Table 2, the highest-rated obstacle was tax rates and government laws with 46.65 percent of participants perceiving this as the biggest challenge to their businesses. Practices of informal competitors was the second most rated obstacle, perceived by 37 percent of the participants as either a severe or very severe obstacle to their business. Uncertainty about government policies and competition from cheap imports were ranked third and fourth respectively. Political instability due to changes in government and electricity were fifth and sixth, while crime, theft, and disorder and access to land followed. Access to finance was ranked 10th. Court delays (5.78 percent), followed by labor regulations (7.18 percent) and business licenses and permits (8.23 percent) were the least rated perceived obstacle to service-sector SMEs. The suggested solutions to the challenges by the participants as outlined in a word cloud in Figure 1 includes government’s reduction in taxes, consistent policies, control of the importation of inferior goods, government to deal with the inflation rate, stability of the Cedi, access to cheap sources of funds, ability to market goods and services, the need for trained personnel, and ensuring regular power supply, among others.

Implications for theory and practice

Governments and institutions are making an effort to ensure there is financial inclusion of businesses and individuals through innovative approaches (Senyo & Osabutey, 2020), the availability of credit to SMEs (Lu et al., 2020), and development of entrepreneurship ecosystems as a mechanism to enhance development in the wake of a global health pandemic (Liguori & Bendickson, 2020). This study has helped to identify the challenges faced by service-sector SMEs. The implication is that policies and solutions to SMEs’ challenges should be tackled from the top down according to the rankings of the challenges identified in this study. Figure 2 outlines the challenges and solutions of service-sector SMEs from both FIs’ and SMEs’ point of view and provides implications if tackled by the responsible institutions. For service-sector SMEs to be sustainable and continue to be the engines of economic growth, it is recommended that government and other stakeholders use the challenges identified and the solutions as part of their development of the service-sector SMEs. This will have diverse implications on ease of doing business, growth of SMEs, improved access to funding, and growth in the GDP.

Disclosure statement

No potential conflict of interest was reported by the author(s).

References

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Ayandibu, A. O., & J. Houghton. (2017). The role of small and medium scale enterprise in local economic development (LED). Journal of Business and Retail Management Research, 11(2), 133–139. https://www.proquest.com/scholarly-journals/external-forces-affecting-small-busi nesses-south/docview/2028982053/se-2?accountid=14648

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Bauweraerts, J., C. Pongelli, S. Sciascia, P. Mazzola, & A. Minichilli. (2021). Transforming entrepreneurial orientation into performance in family SMEs: Are nonfamily CEOs better than family CEOs? Journal of Small Business Management, 1–32. https://doi.org/10.1080/ 00472778.2020.1866763

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Demartini, M. C., & V. Beretta. (2020). Intellectual capital and SMEs’ performance: A structured literature review. Journal of Small Business Management, 58(2), 288–332. https://doi.org/10.1080/00472778.2019.1659680

Donbesuur, F., G. O. A. Ampong, D. Owusu-Yirenkyi, & I. Chu. (2020). Technological innovation, organizational innovation and international performance of SMEs: The moderating role of domestic institutional environment. Technological Forecasting and Social Change, 161(February), 120252. https://doi.org/10.1016/j.techfore.2020.120252

Liguori, E., & J. S. Bendickson. (2020). Rising to the challenge: Entrepreneurship ecosystems and SDG success. Journal of the International Council for Small Business, 1(3–4), 118–125. https://doi.org/10.1080/26437015.2020.1827900

Lu, Z., J. Wu, & J. Liu. (2020). Bank concentration and SME financing availability: The impact of promotion of financial inclusion in China. International Journal of Bank Marketing, 38(6), 1329–1349. https://doi.org/10.1108/IJBM-01-2020-0007

Mabe, D. M. K., F. N. Mabe, & F. Y. N. Codjoe. (2013). Constraints facing new and existing small and medium-scale enterprises (SMES) in greater accra region of GHANA. International Journal of Economics, Finance and Management, 2(1), 160–168.

Mamman, A., J. Bawole, M. Agbebi, & A. R. Alhassan. (2019). SME policy formulation and implementation in Africa: Unpacking assumptions as opportunity for research direction. Journal of Business Research, 97(April), 304–315. https://doi.org/10.1016/j.jbusres.2018.01. 044

Masiello, B., & F. Izzo. (2019). Interpersonal social networks and internationalization of traditional SMEs. Journal of Small Business Management, 57(S2), 658–691. https://doi.org/ 10.1111/jsbm.12536

Nguyen, B. (2018). Entrepreneurial reinvestment: Local governance, ownership, and financing matter. Academy of Management Proceedings, 2018(1), 13097. https://doi.org/10.5465/ AMBPP.2018.13097abstract

Oppong, M., A. Owiredu, & R. Q. Churchill. (2014). Micro and small scale enterprises development in Ghana. European Journal of Accounting Auditing and Finance Research, 2 (6), 84–97. https://www.eajournals.org/wp-content/uploads/Micro-and-Small-Scale[1]Enterprises-Development-in-Ghana1.pdf

Quartey, P., E. Turkson, J. Y. Abor, & A. M. Iddrisu. (2017). Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS? Review of Development Finance, 7(1), 18–28. https://doi.org/10.1016/j.rdf.2017.03.001

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Rita, M. R., & A. D. Huruta. (2020). Financing access SME performance: A case study from batik SME in Indonesia. International Journal of Innovation, Creativity and Change,12(12), 203–224.

Seidel-Sterzik, H., S. McLaren, & E. Garnevska. (2018). Effective life cycle management in SMEs: Use of a sector-based approach to overcome barriers. Sustainability (Switzerland), 10 (2), 1–22. https://doi.org/10.3390/su10020359

Senyo, P. K., & E. L. C. Osabutey. (2020). Unearthing antecedents to financial inclusion through FinTech innovations. Technovation, 98, 102155. https://doi.org/10.1016/j.technova tion.2020.102155

The Ghana Statistical Service (GSS). (2018). The Integrated Business Establishment Survey (IBES): Comprehensive Sectoral Report [online]. Available from: https://www2.statsghana. gov.gh/docfiles/publications/IBES/IBES%20II%20COMPREHENSIVE%20SECTORAL% 20REPORT.pdf

#Women2030: Sustainable Career Development

#Women2030: Sustainable Career Development

Friday, February 4, 2022, by Prof. Analia Pastran and Evangelina Colli

When you are a woman it becomes complex to define the professional development you would like to achieve, since in some way the family, the traditions and customs were preparing us mainly for family assistance tasks. In these times, we are experiencing a global paradigm shift in which the proposal that is promoted with expansive force is to abandon that role for another that puts the core of beliefs in tension.

 

In this context, being able to see yourself as an economically independent professional woman who can express her own thoughts but at the same time strengthen the foundations of a society by thinking in community, it requires an effort that you must be willing to make, but also of a boldness that is achieved through alliances.

 

From the observation and experience of the Urban Thinkers Campus (UTCs)  in Mexico and Ecuador carried out since 2019 to date, we can point out that when innovating and advancing in issues that concern humanity, such as life in cities, women have been the most tenacious allies. Women face challenges that are replicated regardless of the region, country, culture or belief, and whose solutions are global given that local problems are global.

 

The Urban Thinkers Campus (UTC) model is an initiative of the UN-Habitat World Urban Campaign, conceived as an open space that includes a series of plenary sessions with debates at the level of international experts, with the aim of bringing together governments, civil society, researchers and personalities from academia, local authorities, professional organizations and youth groups, to propose solutions to urban challenges and achieve green, productive and more inclusive cities.

 

From this logical framework, we can analyze the real and effective possibilities that women have to access knowledge and power, to apply technology to personal and community development, and to generate alliances during and after these urban thought encounters.

 

On the other hand, we observe then that the generation and escalation of alliances represent a great challenge to be addressed, since there is a vocation and intention to carry them out but the routines of the organizations and personal objectives make them a difficult and harsh matter to specify and to hold.

 

Women 2030, a Smartly initiative, comes to propose a scheme of alliances between women to achieve sustainable career development. During the campuses we emphasize the importance of Women Promoting Women, aware that the model of women that we propose is resisted by society and by the women themselves who are already in decision-making positions.

 

The analysis postulated so far will be under the scrutiny of the social, economic and environmental model that the political systems of the region propose for our democracies.

