The Participations of Entrepreneurs in the Global Market

Semere Haile, Grambling State University

hailes@gram.edu
Marcus Jones, Northwestern University
marcusj@nsula.edu
Diana Oubre, Grambling State University
oubredt@yahoo.com

Abstract
In this changing global marketplace, a growing policy and research interest on the
topics of entrepreneurship is felt across all organizational types: academics, business
people, and governments. Entrepreneurs and small businesses are no longer limited to
domestic markets. In fact, it is becoming a must for locally oriented entrepreneurs to
participate and compete in the international market (Wright & Ricks, 1994). This paper
discusses the emergence and participations of entrepreneurs in the competition in the
global marketplace. Competitive markets have become features of most successful
economies in developed countries. However, understanding what this global competition
is and what it means for policy in developing countries has not been debated as much as
it should have been. The paper is organized in three sections: (1) discussions of the
review articles of the entrepreneurial issues in the global market, (2) presentations and
discussions of the review results, and (3) discussion of ways to enhance future research
efforts in light of the review findings.

Introduction
With the globalization of the world economy, interest in international
entrepreneurship has rapidly increased over the past decade. Each year thousands of
small and mid-sized businesses are actively engaged in the global market and are
increasingly becoming a profitable and popular strategy for many entrepreneurial
ventures (Zahra et al., 2001; Wright & Ricks, 1994). Due to the changing global
marketplace and the increase in entrepreneurial companies the research paths of
international business and entrepreneurship are intersecting with increasing frequency
(McDougall & Oviatt, 2000). Accordingly, even though the ideas of international
business and entrepreneurship have been prevalent, they have not crossed each other
enough in the past years.
The definition of the concept of international entrepreneurship has changed many
times over the years, but now includes for-profit and non-for-profit businesses. It is
accepted that entrepreneurship has at least two parts: (1) an activity, and (2) the attributes
that set this action into motion. It also consists of three dimensions: innovation, proactive
behavior, and risk-seeking action. In perspective, the international entrepreneurship
concept is better defined as a combination of innovative, proactive, and risk-seeking
behavior that crosses national borders and is intended to create value in organizations
(McDougall & Oviatt, 2000).

In this case, both McDougall and Oviatt and few others have laid the groundwork
for the study of global entrepreneurship. They have led the way to the study of enterprises
that are international from their inception. McDougall showed that global start-ups
significantly differ from their domestic counter parts in terms of strategy and industry
structure. However, it is not clear how global start-ups can be assisted to lead to
competitive advantages, as many of the national governments around the world are
striving to improve their living standards. There is a need for refreshing and critical
examination of the key role that entrepreneurship plays in generating innovative activity
and economic growth in developing countries. Competitive markets have become
features of most successful economies in the developed countries. However,
understanding what this global competition is and what it means for policy in developing
countries has not been debated as much as it should have been. Also, there has to be a
discussion on the emergence of the entrepreneurial economy for the public, explaining
the key contribution that entrepreneurship policy makes to economic growth,
employment, and competitiveness in the global market.
Entrepreneurship has been acknowledged as a significant factor in national
economic growth and development for a long time. New business activities can be
established in all countries. However, national differences still exist. There are business
practice differences among countries in the rate of new business start-ups. Studies
indicated that the proportion of adults involved in starting a new business in the United
States, for example, is currently five times the proportion found in Sweden and ten times
the proportion found in Japan. In seeking to develop an understanding as to why rates of
entrepreneurship vary between countries, researchers have also addressed national
differences in entrepreneurial orientation as well as national political/legal, economic,
and social contexts (Baughn & Neupert, 2003; Lee & Peterson, 2000).
Globalization trends, including less trade barriers and better, less open
communication technology, have facilitated the change of focus between international
business and entrepreneurship in recent years (where as international business
traditionally focused on large multinational companies and entrepreneurship has focused
on start-up companies). Entrepreneurs almost have to think about expanding their
businesses to seize opportunities in global markets. Early internationalization has proved
to be a successful strategy for some small and medium firms (Madisen and Servais,
1997). These firms are seeking to derive significant competitive advantage from the use
of resources and the sales of outputs in multiple countries (Oviatt & McDougall, 1994).
All these opportunities are made possible by the use of efficient, worldwide
communication, technology, and transportation for international competitive advantage.
Now, developing nations are improving the conditions within their countries by seeking
new business opportunities through technological ventures.
Entrepreneurship researchers have been focused primarily on the processes
involved in new venture creation (e.g., start-up, marketing, or marshalling resources) and
the management of small and medium sized businesses domestically (McDougall &
Oviatt, 2000). Other studies have also focused on the significance of small and mediumsized businesses in their ability to provide employment, innovations, variety, selffulfillment, growth, etc. (Andersson & and Wictor, 2003). Furthermore, other studies
have examined how small and medium-sized businesses are showing an increasing
interest in international development (Andersson, 2000; Bell, 1995). This

