BULDING AN ENTREPRENEURIAL CULTURE AS THE BASIS FOR THE

REALISATION OF AFRICA`S ECONOMIC DEVELOPMENT.

By

Faith Amenkhienan
11-0084



Paper presented to Mr. Duncan Irungu



Daystar University
Nairobi, Kenya

March 2011

In partial IulIillment oI the requirements Ior the course MGT 610: Cross- Cultural
Management

Table of Content









Abstract
National development based on western deIinitions, models, strategies has Iailed to solve the
under-development oI AIrica. It has instead increased poverty, and debts. To regain its true
independence Irom the west it must seek solutions to its problems through AIrican- oriented
development strategy by building an entrepreneurship culture to reach its desired
development.
This paper looks at the word entrepreneurship` and the concept oI social entrepreneurship,
what constitutes an entrepreneurship culture , theories oI AIrica`s economic development, the
linkage between entrepreneurship and growth and how to build an entrepreneurship culture.

3




















ntroduction
National development based on western deIinitions, models, strategies has Iailed to solve the
under-development oI AIrica. It has instead increased poverty, and debts. To regain its true
independence Irom the west it must seek solutions to its problems through AIrican- oriented
development strategy by building an entrepreneurship culture to reach its desired
development. 'No matter how diversiIied or determined they may be, eIIorts aimed at
ensuring the progress oI entrepreneurship and management in AIrica seem to come up against
a sort oI structural ceiling oI which the height and contours seem to be closely related to the
very culture oI AIricansTSHIKUKU, 2001).

Culture is seen in the AIrican social context as transcending the arts or arteIacts. Cultural
approach is one oI the determinants oI the success or Iailure oI development strategies in
many parts oI AIrica. Soetan, 2001)


Culture is, in some respects, implicated. Values, attitudes and reIlexes are largely inspired by
some old continental civilizations that slavery and colonization have no doubt strongly
shaken but hardly replaced. AIrica is a broken-down continent, economically and socially.
Indeed, many institutions and individuals conversant with AIrican issues believe that
entrepreneurial and management diIIiculties constitute the top challenge Iacing the continent.
AIrica is seen as timid and clumsy in entrepreneurship. AIricans are reportedly bad managers
at all levels.

3

'The phrase "entrepreneurial culture" reIers speciIically to the Iostering oI attitudes oI selI-
reliance, selI-advocacy, and perseverance, and to the skills oI personal visioning, social
networking, Iinancial and technological literacy, recognition oI and response to opportunities,
and selI-directed learning, carleton center Ior community innovation,carleton
universityIaculty oI public aIIairs) )

This paper looks at the concept oI the word entrepreneurship`, conditions Ior building an
entrepreneurial culture and how to build an entrepreneurship culture.


The Word Entrepreneurship`
The vital importance and positive contribution oI entrepreneurship and an entrepreneurial
culture in economic and social development cannot be overstated. Entrepreneurs create and
bring to liIe new technologies, products and services and create new markets and jobs along
the way. Entrepreneurs are smart risk takers, implementers, rule-breakers; or in a word:
innovators. And iI AIrica is to move Iorward we need lots oI them.

Economically, entrepreneurship invigorates markets. New business creates jobs and has a
multiplying eIIect on the economy. Socially, it empowers citizens and makes them innovative
and changes mindsets. These changes have the potential to successIully integrate developing
countries into the global economy. Many managers relax when they solve the problem oI
only their company or institution; and most proIessionals are happy when they satisIy a
client. It is only the entrepreneur who literally cannot stop until he or she has changed the
whole society.

'Entrepreneurship could indeed be seen as the most crucial scarce input, Ior it could be cast
as the "prime mover" necessary to initiate the development process by mobilizing supply oI
other "prerequisites. LeII, 1979)

The United Nations convened the largest gathering oI Heads oI State in the year 2000 and
reached a consensus on an ambitious agenda, the Millennium Development goals.
Entrepreneurship development is an essential ingredient Ior achieving the United Nations
Millennium Development Goal oI reducing poverty. For many developing countries, private
sector development has been a powerIul engine oI economic growth and wealth creation, and
has been most crucial in improving the quality, number and variety oI employment
opportunities Ior the poor.