 

This series of articles is based on the experience of the Smartly #Women2030 program, and the conclusions published in the UTC online Reports: Vibrant and Inclusive Urban Life First and Second Edition.

 

*Article written by: Prof. Analia Pastran and Evangelina Colli, Executive Director and Director of Localizing the SDGs of Smartly, Social Entrepreneurship on the SDGs, Partner of the UN Habitat’ World Urban Campaign. #Mujer2030 desarrollo de carrera sostenible

4th Industry and Humane Entrepreneurship

4th Industry and Humane Entrepreneurship

Sunday, September 26, 2021, by Dr. Ayman El Tarabishy

As our society moves through Industry 4.0 and acclimates to manufacturing automation, this 4th Industrial Revolution is throwing our world into uncharted waters where cold, uncompromising technology meets the warmth and unpredictability of the human experience.

 
Within the context of humane entrepreneurship, we understand that each entity has its histories, values, and cultures that inform how they do business and interact with their peers. However, any time we approach a different way of operating, there are new questions that arise. Chief among them, we must ask ourselves what the role is of humane entrepreneurship at this unfamiliar intersection of technology vs. the human experience and how we can consider the lessons we have learned from the past to embody the society we want to be in the future.


According to academic and researcher Ivea ZeBryte, we must keep sight of the human element in all that we do. ZeBryte says, “When teaching entrepreneurs, we should be working through a matrix where empathy is understood as the ability to put oneself into the place of another, to identify and be sensitive to others that we recognize as different from us.” Therefore, it is precisely the differences that challenge us to come together for the greater good. To move forward together into the next realm of entrepreneurship, ZeBryte lays out the road map to follow: reevaluate, or delineate what we value as humanity; reimagine, or work out the plurality of futures ahead of us; and reset, or build a new system of value creation and exchange based on these agreed-upon ideas.


Meanwhile, taking a more micro-level view, we must also consider what influences entrepreneurs and their decision-making processes, both internal and external. Psychological factors include personality, mindset, and level of cognition, while non-psychological elements encompass affiliation to a group, religion, culture, and friends and family. Additionally, one could underscore three main orientations: entrepreneurial, emphasizing innovation; human resource, regarding empowerment; or sustainability, highlighting environment. “When taking all of these factors cumulatively, it creates a multi-dimensional construct that is humane entrepreneurship,” says Indu Khurana, Assistant Professor at Hampden-Sydney College. Without consideration for the individual and the society, including the influences behind our decisions, we lose the value of humane entrepreneurship.


In the meantime, it is essential to reconcile these humane concepts with new technology that is rapidly advancing this current industrial revolution. Take, for example, the travel industry. With tourism contributing USD 8.9 trillion to global GDP, it is closely linked to countries’ social, economic, and environmental well-being. The opportunities to make it even more innovative and efficient through Artificial Intelligence (AI) and automation are endless. Still, it is essential to consider what cost they may come, particularly for these citizens for whom so much is at stake. As Dr. Jugho Suh, Assistant Professor at George Washington University School of Business, warns, “AI-based off of Big Data is not a panacea for all problems…AI can read patterns and behavior, but it cannot read attitude, values, or underlying motives for action.” Therefore, while it is essential to lift the travel industry in this current age of technology, we must not do so at the expense of human lives.


At its core, technological advances have brought us to the current era and given countless opportunities to those living today. However, we are experiencing an important crossroads right now, one with immense ramifications for future generations, and it is up to us the future we choose to orient ourselves toward. Although there will always be significant differences across cultures, we must find common values to move into the future that we desire together.


Watch the session below for more on the impacts of colonialism on Chile, religion in India, and AI technology on the travel industry.

Investment Choices and The Power of Gold Shield

Investment Choices and The Power of Gold Shield

Tuesday, September 21, 2021, by Dr. Mariya Yesseleva-Pionka, PhD

The Bretton Woods system of monetary management was created to establish an international currency regime. The United Nations Monetary and Financial Conference took place in 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire. At that time, the delegates from 44 countries established two significant institutions – The International Monetary Fund (IMF) and International Bank for Reconstruction and Development, now known as the World Bank Group. It took a long time and only in 1958, the Bretton Woods system was in full operation. The responsibility of the United States was to keep the price of gold fixed at USD 35 an ounce and make sure the supply of dollars was at adequate levels to maintain future gold convertibility, as the gold was the basis for the U.S. dollar. Participating nations were required to settle international balances in dollars. The Bretton-Woods system did not last long and officially ended in 1971 when President Nixon confirmed that the United States would not continue exchanging gold for the United States Dollar, mainly due to the fact that at that time, the U.S. balance-of-payments deficits contributed to the level of dollars in circulation surpassing the level of U.S. gold stock[1].


Is gold still an attractive investment 50 years later? How has the price of gold been fluctuating over the years? The price of gold is affected by three important factors- supply, demand conditions and investors sentiments. Gold is one of the precious metals that has been a subject of great attraction for investors worldwide. For many, the gold represents a treasured investment and demand for gold is exceptionally high during times of economic and financial crises, such as the Great Depression, Global Financial Crisis and the most recent COVID-19 global pandemic. The supply of gold also has an impact on the price of gold. Gold mining has been continuing for centuries and one could assume that, if there is a higher supply, the price should be lower. This is not always the case as the increasing demand for gold is explained by the growing number of jewellery items, the higher level of gold added by central banks to their reserves and gold investments in commodity markets, with many investors choosing to have gold in their investment portfolios as a shield from unstable economic circumstances.


In 2020, during COVID-19 global pandemic, the price of gold was driven to new heights, reaching above USD 2,000 per ounce. Due to volatile economic conditions worldwide, investors rushed to choose gold and other precious metals as a reliable and recession-proof store of value, further driving up the price of gold. Another contributing factor to the surging price of gold was the severe disruption in the gold supply chains worldwide, due to the pandemic restrictions with the decreased production levels, deliveries and suspension of work in refineries. Nevertheless, to this day, gold is a well-known investment choice for diversifying investment portfolios and it is used it as a shield from uncertain economic conditions.



[1] www.federalreservehistory.org/essays/bretton-woods-created

Author

Dr Mariya Yesseleva-Pionka is Global Certificates Manager at ICSB, a Higher Degree by Research Supervisor at Excelsia College and Adjunct Academic at the University of Technology  Sydney, Australia. Dr Yesseleva-Pionka held teaching and senior academic management positions in Central Asia (Kazakhstan) and Australia. She specialised in general investments, personal and corporate superannuation investments while working for Westpac Banking Corporation and BT Financial Group in Australia. She was invited to join The Housing Connection, a not-for-profit organisation in Sydney, Australia as Treasurer and Board Member from November 2019. Her research interests include entrepreneurial finance, traditional and alternative ways to finance small and medium enterprises (SMEs), corporate finance, policies for the small business sector, innovation and SMEs, FinTechs and Blockchain. Dr Yesseleva-Pionka is the Associate Editor for the Journal of the International Council for Small Business (JICSB). 

The Entrepreneurial Journey Part 5 – Can You Execute?

The Entrepreneurial Journey Part 5 – Can You Execute?

Tuesday, September 7, 2021, by Dr. Frederick Crane

Go-to-market strategies for most new ventures are usually fatally flawed. And, they are usually fatally flawed because they are not grounded by voice of customer (VOC) research. You cannot execute successfully without truly vetting the elements of your go-to-market strategy. This is where the rubber hits the road. Planning is nothing without execution! And, executing based on assumptions and guesswork is folly. So, your execution must be validated by your customer.

 

First, determine your suite of offerings for your addressable market. Find out exactly what the customer wants In terms of a product/service suite. Single offerings are considered one-trick ponies to investors. They want to see a portfolio of offerings to different types of customers with different use cases. Yes, your starting point is a beach-head with a core customer and a core use case. But, you have to plan for adjacency plays – new customers, new applications etc. So, determine what will be your first offerings to the first customers and then build out from there.

 

Second, determine you pricing strategy using VOC. Do not use cost-plus pricing or competitive-based pricing, instead use demand-based pricing. In other words, back into your pricing using customer input. Find out exactly what your customers are willing and able to pay. In essence, do not say “our costs are X therefore are price should be Y.” Or, “our competitors are priced at ABC, therefore we should price accordingly.” No, allow your customer to set your price ceiling. They will tell you the value that they attach to your product/service.