internationalization of entrepreneurship is setting countries at a competitive advantage

through entrepreneurial innovations (Simon, 1996). However, emerging into the global
market entails many risks and challenges for firms. Therefore, being knowledgeable
about firms global venture and being able to adapt its operations to the competitive
environment is essential to its success.

International Entrepreneurship for Global Competition

The globalization of business implies both improved competition and cocooperation between businesses in order to acquire a stronger position in the global
market (Chile & Faulkner, 1998). The challenge for managers leading their organizations
into global ventures is how to locate a balance between competition and cooperation and
to manage the tensions inborn to business relations that cross national and cultural
boundaries (Dahles, 2005). Dahles examined whether increased investments by
Singaporean Chinese businesses abroad and in China, in particular, are linked to: guanxi,
which are ethnic ties and shared cultural values, capitalist profits seeking, or government
interventions. Dahles concluded that the Singaporean model shows that individualized
(guanxi-based) strategies of business cooperating represents a meaningful way to relate to
business partners and organizations in a balancing act between cooperation and
competition in a global market (Dahles, 2005).
Entrepreneurs and small-size businesses are not limited to domestic markets only.
The locally oriented entrepreneurs are considering participating in the international
marketplace to reflect these new realities (Wright & Ricks, 1994). In doing so,
entrepreneurship can involve innovative action that exceeds beyond domestic business to
take advantage of global market opportunities, or situations that have the potential to
provide additional beneficial outcomes (Cremer, et al., 2001). For small firms, these
opportunities are typically exploited through exporting, which is selling products to
another country (Wilkinson, 2006). For example, the world market is potentially much
larger for small businesses than the United States alone. In spite of the potential,
however, most small businesses still do not think internationally. According to the U.S.
Department of Commerce, only a small percentage of small businesses export, even
though the number of small exporters has tripled in the last decade. In fact, in the past
five-years, the value of small-businesses exports has increased by 300 percent
(www.sbea.org).
Entrepreneurship appears to be more compatible with some cultures than others.
There is a relationship between cultural values and entrepreneurial activity (Lee &
Person, 2000). Companies may form a partnership to overcome these constraints.
Selecting the right partner is one of the most important tasks in partnership selection.
The selection process should consist of choosing a partner that is innovative, possesses
management expertise, and that will bring new ideas and knowledge to the company.
Selecting the wrong partner can cause the company to make bad decisions and choices,
which may result in the end of the partnership as well as the company (Cavusgil &
Evirgen, 1997).
Since entrepreneurs are now competing globally, they realized that global
thinking is important because todays consumers can select products, ideas, and services

