Studies have shown that entrepreneurship in developing countries is usually necessity-driven. In Egypt, for instance, 73% of the population thinks that entrepreneurship is a good career choice, according to the latest Global Entrepreneurship Monitor (GEM) Egypt report, mainly due to the lack of job and growth opportunities. In developing countries, the situation is different.
On the sidelines of the International Council for Small Business (ICSB) World Congress, Business Forward sat down with Babson College professor and leader of the GEM United States research team Donna Kelley to discuss the driving forces behind starting a new business in emerging markets (EMs) and how entrepreneurs can advocate for their idea within a corporate.
How easy is it for entrepreneurs to establish a market niche in developing countries such as in Egypt?
When you look at the measures drawn from the Global Competitiveness Index and Doing Business report, most of the top-ranked countries are developed economies. Yet, their entrepreneurship rates are actually lower than others.
In these developed countries, entrepreneurial activity more likely happens within an organization – namely an employee launching a business. However, in developing economies, entrepreneurship is necessity-driven because there are fewer jobs available.
Additionally, there are a lot of opportunities in EMs because competition is scarce. Ideas that may be prevalent in another country could gain a lot of traction in a developing economy. An example for that is China. Over the few past years, many businesses adopted ideas from other countries, customizing them to the local market. We might consider them less innovative; however, adopting and adapting might be good.
How can entrepreneurs set foot in big corporates and advocate their ideas within an organization?
In general, entrepreneurs deal with certain stakeholders: advisors, mentors, investors, board members, employees, partners and so on.
Now, when you step into the organizational environment, those stakeholders may differ. You have your manager and senior leaders that either support entrepreneurship or not, the people in the IT department of the company who can help you with the technical part of your startup, those working in the marketing department who can aide you with selling your service or product etc.
You need to think about how you could sell your idea to those stakeholders. Are your senior leaders interested in tapping into a new market and does your idea target that market? Know more about what they want in order to position the opportunity correctly.
Always bear in mind that usually the initial idea sounds bad. It is the seed of the big idea. Hence, one needs to always be ready with plan B, C or D before bringing the idea to leadership.
How can entrepreneurs in the emerging markets get their businesses off the ground?
Young people need to embrace the negative information they find. If they ignore the market’s signals or do not reach out to that market, they are going to lose money and time. Entrepreneurs need to experiment at a low cost very early on, be open to negative information and shape the opportunity in a more viable way. The sooner they enter the cycle of trying, learning, stepping back and constantly questioning where this next step will take them, the less money they lose and the less time they waste.