The concept oI entrepreneurship has evolved over time and is oIten used to mean or
emphasize diIIerent Ieatures. Starting a Ior-proIit business is the most common idea
associated with the term. According Susan Davis and Ashoka Susan Davis, 2002) in their
paper on social entrepreneurship, while trying to deIine the term and its evolution, the term
entrepreneur` comes Irom the French word 039705703/70 Iirst deIined by the Irish-French
economist Richard Cantillon as early as the 17th and 18th centuries and meant one who
opens a new business and is ready and willing to take risks. Jean Baptist Say deIined it as a
person who undertakes or operates a new enterprise or venture, while also taking
responsibility Ior the risks involved in setting-up a new operation.

7

Economist Joseph Schumpeter Iurther reIined the concept in the 20th century describing
entrepreneurs as innovators who drive change in the economy by serving new markets or
creating new ways oI doing things. While both Say and Schumpeter emphasize starting new,
proIit-seeking business ventures, starting a business is not the essence oI entrepreneurship.
Rather it is the role oI entrepreneurs as the catalysts and innovators behind economic
progress.

J. Gregory Dees Ashoka, 2002) states that Ior Peter Drucker starting a business is neither
necessary nor suIIicient Ior entrepreneurship. Drucker explicitly comments, "Not every new
small business is entrepreneurial or represents entrepreneurship. Drucker also makes it clear
that entrepreneurship does not require a proIit motive.

There are diIIerent types oI entrepreneurs but, social entrprenuers seem to be one oI the types
oI which AIrica needs to realise development.

Social Entrepreneurship
Social entrepreneurs are risk-takers. 'They are visionaries who conceptualize a diIIerent
world, a better world and are willing to do what it takes to make their vision come true. Their
starting point is a deep understanding and seeing oI the problems in the present system in the
here and now Pandey, 2006). William Drayton is thought to have coined the term social
entrepreneur` several decades ago. He is widely credited with creating the world`s Iirst
organization to promote the proIession oI social entrepreneurship Ashoka, 2002). Social
entrepreneurs are the engineers behind large-scale movements oI change. They give their liIe
to a cause and cause great change to come about that goes beyond a single village or a single
community to entire countries and populations. William Drayton elaborates that there are Iive
essential ingredients Ior a social entrepreneur: a powerIul, new, system change idea;
creativity; potential Ior widespread impact; entrepreneurial quality and strong ethical Iibre
Ashoka, 2002). Examples oI social entrepreneurs include Gandhi, Nelson Mandela. Florence
Nightingale, Medha Patker, Craig Keilburger. They are catalysts oI change who seek to
generate social value, not monetary proIit. 'Social entrepreneurs make signiIicant and
diverse contributions to their communities and societies, adopting business models to oIIer
creative solutions to complex and persistent social problems ahra, 2009).

Social entrepreneurship extends the deIinition oI entrepreneurship by its emphasis on ethical
integrity and maximizing social value rather than private value or proIit which is necessary
Ior AIrica`s economic development.


Whatever the deIinition oI entrepreneurship, it is closely associated with change, creativity,
knowledge, innovation and Ilexibility-Iactors that are increasingly important sources oI
competitiveness in an increasingly globalised world economy. Thus, Iostering
entrepreneurship means promoting the competitiveness oI businesses.




9

Entrepreneurship and development
The link between entrepreneurship and development has been approached mainly Irom an
economic standpoint, theoretically as well as empirically, Iocussing on economic growth
rather than on development.

From the theoretical standpoint, Todaro analyses Iive leading theories oI economic
development, named stages oI growth, structural patterns oI development, dependence,
neoclassical, and new endogenous growth theory Todaro, 2000).

From the empirical standpoint, the link between entrepreneurship and economic growth has
been explored and demonstrated since the pioneering work oI Birch, in which he showed,
through a longitudinal analysis, that SMEs were the main Iactor oI job creation in the U.S.A.
Birch, 1981)


Theories of Africa`s economic development and development strategies
Throughout much oI the 1950s and 60s, the strategies used by AIrica and its developing
countries were centred on attempts to increase their aggregate national income in the shortest
possible time and develop like the states oI western Europe.

Various theories have evolved to explain AIrica`s economic development the Iirst is the
modernization theory. 'Modernization theorist assumed that the "backwardness" oI the Third
World was an "original" backwardness, a primeval backwardness that had once been
universal and could be overcome by the transmission oI capital and know-how Irom the
industrial West. TSHIKUKU, 2001) But this was proIoundly misleading. The
backwardness oI AIrica was a new Iorm oI backwardness, the product oI colonialism. The
technological backwardness oI AIrican agriculture, Ior example had been shaped and even
developed by colonialism. Not only did modernization theory Iail to see that AIrican
backwardness was shaped by colonialism, but it also Iailed to see how Iar the post
independence pattern oI trade and investment, the patterns oI aid given to local "elites," or the
transIer oI Western tastes, reinIorced the backward, in egalitarian structures oI the ex-colonial
AIrican economies.