from many nations and cultures. Entrepreneurs who expand into foreign markets must be
global thinkers in order to design and adopt strategies for different countries (Kuratko &
Hodgetts, 2007). Shared information on entrepreneurship is occurring differently in other
countries. In particular, there is no distinction between entrepreneurship and business in
developing countries. Entrepreneurship researchers have studied cross-border activities
and form multi-country research teams. The teams are designed to identify and learn
entrepreneurial issues across multiple cultures. In doing so, each team can learn much
from the other culture (McDougall & Oviatt, 2000).
The stage of development from a small national company to a multinational
corporation has been an area of growing research interest (Bilkey & Tesar, 1997). This
growing research on the stage of development, is mainly focused towards different
establishment sequences in terms of markets and several modes of entry over a period of
time. It is important for a firm to be knowledgeable of the global market in which it
intends to expand. The company needs to know about the countrys economic and
political environment and needs to obtain an understanding of the culture in order to grow
and compete in that market (Autio & Sapienza, 2000). Also, there are other factors that
prevent or disturb the flow of information between and from the market. These are
differences in language, level of education, levels of industrial development, etc.
(Andersson & Wictor, 2000). Having little or no knowledge of the culture of the country
could be detrimental to the growth and success of a company. Since the company may
hire people from that country, it is important to learn their language and customs to avoid
differences in the workplace. Possessing an existing knowledge of working in a foreign
environment is essential for success (Autio & Sapienza, 2000). Moreover, other
companies that are emerging into the global market are faced with many barriers or
challenges that can hinder their success. These barriers or challenges include: insufficient
knowledge about the customers and the market in which they are emerging, weak
financial resources to support growth, and poor skills in globalization and marketing
(Varis, et al., 2001).

Innovation and Entrepreneurial Activity for Economic Growth

There is a wide agreement that innovation and entrepreneurial activity are the
drivers of long-run economic growth (Grossman & Helpman, 1994). Those who make
this argument define innovation broadly to include not just new products, but also new
processes, new organizations, new management practices, and new strategies. In the
United States, for example, entrepreneurship is available to everyone. In fact, the history
of the United States is the history of its entrepreneurs. Consider just a few of the many
entrepreneurs who have helped shape the American economy. The economy of the United
States had benefited greatly from a high level of entrepreneurial activity, which has
resulted in rapid innovation in products and process. For example, companies such as
Cisco Systems, Dell and Microsoft, Microsoft, Apple Computer, Starbucks, etc., created
significant economic value by helping to commercialize innovations in products and
processes. Thus, one can conclude that if a countrys economy is to sustain long-run
economic growth, the business environment must be conducive to the consistent
production of product and process innovations and to entrepreneurial activity (Hill,
2007).

Another example is in the case of Poland. The economy of Poland is benefiting

from the high level of entrepreneurial activity. The Poles are entrepreneurial and more
than 1.5 million small and mid-size companies have established since 1989 in Poland.
Foreign investors are arriving in Poland and its gross domestic product (GDP) is growing
by 3.2 percent, which is faster than the old EU countries rates. Polands productivity has
increased by over 3.7 percent in 2004, which was over twice the average of EU. These
facts present a positive picture, even though their bureaucracy is considered one of the
worst in Europe (Fairlamb & Turek, 2004).
A country that has considered innovation and entrepreneurial activity highlight the
advantages of a market economy (Hayek, 1989). In a market economy, such as in the
United States, any individual who has an innovative idea is free to try to make money out
of that idea by starting a business (by engaging in entrepreneurial activity.) For example,
millions of people from all over the world have taken the entrepreneurial challenge and
succeeded in the United States. For example, the number of Hispanic-owned businesses
in the United States in growing three times the national average (Williams & Kang,
2006). Thus, market economies contain enormous incentives to develop innovations.
However, in a planned economy, the state owns all means of production. Consequently,
entrepreneurial individuals have few economic incentives to develop valuable new
innovations. Under a planned economy, it is the state, rather than the individual, that
captures most of the gains. Hence, both individuals and businesses must be given the
opportunity to profit from innovative ideas (Hill, 2007).
Studies have shown that young companies that emerge into global market at an
early age are able to adapt more quickly to that market and become more dedicated to it,
as compared to older companies that have decided to expand globally. Since they are new
to the market, young firms are able to obtain more knowledge about the global market to
make unbiased decisions and take more risk. As a result, their responses to any problems
faced are not standard. Since young companies have not yet established any domestic
relationships, the company would make the global market its priority, therefore placing
more effort towards its growth and success. In contrast, older companies have already
established their relationships with domestic partners and would therefore prioritize their
domestic markets. The older firm may also see a global market as more costly and risky
to them, and may decide to remain in the domestic market (Autio & Sapienza, 2000).
One of the risks of expanding globally is the effect of limitability on the growth of
the company. Imitability is defined as the ease with which a companys technology can
be easily replicated by outsides. As a firm moves into a foreign market its processes could
be easily duplicated by its competitors, which could hinder the companys growth. A
company should be aware of this risk and acquire proper legal protection against it.
Although there are many opportunities and benefits to be obtained from global
expansions, a company must consider such factors as: acquiring an understanding of the
country, such as its culture and economic environment, legal protection against
imitability, the effects of age when entering the global market. By considering these
factors the company would be able to grow and succeed in the global market (Autio &
Sapienza, 2000).
The perception on entrepreneurship has been from both individual and corporate
perspectives. An entrepreneurial mind-set fundamentally involves awareness to
discoveries and the ability to take hold of opportunities. Success in recognizing strategic

