* Director. Centre for Entrepreneurship, Brock University, St. Catharines,

Ontario

Paper presented to a Faculty Seminar, Ecole des Hautes Etudes Commerciales,October 24, 1988

ISSN 0840-853X

DEVELOPMENTENTREPRENEURSHIPlN THIRD WORLD COUNTRIES

byKenneth E. Loucks, ph.D. *

Research report no 88-10-01AChaire d'entrepreneurship

Maclean Hunter

(Conferences)

October 1988

St. Catharines,

Loucks makes a distinction between «Business creation programs» and«Entrepreneurship development programs». He attempts in this article todetermine guidelines for conceptually sound programs increasing the supply ofpeople with entrepreneurial skills, characteristics and abilities.

His reflexions concern primarily the lesser developed countries.aspects of such a program are discussed: the choice of candidates;content of the program... .

The perception of business opportunity can be developed through creativeactivities. The technical training should be adapted to the characteristicsof the domestic market. The educational methodology should favor trainee-centered techniques and place emphasis on case studies. real-life projectsand experiential exercises. The objectives of suda training program shouldbe to increase the input of entrepreneur: in developing countries it isimportant to properly train entrepreneurs but it is more important toincrease the number of potential entrepreneurs.

L'auteur fait une distinction entre les «Business creation programs» etles «Entrepreneurship development programs». L'objectif de sa présentationest d'identifier certains principes pour l'élaboration de programmes visant àdévelopper chez les individus les habiletés. les caractéristiques et lesaptitudes reliées à l'entrepreneurship.

La réflexion de l'auteur porte sur les pays en voie de développement.Plusieurs aspects d'un tel programme sont abordés: la sélection descandidats, le contenu des programmes...

La perception des opportunités de marché pourrait être améliorée par destechniques de créativité. Les habiletés techniques à transmettre devraientêtre adaptées aux particularités des marchés. L'enseignement devrait êtrecentré sur l'individu et privilégier les études de cas, les simulations et laréalisation de projets. L'objectif des programmes doit être d'augmenterl'offre d'entrepreneurs: dans les pays en développement, il est important debien entraîner les entrepreneurs, mais il est encore plus important d'aug-menter le nombre d'entrepreneurs potentiels.

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ABSTRACT

Manythe

RESUME

l wish to 1

of entrepreneurseconomies.

address my remarks,with particular

My reason for focusing on the supply of ent,area of the field where perhaps the least workknown. Much of what 18 labelled entrepreneurshilin the western world focuses on selecting from 1Most ready to venture and then concentrates 1

venture creation process. Hence, much work hasentrepreneurial profiles, developing venture oPP'business planning and developing venture capitalwould more appropriately be labelled business cexceptions, little attention 1s given to developinjbusiness ideas and entrepreneurial characteristi,to enter into the business creation process. prog:what l calI entrepreneurship development.

My reason for focusing on Third World countries i6 that this is the areawhere the need 15 greatest and, in my opinion, the Most interesting work isbeing conducted. ln Most developing countries the natural supply of peoplewith viable business ideas and entrepreneurial characteristics is inadequateto the degree of economic development needed to provide employment andincreasing standards of living for the population. This is not a valuejudgment about the national character of these eountries as it 16 patentlyobvious that many entrepreneurs exist already and it is my experience thatthe potential exists in latent fO1~ with many others. Nor am l advoeatingthe primaey of training as a means for unleashing entrepreneurship. Indeedthere is much evidence to indicate that demand side economic policies(whether arising 'from agrarian reforms and more equitable distribution ofland and incomes and/or priee and market incentives to indigenous producers)would stimulate more entrepreneurship than supply-side provision of inputsand technieal assistance.

But having said aIl of that. the natural supply of entrepreneurs wouldstill be inadequate ta the task in the least developed cauntries.

LDCs are continuously faced with the tasksliving of their population and increasingreliance. Dependency i8 typically a legacy of .

self-reliance and autonomy over one's affairs i:development, particularly with regard to tbe 1

business sector.

LDCs are characterized by high degrees of peasant, subsistence agricul-ture. The need to improve standards of living creates demand for even thebasics from agricultural inputs and simple labour saving devices to healthcare products and services, to school supplies. to household supplies, etc.ln most cases there are no indigenous sources of supply and meeting theseneeds as weIl as the goods and services provided by government, requiresforeign currency to obtain.

