Blogs

Sustainable Development: Why Culture Matters

The banglanatak dot com Case

by Dr Madhura Dutta

The goals and the approaches of social development have evolved over time, learning from global as well as local successes and failures in programmes, policies and partnerships. The current framework that our organisation, banglanatak dot com (BNC), works with is the Sustainable Development Goals, with a roadmap for ending poverty, protecting the planet and improving the lives and prospects of everyone, everywhere. The focus is increasingly on well-being, sustainable economies and inclusive growth.

Well being for rural communities

Working on culture and development, and specifically on grassroots entrepreneurship, has given us several insights into how local economies can be strengthened for inclusive growth, fundamental to which has been the factor of ‘well-being’. India has traditionally had the human and cultural capital to create resilient communities, the power of which was understood by visionary social reformers like Gandhi, Tagore, and Kamaladevi Chattopadhyay, long before such approaches became mainstream. They saw the mindless industrialization and imitation of the West as a problem and threat to the core values and fabric of our societies. At BNC, when we had started working in rural India in 2000, we quickly realized that local cultural assets can be harnessed for economic, social, and environmental well being. Subsequent experimentation and piloting of “culture and development” models for almost a decade led to the “Art for Life” programme, whose goal was to significantly contribute to culture-based rural entrepreneurship, and economic and social empowerment of previously marginalized communities.

We felt fulfilled with our work and built relationships with people we worked with, shared their happiness and challenges, and got immersed in our collective efforts and journeys. Simultaneously we also tried to adopt the language, concepts and frameworks proposed by global thought leaders, and learn from their analysis of what is working and what is not.

The global context and our approach in India

The most recent and universal framework is the Sustainable Development Goals and the 2030 Agenda for Sustainable Development which were adopted by all UN member states in 2015. In 2019, the UN took stock of the progress of these actions and published a report which states:

“…Despite the initial efforts, the world is not on track for achieving most of the 169 targets that comprise the Goals. The limited success in progress towards the Goals raises strong concerns and sounds the alarm for the international community. Much more needs to happen – and quickly – to bring about the transformative changes that are required: impeding policies should urgently be reversed or modified, and recent advances that holistically promote the Goals should be scaled up in an accelerated fashion.”

By the 1980s, UNESCO had already identified culture as a driver of sustainable development, and noted that that “culture impacts people’s behaviour, their contribution to the process of economic and social development, and their well being.” OECD’s 2005 publication, “Culture and Local Development” talks about opportunities of the culture sector in the areas of “cultural tourism, cultural districts and cultural neighbourhoods” that can improve quality of life.

India faces major challenges in providing youth employment opportunities, particularly in rural areas. According to the Centre for Monitoring Indian Economy, the rural unemployment rate had steadily grown from a low of around 3% in 2017 to as much as 7% in March 2020, even before the Covid-19 lockdown. Culture-based approaches to development provide a promising way forward, especially in rural areas rich in traditional cultural skills.

Our search for a solution

The Art For Life (AFL) programme in rural Bengal, even though at a very small scale, has significantly contributed to decent work, poverty alleviation, and productive employment  for practitioners of traditional art and craft forms, substantially reducing desperate out-migration to cities. When we first developed this model in 2004, it focused on building upon already existing culture-based cottage/family led informal industries in villages; age-old income generating activities which had been disintegrating due to globalization and increasing urbanization. Our objectives then were to create sustainable livelihoods through capacity building, collectivization, facilitating access to economic and welfare resources, developing and contemporising cultural products to suit global markets, and establishing direct linkages to buyers. What we learned in the process is that this revival and professionalization of local cultural forms improved not only the rural practitioners’ income and livelihood, but also their collective well-being. These many impacts surprised us, and taught us about the strength of people’s action to bring about positive transformations in their societies.

How we built on our learning

As part of our journey, we started documenting and analysing the processes across various geographies, cultures and art forms of West Bengal. Although the fundamental model remained the same, the local strategies changed and evolved based on what type of art or craft form we were working with and how these were linked to the lifestyle of the community. The factors linked to cultural form included the production processes, community rituals and the customs associated with them, gender implications, and whether those art forms depended on individual or collaborative work. At the societal level, there were factors such as caste systems, social inequalities, internal community conflicts, and political apathy. Despite these, the salient issues were similar – marginalization, poverty, lack of education, poor health and hygiene practices and facilities, and a sense of alienation with low morale, self-respect and dignity of life.

