The entrepreneurship success of a country can be borne through investment in intellectual capital but its sustainability depends mainly on political and economic factors. Bulgaria is one country with a lush intellectual capital featured through valuable capabilities of individuals and enterprises. Worth noting is that entrepreneurship is a tool for wealth creation that benefits both the individuals and the country. For instance, the US is known for its entrepreneur-friendly environment that encourages growth of small businesses for wealth creation.
Bulgaria also needs to seek ways through which it can sustain its intellectual capital for further entrepreneurship stimulation and subsequent wealth creation. The purpose of this dissertation is to compare Bulgaria to Sweden (a country in the Nordic region) and the UK (a country in Western Europe) in terms of entrepreneurial success. Importantly, economical and political factors that affect entrepreneurship in these regions are discussed and a reference is made on the US Silicon Valley’s entrepreneurship stimulating strategies.
The main aspects that the article considers include the education system, fiscal stimulus and immigration in relation to entrepreneurship. Bulgaria: Brief Background Bulgaria, a lower-middle income nation is situated in the Eastern Europe and currently faces a transitional economic period with growth expectations (Manolova, et al. 2007; Georgieva, 1999; Emerson, 2005) and establishment of a civil society. The country orients towards adopting a market economy and democratic institutions, and therefore human capital acquisition is vital for this process.
Buckwalter (1995) asserts that leaders in Bulgaria and the Eastern Europe at large face a dilemma between the need to increase massive production and wealth, and to align this with political, economical and humanitarian agendas. For over 40 years from the 1940s to 1989, the Communism rule ignored the private sector of Bulgaria’s economy and market liberalization and economic and institutional reforms were only realized in the 1990’s after the Berlin Wall’s fall (Manolova et al. 2007 ).
Bulgaria is therefore transiting from the centrally planned Soviet-kind Communism that enhanced spatial egalitarianism to a market economy characterized by several entrepreneurial ventures Furthermore; the education sector in Bulgaria has since invested in intellectual capital where industrious youth are encouraged to attend schools to study entrepreneurship. Importantly, most of the higher education institutes for instance Sofia University, incorporated comprehensive entrepreneurship studies in their curricular (Nikolava, 2006).
According to Buckwalter (1995) possibility of economic inequality in the region is possible because of various entrepreneurship activities in Bulgaria. Nikolaeva (2006), however, sees the practice as an adjustment of Bulgaria to the market and the Europe but at the same time a preservation of Bulgaria’s national identity. Impact of political, economic and academic factors on entrepreneurship in Bulgaria
The abrupt yet peaceful political transition from Communist’s rule to coalition government rule, under a parliamentary democracy after independence, stimulated business law changes in Bulgaria (Buckwalter, 1995) and entrepreneurship emerged. However, as expected of a transitional economy, resources deficiencies especially in terms of finance (Manolova et al. 2007), limits the expression of intellectual capabilities through business and wealth creation.
Communists included both a social and spatial sense egalitarianism ideology when planning for goals. Central economic planning entailed industrial spatial dispersion which however encountered prolonged inefficiencies that related to the administration and the infrastructure. Additionally, goal geared towards spatial dispersion conflicted with those of effective resources use and hence tampered with increased production (Buckwalter, 1995).
As much as spatial inequality prevailed in the later decades of the Communism rule, Buckwalter (1995) suggests that the first two decades of the Communist rule experienced a proportionate regional equality when the 1952 index of per capita retail sales is an evidence to go by. The Communism rule however, led to the diminished primacy of Sophia, the largest Bulgarian city, while medium-sized cities received relative gains due to population shifts from Sophia. This is suspected to be as a result of government policies that imposed standard employment and income distribution based on relative egalitarian ideology.
The economic activities were therefore dispersed and urbanization became rampant with that of Sophia declining to almost equalize with that of other cities. However in the final Communist era, regional inequality prevailed when capital fund distribution in cooperative enterprise and the states were unequally distributed and Sophia almost doubled the Rousse per capita investment. Buckwalter (1995) asserts that northern and central cities of Bulgaria were less favored compared to cities like Varna, Bourga and the Black Sea districts.
Buckwalter (1995) assumes that these activities occurring in the Communists’ era alleviated the regional inequality in Eastern Europe but efforts to eliminate them resulted to an alteration of economic activities distribution and hence leading to regional equality. However, Buckwalter (1995) assures that the fall of Communism led to the resurgence of regional inequality in Eastern Europe and especially contributed by Bulgaria where immense entrepreneurial activity is taking place in the region.
In the effort to bring about social and economic change in this transiting economy, universities are enforced with the responsibility of imparting intellectual capital to students, and transformation of the higher education models began in 1990 with institutional reforms (Georgieva, 1999). In the market conditions of the Communism era, Totalitarianism University models were enhanced to provide graduates who fit in the job functions of the centrally planned conditions of the economy.
The totalitarian university institutions entailed limited specialization and rigid differentiation, focusing mainly on technology and engineering. Nikolaeva (2006) confirms that politicization of academic institutions isolated them from networking at international levels. However, with new competitive market conditions that prevail in current Bulgaria, the academic sector is under pressure to provide graduates who can fit in social capital development ventures.
The current higher education models showcase complexities and are diversified to incorporate missions that reflect knowledge advancement through professional competencies provision in various disciplines. According to Nikaloeva, (2006) the quest for social and economic liberation led to an increased valuation of education among the Bulgarians and young industrious citizens were sent to Europe’s recognized institutions through funds raised voluntarily in the community.