'. .~.::,.": '. ::".i: : ~:..;.. .:!::':-. '::-" <..::.:' :~,'..:'.:;.: : :;,:

today to .

referencethe task of developing the supply

to Third World countries and

g on the supply of entrepreneurs is that it i6 anerhaps the least work is done and the least isabelled entrepreneurship development, particularlyes on selecting from the available supply thosend then concentrates on guiding them through theHence, much work has been done on researchingdeveloping venture opportunity screening devices,oping venture capital markets. Such programse labelled business creation programs. With fewn i5 given to developing the supply of people witheneurial characteristics who are willing and ablecreation process. programs of the latter type arep develoP8ent.

.8 of improving the standards oftheir independence and self-

the colonial era and achievingis largely a mat ter of manpower

development of an indigenous

Theneeds for

commodity

The LDCs are faced wi th an une1needs for foreign currency, their only 0]commodity markets with agricultural ~commodity priees are notoriously ficklethe most .risky of venture investments to

Even when these ventures are «suc'

that there is no net gain to the countryof coffee, cotton, tea, cocoa, sugar

Even when these ventures are «successful» , it 1s not unusual to flndthat there is no net gain to the country. Conversion to cash crop productionof coffee, cotton, tea, cocoa, sugar etc., results in the removal of landfrom domestic food production--sometimes to the point where food has to beimported. When the food imports are added to the imports for infrastructureand the inputs needed for cash crop production, in more than one instance, nonet gain in foreign currency i6 obtained.

If standards of living are to be improved in the LDCs, a higherpercentage of the needs for goods and services will have to be produced withdomestic physical and human resources. This creates a demand for indigenous

entrepreneurship.

My remarks on this task arise first from the work that l have done inAsia, Africa and the Caribbean (principally English speaking Africa) indesigning and implementing combinat ion entrepreneurship development andbusiness creation schemes, and secondly from my recent literature andexperience review published by the International Labour'Office. The attemptis to determine guidelines for conceptually sound programs leading to thecreation of new smal! business enterprises through increasing the supply ofpeople with entrepreneurial skills, characteristics and abilities. My paperis thus primarily a conceptual and theoretical one although based onpragmatic field experience.

of coffee, cotton,

If standardspercentage of the Jdomestic physicalentrepreneurship.

My remarks onAsia, Africa anddesigning and im:business creationexperience review1S to determine g'creation of new smpeople with entre'i5 thus primar!lpragmatic field ex:

Some terminology

When discussing entrepreneurship, it i8 useful ta make some distinctionsin terminology. While this creates abstractions and somewhat artificialsystem approaches to the study of entrepreneurship, the violation of theGestalt of the entrepreneur i5 justified by the need to clarify aspects ofGestalt of the entrepreneur is justified by the need to clarify aspects otthe phenomeno~ amenable to modification by policy makers and facilitatorsinterested in the role of the entrepreneur in economic development.

There is no universal taxonomy of terms and concepts for describing theentrepreneur and his activities. Those proposed by this author, whilederived from the literature of the field. are neither mutually exclusive norcollectively exhaustive. They do however, aid in clarifying variousdisciplines involved in understanding the phenomenon and isolating relativelydiscreet aspects and attendant methodologies appropriate to development.Further, the exercise should help to delineate those aspects of the phenomenacoveredby this paper.

A simple block categorization of the themes might appear as follows:

2

With almost insatiable-y is to supply world;ouree products. World.e countries engage inmost basic needs.

unenviable task. With,Ly option frequently istl and natural resource~kle and thus these co'0 to finance their most .