Although the modernization theory as a whole was premised on the assumptions oI dualism,
convergence, and Iunctional evolutionism, it is possible to subdivide the wide range oI
interrelated theories into speciIic social-structural, social-psychological and economic-
educational perspectives. Abrokwaa, 1999) The social-structural approach revolved around
an analysis oI social order statics) and social change dynamics). According to Abrokwaa,
Abrokwaa, 1999) 'Hoselitz believed that a Iundamental shiIt in cultural outlook was an
essential prerequisite Ior the transition to modernization and economic growth. The
modernization theory suggested that massive inIusions oI Ioreign capital, technology, and
expertise were necessary to build an industrial productions base that would Iacilitate
economic expansion in these nations

11

'Out oI the critique oI modernization theory and the apparent ineIIectiveness oI many oI the
economic development policies associated with it, there emerged the so-called poverty-
oriented, or "basic needs" approach to development Leys, 1982). The dependency theorists
and their epigones have undoubtedly identiIied many oI the Iorces that explain the pattern oI
modern AIrica's development. The most important shortcoming oI dependency theory is that
it implies that there is an alternative, and preIerable, kind oI development oI which the
dependent economies are capable, but which their dependency prevents them Irom achieving.

The second theory is the human capital theory. It stated that 'education, health and non-
proIit research contributed to economic growth by increasing the level oI eIIiciency and
thereIore productivity oI the entire economic system. Abrokwaa, 1999). It was later
discovered by Becker, 1964), and Harbison& Meyers in 1964 that human capital alone did
not cause economic growth. 'The economy must be capable oI using the knowledge and
skills acquired by its people. Abrokwaa, 1999). Though this theory has been accepted and
states that Iormal education was the key to solving the underdevelopment oI AIrica.


The Structural Adjustment Program SAP) was one oI the development strategies imposed by
the International Monetary Fund IMF) on several AIrican countries to reduce demand and
expenditure within the economy. It included include currency devaluation, reduction oI
public spending, removal oI state subsidies, restraints on wages and public sector
employment, and limits on credit expansion. But rather than solve the economic problems oI
these countries, it plunged them deeper into debt, political instability on more dependency on
the west.


Conditions for building an entrepreneurial culture
According to Arti Pandey Pandey, 2006) to build an entrepreneurial culture there must be
monetary capital, regulatory Irameworks, inIrastructure, entrepreneurship education and
training, social and cultural Iactors.

Monetary capital could be in Iorm oI public sector Iunding Irom the government which
include loans Irom Iederal, state, local government or government-run programs to
entrepreneurs. Governments also provide aid that is aimed Ior special areas oI development
like conservation, rural development etc. Monetary capital can also be in the Iorm oI private
sector Iunding obtained Irom venture capital Iirms that target the entrepreneur`s area oI
expertise. These venture capital Iirms also provide technical as well as business support and
direction to start-ups. A venture capital Iund is a pooled investment vehicle oIten a
partnership) that primarily invests the Iinancial capital oI third-party investors in enterprises
that are too risky Ior the standard capital markets or bank loans. Because oI the risky nature
oI venture capital, Iunding is directed towards those Iields that are capable oI giving high
returns: IT, media and communications, construction, mining, healthcare, consumer products
etc. There can also be Iunding Irom angel investors. Thirdly, it can be in the Iorm oI third
sector Iunding directed towards two distinct populations at the social activists) who needs
Iinancial backup Ior her own non-proIit venture; and at the poorest entrepreneurs) who needs
micro-loans/credit in order to start and/or sustain her own business. It also comes in Iorms oI
micro- Iinance. Funding can also be gotten Irom Iriends, Iamily and other inIormal sources.
13

Regulatory Irameworks include political stability, government institutions and bureaucracies,
economic policy, labour market Ilexibility and intellectual property rights.
InIrastructures include transport, electricity, water etc elements that are absolutely necessary
Ior many entrepreneurial ventures to take oII the ground.