opportunities or options is the result of effort and luck combined with alertness and
flexibility. It is also necessary to unite entrepreneurship and strategic management
perspectives when explaining sources of wealth creation (Jantunen et al., 2005). For a
company to be successful in global market, it also has to settle its processes and
structures to compete in the changing global environment. The company would have to
change its management style, its practices, and structure to function effectively in the
global market. For example, the local companys management style may not be
appropriate to apply to its subsidiary company abroad because of the differences in
culture. Therefore, it is crucial for a company to adjust its operational processes in order
to compete and grow in the global market (Jantunen et al., 2005).

Entrepreneurial Orientation
Entrepreneurial orientation is the ability of a firm to create new ideas, to adjust to
a new environment, to grasp opportunities, and to rise above risks and challenges in the
global market. This entrepreneurial orientation concept has been found to lead to
improved performance (Zahra & Covin, 1995; Wiklund & Shepherd, 2005). Studies have
been conducted to decide whether entrepreneurial orientation has a positive, negative or
no relationship to a firms international performance. These studies showed different
results. According to one study, there is a weak relationship between entrepreneurial
orientation and the start-ups performance (Lee et al., 2001). Another study found out that
there is no relationship at all with business profitability (Slater and Narver, 2000).
However, another study suggested that an entrepreneurial orientation enhances the
relationship between a firms knowledge-based resources and its performance (Wiklund
& Shepherd, 2003). Furthermore, one study also ruled that entrepreneurial orientation led
to enhance performance (Zahra and Covin, 1995).
Although some studies have provided different results, it has been concluded that
the firms success in the global market is also dependent of its entrepreneurial orientation.
All this supports opportunity recognition in the new global market. Hence, there is reason
to believe that the issue of entrepreneurial orientation has a positive effect on
international performance. Entrepreneurship orientation and a companys integrating
capabilities are also positively related to a companys global performance.
Entrepreneurial oriented company should also conduct examinations to improve its
operations effectively and skillfully. Entrepreneurial oriented firms also create
opportunities through their actions. The active and effective implementation of new
organizational strategies and practices improve productivity and enables firms to match
their asset base to the requirements of a changing business world (Jantunen et al., 2005).

Conclusion
Globalization of the global economy has raised the vision of firms who now see
the entire world as their market. Some of the ways to do an international competitive
advantage is by the use of efficient, worldwide communication, technology, and
transportation. International entrepreneurship is a new and somewhat surprisingly
growing area of international business research activity. This research paper reviewed the
importance of the global entrepreneurship and discussed the study of global start-ups, the

processes involved in new venture creation, the creation of global start-ups, the
characteristics of successful strategy for some small and medium firms, the emerging
risks and challenges for firms in the global markets, environmental conditions for
entrepreneurship, and the success factors in the use of joint venture in developing
countries. Although this paper has many limitations, further research is necessary
regarding the link between international and local operations, especially for the small
firms in the developing countries. It would be fruitful to do further research on the
framework for assessing the link between small firms in developed nations, and the
developing nations firms that join them in joint ventures. Another interesting direction
for future research to do more comparison studies on the characteristics and behaviors of
individual entrepreneurs between cultural and national boundaries.

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