LDCs, a higherproduced with

for indigenous

~~

EntrepreneurialEnvironment

SocialPoliticalEconomieLegal 1

Legislative

supportnetwork

The entrepreneur is an individual (sometimes a team of individuals) whoconceives and brings into existence a commercial venture. A commercialventure is one which is profit oriented and which adds value to inputs in aneconomic sense. It i6 useful to distinguish the role from that of theinventor, innovator, venture capitalist and owner/manager. t{hile theentrepreneur may perform any or aIl of these roles, this i5 not necessarilythe case. Each of these may simply provide the final link that allows theother parts of the business concept to come together. The entrepreneurperceives the commercial potential of an idea, marshal16 the resources andprovides the impetus to set iu motion the commercial exploitation of theidea. It is worth noting here that, from the entrepreneurls point of view,risk i8 associated with whether or not the idea will work: i8 the market asperceived? will the product or service perform as anticipated? can theinputs be acquired? etc. ln short, he i6 concerned with uncertainty.Financial risk is absorbed by the provider of venture capital and this may orMay not bethe entrepreneur. Thus. financial risk bearing is not of theessence of entrepreneurship. Finance is simply another input to the proce6s.

Venture creation describes the process from the conception of thebusiness idea to the beginning of commercial operations. Tt is the stage ofbuilding the enterprise, the terminal point of which is variously defined butusually conceived to be when the first sales transactions are completed bydelivery of the goods or services. It is usually visualized as including:

Identification of the business opportunity.1.

2. The feasibility analysisworth of the idea.

3.

4.

5.

The business plan phase--establishing the goals, strategies and tactics

for initiating and operating the business.

The resource acquisition phase--assuming responsibility for andoverseeing the assembly of the inputs (including finance).

The activity initiation phase--the implementation of operations.

the differentiation venture creation froID the businessstage is an arbitrary concept, the differentiation of the role of

Sinceoperation

. .,'. ':.., '.:.

Business

ManagementEntrepreneur Venture

CreationBusinessIdea

leadershipintegration

rolebehaviourfeasibilitybusiness planresourceacquisitionactivityinitiation

«Gapfilling»creativityinnovation

motivesattitudesvaluesskills 1

knowledgecharacteristicbehaviours

controlsystemMana.gement

phase--testing the workableness and commercial

..

~

the entrepreneur from that of the manager is often one of degree. Businessmanagement involves the functional operation of an on-going commercial firm.ln addition to providing leadership. the manager assumes responsibility fOT.arketing the product and responding to competition. financial and productionmanagement and making optimum use of the resources available. He isconcerned with the efficiency and growth of the enterprise as contrasted withthe entrepreneur whois concerned with the initiation and etfectiveness ofthe tira.

The entrepreneur, in contrast to the (professional) manager, tends taseek novel ventures in an environment of uncertainty. Unlike the manager whotypically maximizes expected return, he attempts to limit downside risk byundertaking ventures Whose maximum potential lasses will not prevent him fromcontinuing as an entrepreneur while at the seme time providing worthwhilerewards for his efforts. Keeping the distinction between the manager and theentrepreneur clear will help crystallize the characteristics, decision makingmodes and other aspects of the entrepreneurial function.

Obviously one should have some technical knowhe plans to enter. This can mean knowledge of theand display ln a retail operation or knowledge ofa manufacturing operation. The smaller the scale 0entrepreneur himself requires the technical skillsservice. ln the case of indus trial operations, thineur will require vocational skills.

Obviously one,ans to enter..isplay in a

a

neur

While there are sany ways of classifying entrepreneurs, one categorizesthem into craftsmen and opportunists1. The craftsman entrepreneur aimstoward ski11 and product/service development while the opportunist aimstoward the customer and to the environment and market opportunities. If yourprogramme is aimed towards young people, obviously you muBt take cognizanceof the need for technical training and development for craftsmen entrepre-neurs either within or in conjunction with your programme.

Most of the institutions providing technical training are focused onpaid employment iu the modern industrial sector and have their curriculumbased on the ski11 dicta tes of a mas ter craftsman trade certificate.Craftsmen entrepreneurs in deve10ping countries may however require onlyaverage technical skills but a training which crosses trade boundaries andprovides Borne technical literacy. By this l mean the craftsman, afterexamining his market area to determine the goods and services required mustbe able to translate these into the technical skills required to make theproducts and perform those skills with an acceptable degree of quality. Heshould have enough training that he can adjust his products and services ashis business and his market progress.