Fundamental changes

AFL did lead to some fundamental changes that happened despite differences in the societal, institutional and business structures. These were meaningful employment, dignity of work, and creation of a collective community identity based on their traditional cultural forms, and a sense of pride in their own unique skills, previously lost. To create opportunities for exposure, awareness, creativity and branding, the programme integrated international collaborations and community-owned and led village festivals, What evolved as an off-shoot was cultural tourism. the villages started becoming tourism destinations, in turn strengthening local economies and village vitality. ‘Village to city’ became ‘city to village’. The positivity in collective collaboration was reflected in overall village-level development: women’s mobility and decision-making power improved, children started going to school and education became important, sanitation and infrastructure improved through community-led action in partnership with local government.

Case studies

Of course, not all villages achieved the same level of success and growth was not homogeneous.  However, there are several case studies worth mentioning.

One is the Patachitra village of Naya (West Midnapore) which has been reborn into a vibrant hub of scroll painters and is a regular tourist destination. Swarna Chitrakar, the woman leader and star of the village, has been instrumental in putting this village on the international tourist map. Today there are tourists every day in the village, and over 200 artists travel the world to not only exhibit but also train students in various universities, collaborate with artists visiting them, and engage in art residencies.

Charida in Purulia, the village of mask makers for Chhau dance, was essentially a sub-industry for this tribal dance form. No one thought of them as skilled artisans. The village mostly developed organically after our initial AFL interventions, and today it is a known hub of mask makers. All the porches of these artisans’ houses are workshops where they also sell. The entire village street looks stunning with these brightly coloured masks outside every workshop with benches for anyone to sit and watch the artisans work.

In the kantha work cluster in Nanoor (Birbhum), Muslim women embroiderers, once confined to their homes with no possibility of economic independence, have today become small entrepreneurs. About 100 women entrepreneurs provide work to about 600 women in the villages. You can visit their homes, see how they work, interact with them and also purchase products, which can even be done  through WhatsApp. The changemaker of this village is Tajkira, a woman social entrepreneur whose inspiration and confidence led to collective good and development.

 A fifteen year summary

Over a period of fifteen years, AFL has been able to bring about 25,000 artists across 30 art forms under its fold, catalysing the development of Rural Cultural Hubs and revitalizing art, artistes and villages. Today, these artists have about three to five times increase in their income, a level playing field for productive employment irrespective of gender, and community cohesion providing a sense of security to the village people. It tells us about going back to the future through dynamic, sustainable and innovative people-centred economies.

Dr. Madhura Dutta is currently a Program Specialist for ‘Culture and Development’ at banglanatak dot com. She has over 18 years of global work experience including at banglanatak dot com, UNESCO, All India Artisans & Craftworkers Association and CSRs.

Uncategorized

On entrepreneurial management: Not just being innovative but creating new environments

by Jay Mitra

The last ten years or so have probably seen the biggest campaign for innovation in the corporate market place. Products, services, organizational strategies, markets and business models have all been scrutinized to be redesigned with the badge of innovation written across every single thing that they do. In the wake of permanent “disruption” buzz words have proliferated to accommodate the need to innovate or die! Yet very little has actually changed in terms of what forms represent, how they are organized to swallow greater helpings of market share, cut costs, buy back shares, cut investments in employees, buy back shares, bump up stock options, try and manipulate data, abuse employees in the run of things, and worse traffic the wishes, desires, messages to havens of manipulative data, all in the name of technological innovation.

A few years ago archeologists, anthropologists, and other scientists, proclaimed that we have entered the age of the Anthropocene. Human kind, for both good and bad, have eventually come to reign supreme over anything else that shaped our earth, our atmosphere, and of course the nature of our relationships with each other. This is a far cry from the Ice Age. And human kind has ushered in a new technology –led revolution with Industry 4.0 together with its advanced guard of machine learning, artificial intelligence, augmented and virtual reality.

The corporate response and the analytical response from scribes and researchers has been to speculate in detail the advances that technology will make to change our lives. But this time it will be different because more technology will not only promise more leisure time but actually take over our activity time to leave us with nothing very much to do. The palliative rejoinder to that has been the dreamy supposition that new, undefined, and the known unknown jobs would help us reinvent ourselves. In effect, the tools of innovation now are slipping directly into the hands of the machines and their algorithms that will make, serve and transform the operations and outcomes of tomorrow’s commerce. This then is the promise of innovation.

Being entrepreneurial remains the only human function which can make sense of this technological whirlwind by taming its power for productive ends. Entrepreneurial managers do not simply lascivate over technology-led opportunities and the quick ROI fix, although everything in the reported media stories would indicate that the holy grail of short-termism, appropriation of our most personal data, mega mergers and acquisitions, and an antiquated model of growth through market share, are still part of the senior manager’s weaponry. The entrepreneurial manager mobilises a set of financial, human, organizational and social resources to create new forms of business activity. This means addressing pro-actively in-firm inequalities in pay, access to know-how, creative decision making processes, and reimagining the ethics of business organization. To assume that this can be achieved while maintaining the structural status-quo is an expression of stupefied arrogance. It is like the technology has hit the managers so hard, that they are unable to think beyond the pants of their seat.