 

Third, determine your channels of distribution using VOC. Engage your potential customers and determine where they currently shop for solutions like yours. And, are they happy with where they have to shop for them? You need to gain market access to your customers so find the right channels and then slot your products/services in those channels. Also, be mindful that most investors want a venture that has planned on multiple channels of distribution. Multi-channel is actually a must today so forget your notion of a single D2C channel – your own website only. Pure-plays such as this limit your access to customers; cost a lot of money re: customer acquisition; and scare investors!

 

Fourth, determine your marketing communications strategy by using VOC. This execution element is perhaps the most critical. The wrong media mean missed opportunities. Remember, no one knows you, your venture or your brand. You need to reach your customers. So, you need to determine exactly what media your addressable market consumes – what they read, listen to, and watch. You will not have enough budget to shotgun this. So, narrow-cast – focus – and hit your customer directly. If you know precisely the type of customers that are part of your addressable market, talk with them and ascertain their media habits. If they say, “we watch Oprah”, then, you better advertise on Oprah. If they say, I learn about product/services like this on Instagram”, then you better be on Instagram!\

 

A cohesive, integrated execution strategy is a must if you are going to have a successful entrepreneurial journey. And, it is possible. Just do the work and enjoy your success!

Author

Frederick Crane serves as a Senior Project Manager for the International Council for Small Business (ICSB).

Dr. Crane is an Executive Professor of Entrepreneurship & Innovation at the College of Business at Northeastern University; Former Editor of the Journal of the Academy of Business Education; and co-founder of Ceilidh Insights LLC – an innovation management training, intellectual property consulting
and consumer insight company. He was formerly a professor of marketing and entrepreneurship at the University of New Hampshire and a Chair and Full professor at Dalhousie University.

At Northeastern, he developed the graduate new venture creation course; the undergraduate innovation course – which is now taught campus-wide; and developed the online MBA course on innovation and enterprise growth. He also serves as the Faculty Advisor for the Private Equity and Venture Capital Club. Every semester at least one of his teams from his new venture creation course goes on to commercialize a business.

Citation of Article:

Crane, F. (2021, September 7). The Entrepreneurial Journey Part 5 – Can You Execute?  The International Council for Small Business, Small Business Gazette. https://icsb.org/the-entrepreneurial-journey-part-5-can-you-execute/

Education and Humane Entrepreneurship

Education and Humane Entrepreneurship

Sunday, September 5, 2021 by Dr. Ayman El Tarabishy

Education sits as the cornerstone of creating socially and environmentally conscious entrepreneurs. When we imagine the future of humane entrepreneurship, it includes empowered employees and well-educated entrepreneurs making intelligent decisions to heal the environment and benefit the world. To enable entrepreneurs to make these changes we envision, we must educate them on the issues that truly matter, such as integrating social entrepreneurship with sustainable entrepreneurship and employing business practices that protect our planet, communities, and future generations.

 

First, we must consider the significance of climate change and the role that government officials and entrepreneurs play in preventing further damage to the planet. Although governments are making changes to reduce negative impacts on the environment, we are still concerned about whether profitability and sustainability can coexist. We must educate all stakeholders about climate risk and their duty to promote sustainability in response to this. As observed by Dr. Mariya Yesseleva-Pionka, Global Certificates Manager for ICSB and adjunct professor at University of Technology Sydney, “With every new business venture comes a great responsibility for making climate-friendly decisions.” Therefore, we need to continue developing and supporting eco-friendly solutions such as green start-ups, fin-techs, and sustainability reporting and educate entrepreneurs on how to implement SDGs and sustainable business practices properly. It is imperative to note that long-term profits will not matter if the planet deteriorates due to climate change.

 

This sustainability education is inherently tied to education about social entrepreneurship, as both of these entrepreneurial approaches target issues on a human and environmental level. Although there exists an increasing amount of research on social entrepreneurial intention (SEI), or the motivation of entrepreneurs to build new social enterprises, we still lack knowledge about different SEI antecedents, such as personality, cognition, and experience, as well as variables moderating antecedent-SEI relationships, including economic and social influences. According to Dr. Phillipp Kruse, a scientific staff member at the Dresden University of Technology, the solution to these research issues lies in examining SEI in countries with different cultures and economic situations and developing a validated instrument with which to measure SEI. Additionally, social entrepreneurship educators must include more psychological input in university courses to strengthen participants’ motivational ties to social entrepreneurship.

 

With the amount of power entrepreneurial learners possess to change the future of business and the environment, we owe them the best education, educators, research, and settings. We must listen inclusively to the voices of these learners and new and small businesses alike. As stated by Dr. Norris Krueger, Senior Research Fellow at the College of Doctoral Studies, UOPX & Entrepreneurship Northwest, “Students are our secret weapon. In terms of learning and educating, and especially in terms of the ecosystem.” To provide entrepreneurial learners with the best resources, we must shift from top-down systems to bottom-up, from institutions to people, and from hierarchies to networks. Inclusivity and active listening are the keys to discovering what our entrepreneurial students need to flourish, improve their communities, and shape the future of humane entrepreneurship. In educating entrepreneurs and stakeholders on their sustainable responsibilities, increasing students’ ties to social entrepreneurship at the university level, and providing high quality, comprehensive education, we grant entrepreneurs the tools necessary to implement safer business practices and create long-term, positive change for our environment, communities, and ways of life.

For more on the importance of entrepreneurial education, watch the session below.

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Entrepreneurial Journey Part 4

The Entrepreneurial Journey Part 4 – Do You Have the Right Brand?

The Entrepreneurial Journey Part 4 – Do You Have the Right Brand?

Wednesday, August 25, 2021, by Dr. Frederick Crane

Entrepreneurial Journey Part 4

I have argued for more than 20 years that building and sustaining a powerful entrepreneurial brand is critical if a venture is to survive, grow, and endure in a complex and competitive marketplace. Moreover, a new venture has a relatively short time frame in which to establish its brand. If it misses this critical window of opportunity, it is very likely to fail. Entrepreneurs must focus on creating brands that clearly communicate the value desired by the customer as well as reinforce the intended position the entrepreneurial firm wishes to occupy in the market. Importantly, the brand must be consistent and sustained over time.

 

One of the most basic definitions of a brand is that it is something of “value” for both the customer and the company.  At a practical level, a brand embodies your offer of value—your promise—to the customer. Ultimately, a brand is a blend of what you say it is, what others say it is, and how well you deliver on your promise—from the customer’s perspective. Finally, a brand is a powerful asset that must be carefully developed and managed. 

 

For you and your venture, the brand you select is important because it can set you apart and truly differentiate your venture (and its products/services) from your competitors. But branding brings other benefits to your venture. First, branding can be an integrative tool for the entire venture. For example, the branding process, even the simple naming of your business, forces you to consider very carefully the core “value” you will create and deliver to your key customers. In addition, branding also helps you sharpen your business model (how you will make money and from whom you will make it). Second, branding increases the chances of acquiring your initial set of customers in the early stages of your venture. And, of course, branding will help solidify customer loyalty to your venture in the later stages. Third, branding can increase your access to suppliers and improve your chances of channel support. Fourth, branding can increase access to new venture capital. 

 

While a brand is extremely important to you and your venture, it might be argued that customers, in fact, may benefit most from branding. Recognizing competing products by distinctive branding allows customers to be more efficient shoppers. Consumers can recognize and avoid products with which they are dissatisfied while becoming loyal to other, more satisfying brands. Strong brands reduce customers’ perceived risk when purchasing and can increase their trust with the brand. Finally, strong brands also help the customer visualize and better understand the product or service.

 

A good brand will possess a number of important characteristics. Keep these characteristics in mind as you begin the branding process. For example, a good brand has the following qualities:

  1.  Effectively communicates the distinctive value you wish to offer the customer
  2.  Is “relevant” to the customer
  3.  Reinforces the company’s intended positioning in the marketplace
  4.  Is consistent and unifying
  5.  Is easily understood by your customers and your employees
  6.  Can be sustained over time

You should consider these characteristics as you begin to ponder your possible brand(s) for your venture. It is clear that brands lacking the above characteristics are likely to be weaker brands that may not survive in a crowded and competitive marketing environment. My advice: test your brand with your potential customers – find out what they think and how they feel about your brand concept.

Author

Frederick Crane serves as a Senior Project Manager for the International Council for Small Business (ICSB).