Smith, N.. The Entrepreneur..1

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~

4

TECHNICAL TRAINING

knowledge of the business thatthe elements of store layout

~ of machines and equipment forlIe of operation. the more the~ills to produce the product or

this means that the entrepre-this

Michigan State University, 1968

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Technical training institutions are accustomed to training in discreettrades such as tinsmithing, blacksmithing, welding and machining and do nothave the ability to respond to the craftsman entrepreneur who observes thatin his community there is a need for tin cups, pails, watering cans, rakes,hoes, knives and oxen carts. A small business to produce these products at aquality level acceptable to the income levels of his customers would requiresome skills in both metal working and woodworking. An institution isrequired that can analyze the skill needs for this business and put togetnera modular training programme that spans traditional trade training boundariesand delivers a craftsman entrepreneur appropriate to his market.

Attachments to existing forms sufter trom the same deticiency. Existingsmall businesses by intormally trained artisans tend to concentrate on oneproduct. Attachments in these businesses usually result in the traineelearning how to make a product but not how to use the skills to make otherproducts or even how to change the design of the existing product to adjustto changes in his market. The result is saturation of the market with the

single product.

As one shifts from a focus on the self-employed craftsman entrepreneurto a larger scale business in the modern sector, i.e., a firlD with more thanfive or six employees operating with power equipment in a competitiveenvironment, the need shifts to more technical literacy--that is, technologychoice, materials substitution, work methods, etc. While this May soundrelatively sophisticated, my observation is that in mo~t developingcountries, the degree of skill and knowledge required is not that high. Anunderstanding of workflow and shop layout, when to rivet and when to weld,

single purpose and multipurpose equipment, simple productivity improvementmethods, etc. The difficulty is more in finding training institutions withthe vision and ability to implement this kind of training that is oriented to

the realities of the domestic market.

If one 16 attempting to develop the supply of entrepreneurs who arecapable of benefiting from the support systems of business creation policiesand programmes, one must decide on a starting point. Sorne, notingMcClelland's work as reported in The Achieving Society2 and seeing theinfluence of the home and child-rearing practices, would suggest this as thestarting place. Whether or not this i6 valid, it i5 obviously a much longerrange than most policy makers have the patience for.

It is interesting to noteearly age and go on over a longdes ire and action with regardaware of any that are integratedvarious components.

2 McClelland, D.C.,Nostrand, 1961

. ,'.

5

WHO SHOULD BE DEVELOPED?

however, that some programmes start at a veryperiod of time to ereate awareness. interest,to the role of entrepreneur. While l am not

programmes, we ean see examples of the

york: D. VanThe Achieving Society, New

.:.:.::..

~

ln the United States, there exist progrlschool level introduce àn awareness of the cand the role of businesses -- small and larJ

services. At the secondary school level, ex]operating a small business are being ta~programme forms secondary school students i)product, sell shares and form a company, mak4disburse the profits or losses and disseKingdom, a pilot programme is under way to in"for yourse!f at the secondary school leve14.many, many colleges and universities now haveeven degree programmes in their curriculum5.

The earlier one starts, the more broadly based is the target group andless selective is the programme in who is ta be developed. Similarly,more remote is the connection with resulting business creation, ~he

lter the need to measure results on intervening steps--i.e., of thosened, what proportion are aware of the role of the entrepreneur; of those,. proportion express an interëSt as a possible career choice; of those,

many desire ta become entrepreneurs; of those, what proportion take~j and of those, how many are successful in establishing a business.

the lessthe mot:

greatertrained,what prehow mailaction;

Selection is introduced for two reasons. It is neither practical nordesirable for everyone to aspire to be entrepreneurs 50 development should bedirected at those most likely to become interested and pursue the career.There may be insufficient resources to develop aIl those with a desire tobecome entrepreneurs and therefore, the resources should be expended on thosemost likely.to succeed.

Entrepreneurship development programmes that focus on guiding peoplethrough the process of company formation can select from the available supply

.3

4 Gibb, Alan, <cProgramme forEnterprise», Small BusinessSchool, Durham, TI.K.

!5 Loucks, K.E., «Survey of Canadian Sull Business Management andEntrepreneurship Educational Activities», Government of Canada,Ministry of Industry, Trade and Commerce, Ottawa, 1980.