Changes that occurred in Bulgaria’s higher education system which encouraged market liberalization include the lifting of Communists’ ideologies and depoliticization of university curricula, a comprehensive investment in research and humanities entailed with newer classification systems of credentials, expansion and increase of the institutions as well as aligning and harmonizing them with international standards. Manolova et al. (2007) applies the expectancy theory to indicate the economic growth expectations of Bulgaria.
Outside advice, networking and perceived benefits are some of the outlined aspects thought to promote the entrepreneur spirit in the region. Manolova et al. (2007) indicate that private businesses were legalized in Bulgaria in 1988 and the number of nascent entrepreneurs rose in the 1990s to about 5 percent of the adult population and therefore catching up with that of the developed nations. Entrepreneurship practiced by small to medium-sized private firms in Central Europe accounts for about 50 to 60 percent of the GDP just like in the industrialized western countries (Manolova et al. 006).
Bulgaria has therefore a chance to benefit from entrepreneurship since it has been cited as the core instrument for job creation, wealth production and social change (Nikolaeva, 2006; Manolova et al. 2007; Georgieva, 1999). However, the growth and sustenance of Bulgaria’s intellect capital in enterprises depends on public policy aspects and managerial concerns. Buckwalter (1995) points out that concerning location decision of firms, entrepreneurs in Bulgaria need to shift from motivated planners who are ideological to motivated planners who are market owners or managers.
Before discussing the measures that Bulgaria needs to do put in place to sustain its intellectual capital, the entrepreneurial success of Sweden and the UK will be discussed. Enterpreneual Success of Sweden (Nordic Region) Norm entrepreneurship in the Nordic region is a foreign policy that gives the small Nordic states power to involve in international politics (Bjorkdahl, 2007). Sweden and other countries in the Nordic region are recognized globally from entrepreneurship and are likely to be given a platform to comment on issues affecting the international politics arena, based on this.
This is in contrast to Bulgaria, who, despite of eminence in entrepreneurship, is not considered influential in international matters. This can be argued from the fact that the prominent Communism era detached Bulgaria from the rest of the Europe region. Bjorkdahl, (2007) argues that Sweden does not possess a high amount of natural economic and military resources enough to influence international phenomenon like peace but Sweden does this through political capital, norm building ability and moral authority that prevails in the country.
Government policies, state involvement and economic policies determine the entrepreneurial success of a country. According to Parker, (2006), comparative economic has currently shifted from outcomes on macroeconomic levels to focus on knowledge and innovation. Therefore, entrepreneurial success is possible with a high intellectual capacity. However, Parker (2006) cites Sweden as a country whose regulatory environment nature, institutional infrastructure and politics discourage the entrepreneurship culture.
Sweden however is economically famous for possession of large firms. Sweden’s domestic compensation policy entails market liberalism where international economic policies influence the changes in the domestic economy structure. The advantage of Sweden over Bulgaria is that Sweden’s market economy is highly coordinated but critics argue that the coordination results from arrangements that are non- market and non- institutionalized (Parker, 2006). Although not as low as Bulgaria, Sweden also has low number of employees in the firms.
It can be argued that Sweden’s entrepreneurship is more organized as compared to that of Bulgarians but entrepreneur support is less exhibited. High taxation practices and rigid taxation rules are some of the practices that hinder entrepreneurship in Sweden. Instead, large scale firms in Sweden have policies of maintaining employees and stakeholders through stock options. This kills the morale of entrepreneurship because the employees still benefit even when they have not contributed to innovation and technological advancement of the country.
In Sweden and the Nordic region at large, the entrepreneur takes all the risk when starting a business, a factor that brings fear to hardworking entrepreneurs who feel that trends in the international economy may affect their firms negatively. When compared to an established entrepreneur culture like that of the Silicon Valley in the US, the venture capital that Sweden grants to the entrepreneurs is very limited. Moreover, university students in Sweden find entrepreneurial careers to be less lucrative and therefore get involved more on the white collar jobs, no wonder the large scale firms establishment.
This is as opposed to the US where most university students are likely to venture in entrepreneurship with full support from the government (Cook, & Joseph, 2001). Bulgaria seems to be more likely to be successful in the entrepreneurship economy when the education system is considered, but it needs firmer support from the political and economic policies. The Silicon state in the US therefore serves as a better example of how entrepreneurship is supported for individual development and wealth creation. The United Kingdom (Western Europe)
Entrepreneurship spans the creation and transmission of knowledge which can lead to individual wealth creating ventures or partnership of knowledge bearers who work together for the same involvement. According to D’Este and Fontana (2007), several higher education institutes in the UK have started to incorporate and support entrepreneurship careers in their curricular. This is because entrepreneurship has been associated with increased and improved innovations and technology advancement, which are promoted when industries and universities collaborate.
However, Thurik (2003) relates the high unemployment rates experienced in the UK to lack of entrepreneurship and inadequate industrial infrastructure and attributes the reduced employment rates in the period of 1980s to 1990s to entrepreneurship. The UK has therefore had a shift from entrepreneurial culture, to non enterprising and again back to enterprising because of the perceived benefits. Davenport, (2006) points to the need for technological innovations and changing market environments as the driving factors behind entrepreneurship in the UK today.
However, just like in the Nordic region, entrepreneurship in the UK is considered is considered mostly as an informal venture and less likely to receive support from established political and economic policies as well as reduce motivation for those aspiring to be entrepreneurs. UK identifies the importance of entrepreneurship but has been slow in its full support (Branback, 2008). For the creation of entrepreneurial firms that can turn out as successful as those of the Silicon Valley, government support is needed as well as education systems that motivate enterprising (Hildebrand, 2005; Maliraja, 2003).
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