Dr. Crane is an Executive Professor of Entrepreneurship & Innovation at the College of Business at Northeastern University; Former Editor of the Journal of the Academy of Business Education; and co-founder of Ceilidh Insights LLC – an innovation management training, intellectual property consulting
and consumer insight company. He was formerly a professor of marketing and entrepreneurship at the University of New Hampshire and a Chair and Full professor at Dalhousie University.

At Northeastern, he developed the graduate new venture creation course; the undergraduate innovation course – which is now taught campus-wide; and developed the online MBA course on innovation and enterprise growth. He also serves as the Faculty Advisor for the Private Equity and Venture Capital Club. Every semester at least one of his teams from his new venture creation course goes on to commercialize a business.

Citation of Article:

Crane, F. (2021, August 25). The Entrepreneurial Journey Part 4 – Do You Have the Right Brand?  The International Council for Small Business, Small Business Gazette. https://icsb.org/the-entrepreneurial-journey-part-4-do-you-have-the-right-brand/

Humane, Sustainable, and Harmonious Entrepreneurship: Shifting to a More Holistic Perspective of Entrepreneurship

Humane, Sustainable, and Harmonious Entrepreneurship: Shifting to a More Holistic Perspective of Entrepreneurship

Saturday, August 21, 2021, by Dr. Ayman El Tarabishy

Entrepreneurship can be sorted into various sectors of disciplines, each impacting our lives and the world around us in different ways. Alone, each of these practices possesses the power to make long-term, positive change, both in the corporate world and in our communities. However, we must challenge ourselves to push humane entrepreneurship one step further. By integrating these practices and their ideologies, we gain the ability to improve our society in entirely new ways. Intersectionality is vital to humane entrepreneurship, as we cannot practice human-centered entrepreneurship without also taking action to protect our environment and human rights. While we work to combat global issues such as COVID-19, climate change, and inequity, entrepreneurs exist at the forefront of ensuring the health and wellbeing of our communities. By understanding the interconnectedness of these issues, we can adopt a more holistic view of entrepreneurship and actively improve the world with newfound strength in unity.

 

One of the main objectives of humane entrepreneurship is to produce engaged employees through High-Performance Work Systems (HPWS), which empowers and enables employees to embrace creativity and take innovative risks. Building upon this framework, Dr. Jeff Hornsby, Director of the Regnier Institute for Entrepreneurship Innovation, argues that integrating HPWS with Entrepreneurial Orientation (EO) can “generate human and social capital and produce an innovative workplace culture based on such elements as enablement, empowerment, equity, and empathy.” In addition, Human Resource Management (HRM) greatly impacts the human and social capital within a firm, which is the primary source of innovation in a humane company; therefore, HPWS, EO, and HRM combined ultimately build the foundation for a successful humane enterprise. The result is engaged employees working towards a better society for a company they believe in.

 

As the fundamental goal for humane entrepreneurship is prosperity for our companies and communities on a human level, we must also consider the state of the environment in which we are building these enterprises. Particularly in our post-pandemic society, we are now being afforded the unique opportunity to reconsider what kind of cities, jobs, and entrepreneurship we genuinely need. Sustainable entrepreneurship uses the Sustainable Development Goals (SDG) 12 as a concrete guideline for tackling interconnected carbon emission footprints, gender equality, and quality education. To uphold these intentions, Professor Analia Pastran, founder and CEO of Smartly Social Entrepreneurship on the SDGs, asserts that we must boost sustainable options, create effective green agendas for the younger generations, and support legislation to provide entrepreneurs the legal framework to implement SDGs. Analyzing SDG 12 in this way, it becomes clear that humane and sustainable entrepreneurship are inherently connected and must work together to create a healthier society.

 

Considering entrepreneurship and the environment, we need to consider the effects of corporations and MSMEs alike on our planet and communities. Although entrepreneurship can be a strong tool for creating jobs, wealth, and innovation, it can also contribute to environmental pollution and unsafe work environments. The reason for this lies in leaders valuing profit over people and the planet, which points to the importance of educating entrepreneurs on the triple-bottom line. According to Professor David Kirby, co-founder of Harmonious Entrepreneurship Society (HES), “We were put on this planet to look after it. Therefore, we must take care of the human environment, as well as the physical environment.” From this standpoint of compassion, an evident means of protecting both people and the planet is converging economic, sustainable, humane, and social entrepreneurship underneath the umbrella of harmonious entrepreneurship, which is based on the understanding of the planet as one extensive system with many interconnected subsystems.

 

This intersectionality in entrepreneurship serves as the key for unlocking solutions to the universal issues facing us. By adopting a more holistic view of entrepreneurship, we conclude that no human issue stands alone. In solving problems like climate change and inequity, and advocating for human rights, integrating different entrepreneurial sectors allows us to stand together, stronger and more capable than ever before.

 

Watch the session below for more on humane entrepreneurship, SDGs, and the benefits of integrating different entrepreneurial approaches.

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ICSB Proposes an Audacious Plan to Save Small Businesses!

ICSB proposes an Audacious Plan to Save Small Businesses - If we continue to think small in terms of solutions, we will be stuck in small and incremental changes Sunday, March, 22, 2020 ICSB proposes an Audacious Plan to Save Small Businesses - If we continue to think...

Challenges of Services Sector SMEs in a Developing Country: A Case of Ghana

Challenges of Services Sector SMEs in a Developing Country: A Case of Ghana

Thursday, April 7, 2022, by Afia Serwaa Attrams & Makgopa Tshehla

School of Business Leadership, University of South Africa, College of Graduate Studies

 

Abstract

Small and medium-sized enterprises (SMEs) face diverse challenges that require solutions to enable the sector to thrive. The study used a sector-based approach to assess the challenges of SMEs from the financial institutions’ and SMEs’ points of view and suggested solutions to the challenges with a focus on the service sector in Ghana. The findings revealed that diversion of funds, inconsistencies in business, and lack of documentation prevail and are curbed by using mobile banking, improving relationship banking, and monitoring. From the analysis of 688 SMEs, high taxes and informal competitions are the highest-ranked challenges, while access to finance is ranked tenth. The policy recommendation is to reduce SME taxes and ban the importation of inferior goods.

 

Background

Small and medium-sized enterprises (SMEs) are the engines of economic growth in most developing countries. They contribute significantly to employment and the country’s Gross Domestic Product (GDP) and create incomes for individuals and households (Abor & Biekpe, 2006; Abor & Quartey, Abor and Quartey, 2010a). Due to their significant contributions to employment in most economies, they have proven that small businesses do really matter and developing economies especially cannot be without them (Radic, 2020). The service sector in Ghana is the largest of the three sectors (including manufacturing and agriculture). The trading (wholesale and retail trade) subsector constitutes the majority of business engagements in the services subsector according to the Ghana Statistical Service (GSS, 2018). The other subsectors include transport, information technology, hospitality, health, and education (among others). SMEs face diverse challenges (Asare, 2014; Ayyagari et al., 2017) that hinder their growth potentials (Abor & Quartey, 2010b; Ayandibu & Houghton, 2017). Although these challenges have been discussed in the literature extensively with diverse solutions (Donbesuur et al., 2020; Mamman et al., 2019; Quartey et al., 2017), they have mostly covered SMEs in general, but Seidel-Sterzik et al. (2018) have suggested a sector-based approach in tackling SME challenges. Some of the challenges identified include high cost of renting premises, high cost of income and property taxes, low investment capital (Mabe et al., 2013), access to credit (Brixiová et al., 2020), and the need for SMEs to improve on their internal ability to source for resources (Rita & Huruta, 2020). Oppong et al. (2014) contributes to the debate on SME challenges and suggests that there is a gap on how to plan, direct, control, and effectively market and strategize for their business on the part of SMEs which requires training interventions from government and non-governmental organizations.

 

SME owners are characterized with low capacity to manage their businesses, among other constraints (Abor & Quartey, Abor and Quartey, 2010a), and this requires the ability to understand their intellectual capital to enhance their performance (Demartini & Beretta, 2020) and invest in resources to build and maintain their networks to enhance their scope of business (Masiello & Izzo, 2019). They are further characterized by their owners who tend to lead their business operations when they are small family businesses but, as the business grows, the capacity to manage it by the family diminishes and reverts to nonfamily managers, depending on their intellectual orientation (Bauweraerts et al., 2021). Moreover, their financing decisions in terms of reinvesting in the business are affected by the local governance environment and the source of external financing (Nguyen, 2018). They are mostly financed by external sources (Beck & Demirgüç-kunt, 2008), mainly financial institutions (FIs) who, although challenged by SMEs information asymmetry, tend to use a relationship banking approach to still extend credit to them even in challenging situations (Calabrese et al., 2020). The challenges of SMEs presents an opportunity for research leading to policy directives especially for the benefit of developing economies.

