Entrepreneurial Environment At Regional Level

Regional Businessmen

Discuss About The Entrepreneurial Environment Regional Level.

Entrepreneurship is one of the major drivers of the world economy. It influences regional developments, employment rates, competitiveness, productivity, and regional growth rates. Many regions depend on entrepreneurship for development plans and projects. There is, however, a disparity on the rate at which entrepreneurship influences economy in different regions and countries. For example, chances of a new business surviving in a market depending on various factors and policies of a particular region. The disparity in regional entrepreneurship is brought about by three factors which include: the nature of markets in different regions, the innovation systems available in various regions and cultural beliefs and practices. These factors influence important decisions that entrepreneurs make before starting up new businesses and decisions made during management of existing firms. The three factors have been described as limiting factors to regional economic balance. Therefore, attempts are made to bring a balance through governance and policies. The aim of these laws is to spread risk factors and benefits across all regions in equal measure. Entities targeted by most of these policies include businessmen, regional governments, communities and non-governmental aid agencies.

Entrepreneurship refers to the process of starting and managing a business after considering all the risks involved. Businessmen, also known as entrepreneurs, are an integral component of entrepreneurship. They are the people who analyze various business conditions in a given region before venturing (Smallbone and Welter 229). Favorable conditions will attract many businessmen to start up their businesses in a region while harsh conditions will drive them away. To start a business in a region, an entrepreneur will have to look at the existing business factors in that region. Most important regional factors to consider include the market conditions, innovation capability, and place-based cultures.

Regional factors can influence decisions of an entrepreneur in a number of ways. First, the nature of a regional market will determine the ease of starting a business or not as well as the scale of a business. A market can be either big or small depending on its composition. For example, a fashion business must consider the population component of the market before venturing. If a region has more young people, then a fashion business is likely to do well. But a market dominated by elderly individuals will not attract a business which sells designer clothes. A decision to start microfinance or banking business also depends on the cash flow rate of a region. A market with a small population will definitely attract fewer entrepreneurs compared to a region with a large population (Fritsch 1928). The second factor is innovation systems available. Every businessman who wants to start a business must fast look at the chances of expansion. If a region has appropriate technology and resources responsible for innovations, then a businessman will prefer to invest in the area. Because resources are unevenly distributed, some regions have fewer entrepreneurs. Finally, the culture of a region is a factor that a businessman must consider before starting up a business (Fritsch and Wyrwich 2001). For example, in a region dominated by Muslims, it will be difficult to run a big business or an alcohol firm because of a culture that prohibits Muslims from consuming pork and alcohol.

Regional Governments

Regional development depends on the businesses available in that region. An area with many business organizations will definitely have infrastructural development. This trend leaves some regions with less favorable conditions undeveloped (Cooke, Asheim, Boschma, Martin, Schwartz and Tdtling 142). Therefore, policies and laws have been formulated to make entrepreneurs invest in such areas with the aim of balancing regional developments. For example, some countries limit the number of businesses in a particular region by raising licensing fees and tax rates while lowering such rates in regions with less favorable conditions. This way, some businessmen will prefer to operate in areas where tax rates are low. Some policies also give financial benefits such as incentives and transport services to businessmen who invest in regions where risks involved are high. Even though these intervention policies are used, they have yielded limited results.

Governments affect business management world in many ways because they are the makers of policies and laws that govern businesses. While national governments make general policies and laws, the regional government makes specific rules that are influenced by the specific conditions of such regions (Minniti 780). Before venturing into a business, an entrepreneur must first look at the existing laws and determine if the business in mind can survive in the environment. Government controls businesses environment through many different mechanisms. First, governments make rules and regulations that directly affect organizations. Secondly, the governments set various business rates which include tax rates, licensing fees and money exchange rates. A government can provide benefits to businesses which include incentives, infrastructure installations, and security services. Some regions are considered high-risk areas because of the frequent occurrence of natural calamities such as floods and rampant insecurity incidences (Pietrzak, Balcerzak, Gajdos and Arendt 196). Businessmen always avoid such regions because of the risks. It is the government’s responsibility to make such areas attractive to entrepreneurs by organizing compensation projects should a business suffer from the risks.

Because of its position in the business world, regional governments are one of the major targets of regional entrepreneurship policies. Regional markets vary from place to place. Since businessmen are driven by profits, a region with a small market will have few entrepreneurs willing to invest. Such regions will face underdevelopment and low employment rates as a result. With the right intervention policies by regional governments, favorable market factors can be put in place to encourage entrepreneurship in the markets. A government can strike a deal with organizations which require every organization operating in a large market area to also open a small branch in the small market area.

How Entrepreneurship Policies Target Communities

The regional governments can also establish innovation systems in their respective areas to attract businesses. Technology is improving the business world daily. To remain competitive, firms must utilize technology in their operations. It gives the businesses an opportunity to lower their production costs and maximize profits (Engel and del-Palacio 41). Technology also gives small firms an opportunity to expand.  However, some technologies are so expensive that most organizations cannot afford to buy or install them. Therefore, to attract entrepreneurs in their regions, some regional governments help organizations to acquire these technologies by subsidizing their costs. This act has enabled many regions to develop at higher rates than others. Other regional governments are always reluctant to help businesses acquire such technologies making such regions remain behind businesswise. Therefore, national governments make interventions that target regional governments to help reduce regional disparities (Mason and Brown 217). Finally, some products and services are essential to some section of regional populations but popular cultures in such regions mean that businesses offering such products and services will not do well. Governments of such areas can help few individuals to operate such business by subsidizing their costs and reducing their taxes.

