Government Matters

In the booming economies of the developing world, including Brazil, China, India and eastern Europe, numerous entrepreneurs are starting new businesses daily; some have already built mammoth enterprises. Their accomplishments are laudatory, but in most cases their company’s competitive advantage does not come from innovation, but because they provide products and services at the lowest cost, accept reduced profit margins, or have imported ideas that are already proven elsewhere in the world; by definition they rely on a less defensible or durable position than those with proprietary products and services. Abundant entrepreneurial activity and recurrent innovation excellence does not exist in a vacuum, nor does it materialize consistently without the establishment of specific conditions. If a country’s public-policy goals aim for the long-term nurturing of systemic innovation and entrepreneurship, then implementing a thoughtful multidimensional mix of governmental policies that fit the cultural norms becomes vital. Unfortunately, these conditions rarely coexist productively. As with most things in life, off-the-shelf formulae infrequently provide one-size-fits-all directions for reaching the intended objective. However, the approach and lessons of those that have made significant headway provide instructive examples of the art of the possible for building an entrepreneurially driven economy.