Methodology

For the qualitative aspect of the study, seven FIs were interviewed using a semistructured interview guide to obtain information on their challenges in lending to SMEs and how they have been able to overcome those challenges. The qualitative study was followed by a quantitative study where data were collected from 688 SMEs, the majority of whom were in the service sector in the Accra and Kumasi localities in Ghana. The questionnaire was divided into sections, with section A on the demographics of the participants. To address the objective of the study, participants had to select from a list of 16 challenges the degree to which each was an obstacle to their business, using a five-point Likert scale from no obstacle to very severe obstacle. The views on how the challenges can be overcome were also obtained.

Findings

The FIs discussed the challenges they encounter when they grant credit to SMEs, and these have been outlined in this section. Furthermore, the challenges of SMEs in the service sector have been weighted and discussed with implications for theory and/or policy.

FIs’ challenges and way out with SMEs

The FIs identified six main challenges they encounter in their dealings with SMEs in the service sector. Diversion of funds has been identified as one challenge. According to FIs, SMEs easily change their minds about the purpose of credit facilities granted them once the funds have been disbursed and especially if it is in the form of working capital or overdraft. They further engage in multiple banking, where they borrow from one bank and move the funds into another bank for another purpose. Another challenge that leads to the diversion of funds is inconsistencies in business dealings by SMEs in the service sector. Because these businesses are small and the ownership is vested in mostly one man with little structure in place, they tend to make business decisions in an ad-hoc manner without recourse to their FIs who have extended credit facilities to them. They tend to acquire assets and enter into business deals with little consideration of the implications for their business. Furthermore, FIs are challenged by the lack of succession planning of SMEs such that in the absence of the main promoter of the business, the activities come to a halt and in some cases where death occurs, the business closes down with loans not being repaid. In addition, FIs are challenged by the lack of documentation by the SMEs, which tends to affect the financing decisions to extend or renew existing credit to these SMEs. Poor management capacity and the informal structure of SMEs in the service sector also pose a challenge to FIs as, in their financial inclusion approach, SMEs who can access banking services are those who have registered their businesses, have proof of addresses, and can be reached via mobile phones or e-mails. This, therefore, excludes some of the SMEs from being banked.

 

Despite the challenges FIs encounter with SMEs, they intimated that they do find SMEs profitable, as a majority of their bank portfolio is made up of SMEs. Hence, FIs have adopted some techniques in being able to lend to SMEs. These include the use of mobile banking, especially for traders who tend not to leave their shops. The mobile bankers visit them in their locations to both collect deposits or give credit. The use of insurance cover as part of securities when they lend to opaque SMEs, building closer relationships with their SME customers to reduce information asymmetry challenges, and developing basic financial information for the SMEs using their bank account operations to JOURNAL OF THE INTERNATIONAL COUNCIL FOR SMALL BUSINESS 3 determine ability to repay a credit are all approaches used by FIs to lend to SMEs. Finally, FIs have concluded that improving due diligence and bank account monitoring is one of the ways they can lend to SMEs successfully.

Service-sector SMEs challenges and the way out

For the quantitative aspect of the study, participants were given a list of 16 obstacles that SMEs face and asked to select their perceived level of severity of the obstacles to their businesses on a five-point Likert scale from no obstacle to very severe obstacle. The obstacles and the level of severity are listed in Table 1. The researchers then combined the percentage of participants who selected severe obstacle and very severe obstacle for each item and ranked the obstacles in Table 2 to determine how the obstacles had been rated by SMEs and the implications thereon. From Table 2, the highest-rated obstacle was tax rates and government laws with 46.65 percent of participants perceiving this as the biggest challenge to their businesses. Practices of informal competitors was the second most rated obstacle, perceived by 37 percent of the participants as either a severe or very severe obstacle to their business. Uncertainty about government policies and competition from cheap imports were ranked third and fourth respectively. Political instability due to changes in government and electricity were fifth and sixth, while crime, theft, and disorder and access to land followed. Access to finance was ranked 10th. Court delays (5.78 percent), followed by labor regulations (7.18 percent) and business licenses and permits (8.23 percent) were the least rated perceived obstacle to service-sector SMEs. The suggested solutions to the challenges by the participants as outlined in a word cloud in Figure 1 includes government’s reduction in taxes, consistent policies, control of the importation of inferior goods, government to deal with the inflation rate, stability of the Cedi, access to cheap sources of funds, ability to market goods and services, the need for trained personnel, and ensuring regular power supply, among others.

Implications for theory and practice

Governments and institutions are making an effort to ensure there is financial inclusion of businesses and individuals through innovative approaches (Senyo & Osabutey, 2020), the availability of credit to SMEs (Lu et al., 2020), and development of entrepreneurship ecosystems as a mechanism to enhance development in the wake of a global health pandemic (Liguori & Bendickson, 2020). This study has helped to identify the challenges faced by service-sector SMEs. The implication is that policies and solutions to SMEs’ challenges should be tackled from the top down according to the rankings of the challenges identified in this study. Figure 2 outlines the challenges and solutions of service-sector SMEs from both FIs’ and SMEs’ point of view and provides implications if tackled by the responsible institutions. For service-sector SMEs to be sustainable and continue to be the engines of economic growth, it is recommended that government and other stakeholders use the challenges identified and the solutions as part of their development of the service-sector SMEs. This will have diverse implications on ease of doing business, growth of SMEs, improved access to funding, and growth in the GDP.

Disclosure statement

No potential conflict of interest was reported by the author(s).

References

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Abor, J., & P. Quartey. (2010a). Issues in SME development in Ghana and South Africa. International Research Journal of Finance and Economics, 39(January), 218–228. https:// www.smallbusinessinstitute.co.za/wp-content/uploads/2019/12/ IssuesinSMEdevelopmentinGhanaandSA.pd f

Abor, J., & P. Quartey. (2010b). Issues in SME development in Ghana and South Africa. International Research Journal of Finance and Economics, 39(39), 218–228. Asare, A. O. (2014). Challenges affecting SME’s growth in Ghana.

Asare/OIDA International Journal of Sustainable Development, 7(6), 23–28. http://www.ssrn.com/link/OIDA

Ayandibu, A. O., & J. Houghton. (2017). The role of small and medium scale enterprise in local economic development (LED). Journal of Business and Retail Management Research, 11(2), 133–139. https://www.proquest.com/scholarly-journals/external-forces-affecting-small-busi nesses-south/docview/2028982053/se-2?accountid=14648

Ayyagari, M., V. Maksimovic, & A. Demirgüç-Kunt. (2017, November 14). SME finance. World Bank Policy Research Working Paper No. 8241. SSRN.

Bauweraerts, J., C. Pongelli, S. Sciascia, P. Mazzola, & A. Minichilli. (2021). Transforming entrepreneurial orientation into performance in family SMEs: Are nonfamily CEOs better than family CEOs? Journal of Small Business Management, 1–32. https://doi.org/10.1080/ 00472778.2020.1866763

Beck, T., & A. Demirgüç-kunt. (2008). Access to finance : An unfinished Agenda. The World Bank Economic Review, 22(3), 383–396. https://doi.org/10.1093/wber/lhn021

Brixiová, Z., T. Kangoye, & T. U. Yogo. (2020). Access to finance among small and medium[1]sized enterprises and job creation in Africa. Structural Change and Economic Dynamics, 55 (December): pp 177–189 .

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Demartini, M. C., & V. Beretta. (2020). Intellectual capital and SMEs’ performance: A structured literature review. Journal of Small Business Management, 58(2), 288–332. https://doi.org/10.1080/00472778.2019.1659680

Donbesuur, F., G. O. A. Ampong, D. Owusu-Yirenkyi, & I. Chu. (2020). Technological innovation, organizational innovation and international performance of SMEs: The moderating role of domestic institutional environment. Technological Forecasting and Social Change, 161(February), 120252. https://doi.org/10.1016/j.techfore.2020.120252

Liguori, E., & J. S. Bendickson. (2020). Rising to the challenge: Entrepreneurship ecosystems and SDG success. Journal of the International Council for Small Business, 1(3–4), 118–125. https://doi.org/10.1080/26437015.2020.1827900

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Mabe, D. M. K., F. N. Mabe, & F. Y. N. Codjoe. (2013). Constraints facing new and existing small and medium-scale enterprises (SMES) in greater accra region of GHANA. International Journal of Economics, Finance and Management, 2(1), 160–168.