Entrepreneurial management can address the inequities above by harnessing the data and the machine learning to identify and negotiate priorities with both the organisation’s internal and external communities of interest. It can collaboratively identify what processes and outcomes would attract interest and leverage inside the company and with the community in which it is embedded. It can activate a social model (not a business model) of talent nurturing in communities. It can move away from a given extractive strategy of resource absorption to continuous resource innovation. Instead of linear growth it can enrich itself with a better equipped local community with whom it works out what is good for the firm and what is better for the environment it serves.

Jay Mitra: Professor of Business Enterprise and Innovation and Doctoral Supervisor, Essex Business School, University of Essex, UK. Email: jmitra@essex.ac.uk / jaymitrauniverse@hotmail.com

Uncategorized

On being a responsible business: Developing Extrinsic Values

by Jay Mitra

Milton Friedman never really understood the difference between shareholding and ownership, that is the difference between acquiring a stake in an organization, as a form of possession, and owning it as if were yours to decree what should happen or not to its fortunes. Even if shareholders were considered owners, the sense of collective responsibility has never really galvanized the testosterone driven movers and shakers among stock brokers, private equity merchants, and financial management experts in business schools.  After all even Jack Welch, the grand custodian of shareholder value rejected it as the “dumbest idea in the world.

Given an ineluctable sense of economic suffocation holding back businesses globally from reinventing themselves it is time perhaps to reconsider a different approach to responsible business. Corporations will not live by ethics or gender-based diversity programmes alone, or by self-righteous corporate social responsibility agendas. None of them seems to gain any traction as far as responsibility for a moral code of conduct, to women and their evolving status as leaders, and to social change, is concerned. Simply put not one of the issues (and many beyond them) forms part of an organization strategy or informs the metrics by which business performance is judged. They emerge as “issues” to assuage a sense of collective guilt not as a vehicle for collective, permanent responsibility. Industry leaders and status-quo analysts, and established researchers, would back the “issues” and appear on social media or television to promote them, but the same group of people might consider weaving them into the fabric of strategy and operations, as a possible distraction from ROI, quarterly returns, investment appraisals and even equal pay statistical returns.  

Action, following the critique above could include a pronounced move towards embedding the organization in the economic and social environment in which they are located. Sociologists have long discovered that embedding was given, especially when firms are created, but we find little by way of practice by firms at either the local or international level. So would it too far- fetched to expect organisations to embark on a new mission which argues for:

  • A limited voting rights seat on the board for a specific numbers (at least one) from each community in which it located (including branches, subsidiaries and associates) with representatives from community organisations, universities and small firms;
  • Select (based on local feedback) and incorporate at least a set of local economic and social objectives of the region in which it is based;
  • Advocacy of an internationalization plan which engages with the economic priorities of the region in which it intends to operate;
  • Connect the choice of priorities mentioned above with actions plans for delivering the appropriate sustainability development goals  in the regions of corporate activity;
  • Encourage and allow the supply chain players to develop a collaborative agenda for community-based business activity (not separate community business or social enterprise).

Fortunately, in Ford’s recent engagement with MIND to tackle mental health issues at work, we can see the possibility of change. So can we in the numerous small firm-based initiatives at the local community level, by the firms themselves. But these have to be more than extra initiatives or projects. They need to be part of a new, networked organizational agenda, the development of which may be referred as the extrinsic values of an organization. The avalanche of technology and the sweeping changes to industry structure and business models calls out for a change of vision, mission and action. Just as organisations need to sharpen their intrinsic values of employee involvement and diversity, they could do so much more than simply seek egregious monetization of every piece data they acquire, and be responsible business leading economic and social change.      

Jay Mitra: Professor of Business Enterprise and Innovation and Doctoral Supervisor, Essex Business School, University of Essex, UK. Email: jmitra@essex.ac.uk / jaymitrauniverse@hotmail.com

Uncategorized

In Our Well-Being Lies Entrepreneurial Sustainability: Getting down to the basics of applying sustainability for dynamic small business ventures

by Neha Gopinath and Jay Mitra

A decade or so of stormy economic weather, social fragmentation and institutional failures around the world, has, paradoxically, focused people’s minds on possible solutions. Thus inequality, demographic changes, rapid technological development, environmental pollution, climate change, poverty, and migration, are issues which need urgent resolution or mitigation. The resolution, so public and scientific punditry suggests, may be found in a pronounced effort at sustainable economic and social development, controlled globalisation, ecological husbandry, socially driven enterprise, fair working conditions, and the measurement of social impact. The United Nations has set seventeen Sustainable Development Goals (SDGs) to encapsulate ways and means to transform our world. The interventions of many may address, and hopefully achieve, some of these goals.