'EIIective entrepreneurship programs would Iocus on introducing entrepreneurs to-be to the
Iundamentals oI setting up a business, improving hands-on skills, teaching them the
importance oI broader public policy and how these aIIect them as business owners. Pandey,
2006). Children can be introduced to the concept oI entrepreneurship in school. 'From an
early age children need to be imparted the importance oI working hard, taking risk and
expecting rewards and not to expect to reap where they didn`t sow by just seizing an
established business. Such behaviour is the anti-thesis oI an entrepreneurial culture.
CAPITAL, 2011)
In societies where entrepreneurship is not looked upon as a respected means oI livelihood-
generation, and the Iinancial gain that accompanies it are looked upon as illegitimate or ill-
begotten, the disincentive to engage in entrepreneurship is indeed very strong. On the other
hand, in societies where ambition and a drive to succeed are considered valuable qualities and
entrepreneurs are highly regarded there are more individuals who Iollow the entrepreneurial
creed. It is important to have an in-depth understanding oI why individuals behave the way
they do, iI indeed we are going to attempt to change their behaviour in any substantial
manner. II we going to work towards building more entrepreneurial societies, we must begin
with the men and women who constitute these societies, and understand what motivates
them, and what deters them Irom participating more whole-heartedly in entrepreneurial
ventures.
#ecommendations for building an entrepreneurial culture
'Creating an entrepreneurial culture is a multi-Iaceted, organic phenomenon. Susan Davis,
2002). As culture is a highly dynamic, synthetic web oI Iactors and expressions, cultural
shiIts occur when a tipping point is reached. To move Irom a culture that undervalues
entrepreneurship to one that does, involves shiIts in attitudes, expectations and perceptions
among people oI all ages.

To build an entrepreneurship culture that promotes economic development in AIrica means,
building an entrepreneurship culture that creates the kind oI development that permits people
to realize their aspirations Ior decent work and engenders just and environmentally
sustainable communities throughout our AIrica.

In this context Culture reIers to the enduring set oI values oI a nation, a region, an
organization or any readily identiIiable group oI people. Entrepreneurship is deIined as the
act and process by which societies; regions, organizations, or individuals identiIy and pursue
business opportunities to create wealth as it relates to assuming risk with the hope oI getting a
reward. There is need to Governments to embark on institutional building capacity which
helps develop entrepreneurial culture and spirit. CAPITAL, 2011).

II promoting an entrepreneurial culture is a desirable means oI achieving our end social and
economic development), then we must clearly deIine what elements, behaviours, traits and
characteristics we want to encourage and value.
13


First, EIIorts to Ioster entrepreneurship in AIrica should be reIocused more on high value-
added growth opportunities oI existing SMEs and less on encouraging Iormation oI new start-
up businesses. Secondly, AIrican individuals must shiIt how we see work and people`s
relationship to it throughout their liIe cycle. Thirdly, AIricans must shiIt the Iocus oI today`s
dominant neo-liberal macroeconomic policies Irom primarily Iighting inIlation and protecting
investors to promoting decent work and employment-intensive, environmentally sustainable
growth. Fourthly, 'publicly supported eIIorts to Ioster high-technology innovation should be
reIocused, at an early stage, on potential Ior commercialization oI the innovation, oIIset by
inability oI the private sector to act without public support Fernando Fabre, 2003).
AIricans should remove all barriers, particularly those created by government or within its
power to change, that block or discourage people`s entrepreneurship.

There should be access to credit without collateral Ior the poorest, and other productive
resources are essential ingredients to embed entrepreneurship and selI employment
throughout every stratum oI society, including women and men oI all ages; new Iinancial
services are also needed Ior the growth oI the citizen sector.


EIIorts to Ioster entrepreneurship in AIrica should include attention to enhancing and
Iostering development oI new exit opportunities Ior early-stage investors in entrepreneurial
ventures.

EIIorts to Ioster entrepreneurship in AIrica should include developing more eIIective ways
Ior individual investors in AIrica to participate in risk capital investing Fernando Fabre,
2003).
Education and employment policies should be developed in an integrated manner as they
have direct implications and impact each other. Youth employment and entrepreneurship
policies are likely to be more eIIective iI they are closely linked and integrated with
educational policies including the structure and content oI school curricula, extra curricula
activities and aIter-school programs. Vocational needs oI young people should be central.
One approach is to craIt an overall youth policy. OI course, one pervasive problem with these
eIIorts is the Iailure to challenge gender stereotypes thus perpetuating occupational
segregation by sex. Every child is good at something. Encouraging and giving that child the
opportunity to succeed is extremely important is shaping their personality and tolerance Ior
risk.