Mamman, A., J. Bawole, M. Agbebi, & A. R. Alhassan. (2019). SME policy formulation and implementation in Africa: Unpacking assumptions as opportunity for research direction. Journal of Business Research, 97(April), 304–315. https://doi.org/10.1016/j.jbusres.2018.01. 044

Masiello, B., & F. Izzo. (2019). Interpersonal social networks and internationalization of traditional SMEs. Journal of Small Business Management, 57(S2), 658–691. https://doi.org/ 10.1111/jsbm.12536

Nguyen, B. (2018). Entrepreneurial reinvestment: Local governance, ownership, and financing matter. Academy of Management Proceedings, 2018(1), 13097. https://doi.org/10.5465/ AMBPP.2018.13097abstract

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Quartey, P., E. Turkson, J. Y. Abor, & A. M. Iddrisu. (2017). Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS? Review of Development Finance, 7(1), 18–28. https://doi.org/10.1016/j.rdf.2017.03.001

Radic, D. (2020). Small matters! Journal of the International Council for Small Business, 1(1), 24–27. https://doi.org/10.1080/26437015.2020.1714357

Rita, M. R., & A. D. Huruta. (2020). Financing access SME performance: A case study from batik SME in Indonesia. International Journal of Innovation, Creativity and Change,12(12), 203–224.

Seidel-Sterzik, H., S. McLaren, & E. Garnevska. (2018). Effective life cycle management in SMEs: Use of a sector-based approach to overcome barriers. Sustainability (Switzerland), 10 (2), 1–22. https://doi.org/10.3390/su10020359

Senyo, P. K., & E. L. C. Osabutey. (2020). Unearthing antecedents to financial inclusion through FinTech innovations. Technovation, 98, 102155. https://doi.org/10.1016/j.technova tion.2020.102155

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Corporate Entrepreneurship: The Power of Creativity and Passion in a Crisis

Corporate Entrepreneurship: The Power of Creativity and Passion in a Crisis

Friday, February 11, 2021, by Dr. Alex F. DeNoble, Ph.D

Executive Director, Lavin Entrepreneurship Center San Diego State University

 

Let’s not pretend that things will change if we keep doing the same things. A crisis can be a real blessing to any person, to any nation. For all crises bring progress.

Albert Einstein

 

I recently attended the 2022 annual meetings of the United States Association for Small Business and Entrepreneurship (USASBE) in Raleigh North Carolina.  A number of years ago, USASBE developed a new program innovation called Learning Journeys.  Each year, the conference is held in a different city and the local hosts would organize a number of outings to give conference participants an overview of local entrepreneurship points of interest. This year, I happened to go on the Arts and Entrepreneurship Learning Journey. It was during this tour that we made a stop at the Raleigh Little Theatre. During the visit, our group had the opportunity to hear from Executive Director, Heather Strickland.

 

Heather explained that the “Little Theatre” movement began in the early 1900’s as a way to broaden the reach of theatre as an artform to all segments of society. Little Theatres then began to crop up in communities throughout the country.  The Raleigh Little Theatre began operations in 1936 and has been running ever since. The Raleigh Little Theatre operates through financial support from public and private grants. philanthropy and a cadre of community volunteers involved in all facets of the production process.

 

During her presentation, Heather discussed the crisis that the group experienced at the onset of the COVID-19 pandemic. As one can imagine, the city ordinance requirements hit the Raleigh Little Theatre pretty hard. They could not hold in person events and hence had no way of continuing their traditional operations. This is when the leadership team unleashed their creativity and passion to imagine a way forward. Their solution: old time radio productions!  During the 1940’s and 1950’s, this is how large segments of the population received their entertainment. Families would gather around the radio at  predetermined times to listen to stories such as Orson Wells’ epic tome “The War of the Worlds”.   A suggestion was made by one of the directors to stage our own version of “old time radio”.  It was during the September / October timeframe leading up to Halloween. So the group made a commitment to produce a series of shows based around Edgar Allen Poe’s stories and poems. Using this approach, actors could lend their voice and other production specialists could work remotely. People within the community and even around the country could subscribe on a “pay as you can” basis. Even the education sub-group within the Raleigh Little Theatre community was able to get involved. The bottom line to this story is that the program was so successful that they are now considering radio show productions as a permanent addition to their portfolio of programs.

 

So why would I share this story in a featured monthly article series devoted to corporate entrepreneurship?  In my first article in this series, I underscored the urgency for corporate entrepreneurship, especially in today’s environment. I talked about a punctuated equilibrium situation where an exogenous factor can suddenly impact an ecosystem. For the Raleigh Little Theatre, the impact of COVID-19 and the ensuing social distancing mandates was profound. They simply could not conduct business as usual. But their solution, originally intended as a stop gap measure, was innovative and inspirational. The community embraced it. People from outside of the Raleigh geographic area subscribed to the streaming broadcasts. But best of all, the Raleigh Little Theatre now has a new program to add to their portfolio. Thank you Heather for sharing such an inspirational story of how dreaming and behaving like an entrepreneur can lead to amazing new business opportunities.

 

 

 

 

#Women2030: Sustainable Career Development

#Women2030: Sustainable Career Development

Friday, February 4, 2022, by Prof. Analia Pastran and Evangelina Colli

When you are a woman it becomes complex to define the professional development you would like to achieve, since in some way the family, the traditions and customs were preparing us mainly for family assistance tasks. In these times, we are experiencing a global paradigm shift in which the proposal that is promoted with expansive force is to abandon that role for another that puts the core of beliefs in tension.

 

In this context, being able to see yourself as an economically independent professional woman who can express her own thoughts but at the same time strengthen the foundations of a society by thinking in community, it requires an effort that you must be willing to make, but also of a boldness that is achieved through alliances.

 

From the observation and experience of the Urban Thinkers Campus (UTCs)  in Mexico and Ecuador carried out since 2019 to date, we can point out that when innovating and advancing in issues that concern humanity, such as life in cities, women have been the most tenacious allies. Women face challenges that are replicated regardless of the region, country, culture or belief, and whose solutions are global given that local problems are global.

 

The Urban Thinkers Campus (UTC) model is an initiative of the UN-Habitat World Urban Campaign, conceived as an open space that includes a series of plenary sessions with debates at the level of international experts, with the aim of bringing together governments, civil society, researchers and personalities from academia, local authorities, professional organizations and youth groups, to propose solutions to urban challenges and achieve green, productive and more inclusive cities.

 

From this logical framework, we can analyze the real and effective possibilities that women have to access knowledge and power, to apply technology to personal and community development, and to generate alliances during and after these urban thought encounters.

 

On the other hand, we observe then that the generation and escalation of alliances represent a great challenge to be addressed, since there is a vocation and intention to carry them out but the routines of the organizations and personal objectives make them a difficult and harsh matter to specify and to hold.

 

Women 2030, a Smartly initiative, comes to propose a scheme of alliances between women to achieve sustainable career development. During the campuses we emphasize the importance of Women Promoting Women, aware that the model of women that we propose is resisted by society and by the women themselves who are already in decision-making positions.

 

The analysis postulated so far will be under the scrutiny of the social, economic and environmental model that the political systems of the region propose for our democracies.

 

This series of articles is based on the experience of the Smartly #Women2030 program, and the conclusions published in the UTC online Reports: Vibrant and Inclusive Urban Life First and Second Edition.

 

*Article written by: Prof. Analia Pastran and Evangelina Colli, Executive Director and Director of Localizing the SDGs of Smartly, Social Entrepreneurship on the SDGs, Partner of the UN Habitat’ World Urban Campaign. #Mujer2030 desarrollo de carrera sostenible

The Entrepreneurial Leopard

The Entrepreneurial Leopard

Friday, January 28, 2022, by David A Kirby

Professor David A Kirby

 

Used  as a title for a recent essay in this ICSB series (Dana and Salamzadeh, 2022), the idiom “A leopard cannot change its spots” is thousands of years old. It means people and things cannot change their innate nature. But this is exactly  what MSMEs will need to do.