~~

6

there exist programmes that even at the primaryawareness of the operation of the economic system

-- small and large -- ln providing goods and:y school level, experimental courses in owning and~S are being taught3, The Junior Achievementschaol students into small groups who decide on aIrm a company, make and market their product and

losses and dissolve the company. ln the Unitedis under way ta introduce a curriculum in working

lary school level4. ln North AIIIeriea and elsewhere.versities now have entrepreneurship courses, some

is the target group and

developed. Similarly,business creation, ~he

WHO SHOULD BE TRAINED

un: Education forUniversity Business

CUrriculum:SchoolCentre, Durham Business

those most ready to begin. The techniques for doing this are reIativeIy weIl

known and place emphasis on6:

the candidate have an identified businesshe have relevant business or technical experience?he have access to financing?he come from a background of self-reliance?he demonstrate initiative and determination?

DoesDoesDoesDoesDoes

-

for programmes aimed at increasingsupply, different indicators are needed. Aenterprise (farmers, small business owners, self-employed professionals,etc.) and a wide network of acquaintances who serve as role models or usefuibusiness contacts have been shown to be useful indicators. But the moreweight one puts on these indicators, the more one is subject to accusationsof elitism. Government entrepreneurship development agencies find thesecharges very difficult political issues to handie. Academie achievement,while having a slightIy positive correlation with business success, 16 a veryunreIiable indicator of entrepreneurial potential.

But

It is not surprising therefore that selection techniques have tended tofoeus on personal charaeteristics and psyehologieai assessments. The mostwidely used work is that of David MeClelland on the Achievement motive.Subsequent work by McClelland and others has highlighted the importance of

other characteristics such as need for power, sense of efficacy, propensityto take risks. need for independence, and internaI locus of controi as

important indicators of entrepreneuriai potential7.

The validity of these measures as indicators of entrepreneurialpotential has been the subject of much controversy. Critics point to theoriginal research that was done on successful businessmen and point out thatbeing a successful manager May not take the same motives as those leading tobusiness formation. Where selection on these characteristics is part of anintegrated programme. it is difficult to separate the effects of thecharacteristics from other aspects of the programme in contributing tobusiness creation. Furthermore, it is alleged, it is not known the differen-ces between the characteristics of those who attempt entrepreneurship and are

successful and those who try and are note,

University of the Philippines. Institute for Small ScaleIndustries. Trainer's manual on Entrepreneurship DevelopOlent,Singapore: Technonet Asia, 1981

6

.., Rao, R.V. and Moulik, T.K. (eds.). Identification and Selection ofSmall Scale Entrepreneurs, Ahmedabad: Indian Institute of

Management, 1979

KilbYi Peter, ed. Entrepreneurship and Economie Development,Toronto: Collier-Madmillan Canada Ltd., 1971

Broekhaus, Robert H. «Risk TakingPropensity of Entrepreneurs»,

B

7

opportunity?

rather than selecting from thefamily background of îndependent

Others have pointed out that different people express the same motive indifferent ways, thus those with high needs for achievement IDay seek successin professional sports or sorne other endeavour and not necessarily instarting a business. Thus, knowing if the behaviours of the candidates aresimilar to the behaviours exhibited by entrepreneurs is at Ieast as importantif not aore so than the motives--that is, what does he do, not why does he doit. Therefore, it is important ta know the role the entrepreneur performsand his characteristic behaviour in performing that role.

McClelland and his associates have recognized the merit of this app~oachand are currently engaged ln a major USAID financed research project based onthe critical incident method to de termine what it is that successfulentrepreneurs do and how they do it that 15 different from those who are lesssuceessful. The researeh may be subject to the same criticism as the ea~lierwork in that the researeh subjeets are those who are already ln business andthus the behaviour traits of managers i8 being measured. Nevertheless, mauyof these managers will have started their own businesses and, if behaviourtraits are fairly stable over time, much useful information ean come fromthis researeh and its results are eagerly awaited by those interested in theconceptual development of the entrepreneurship development field9,

Meanwhile, others have continued to work with the role conceptattempting to define the functions. activities and behaviour modes ofentrepreneurs. A distillation of their findings would include1°:

3.1 FUNCTIONS

- searches fi

- translates

- seeks and 1

~ evaluates 1

- marshalls

- makes tille

~ takes ulU

- provides f

the firm.

les for and discovers new information.

.ates new information into new markets.

and discovers economic opportunity.

