Treating the Root Cause: Where has it gone wrong for small and medium entrepreneurs in Sri Lanka?
There is no for question, entrepreneurship is a very important practice in fostering various country level indicators. In the perspective of academic, this contribution is made two levels. One is corporate entrepreneurship and the other refers to independent entrepreneurship. The former refers to practice of entrepreneurship in established firms whereas the latter refers to the practice of entrepreneurship at individual levels. The contributions made by these two extremes to the national economy vary differently.
In a context like Sri Lanka, independent entrepreneurship has been given comparatively high importance by their importance and contributions to the national economy. But our research indicate that there is a problem or a confusion exists in relation to small and medium entrepreneur’s definitional angles. Academically, some define an entrepreneur as one who runs a profit generating venture. But our view in this regard is that, mere profit generating activity certainly differs from entrepreneurship. Still unbeatable academic definition of entrepreneurship affirms the need and identification of an entrepreneurial opportunity at the outset and thereby converting that opportunity into a viable venture. Therefore, in the perspective of entrepreneurial opportunity recognition as the heart of entrepreneurship, we say there are less number of independent small and medium entrepreneurs in Sri Lanka. Thus this dilemma arises in relation to the definition of entrepreneurship in the context of Sri Lanka.
We agree to the fact that, all small and medium entrepreneurs in Sri Lanka have identified some degree of an entrepreneurial opportunity, or otherwise they will not start their venture. But importantly, sustainability is of paramount importance and the majority have disregarded it. To develop the notion of sustainability of a venture, the degree of entrepreneurial opportunity recognition is important. Which means, the high level of entrepreneurial opportunity relates to high level of venture sustainability. High level of opportunity refers to an entrepreneurial opportunity which actually fills a need in the market place. To fill a need in the marketplace, novelty is important. If high level of opportunities are pursued in a venture sustainability of the venture may be facilitated and thus true entrepreneurship can be executed regardless of the size of the firm. Therefore, a mere profit generating venture is differentiated from an entrepreneurial venture.
Provided that, our observation shows that authoritative bodies of small and medium entrepreneurs in Sri Lanka do not have recognized what is being entrepreneurial. We appreciate the fact that those authoritative bodies have been implementing various initiatives to stimulate small and medium entrepreneurs in Sri Lanka. But those bodies do not convince the root cause of entrepreneurial success. Which is the need for high levels of entrepreneurial opportunity recognitions which actually fills a gap in the market with the novelty aspect. Therefore we suggest to implement and to educate small and medium entrepreneurs who have been registered and conducting businesses under authoritative bodies in relation to entrepreneurial opportunity recognition dimension.
Also, the other observations of our research implied the need for stimulating entrepreneurial education regardless of the various initiatives implemented. Our research indicated that small and medium entrepreneurs do lack in knowledge about managing their ventures. We observed that knowledge in relation to financial aspects and knowledge in relation to relative competitors of the firm are lacking among them though number of initiatives have taken place. Therefore, entrepreneurial education in relation to opportunity recognition, innovations, competitive strategies, risk management strategies are some of the strategies needed apart from the current initiatives. We have identified entrepreneurial education as a root cause of high failure rates among small and medium entrepreneurs in Sri Lanka. Our rationale here is that, none of the aspects of managing strategies of profit, costs, and etc will no longer be successfully implemented unless the root cause of entrepreneurial success is not addressed. Thus treating the root cause is important to develop sustainable entrepreneurship in a country.
Apart from the entrepreneurial education we suggested our research indicated that small and medium entrepreneurs lack unique capabilities and resources in relation to their ventures. Applying the academic notions of entrepreneurship unique resources and capabilities strengthen the sustainability of a venture. Putting it very simply, though small and medium ventures are comparatively small in scale unique resources and entrepreneurial capabilities are needed to be developed if the venture to fill a gap in the market. Possession of unique resources clearly differentiates a venture from a mere profit generating activity once more. Advantages over their competitors can be gained and successful entrepreneurship can be executed thereby. The general understanding among the small and medium entrepreneurs is that gaining advan-
“We have identified entrepreneurial education as root cause of high failure rates among small and medium entrepreneurs
in Sri Lanka”
tages over their competitors and being competitive only relates to large businesses. Our justification here is that, to be competitive the scale of the business is not a criteria.
Furthermore, Sri Lankan cultural inheritance also provides important implications to the practice. In general, Sri Lankan small and medium entrepreneurs’ employ less than 99 employees. Provided that we have observed that the distance between the owner of the firm and his/ her employee is substantially large. Which means in firms owners resist to distribute their authorities ( powers) among their employees. This scenario led employees to feel as mere employees who follow direct orders of the owner and eventually they become demotivated and causes employee dependency. Also it was noted that high rules and regulations and standardized procedures are implemented as a result of the perceived uncertainty about the business environment.
The small and medium entrepreneurial venture segment in Sri Lanka is predominantly female driven. Provided the cultural inheritance of Sri Lanka, households are father dominated and mothers prefer to look after their children. But this trend has been changing at present. As a remedial action to high costs of livings and standards, women tend to start their additional income generating activities besides the income that is being generated by men. This nature has led the women to start their business with a conventional setting and perhaps with less entrepreneurial knowledge. Our research studies highly recommend that, business initiatives as means of income generating activities are good, but to be entrepreneurial it requires strategic entrepreneurial thinking. Putting it very simply, running a small entrepreneurial venture is not running a mere business venture as we mentioned above. This large proportionate female participation of small ventures lead them to pay emphasis of social factors.Because men favour for ego goals whereas female favor for social factors.
Overall, we state that owner manager of a firm has all the powers to change organizational politics with a stroke of a pen. All the hiring, promoting and demoting are done as per the owner of the firm and thus the future of the firm simply determines by the owner. But, changing cultural attitudes are relatively a hard attempt. Therefore, we conclude that being entrepreneurial typically requires an entrepreneurial strategy, entrepreneurial opportunity seeking behaviors, possession of unique resources which no any other venture hold, and managing the venture successfully provided the diverse cultural backgrounds of employees.These strategies required to be implemented in national level provided these as the root causes of venture failure.