Our interest is in how these large macro level dynamics of sustainability play out in the lives of people, in particularly, their creative environment at work, in their roles as entrepreneurs and workers, especially in small, innovative firms, which form the backbone of most economies. This has led us to examine two ostensibly unrelated phenomena which have captured the imagination of public policy makers, private business practitioners and academic researchers, namely, entrepreneurship and well-being. These issues find their sustainable development home in SDGs 8 and 17.

By entrepreneurship, we refer to the identification, development and implementation of economic and social opportunities to produce new goods, provide novel services, and establish new ventures, essentially through the creative mobilisation of human, financial and social capital. Since the latter half of the last century, much store has been set by the ‘elixir’ of entrepreneurship in creating most new jobs, using new technology to produce new goods and services, and generally improving business and social ventures in our societies. Perhaps excessive attention has been given to the talismanic capabilities of entrepreneurs to drive such change, while ignoring the contributions of those around them and their well-being in generating creative, innovative outcomes. Smaller firms depend, more so than their larger counterparts, on the creative combinations of ideas, resources and the endeavours of both the entrepreneurs and the small team of employees and associates in their networks.              

By well-being, we consider the positive emotions and feelings of happiness people experience, or the feeling that we are doing something meaningful and purposeful in life.[1] In an entrepreneurial context, we could interpret a range of behaviours and psychological process linked to entrepreneurial success, including positive self-perceptions, belief in others, and intricate mental tasks, such as creativity, flexibility and innovation. [2]

The wellbeing of people at work has dominated the headlines of numerous business and research publications. Popular appraisals of the ‘best companies to work for’ show, for example, that while business giants such as Safeway and Haggen in the USA, Morrison and Tesco in the UK, Infosys in India, have announced declining profits and layoffs in a climate of distrust, skulduggery, and limited concern for general welfare of all its stakeholders people (employees, customers and other stakeholders), smaller, family-owned, private companies such as Publix has never made an employee redundant in its 86-year history while increasing its revenue to $30.6 billion from a previous sum of $24.5 billion. The absence of such well-being at work has tarnished Uber’s image as one of the most successful unicorns in the world, reflecting in part the human cost of a dystopian reality of entrepreneurial management practice.

Researchers have indicated that well-being acts as a natural motivator, improves physical health and longevity and promotes positive relationships, which can act as a catalyst for success for the organisation, and in turn, the economy. The literature on entrepreneurial and innovative organisations (especially small and medium sized enterprises) refer to the need for shared vision, the importance of creativity, autonomy and self-efficacy; but they are directed towards the locus of control of the entrepreneur. The concept of dynamic capabilities[3]  focuses on the abilities to introduce new or re-shape firm’s resources and routines in the image and vision of its entrepreneur(s) and, in some cases the management team. We know less about the dynamics of interactions between the entrepreneur(s) and the rest of the team of people. Continuous, adrenalin fuelled environments may not be conducive to creative, innovative outcomes and the well-being of the entrepreneurs and other team members. The development of organisations can be hampered if individuals are unable to achieve their aspirational goals.

We see the nexus of people, structure, organisations and environment enabling entrepreneurship.[4] Each of these components entails the various relationships between individuals structures within a firm and the environment. The current limitations in the use of the human element  in the literature suggest the need for ‘stretch’ and new conceptual combinations.

Amartya Sen has proposed the idea of ‘functionings’ as what people want to achieve in their lives).[5] We adapt Sen’s ideas to argue that ‘functionings’ are what people (both the entrepreneur and his employees) want to achieve in their organisations as individuals. These functionings are facets like autonomy, environmental mastery, personal growth, self-acceptance, creativity, freedom to grow, training and development, many more which enhances their sense of purpose and wellbeing as individuals in entrepreneurial organisations. We ask:

Is there a probable relationship between entrepreneurial organisational culture and employees’ mental health and well-being?

What are the factors that affect employees’ well-being in an entrepreneurial organisation? How and why are they important?

How does the need to become and sustain an entrepreneurial organisation affect employees’ wellbeing and mental health at work?

