Government intervention in entrepreneurship: When is it too much?
December 26, 2011 by Lisa-Ann LEE
Fearless is a word often used to describe Karen Kerrigan, a think tank member of the World Entrepreneurship Forum, and it’s not difficult to see why.
Deciding that entrepreneurs weren’t getting the attention they deserved from government bodies, she founded the Small Business & Entrepreneurship Council (SBE) in the US, ruffling more than a few establishment feathers in the process.
Started in 1994, the SBE is a research and advocacy organization dedicated to help small business owners and promote entrepreneurship.
Today, the think tank has more than 70,000 members and she is one of the most influential voices in Congress, having led several key initiatives to improve business conditions for entrepreneurs and foster US and global entrepreneurship.
Though market conditions in the US and Singapore are different, Kerrigan believes that entrepreneurs in both countries need to be vocal about the challenges they face.
“Entrepreneurs must work together through associations or coalitions to collectively voice their concerns to government,” she says, adding that government bodies on their part also need to understand that while a certain degree of taxation and regulation is necessary, start-ups need to be allowed the freedom to grow and innovate.
“Governments must understand that in an era of limited resources and many challenges, entrepreneurs can help develop solutions to key challenges faced by society… the more time and resources a business owner has to put into their enterprises, the more jobs and positive economic activity will flow from those entities. In addition, a vibrant and relatively free business sector produces more tax revenues for the government.”
When to help and when to leave well alone
If the comments made at August’s Chillin’ With session with then presidential candidate Dr Tony Tan were any indication, it seems that many local start-ups view the Singapore government’s financial assistance as more of a hindrance than a help. Some participants in that session pointed out that micromanagement and bureaucratic red tape are some of the hoops that investors and founders find themselves having to jump through when seeking grants.
So exactly when should the government intervene and when should they leave start-ups and investors to work things out on their own?
Kerrigan offers that governments should only intervene or regulate when there is market failure. However, this is not to say that they should limit their involvement to crisis situations.
She points out that there are plenty of areas that would benefit from their attention, including: Identifying ways to reform taxes, creating regulations or compliance to better streamline current systems and make them more globally competitive, and removing trade barriers and making sure that there are proper laws in place to protect entrepreneurs’ intellectual property rights.
Creating a culture of entrepreneurship, therefore, is “the responsibility of both the government and the private sector,” she notes.
Can entrepreneurship be taught?
While Kerrigan acknowledges that successful entrepreneurs have certain in-born traits that separate them from their peers, she believes education also has a role to play in laying the foundations for a life of entrepreneurship.
“The fundamentals, for example: Financial literacy, how to develop a business plan, marketing, competitive analysis and management, are clearly important [because they are] the basic building blocks that increase a startup’s chance of survival and growth,” she explains, adding that it is never too early to get children started thinking like entrepreneurs.
“At the earliest stages of education, children need to be exposed to entrepreneurship as a career option. Their leadership, team building, problem solving and creative skills need to be developed.”
Kerrigan adds that the importance of having mentors or role models should not be overlooked either.
“Part of the entrepreneurship education process should include regular exposure and engagement with successful entrepreneurs – men [and] women from different backgrounds and ages. Meeting entrepreneurs and hearing their stories is not only educational but motivational – this plays such an influence in whether people decide to start businesses, their exposure and interactions with real entrepreneurs.”
This is especially true when it comes to encouraging more women to become entrepreneurs in the region.
“On a global basis, there has been extraordinary growth in the number of women entrepreneurs. Higher numbers of successful women entrepreneurs mean there are more role models to encourage and influence the next generation,” says Kerrigan. Many women across the world remain disenfranchised.
“Government leaders must understand that women’s role in society is critical to their nation’s economic future and overall health. When they hold back women, they are holding back their entire country’s potential and ability to compete on the international level.”
How do you think entrepreneurs and the government can work together to foster a better startup environment in Singapore? Do you think there’s a need for a collective organisation to represent small business owners in Parliament? Share your thoughts with us.
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About The Author
Lisa-Ann LEE - Contributing Writer
Lisa-Ann is a nomadic wordslinger who can be found roaming the not-so-dusty plains of the tech start-up scene and freelancedom. Say "howdy" to her on LinkedIn.Read other posts by Lisa-Ann LEE