.tes economic opportunities.

ills the financial resource necessary fo

time-binding arrangements.

ultimate responsibility for management.

~s for and 1s responsible for the motiv

--

Academy of Management Journal, September 1980

Brockhaus, ReDistinguish 1Longi tudinal

9 McBer and CO8PQny. Entrepreneurship and Small-Enterprise Develop-ment: First Annual Re~ort. Washington: The United States Agencyfor International Development) 1984.

:1.0 Kilby t P. Supra

8

new markets, techniques and goods.

financial resource necessary for the enterprise.

for the motivational system within

«Psychologieal!ssful from th.Academy of Maru

Robert H. «Psyc1l the SuccessfulL1 S tudy» 1 Acadel

:nd Environmental FUnsuccessful Entr~ement Proceedingst

.al Factors whichEntrepreneur: A.ngs. 1980

provides leadership for the work group.

is the ultimate uncertainty or risk bearer.

Exchange Relationships

Perception of market opportunities.

Acquiring scarce resources.

Purchasing inputs.

Marketing the product.

Responding to competition.

Political Administration

Dealing with the public bureaucracy.

Management of human relations within the firm.

Management of customer and supplier

Management Controi

Financial management.

Production management.

Technology

Acquiring and overseeing

Industrial Engineering--minimizing inputs with a given production

process.

Upgrading processes and product quality.

Introduction of new production techniques and products.

BEBAVIOUR MODES

Thinking orientation to making

orientation.

Intuition process of gathering

3.2 ACTIVlTIES

3.2.1

3.2.2

3.2.3

3.2.4

3.3

sensation.

oriented in dealings with people rather than judgementPerceptionoriented.

subsequent research establishes the functions, activities andmodes of successful entrepreneurs, one knows not only what to train

to develop entrepreneurs, but can seek early indicators of these inde termine who to train. These indicators can be sought in such

school, play. sports, hobbies and social activities as predictors offor entrepreneurial development. .

Ifbehaviou:!:in orderorder toareas as

potential

ln thepersonality

meantime, no doubt, many will continue to rely on assessments of

characteristics.

. .

'.. ..".

9

relations.

assembly of the factory.

decisions as opposed to feeling

information as opposed to relying on

It is not enough to have the right person with suitable motives andbehaviourpatterns. That would be like having a finely conditioned athletewith no game to play. There must be a business opportunity to pursue. r-tanybusiness creation programmes select from the supply of those that havebusiness ideas, but if you are the develop the supply. how do you developbusiness ideas.

The business ides is the essence of entrepreneurship. Tt is the «deal»,the raison d'être of the entrepreneur. The formation of the business is ahighly creative aet although it does not necessarily rest on originalcreativity and invention. It MaY weIl involve the perception of a businessbuilt on a market application of someone else's invention. Schumpetercharacterizes the business concept as «gap filling and input completing» ofthe production function in economics. As examples he cited11:

The introductionfamiliar.

1-

2-

3-

4-

5-

The development of a new method of production, one notexperience; this does not have to be a new discovery--itnew way of handling a conunodity commercial1y».

The opening of a new market--new to a given country,whether it bas existed before ln other locations.

The acquisition of a new source of supply or raw materials or inter-mediate manufactured goods (again which may have existed previously inanother location).

5- The carrying out of the new organization of an industry, like thecreation of a monopoly position (for example, through justification) orthe breaking up of a monopoly position.

Karl Vesper reviewed case histories of 100 highly successful entrepre-neurs to determine their approach to formulating new venture ideas. Here's

what he found12:

The large majority of theexpertise rather than thlexamine his or her own csources.

1-

11 Schumpeter. J.A.Mass.: Harvard

12 Vesper,Factor»,

10

WHAT BUSINESS OPPORTUNITY?

of a new good with which consumers a~e not yet

i by~ «8

. tes ted

also beyet

can,

regardless of

studiedentrepreneurs studied priœarily used their ownat of others--the entrepreneur should closelyeducation, work experience and hobbies as idea

Theory of Economie Development, Cambridge.ersitypres61 reprint edition, 1959

ew Venture Ideas: Do Not Overlook Experience- --,., -~-~

that ofown

The Theory of Econ08ic Development,UniversityPres6, reprint edition. 1959

(NewKarl H.,Harvard

Not OVerlook, 1979

~arl H., «New Venture Ideas:Harvard Business Review, vol.