Our research adopts an interpretivist approach to gain in-depth insights into how people perceive wellbeing at work in small entrepreneurial firms. We examine three types of entrepreneurial firms – high technology businesses, social enterprises and networked, community-based firms. Our early findings indicate that entrepreneurial organisations are better able to understand what hinders the well-being of their people. However, their entrepreneurial capabilities could be jeopardised when dysfunctional relationships, procedures, policies and compromises with the creative process breeds a culture of stress, anxiety and negative well-being. Perceptions of negativity could damage the individual’s self-worth, his/her ability to make a worthwhile contribution, and impede entrepreneurial outcomes.

Based on the questions above and our initial exploratory research finding we have developed six propositions and an analytical framework with which to examine in more detail the significance of the relationship between well-being and entrepreneurship. Given the growing importance of sustainable entrepreneurial ventures, better working conditions and decent work for economic growth and social development, we believe continuing research on this relationship could have profound effects on how new or established, entrepreneurial ventures could foster a new model for work and enterprise, stimulating sustainable economic growth and social development.       

Figure 1: A Framework for analysing the relationship between the Well-Being of People and the Entrepreneurial Firm

We look forward to working with all who are keen to safeguard the value of entrepreneurial talent and those who help foster and support such talent to promote the search for innovative solutions to overcoming barriers to sustainable working lives. Both sustainability and entrepreneurship are dependent on negating the idea of things remaining the same; both act as instruments for transformation of people’s lives now and in the future.

_____________________________________________________________________________________

Neha Gopinath: Doctoral Researcher, Essex Business School, University of Essex, UK. Email: ngopin@essex.ac.uk

Jay Mitra: Professor of Business Enterprise and Innovation and Doctoral Supervisor, Essex Business School, University of Essex, UK. Email: jmitra@essex.ac.uk / jaymitrauniverse@hotmail.com

References

  • Lyubomirsky, S. and Dickerhoof, R. 2005. Subjective well-being. Handbook of girls’ and women’s psychological health: Gender and wellbeing across the life span, 166-174.
  • Mitra, J. 2012. Entrepreneurship, Innovation and Regional development: An Introduction, , Abingdon, Routledge
  • Sen, A. 1984. The living standard. Oxford Economic Papers, 36, 74-90.
  • Sen, A. 1993. Capability and Well-Being73. The quality of life, 30.
  • Sen, A. 1997. Human capital and human capability. Pergamon.
  • Teece, D. J. 2017. Dynamic Capabilities and the Multinational Enterprise. Globalization. Springer.
  • Tkaczyk, C. 2016. ‘My Five Days of ‘Bleeding Green’; Empowering Employees in Fortune,’100 Best Companies to Work For 2016’; Europe Edition; Vol. 173; No. 4; March 15
  • Robertson, I. and Cooper, C. 2011. Well-being: Productivity and happiness at work, Springer.
  • Robeyns, I. 2005. The capability approach: a theoretical survey. Journal of human development, 6, 93-117.
  • Ryff, C. D. and Keyes, C. L. M. 1995. The structure of psychological well-being revisited. Journal of personality and social psychology, 69, 719.

[1] Robertson & Cooper, (2011); Ryff & Keyes, (1995).

[2] Lyubomirsky et al., 2005

[3] Teece, 2017

[4] Mitra, 2012

[5] Robeyns, 2005; Sen, 1997,1993, 1984

Uncategorized

How the South Korean government is handling the coronavirus outbreak in innovative ways

From drive-thru testing to GPS tracking

Dr. Su-Hyun Berg

© Kim Hyun-Tai/​YONHAP/​AP/​dpa

Situation in South Korea

As of the 26th of March 2020, South Korea confirmed 9,241 cases of infection after the first case of coronavirus in the country on January 20. At the moment, 4,144 patients were discharged from hospitals after making a full recovery from the virus and 131 deaths are reported.

Table 1. Reported Cases and Management Status (total since 3rd Jan 2020)

Source: Korea Centers for Disease Control and Prevention (KCDC)

Figure 1. Number of new confirmed cases (per day)

Source: Korea Centers for Disease Control and Prevention (KCDC)

Cases of COVID-19 patients have increased significantly in South Korea since mid-February, particularly in and around the city of Daegu (North-Gyeongsang province, 237km away from Seoul, See Map 1 below). Korea, as a leading high-tech and digital country, as well as a country experienced by SARS and MERS, is very focused on this development.

A picture containing screenshot

Description automatically generated

Map 1. Number of confirmed coronavirus cases by provinces & special cities.

Source: Ministry of Health and Welfare of South Korea

More than 365,000 people have been tested in the crisis centers since mid-February, and many have since been released as healthy. In this way, infected people can be identified and treated at an early stage.