AIrica should abandon imported Western development strategies in Iavour oI AIrican-
oriented ones iI any meaningIul strides are to be made to better the conditions oI its suIIering
masses in the next century.
AIrican governments and policymakers employ the AIrican traditional method oI
communalism, which brings together the knowledge, skills, and labour oI all community
members and involves them in decision-making processes. Abrokwaa, 1999).
Entrepreneurial Intensity is achieved by balance between individualism and collectivism.

17

Development must also be needs-oriented, selI-reliant, indigenous, and environmentally
sound F.Cheru, 1989). This approach would help clearly deIine projects and expected
outcomes.
AIrican leaders, politicians, and policy makers must be committed to the general
socioeconomic growth oI their people instead oI exploiting them to achieve their individual
selIish ends.

There is an urgent need to democratize both the domestic and the international economic
order to allow equal participation in decision making processes, particularly concerning the
setting oI international prices Ior raw materials and tariIIs on export commodities.

Implementation strategies adopted must lead to sustainable development and Iocus on
building local capacities, with the people becoming the initiators and implementers oI their
own development on their own terms.
Conclusion
To achieve economic development, AIricans, must indeed leave the western oriented
strategies and adopt AIrican oriented ones. Using the approaches above AIrica will realise
development. It is now time Ior AIrica to regain its true independence by seeking solutions to
its socioeconomic problems through AIrican-oriented development strategies Ior the 21st
century.


#eferences
Abrokwaa C k (1999) Afrlca 2000 WhaL uevelopmenL SLraLegy? Iootool of 8lock 5toJles 29 (3)
646668
Ashoka S u (2002) SCClAL Ln18L8LnLu8SPl 1CWA8uS An Ln18L8LnLu8lAL CuL1u8L lC8
SCClAL Anu LCCnCMlC uLvLLCMLn1 ootb mploymeot 5ommlt (p 34)
8ecker C (1964) human caplLal Notloool 8oteoo of cooomlc keseotcb
8lrch u (1981) wbo cteotes Iobs? 1he ubllc lnLeresL
CAl1AL C ( 2011 !anuary 29) ocootoqe eottepteoeotlol coltote spltlt 2lmbobwe
ottepteoeotlol loftosttoctote 5etles 8eLrleved march 20 2011 from Lhe zlmbabwe Lelegraph
hLLp//wwwzlmLelegraphcom/?p227
carleLon cenLer for communlLy lnnovaLloncarleLon unlverslLy(faculLy of publlc affalrs) (nd)
lostetloq oo ottepteoeotlol coltote fot llfelooq mployoblllty 8eLrleved march 22 2011 from
llfelong enLerpreneurshlp and employablllLy
hLLp//wwwcarleLonca/3cl/3cl_flles/LnLrepreneurlalCulLurehLm
lCheru (1989) 1be slleot tevolotloo lo Aftlco london Zed 8ooks
lernando labre 8 S (2003) 8ollJloq tbe ottepteoeotlol coltote naclonal llnanclera SnC mexlco
uS 1rade and uevelopmenL Agency
Leff n P (1979) LnLrepreneurshlp and Lconomlc uevelopmenL 1he roblem 8evlslLed Iootool of
cooomlc lltetotote 17 (1) 4664
Leys C (1982) Afrlcan Lconomlc uevelopmenL ln 1heory and racLlce uoeJolos 111 (2) 99124
andey A (2006) 8ulldlng an LnLrepreneurlal CulLure ootb mploymeot 5ommlt (pp 137)
LducaLlon uevelopmenL CenLer lnc
SoeLan u 8 ( 2001 CcLober) CuL1u8L CLnuL8 Anu uLvLLCMLn1 34
Susan uavls l 8 (2002 !uly 31 ) SCClAL Ln18L8LnLu8SPl 1CWA8uS An Ln18L8LnLu8lAL
CuL1u8L lC8 SCClAL Anu LCCnCMlC uLvLLCMLn1 yespopet(ootb mploymeot 5ommlt) 34
1odaro M (2000) cooomlc uevelopmeot (7Lh ed) essex london Addlson Wesley
1SPlkuku k (2001) CuL1u8L Ln18L8LnLu8SPl Anu lN1kNA1lONAl cONlkNc ON 1n
cul1ukAl AllkOAcn 1O uvlOlMN1 lN AlklcA (p 28) uAkA8 SLnLCAL lnLernaLlonal
uevelopmenL 8esearch CenLer of Canada
Zahra C n (2009) A Lypology of soclal enLrepreneurs MoLlves search processes and eLhlcal
challenges Iootool of 8osloess veototloq 24 (3) 319332