 

Ever since the work of Cantillon (1680-1734 ) wealth creation and the generation of profit has been a central theme of  entrepreneurship and in his articulate essay on the topic Friedman (1970) argued   that “The Social Responsibility of Business is to increase its profits” – to make as much money as possible. Since then, this doctrine has dominated business thinking and while the entrepreneurial  pursuit of wealth has brought about change and improvement, particularly in the world’s developed economies,  often it has been at the expense of people and the planet. Accordingly, despite the introduction of such new approaches as ecopreneurship, humane entrepreneurship and social enterprise, entrepreneurship   has had little impact on the sustainability challenge and may, indeed, be regarded as having contributed significantly to  the plight of the planet. Hence, questions have been raised about its compatibility with sustainability (Gawel, 2012)  and both academics  and practitioners have been actively  seeking new business models to address the challenge (Schaltegger, et. al. 2016).

 

The problem is that the planet is a system which means  it is not possible to address  one element  without disturbing the other connected elements –  solving one problem often  creates other problems elsewhere  in the system. To address the sustainability challenge, therefore, requires a systemic approach to entrepreneurship that integrates or harmonises the traditional economic, eco, humane and social approaches and brings profit, people and planet into harmony. (Kirby and el-Kaffass, 2021).

 

While this appears to contradict Friedman’s doctrine what he actually said was that the social  responsibility of business is “to make as much money as possible while conforming to the basic rules of society, both those embedded in the law and these embedded in ethical custom. Rarely, however, has this   been  articulated or acted upon, yet  all of the major world religions address such ethical  issues. Indeed in Islam, for example,  the Quran explains explicitly how ethical business should be conducted while the Prophet  MOHAMED pronounced that “The world is green and verdant and verily God, the exalted, has made you the stewards of it”.

 

To save the planet MSMEs will need to change. Profit and shareholder satisfaction will no longer be the primary objective.   Rather  a more blended, systemic  approach that harmonises profit, people and planet is needed. The entrepreneurial  leopard  needs to change its spots!

 

References

Dana, L-P and Salamzadeh, A., (2022), A leopard never changes its spots! ICSB  Entrepreneurship around the globe. 23 January. (news@icsb.org)

Friedman, M., (1970) The Social and Ethical Responsibility of Business is to increase its profits. New York Times. September 13. 122-126

Gawel, A. (2012). Entrepreneurship and sustainability: do they have anything in common? Poznan University of Economics Review. 12 (1) 5-16.

Kirby, D.A. and El-Kaffass, I., (2021), Harmonious Entrepreneurship – a new approach to the challenges of  global sustainability. The World Journal of Entrepreneurship, Management and Sustainable Development. .17(4), 846-855. First online 12th July.(https://doi.org/10.1108/WJEMSD-09-2020-0126).

Schaltegger, S., Hansen, E.G., & Ludeke-Freund, F. (2016). Business Models for Sustainability: Origins, Present Research and  Future Avenues. Organization & Environment. 29 (1) 3-10.

Entrepreneurship around the Globe: “A leopard never changes its spots!”

Entrepreneurship around the Globe: “A leopard never changes its spots!”

Sunday, January 23, 2022, by Leo-Paul Dana & Aidin Salamzadeh

Leo-Paul Dana

Rowe School of Business, Dalhousie University, Canada

Aidin Salamzadeh

Faculty of Management, University of Tehran, Iran

 

Many people believe that doing business is just about selling something. Although this could be true, one cannot neglect the importance of where we do such activities. As mentioned by Peter Drucker: “culture eats strategy for breakfast”. The context reveals the playground in which we could win or lose. While a businessperson could succeed in a context, he or she might not even be able to compete in another context. The culture could motivate people or kill their creative spirit.

 

Hopefully, many intellectuals and authors have already highlighted its importance, but how it could affect business activities is beyond a simple discussion. Countries have various cultures that have been evolved throughout centuries. Many cultural aspects of a set of randomly selected countries might be surprisingly contradictory, while similar textbooks, courses and programs are offered around the Globe to help people do their businesses! It is more like trying to survive a freshwater fish by putting it in the ocean or saltwater!

 

One might believe that “doing business is all about offering a set of products to a group of customers. that’s it!”. To be honest, one might answer, “that’s not right at all!”. While the business modelling logic provides a basis for understanding any business, it lacks enough attention to its context. At least, this is the mainstream approach in business schools worldwide. We do not overlook the activities already done by various entities in many countries, but we talk about the mainstream approach.

 

A leopard never changes its spots!

 

Generally, people respect their shared values, beliefs, and customs, which we simply call their culture. People stick to these issues and avoid doing something contrary to those unwritten rules and regulations. It is almost impossible to change who they are, even if they try to do so very hard. Then, as businesspersons, we need to be so careful about such issues. Although it seems simple, history has shown that it is not much simple. Without respecting various cultures, no one could not make a success story in a specific context. Then, before initiating a business, one must learn more and more about the context. Indeed, many benefits are associated with studying the context, such as knowing the Dos and Don’ts, ensuring survival and growth, and preparing to succeed.

 

“Understanding Contexts of Business in Western Asia: Land of Bazaars and High-Tech Booms” (Dana et al., 2022) is an example of how culture has affected Western Asian countries by using an interesting phenomenon called “bazaar”, and how such a cultural fact has helped them deal with high-tech booms and improving entrepreneurial ecosystems in those countries. It could be a beginning to revise teaching and doing business in diverse contexts.

 

References

Dana, L. P. (2014). Asian models of entrepreneurship—from the Indian Union and Nepal to the Japanese Archipelago: Context, policy and practice. World Scientific Publishing: Singapore.

Dana, L. P., Salamzadeh, A., Ramadani, V., & Palalic, R. (2021). Understanding Contexts of Business in Western Asia: Land of Bazaars and High-Tech Booms. World Scientific Publishing: Singapore.

From Digital Revolution Back to the Barter System in One Day

From Digital Revolution Back to the Barter System in One Day

Tuesday, January 18, 2022, by Dr. Mariya Yesseleva-Pionka, PhD

We have been witnessing a digital revolution worldwide which affected all industries, especially with the evolution of digital payment methods. The global connectivity due to the introduction of the Internet allowed for the flow of information, payments, emails, texts, to name a few. We all so quickly got used to having a mobile phone that gave us quick and easy access to all the banking and finance needs, exchange of data, verbal, video and text communication. The IT industry has flourished over the years by introducing new software, Apps and programs with a greater emphasis on mobile phone users. An everyday consumer has rapidly accepted online bank cards, online banking and investment systems, digital cash, online roboadvisers,  trading in cryptocurrencies and other digital tokens mainly because they were introduced with user-friendly mobile interfaces.

 

Kazakhstan, which used to be part of the USSR, gained its independence back in 1991, is the largest country in the Central Asian region. The banking sector in Kazakhstan introduced digital and QR code payment systems a few years ago and strongly promoted cashless payments. The digital payment options have quickly received acceptance from the general population. It was easy, convenient and fast to transfer money and pay for goods and services. It was interesting to witness that even small shop owners had access to the QR codes and, in general, MSMEs were happy to accept cashless payments. Physical cash was rarely circulated. The vast majority of payments were digital, and whenever someone had a banknote, in many cases, sellers could not accept it as they did not have change and asked for a digital transfer of the funds.  It was all due to smart mobile phones that could provide access to the online banking apps that offered omnichannel banking experiences, from basic banking needs to all the types of shopping, travelling, investing needs, and so much more. The Kazakh nation has been tech-savvy for years and showed no signs of slowing down.

 

This all changed on the 4th of January 2022, when the lives of the citizens were thrown into turmoil. Suddenly there were demonstrations and unrest and a major disruption to everyday life. Sadly there was also loss of life. The entire country was in a state of emergency, and people were urged to stay at home. There was no Internet access, mobile networks stopped working, international numbers could not be reached on landlines – the country was cut off from the outside world. The banking sector stopped operating, the stock exchange suspended operations, and ATMs were emptied.

 

Large supermarkets and malls were closed, none of the point of sale terminals were working, and none of the bank cards were accepted. When going to the small local shops to buy bread and milk, the ordinary citizens were asked to pay with cash only as all the cashier online payment systems were not operating. Everyone had money in their bank accounts but could not access them to pay for essential goods. People did not have any cash savings at home as they got used to mobile phone cashless payment systems. After a few days, while queueing for food, some people were desperate to buy necessary items but had no cash to pay for them. They started asking people if they were able to give some money in exchange for expensive phones and other valuable items; others were asking shop owners to provide food in exchange for valuable items. In the emergency state, the barter system started its operation.