Drive-thru testing: 20,000 people every day

South Korea has built 633 testing sites nationwide, including 45 drive-through clinics and pop-up facilities (Photo 1) to help diagnose patients and minimize contact between the potential patient and medical staff. This new idea shortens time spent on testing to just 10 minutes per person as the medics do not have to change quarantine suits after every test. Applicants must drive to the site in their cars wearing masks. Tests are conducted at a makeshift tent outside of buildings to prevent spreading indoors. The test fee is between USD 70 and 140 and it will be free of charge if the test result is positive. The drive thru facilities cut testing time by as much as a third, so it makes 20,000 tests per day possible in Korea. In other words, the number of inspections was 26 times higher than other countries.

©Yonhap/AFP via Getty Images

Transparency – Trace, Test and Treat

Time magazine[1] and BBC News[2] reported that the reason why South Korea’s coronavirus outbreak got so quickly out of Control. Main explanation is due to the relative “openness” and “transparency” in Korean society. The South Korean Foreign Minister, Kang Kyung-Wha, had an interview with BBC’s Andrew Marrs on March 15, 2020 and pointed out that the preventative measures being taken in South Korea have so far involved no lockdowns, no roadblocks, no curfews and no restriction on movement. Furthermore, she thinks extensive testing has been the key to South Korea’s low corona virus fatality rate, and that the South Korean government have the responsibility to “guard against panic”. South Korean President, Moon Jae-in, has taken a back seat as health officials communicate twice a day to the public about the state of the outbreak showed the high degree of transparency and competency of South Korean health institutions.

5-day rotation mask distribution system

Korean government recently introduced “5-day rotation mask distribution system” to the country. This system guarantees that Korean citizens and foreigners can buy two masks per week on designated days by presenting their ID card at pharmacies, post offices or supermarkets. People are also allowed to buy masks for family members under 10 years or over 80 years old by showing their ID in print or digitally through the mobile app “Government 24”. This new distribution system secures equal allocation of masks and prevents citizens from unnecessary panic buying.

© NewDaily Korea

Self-Diagnosis Mobile App

The Korean government has developed two mobile phone applications to follow potential patients, with one of them being mandatory for people arriving from high-risk areas – currently includes China, Hong Kong, Macao, Iran and the EU countries – who are forced to answer daily questions about their possible symptoms. The app forwards users to telecalling executives for arranging testing if they report developing symptoms. The other app warns public officials whenever someone is quarantine leaves the isolation zone. 

© Financial news Korea

Practicing social distancing

More firms introduce “social distancing measures”.  LG International Group has decided to extend its telecommuting policy to March 20th, Hyundai Motors Co., Kia Motors Corp. and SK Group are considering similar extensions to their respective work-from-home arrangements. Hanwha and Doosan Groups are thinking about expanding their social-distancing measures through telecommuting, holidays and other means. MOTIE (Korean Ministry of Trade, industry and Energy) decided to support companies in the exhibition industry and to diversify export marketing for export companies by rescheduling exhibitions,  expanding digital marketing support such as 1:1 Video Buyer Meetings in collaboration with KOTRA (Korea Trade-Investment Promotion Agency) regional offices and overseas networks, or merging postponed exhibitions with similar ones. [3]

Lessons

Cases of COVID-19 patients have increased significantly in South Korea since mid-February, particularly in and around the city of Daegu. Korea, as a high-tech and digital country, as well as a country experienced by SARS and MERS, is very focused on this development by concentrating on identification and treatment at an early stage. The “Korea model”, characterized by full transparency, pre-emption and prevention, built public trust and led to a very high level of civic awareness and voluntary cooperation that strengthens the collective effort to overcome COVID-19 outbreak.

Dr. Su-Hyun Berg is a Korea export specialist at COLUMDAE ApS.

 Su-Hyun has worked with a wide range of Korean and European governmental and industry organizations with a key focus on high technology projects including Industry 4.0, AI, Biotechnology and renewable energy issues.


[1] https://time.com/5789596/south-korea-coronavirus-outbreak/

[2] https://www.bbc.com/news/world-asia-51836898?intlink_from_url=https://www.bbc.com/news/topics/cnx753jej1xt/south-korea&link_location=live-reporting-story

[3] https://korea.ahk.de/covid-19


Blogs

Entrepreneurial Ecosystems around the World

By Zoltan Acs

Over the past dozen years we have witnessed a new approach to improving the world’s economy.The story goes something like this. If we could get more cooperation and integration between economies then the economy might improve. The answer seems to be found in something called an entrepreneurial ecosystem. The ecosystem shows how well we integrate the institutions and people in an economy. Of course this is not new. We have had such focuses in the past but never has the focus been so clearly on the role of entrepreneurs in the ecosystem.   If we could get better cooperation betweenuniversities, governments, venture capital foundations and other relevant institutions we could improve the economy of all countries.

