Why does entrepreneurship policy matter? And how can policies make or break the entrepreneurial spirit? In part two of this feature, Profs. Tales Andreassi and Éder Danilo Bezerra of FGV-EAESP and their fellow co-researchers propose a set of recommendations for facilitating entrepreneurship in Brazil and giving it pace.
Read Part 1 of this feature
Research on entrepreneurship in Brazil through the lens of eight different dimensions – promotion of entrepreneurship; entrepreneurship education; reduction of entry/exit barriers; start-up financing; start-up support, target group measures; infrastructure; and technology and innovation – led Prof. Tales Andreassi and his co-researchers to probe the websites of 39 ministries, secretariats and agencies listed on the Federal Government website and inspect 94 public entrepreneurship policies in the country.
Results showed that Brazilian public entrepreneurship policies focus more on issues related to financing, start-up support and technology and innovation, but there are only few policies directed towards increasing the number of entrepreneurs in Brazil, such as policies on the reduction of entry/exit barriers and infrastructure. Policies related to target groups witness a small representation too. There are also few policies on the promotion of entrepreneurship and entrepreneurship education, which are essential if entrepreneurship is to be seen as a career option by a larger number of people.
What the numbers say
The smaller number of policies prior to setting up an enterprise and aimed at generating more entrepreneurs and new businesses (promotion of entrepreneurship and entrepreneurship education), when compared with policies for existing businesses (start-up financing), reflect Brazil’s stage of development in the field of public entrepreneurship policies. It is at the efficiency stage, where policies prioritise support for small enterprises as a way of improving the entrepreneurial climate, while countries such as Canada are at the innovation stage with policies focus on the promotion of entrepreneurship itself. There is still no policy in Brazil to promote entrepreneurship as a coordinated mechanism that is necessary for the development of an entrepreneurial culture in the country.
Results in the technology and innovation dimension confirm that innovation could be used as a driving force in the drafting of public policy. They also indicate that Brazil, like several other countries, sees innovation as the impetus it needs for growth.
Similarly, target group measures play a significant role in society as they promote economic development and social inclusion. Low priority for target groups, such as women, youth, and the vulnerable, indicate the need to create more policies with this focus.
Despite their low percentage rate, policies related to infrastructure are vital to the creation of a suitable and accessible setting for the development of new businesses and those already in existence. This could be a reflection of the embeddedness of these policies in the panorama of entrepreneurship policies in Brazil. As infrastructure policy is considered basic, it should be formulated to guarantee the survival of existing enterprises and create conditions for the operation of new businesses, and make them more dynamic.
A further problem related to the formation of public entrepreneurship policies is the fact that entrepreneurship has never received due attention at the national level, as initiatives are more local or regional. As such, there should be interaction between the people and institutions in order to form a national entrepreneurship system capable of creating an entrepreneurial environment.
Broadening the scope
With gaps identified in the Brazilian agenda for entrepreneurship support, Prof. Andreassi and his colleagues propose a number of actions to improve national policies. The suggested measures focus on five main aspects – consideration of all stages of the entrepreneurship process, reduction of entry and exit barriers, formulation of policies for target groups, macro- and microeconomics considerations, and wider interaction between actors of the national entrepreneurship system.
Addressing what’s under the radar
The entrepreneurial process – from the birth of an idea to the consolidation of a new business – involves different stages. First, there is the entrepreneur’s intention to set up a company. Next comes the stage where the enterprise is considered nascent – it is being created and does not yet exist. Later, it is regarded as new during the first months of its existence and goes on to consolidate and expand. At each of these phases, the difficulties and requirements of the entrepreneur and the enterprise are different and require different policies. Brazilian entrepreneurship policies mainly focus on maintaining established businesses and there are fewer policies for the early stages. As such, governments should focus on drafting policies which consider the specific requirements of each phase of the entrepreneurial process and also meet the needs that entrepreneurs face in the early stages.
Easing entry and exit
There is the need for expanding policies to reduce entry and exit barriers. Barriers to setting up new businesses is one reason why many people decide not to create one. In the World Bank’s Doing Business, Brazil is one of the countries with the greatest number of demands and costs when it comes to opening a business. Simplifying these procedures and reducing the costs of opening a business could lead more people to take the road to entrepreneurship.
Pillar of support for target groups
More policies should be formulated for specific groups. This would lead to the development of entrepreneurship among groups that would result in greater returns in terms of job creation. For example, there could be incentives for high-impact or rapid-growth entrepreneurship. This type of entrepreneurship is formed by a small group of enterprises which expand rapidly and generate greater dynamism in the economy.
Macro-micro sides of the policy coin
Another recommendation is related to the recognition that there are policies which are essentially macro- and microeconomic. Policies can be formulated from a macroeconomic perspective, which includes those directed towards infrastructure, adequate education, flexible labour markets and research and development. However, there can also be microeconomic policies which focus on individual entrepreneurs or enterprises, information flow and financing. This understanding leads to a better grasp of the economic effect of public entrepreneurship policies and their effectiveness.
Public entrepreneurship policies should also consider more intense interaction between society and institutions in order to form national entrepreneurship systems. These systems should be made up of an interconnected set of agents responsible for creating an environment conducive to entrepreneurship and should include policies with a clear role and focus for this purpose. National entrepreneurship systems recognize the role of each country’s institutions in the formulation of public entrepreneurship policies and as a result, have the potential for making entrepreneurship a consistent activity at national level.
A new fertile ground
Equipped with a clear understanding of their country’s entrepreneurial climate, public policy formulators should consider the relevance of potential entrepreneurs and the small number of policies directed towards them, and create more policies to promote an entrepreneurship culture and entrepreneurship education. As Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, rightfully points out, “Entrepreneurship is the engine fuelling innovation, employment generation and economic growth. Only by creating an environment where entrepreneurship can prosper and where entrepreneurs can try new ideas and empower others can we ensure that many of the world’s issues will not go unaddressed”.
- Link up with Prof. Tales Andreassi via LinkedIn
- Discover FGV-EAESP, Brazil
- Study a Professional Master’s in International Management (MPGI) at FGV-EAESP
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