 Besides business owners, community members are the second group that benefits directly from firms. Community members have their lives directly influenced by firms available in their regions. They are the ones who feel the pinch of a deteriorating economy and also enjoy the fruits of a stable economy. For this reason, the community is an important target of regional entrepreneurship policies (Ács, Szerb and Autio 63). It is always advisable that they are represented during the process of making the policies. Before the regional authorities decided to limit the number of businesses in a market, they should first consider impacts it will have on the community.

There are a number of ways by which entrepreneurship and communities relate. First, every entrepreneur wants to start a business in areas with a good market. The market will be provided by the community in which the business is located. The ability of the organization to have customers will depend on its relationship with the community members. Factors such as customer services and relations are important during decision making by entrepreneurs (Baum, Frese and Baron 81). Businessmen, therefore, operate in ways that please the member of societies in which they are located. Secondly, firms do employ individuals from local societies. Most firms depend on community workers for almost all their workforce. Only positions which require high training levels are filled with individuals from outside the local communities. Businesses also contribute to community development and social projects (Sternberg 140). Finally, the presence of some large-scale businesses contributes to the development of many communities. For example, a large-scale manufacturing firm in a rural community will bring about many infrastructural developments which would not have been installed. Entrepreneurship is, thus, an activity which relies on societal goodwill.

A difference in population components of various communities leads to a disparity in willingness to venture in some communities. Entrepreneurs will first look at the availability of markets for their goods and services, and presence of a pool of workforce before opening a new business. This explains why highly populated areas like urban centers attract more investors than areas with low populations (Baum, Frese and Baron 43). Cultural beliefs of a community also affect entrepreneurship. One aspect of culture is religion. Religious blocks tend to form communities because of their shared ideas and behaviors. The behaviors form the basis within which businessmen make decisions. Government policies must also put cultural beliefs of specific communities into consideration.

Availability of a reliable pool of labor is the second consideration. The staff of an organization is comprised of three levels: skilled, semi-skilled and non-skilled labor. A community with dense population is likely to have all these categories of labor. Businessmen will, therefore, prefer to invest in these regions. Presence of schools and tertiary colleges in a community provides an added advantage because firms will have access to fresh graduates (Huang-Saad, Duval-Couetil and Park 78). There have been policies implemented by governments to balance regional entrepreneurship. One of the policies is the development of rural areas by setting up schools technical colleges in rural areas. This move has succeeded in attracting investors to rural areas thereby developing rural communities.

Another stakeholder in entrepreneurship is the private organizations which are interested in regional developments. Some of these organizations are profit-oriented while some are non-profit organizations. These agencies contribute to regional entrepreneurship by providing enabling environments in some regions which harsh business conditions (Fritsch and Wyrwich 965). Most of them provide similar services to the governments. In an area frequented by natural floods or storms leading to low investment rates, non-government organizations can decide to either financially support businessmen who are willing to opens firms or put up compensation schemes for their businesses. Some organizations also help to build infrastructures such as roads in rural areas to open the regions up for investors (Palander, Vainikka and Yletyinen 100). Private organizations can also decide to provide essential goods and services in regions considered to be high-risk zones to market their brands.

Due to their influence in local entrepreneurship, non-government agencies must be considered by authorities during policymaking. For efficiency, it is important that these organizations collaborate with both national and regional governments. Integrating their operations will increase the success rate of the policies (Dvouletý and Mareš 12). Government rules need to relax rules and rates for organizations which are willing to provide goods and services in high-risk regions. Some profit-oriented private agencies are attracted to urban centers just like entrepreneurs. The governments need to tighten regulations that such firms must meet before venturing. This policy helps achieve regional balance in terms of growth and development.

The main aim of regional entrepreneurship policy is to reduce disparity among regions in terms of developments. The policies target four main stakeholders in entrepreneurship which include entrepreneurs, regional governments, communities and non-government organizations. Some of these stakeholders benefit from the policies while others are just players who ensure that all regions are balanced (Alvedalen and Boschma 891). A policy which reduces rural-urban migration by building structures in the rural areas benefits local entrepreneurs. The building project is carried out by either governments or non-governmental charity agencies but the ultimate beneficiaries are businessmen and community members who will get goods and services and employment opportunities.

Conclusion

Entrepreneurship runs development of most communities. Business is a source of living for both businessmen and employees, most of which come from societies where the firms are located. There is a regional imbalance in development leading to regions being divided into high-risk areas and low-risk areas. Because entrepreneurs are driven by profit margins, they will be attracted to low-risk areas more than high-risk regions. This will lead to many business organizations in urban areas than rural areas. There are, thus, policies and rules put by governments to reduce the disparities. These policies open up other regions so that entrepreneurs can invest in them. They target key players in entrepreneurship which include entrepreneurs, business environments and various forms of governments. Because entrepreneurs are the people with ability and willingness to open businesses, they are often affected by the rules and regulations. financial, they are among the major beneficiaries of these policies. Both government and non-government organizations support projects which help to achieve the regional balance.

References

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