Do ~57( 4),

~

2- A close connection between prior work and ne1to a large majority of successful startups.in advanced technology areas like computers ~

lowest in enterprises of a. relativelynursing homes, fast food franchises andbusinesses.

3- Those starting successful advanced technology companies acquired theirexpertise through one or more college degrees and substantial workexperience in scientific research or engineering design. Those startingsuccessful low technology businesses usually have not attended collegebut have five or more years working for other people on the shop f1oor.

4- Roughly 40% of the ventures studied began as relatively small ttmeenterprises'that had been purchased and after the entrepreneur acquiredexperience, expertise and business exposure the firms drifted to fast-growing, highly profitable ventures.

Many of the intake to entrepreneurship development programmes will nothave long work experience and 50 other methods of stimulating business ideasmust be attempted. Joseph McPherson has listed sorne of the approaches tostimulating creative thinking as follows:

Brainstorming--six step system that defers judgement until as mBny ideasas possible ean be expressed.

1-

2-

3-

4-

5-

6-

Synectics-- an eight step method emphasizing procedures for making thestrange familiar, and the farniliar strange.

The fundamental design method--using five ways of thinking to alter thehabituaI ways of viewing engineering problems.

Hypotheticalsituations and

Forced relationships--to bring about contact between different elementsthat have not been made to relate before.

Attribute listing--looking at each aspect of a product and finding waysta improve it.

Other programmes have utilized more conventional approaches to develop-ing product and project profiles. These involve reviewing import data todetermine a list of items imported in sufficient quantity to support localmanufacture; listing local resources and examining downstream processing todetermine either new uses for the materials or existing products that couldbe manufactured for export; examining products or se~~ices that exist inother countries that could be. introduced ln the home market; examiningproducts that exist in the home market that could be sold elsewherej etc.

Many maintain that thecriticized the procedure of

11

new venture ideas was common" The correlation was highest's and medical instruments and

unspecialized nature such asnd other consumer oriented

hypotheticalfOl"designed, for today.

situations--products are 1

productstranslated intothen

0'*'<1. idea

profiles.

and have

It seemsentrepreneur mustproviding product

have hisand project

though that this criticism is too dogmatic. A largê bank of project profilesneed not be implemented unaltered but can serve as a stimulus to creativethinking that allows the trainee to generate his own project. The 8mallIndustry Extension Training organization in India has made extensivesuccessful use of product and project profiles13.

,Finally, probably the most power fuI influence on the successful startup

of new small businesses in North America ln recent years has been the growthof franchising. For the franchis or , the phenomenon is one of marketingbusiness plans to standard format.

The generation of viable business opportunity ideas is an underdevelopedarea in many entrepreneurship development programmes. However, approachesand techniques for assisting in this regard can be implemented.

In designing the curriculum there 1s little guidance in what it isnecessary to teach, what it i5 desirable to teach and what it i8 notnecessary to teach. It has long been known that training alone cannot do thejob of business creation and that integrated programmes of selection,training, credit facilities. follow-up counselling and advisory se1vices,etc. are required. The idea of an integrated programme i8 that aIl com-ponents are important 50 it 16 difficu1t enough to separate out the impor-tance that 8hould be attached to any one component sueh as training let alonethe neeessity of any topie within that component.

While it i5 clear that entrepreneurs need behavioural skills, attitudesand values as weIl as knowledge of the venture creation process and certainmanagement tools and techniques, exactly which ones has not been establishedunequivocally by research. And in an integrated programme the1'e is thequestion of what should be taught, what should be learned on the job and whatshould be provided by the follow-up services.

SUBJECT 1NATTER

Professor Ronnie Lessem provides a useful conceptual schemedesign of the programme. He di vides the task into providing:

Instruction in administrative know-how.

Training in business tools and techniques.

Education into managerial insights.

Development of the person/entrepreneur cha

1.

2.

3.

4.

Education into

Development of

Small Industry Extension Training Institute.Profiles at SENDOC. Hyderabard, India, 1976

1~

.'