This new focus on ecosystems has bought a new and concerted effort to create entrepreneurial ecosystems and tools to measure existing systems.One such tool is the Global Entrepreneurship Index (GEI).  The GEI measures how institutions and individuals interact across four sub-indices and fourteen pillars. The GEI then ranks economies across the globe on their ecosystem performance.  Thus, we have a way to measure the ecosystem that is more or less useful for the task at hand. However how will improving the entrepreneurial ecosystem in a country lead to better economic performance? And if so, how will better performance manifest itself? Before we can answer this question we need to lay a little ground work.

Over the years we have moved from a focus on more startups, to more high growth startups and finally to more high tech startups. What we know is that more startups are negatively correlated with growth and not positively. In other words what we need is fewer startups and fewer small firms to grow an economy.  However, the question of the ecosystem is less clear. We do not know if improving the ecosystem will improve the economy or by how much.

Perhaps the first point that should be made is that economic growth does not equal productivity. Economic growth basically refers to the capacity of countries to produce more goods and services, irrespective of how higher production is achieved. The positive variations in GDP or employment over time are the usual suspects among those interested in studying economic growth figures, mostly because they represent the desired objective of most policy makers, as a measure of economic prosperity.

Productivityis a more complex concept. At the country level, total factor productivity(TFP) deals with two highly interconnected economic aspects. First, TFP has to do with the capacity of countries to allocate and exploit available resources efficiently (P = productivity effect). The notion that markets are good at directing resources is a good catch-all explanation concept; but for many businesses it is hard to find all that is required to perform in the market and to keep pace with industrial and digital revolutions that not only equip businesses with new resources, but also change the ways to exploit them.

The second component of TFP deals with the capacity of organizations to channel innovations to the economy (I = innovation effect) that, consequently,  translate into higher levels of output per input unit (in the case of countries, GDP per worker). Maybe we all are too used to link innovation to technological inventions that are successfully commercialized. However, our definition of innovation is not restricted to engineering (such as the driverless car) or to medical advances (such as nerve stimulation or non-invasive procedures), and is open to other, equally valuable, types ofnon-technological innovations related to product and processes.

In plain words, the combined effects of productivity and innovation shape total factor productivity (TFP = P * I). However, the capacity of countries to produce GDP is bounded by their available resources and their transformative capabilities. This way, total factor productivity defines the countries’production frontier and captures productivity variations that originate in differences in both production factors (P) and technology linked to innovation activities (I).  

What we would like to do is to measure the relationship between the quality of the entrepreneurial ecosystem in a country and TFP and its components. However, first we want to clarify two more ideas. A country can either be on the technological frontier or trying to get to it. For example a country like Switzerland is almost certainly on the technological frontier and a countrylike Egypt is certainly not on the frontier but is trying to get there. Broadly, countries that try and push the frontier are trying to be more innovative, and countries that are not on the frontier are trying to be more productive or more efficient with existing resources.

  We can argue that the entrepreneurial ecosystem impacts total factor productivity (TFP) via two differentiating effects (TFP =P * I): productivity (P) and innovation (I). This suggests that a superior entrepreneurial ecosystem does not necessarily make a country richer but,  rather, shapes economic and market structures as well as cultural aspects of societies, all important factors of the entrepreneurial ecosystem that improve total factor productivity.

We first explored the relationship between the GEI index and total factor productivity (TFP), paying special attention to the productivity (P) and innovation (I) effects. To do this we used data made available by the International Monetary Fund (IMF) to compute, for each country, the total factor productivity values (TFP = P * I)—defined as the capacity to produce GDP(output) using the capital stock and the labor force as inputs—as well as the productivity (P = use resources more efficiently) and the innovation (I = do new things to shift the production frontier) effects.

We found a significant, relatively strong positive correlation between entrepreneurship and total factor productivity (0.35). We also noted that entrepreneurship correlates weakly positively with the productivity effect(0.09).

Variables Correlation
GEI vs. total factor productivity 0.35
GEI vs. productivity effect 0.09
GEI vs. innovation effect 0.39

The strongest positive correlation was found between entrepreneurship and the innovation effect (0.39). This is not surprising. Just like we cannot imagine progress in the 19th century without the creation and development of steam engines, it is hard to imagine entrepreneurship in the 21st century without the power of technology-driven inventions. With the new millennium industries and markets from around the globe are witnessing drastic transformations that are the result of a digital revolution in which entrepreneurs are taking an active role by creating new businesses that are responsible for this revolution. The result is a good sign that reinforces our argument that the creation of ‘new things or new ways to do things’ definitely constitutes the vital force driving economic development. 

