Entrepreneurship, Skill or Luck ?

What makes entrepreneurs successful?  Is it skill or luck?   Many argue that an important component of entrepreneurship is the willingness of the venturesome to ‘assume’ or ‘insure’ the doubtful and timid by guaranteeing to the latter a specified income in return for an assignment of the actual results.” In this view, Luck is a big determinant of entrepreneurial success. It is the only determinant of entrepreneurial success: in their model entrepreneurs are simply less risk averse individuals who are willing to guarantee workers’ wages and bear residual risk.  Schumpeter argues just the opposite, claiming that “the entrepreneur is never the risk bearer,” but rather an innovator, one who discovers new production processes, finds new markets, creates new types of organizations, or introduces new products. Entrepreneurial success, in this view, flows from innovative skill.  Only suppliers of capital bear risk.

By examining the experience of serial entrepreneurs and the venture capitalists that fund them, we are able to provide insights into how important each is and what type of skill each possesses.  It is indicated that skill is an important determinant of success for entrepreneurial startups.  Successful serial entrepreneurs are more likely to replicate the success of their past companies than either single venture entrepreneurs or serial entrepreneurs who failed in their prior venture.  

More experienced venture capital firms are also shown to have higher success rates on their investments.  However, this is isolated to first time entrepreneurs and those who previously failed.  When experienced and inexperienced venture capital firms invest in entrepreneurs with a track record of success, there is no performance differential.  This evidence would seem to suggest that prior success is a signal of quality or that venture capital firms add little value to talented, successful entrepreneurs.  If prior success were pure luck, we would not see this pattern.   

While they are more likely to be successful, serial entrepreneurs are not able to extract all of the value from their superior ability.  We find that successful serial entrepreneurs do not achieve higher valuations than do other entrepreneurs.

This leads to higher deal returns for venture capitalists who invest in companies started by successful serial entrepreneurs.  Investing in serial entrepreneurs also leads to higher rates of return of the funds themselves.  

Waseem Chishti

11k-3033

WOMEN ENTREPRENS IN PAKISTAN

WOMEN ENTREPRENEUR IN PAKISTAN

HOW TO IMPROVE THEIR BARGRAINING POWER

As being Eve’s daughter on Earth, women today face fewer barriers, inequities still exist, negatively impacting the growth of women-led and owned initiatives. With reference to an associate professor of strategy and policy and director of the Council for Women's Entrepreneurship and Leadership at Boston University's school of management:

"We realize anyone trying to grow a business is going to face challenges and hurdles... but the hurdles are higher for women."

A woman has less entrepreneurial experience and is less likely to participate in networks with nigh net worth individuals. It is a difficult prospect for women to raise capital. If such commitments are made by women, it is often needed to build a stronger case about her capabilities and commitment than their male counterparts without the benefit of established relationships.

It is necessary to dig deeper to understand the gender biases embedded in society which limit women’s mobility, interactions, active economic participation and access to business development services. There are two basic categories in the business environment for women that reflect the complex interplay of many factors. The first is made up of social, cultural, traditional and religious elements. The gender bias of this type of system is rigid and deep-rooted as it draws legitimacy from the perpetuation of a traditional mind-set, established rituals and a firm belief system. The second group of factors derives from the first group, taking the form of constitutional structures, policy documents, regulatory arrangements and institutional mechanisms. This category is contemporary rather than traditional, so it is cosmetically impartial.

The World Bank Country Gender Profile of Pakistan deplores the fact that the status of women in Pakistan is among the lowest in the world. UNDP (1996) describes the strong “inside/outside” dichotomy in Pakistan, where women are restricted to the “inside” space of home and household, embodied in the tradition of veiling. This restricts women's access to education, employment, training opportunities and social service.

There has been a gradual growth of support initiatives in both the public and private sectors, mainly to promote enterprise development. Correspondingly, activities to promote women’s entrepreneurship have also been initiated by the Government, donors and international agencies, and NGOs and CBOs. Successful micro-finance and micro-credit schemes have been ongoing for some years now, such as the First Women’s Bank, Bank of Khyber, Aga Khan AKRSP, National Rural Support Programs (NRSPs) and, more recently the Khushali Bank. Several of these have also contributed to supporting women’s enterprise development.

As a result of these recent support initiatives, I now felt that a considerable amount of unrecorded information, and experiences and lessons available on the constraints and problems. In order to formulate and develop workable, effective, targeted and cost-efficient strategies, it is necessary to examine the factors influencing women entrepreneurs in their successes and failures, with a view to assisting women entrepreneurs in up scaling and increasing their negotiation skills and bargaining power.