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12

WHAT TRAINING

for the

characteristics.the

Index to product

further provides the following matrix of design components14Be

EntrepreneurialDevelopment

Business

Administrative

Within this framework many decisions remain to be made. While aIlentrepreneurs should know how to conduet a feasibility analysis and prepare abusiness plan, they will also need to know something about marketing.production and financial management. But what they need to know within thesetopies will very much depend on the nature of the business they are entering,the scale of the contemplated enterprise, the sophistication of their marketand the degree of competition. With respect to marketing, a self-employed

~4 Lessem, Ronnie, Training Entrepreneurs, London: The Urbed research

Trust, unda.ted.

~

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Educational Design

Collaboration and

NegotiationOrganizingYourself

Matchingyou andyour business

.Developingnegotiatingskills

.developingabili ty to takecalculated risks

. gaining skillsin conflictresolution

onels.Harnessingmotivation

.developingcreativity and

imaginationdevelopingself-assertive-ness

.establishing aself-businessidentity

.Increasingability to:plan tacticsset goalssolve problemstroubleshoot

Increasing one'sability to:

,motivate people.communicate inperson and on

paper.to bring peopletogether innovel andeffective ways

.Forming abusinessstrategy

.Developingmarketingknowledge/skills

.diagnosing onelsbusinessstrengths/weaknesses

Developingknowledge andskiIIs in:

.workl studymeasurement,costing,budgeting,pricing,inventory/quality control,cash flow

analysis

Gainingknowledge in:

.businessincorporationandregistration

.advertising andpublic relations

Getting to know

about:.professional.employing staff.finance and

banlcing

know-howGainingin:

.officeprocedures

equipment,.basicbooks,stationery

.bookkeeping

craftsman MaY get by with a knowledge of how to price his goods and services,how to develop a customer contact list and the rudiments of personal sellingwhile a large scale workshop will need more sophisticated market developmenttechniques and knowledge. Fortunately aIl of this becomes increasingly lessvague as the trainer gains knowledge of the trainee and his contemplatedbusiness venture, so Most programmes start with the development of personalskills and business opportunity identification.

HETHODOLOGY

Educational methodology ranges from teacher-centered techniques ofrevealed knowledge such as lectures to trainee-centered techniques of self-discovery such as experiential exercises. As the product of the programmeaims toward independent. self-reliant people, the educational methodologyshould favour trainee-centered techniques and place emphasis on suchapproaches as case studies. real-life projects, and experiential exercises.Even in such straightforward matters as imparting information, traineesshould be involved in determining what information is required, collectingand interpreting it with the trainer as a resource person.

ln a study of successful entrepreneurship development programmes,Professor Harper found that 80% use case studies, 60% use management games,70% use visits to existing businesses while 40% use periods of attachment toexisting businesses. With regard to the resource person, one-half of theprogramme directors had some business experience while others made extensiveuse of practicing entrepreneurs as weIl as managers from larger businessesand bankers. Most programmes included the preparation of business proposaIsinvolving the trainee in the field work and in practice presentations ln arole play situation as weIl as actuai presentations to bankers.

As œentioned previously, no entrepreneurship development programme canhope to result in business creation based on training alone. This paper hasbeen concerned with developing the supply of those ready, willing and able toventure. It remains for other programmes to ensure the existence of asupportive environment, particularly with regard to availability of financ-ing, premises, fOllow-up services, and most importantly, a political,cultural and economic environment that encourages independent enterprise.Hopefully, this paper bas addressed Borne of the issues and provided someguidance on developing the supply of entrepreneurs who can benefit fram thoseprogrammes and thus create more businesses in the developing countries.

At the same Ume, due to the nature of their derivation, wany of theguidelines are really hypotheses remaining to be tested. There is con-siderable scope for research and the need is real. The magnitude of thedevelopment task in Third World countries exceeds the resources of thosecountries and those. of the international donor community. Research thatincreases the effectiveness and efficiency of program design and delivery canhave very large paybacks in the allocation of scarce technical assistanceresources. Further research that improves our understand1ng of the

14

18 THAT ALL TBERE 15?

somethose

~

entrepreneurship development process, as distinct from policy measures andbusiness creation processes, enables us to better understand the entrepreneuras a phenomenon that many have claimed to be of the essence of the wealth of

nations.

d""""""'" .

15