The conclusion for countries and public policy is that improving the entrepreneurial ecosystem helps countries push out the technological frontier that are already on the frontier! If your country is not on the technological frontier then improving the entrepreneurial ecosystem will help very little to improve your economy.

Blogs

Save Your New Business – Avoid The Chasm by Nick Hixson

There is an issue with any new product launch. It’s commonly described in Figure 1: Innovation Adoption Life Cycle

Chasm

Figure 1: Innovation Adoption Life Cycle

The first people to buy your new product or service will be innovators and early adopters (I+EA) – people who like new things. But then you have to start selling to the rest of the market – The Early Majority because you have sold to all the innovators and early adopters that you can find. And that’s when you hit a problem. It’s described by the chasm. A place where suddenly sales dry up. And losses mount.

Product marketing strategies

Your sales can dry up because your marketing to I+EA does not work with The Early Majority. And you don’t know exactly where that change occurs. So, you still use the same marketing strategy for the I+EA group but you are running out of them. You need to use a different marketing strategy for the rest of the market.

Innovators and early adopters like new things but the rest of the market – the Early and Late Majority – wants proof. Proof your solution will work for them, which typically comes in the form of other people having bought it and used it already, liking it and reviewing it. Then you’re into a market which is full of competitors. And your marketing needs to address this.

It’s difficult to know when this change occurs so you tend to use the wrong strategy for too long. Because your idea is new, there’s no data to tell you when you’re running out of I+EA customers. You may feel that it is getting more difficult – speed of sales starts to fall off, the time to convert a lead starts to increase, but it won’t be enough to tell you definitively you are at The Chasm. However, it is enough to tell you to start marketing for the Early Majority as well as continuing your marketing for the remaining I+EA.

Now, for ‘product’ read ‘business’

What is less well understood among small business owners is this concept works for a new business as well as for a new product or service. With any new business, its first customers are taking a chance as they have no track record to rely on, no-one they can ask – and there are no reviews for something which hasn’t existed before. But they will take a chance and often offer the new business far better terms especially in paying its invoices, than any existing business can get. Your first customers (I+EA) are invested in your success and will change the normal rules to help that happen. Recognising this, the business will treat those first customers incredibly well as they are providing some feedback that the business has got an idea with some merit that somebody will pay for.

As the new business starts to run out of I+EA customers it needs to switch its marketing in the same way as if it were selling a new product. It needs to market to the Early Majority. The business needs to provide proof which it has from the testimonials and case studies based on the I+EA customers.  Service levels to the I+EA group still need to be high though, and it’s very easy for service levels to drop as the business changes its target markets. This needs careful management otherwise I+EA customers will not provide the proof needed for the Early Majority.

Planning for The Chasm

Figure2: The Product Life Cycle chart shows the sales and profits (and for profits read cash flow) of a new product or service.

Product Lifecycle

Figure 2. Product Life Cycle: Sales vs Profits

Usually a loss is expected in the early period from investment in product development, acquisition of assets and structure to enable sales to take place, which naturally starts later. This is the dip in profit shown underneath the horizontal axis at the beginning. Again, the analogy is accurate for a new business as well as a new product or service. The new business needs to invest time and resources, which create a loss before it can sell anything. The business generally accounts for this in its business plan, but what it doesn’t often do is plan for The Chasm.

Realisation of the risks

The general rationale of most businesses is that customers are all much the same so that more marketing effort will simply result in more customers in a linear way. Wrong! Business plans may have built-in some sensitivity and SWOT analyses but they tend not to produce anything which recognises the necessary change in marketing method to address the change in market when the new business or the new product changes from I+EA to Early Majority.

The first realisation is that all customers are not the same. Failing to recognise the differences between I+EA customers and the rest of the market will slow sales and impact cashflow negatively, possibly fatally.

The second realisation is that overlap marketing may well be necessary to bridge The Chasm quickly.

Double dip losses

If the new business has insufficient cash resources, either through trading or through funding to invest in the necessary overlap marketing to soak up the remaining I+EA with the initial marketing strategy, whilst simultaneously spending on the new marketing strategy for the Early Majority, there is the real risk of a double dip of losses just at the time when that Chasm appears. So, it is quite possible that the double dip together with a lack of sales can cause the business to fail. This is illustrated in Figure3: The Double Dip

Chasm +P+L

Figure 3 : The Double Dip

Avoid The Chasm for survival

To avoid this double dip the new business needs to retain enough resources to fund the double marketing effort so that the chasm is reduced or eliminated. You need to review your planning and check you have enough marketing budget.  Bridging the chasm quickly by reducing its timespan and impact is critical to business survival and enables you to scale the business faster.