 

What happened in Kazakhstan is unprecedented but makes us all think about the key questions:

 

Are we ready for the digital world?

 

Are we ready to have only digital means of payments?

 

What happens to us and our daily lives once the Internet goes down due to various reasons?

 

What happens to technology, the finance and banking sectors, and, most importantly, payment methods in the absence of the Internet and global connectivity?

 

What will be the value of cryptocurrencies and other digital tokens when there is no access to the Internet?

Author

Dr Mariya Yesseleva-Pionka is Global Certificates Manager at ICSB, a Higher Degree by Research Supervisor at Excelsia College and Adjunct Academic at the University of Technology  Sydney, Australia. Dr Yesseleva-Pionka held teaching and senior academic management positions in Central Asia (Kazakhstan) and Australia. She specialised in general investments, personal and corporate superannuation investments while working for Westpac Banking Corporation and BT Financial Group in Australia. She was invited to join The Housing Connection, a not-for-profit organisation in Sydney, Australia as Treasurer and Board Member from November 2019. Her research interests include entrepreneurial finance, traditional and alternative ways to finance small and medium enterprises (SMEs), corporate finance, policies for the small business sector, innovation and SMEs, FinTechs and Blockchain. Dr Yesseleva-Pionka is the Associate Editor for the Journal of the International Council for Small Business (JICSB). 

ICSB Top Photos of 2021

ICSB Top Pictures of 2021 - A Year in Review December 27, 2021

Alternative Finance Landscape: Roboadvising

Alternative Finance Landscape: Roboadvising

Monday, December 6, 2021, by Dr. Mariya Yesseleva-Pionka, PhD

At various stages in their personal lives, many entrepreneurs choose to seek the advice of a finance professional to assess risks and recommend financial solutions that could help in the financial decision-making process. Historically, professional advisers or financial planners could be found among lawyers, tax and insurance agents, credit providers, stockbrokers and other financial service providers. As such, it is necessary always to check if all the licenses and registrations are in place before you pay for the services and rely on the advice provided by a chosen financial adviser. A complete financial advice from a selected financial planner typically encompasses information and advice that makes it easier for you to manage investment options, tax implications, insurance policies, education needs, retirement plans and various loans and provides an interconnected financial plan.

 

As the widespread adoption of digital banking continues to increase it is evident that customers will continue to expect more personalised banking services. The myriad banking options shared with customers through their banking applications are making it more challenging to make well-informed financial decisions. Access to professional financial advice has always been associated with a fee payment which gave you access to personalised advice on a diverse range of financial matters. Clearly, for a significant number of people, the fees were considered to be quite high and as a result, not many people could access professional financial advice services. 

 

In today’s digitalised world roboadvising has gained popularity due to lower costs, at scale personalisation, greater accessibility, efficiency and overall, financially inclusive approach. In general lower fees charged by roboadvisors made their service more accessible in comparison to their traditional financial advisors. The process is relatively straightforward, which involves completing an online questionnaire that contains a large set of questions connected with your financial plans, age, risk tolerance level, investment horizons, the amount you are planning to invest, among other granular questions. Upon successful completion of the questionnaire, a roboadvisor will ask you to link your bank account with the roboadvisor’s platform for a more seamless investment experience.

 

There are many online platforms that rely on mathematical computer algorithms to provide recommendations and financial advice to customers with varied financial profiles. Even in the presence of so many benefits, it is essential to be aware of the limitations associated with roboadvising. For many clients, having no face-to-face meetings or conversations could be considered a major hurdle. Roboadvising is still a new landscape, so it is necessary to compare fees and services offered by various roboadvisors.  For instance, check how accessible is the customer support team (e.g., chatbots, emails, phone contact with human advisors), level of management and investment fees charged, types of investment options in order to gauge the level of portfolio diversification, educational material they have on offer, minimum investment amounts, level of customers’ ratings, opportunities to minimise tax exposures, trading costs associated with buying and selling various investments and potential conflicts of interest when it comes to the types of investment products recommended by roboadvisors. Remember, every single outcome in your financial success story is defined by the financial decisions you make.

Author

Dr Mariya Yesseleva-Pionka is Global Certificates Manager at ICSB, a Higher Degree by Research Supervisor at Excelsia College and Adjunct Academic at the University of Technology  Sydney, Australia. Dr Yesseleva-Pionka held teaching and senior academic management positions in Central Asia (Kazakhstan) and Australia. She specialised in general investments, personal and corporate superannuation investments while working for Westpac Banking Corporation and BT Financial Group in Australia. She was invited to join The Housing Connection, a not-for-profit organisation in Sydney, Australia as Treasurer and Board Member from November 2019. Her research interests include entrepreneurial finance, traditional and alternative ways to finance small and medium enterprises (SMEs), corporate finance, policies for the small business sector, innovation and SMEs, FinTechs and Blockchain. Dr Yesseleva-Pionka is the Associate Editor for the Journal of the International Council for Small Business (JICSB). 

So You Say You Want An Entrepreneurial Revolution

So You Say You Want An Entrepreneurial Revolution

Monday, December 6, 2021, by Dr. Norris Krueger

Is it Kepler Time?

So you say you want a revolution; well, you know, we all want to change the world.[i] [ii]

 

2022 is ICSB’s Year of Revolution. We have been witness to no less than four Copernican revolutions in how to develop entrepreneurs and entrepreneurship. In each case, we have already had our Copernican moments. But would Copernicus be Copernicus without those like Kepler who fought to prove their essential value?  As a field, the time has now come to find and support our Keplers.

Copernicus proved what many had already suspected: The earth travels around the sun, not vice-versa, despite our evident lived experience. A great triumph for science, yes, but his insights did not change the world until Kepler figured out how to make it actionable by demonstrating the regularity of planet orbits.

Entrepreneurship has already had our Copernican moments; the time has come to empower a generation of Keplers. Everywhere we look, we see “entrepreneurs” and “entrepreneurship” – yet in reality, the quantity of entrepreneurial activity has been in decline for decades.

TESLA for our time: Taking Entrepreneurship Seriously by Losing Assumptions[iii]

Our own lived experience about entrepreneurs and entrepreneurship is often as wrong it is about celestial mechanics. Entrepreneurship is both a consequence and driver of complex dynamic adaptive systems where simple linearities are rare. To use an apt analogy, local economies are far more like a messy rain forest than a tidy, organized farm.[iv] Too often, our experiences lead us in the wrong directions. Just as the persistent myths and misconceptions about entrepreneurship resonate too often with our intuitions, the critical leverage points for growing entrepreneurs can be maddeningly counter-intuitive. That means letting go of well-entrenched assumptions about entrepreneurs and entrepreneurship. Losing our most cherished beliefs is never easy, but the rewards will be brilliant.

There are no less than four Copernican revolutions in how to grow healthy entrepreneurs and healthy entrepreneurship. Yet entrepreneurship is lionized but not embraced. Each month I will take a deeper look at these:

            1) Entrepreneurial education and learning

            2) Lean startup, design thinking, etc.

            3) Bottom-up, outside-in entrepreneurial ecosystems

            4) Social and sustainable entrepreneurship

We need to embrace all four if we are to realize the entrepreneurial potential of our communities – all of our communities. That we need to embrace if we are to realize the entrepreneurial potential of our citizens – all of our citizens.

We will likely have to storm a few barricades for the entrepreneurial revolution to succeed. Will you join ICSB and friends? Then, we will give John Lennon the final word: Don’t you know it’s going to be all right?

 

ICSB Entrepreneurship Revolution series continues with Dr. Norris Krueger.

[i]     Lennon, J & McCartney, P (1968) “Revolution”. Sony Music Publishing (with apologies for the liberties).

[ii]    Stay tuned for a “Keplerian” entrepreneurial update of this Beatles classic…

[iii]    ICSB CEO Ayman El-Tarabishy has dubbed me the “Tesla of entrepreneurship”; it seems only appropriate to leverage the meme

[iv]    e.g, Hwang & Horowitt’s seminal 2012 book, The Rainforest; also Brett’s 2020 Admired Disorder)

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