Global or Local Entrepreneurship: Which is better for society?


Introduction

This essay assesses which of the two kinds of entrepreneurship orientation is better among global and local entrepreneurship. The first section of the debate exemplifies the advantages and disadvantages of going global. The second section discusses of the merits and demerits of being local. The final section then highlights which of the two is better and the reason why it is better than the other. Global entrepreneurship refers to the ability to create enterprises which have worldwide reach or enterprises which have a worldwide market or have a global vision (McKinnon, Smith and Thomson, 2015). To assess the role of global entrepreneurship Burberry Fashion Company shall be used as a case example of a company which has a global outlook and its contribution to the entrepreneurship and business. Local refers to businesses that have a confined entrepreneurship orientation which means that the business is restricted to a particular country and it does not have global vision or intentions of expanding its markets or production globally (McKinnon, Smith and Thomson, 2015). The aim of local entrepreneurship is to serve the local needs of the local market. In regard to the local business this essay shall use the case of Dandie Fashion Company. The essay shall then examine the implications that each of these enterprises have on the entrepreneurship and business.

Evaluation of global businesses

One of the main advantages of global companies on entrepreneurship and business is that global outlook injects trade in emerging economies. Companies that have global orientation create trade opportunities in the emerging economies (Johnston, 2010). By exporting commodities and products to the emerging economies, global companies such as Burberry Company create jobs and employment opportunities in their economies because they create demand for local products. In addition, Prange and Verdier (2011) noted that successful fashion companies also build emerging economies by purchasing fabrics as well as ready to wear cloth from the emerging countries. Job creation provides the local populations with income as well as disposable income because in many instances the global companies employ locals at a better wages than the local companies. This rejuvenates other sectors of the economy as they increase the spending power of the populations within the economy where they have operations (Kumar and Liu, 2012).

Haar (2012) noted that companies such as Burberry have nevertheless relocated their manufacturing activities to offshore countries. This promotes small businesses and enhances entrepreneurship in the emerging economies (Prashantham, 2016). Fashion companies also engage in skills transfer to the emerging economies where they have relocated their manufacturing. This creates empowers local population with better skills and knowledge for entrepreneurship and business.

The global oriented companies were noted to create accessibility of cheaper goods and services because they had the logistics and the capacity to source for raw materials globally which enabled them to produce their goods and services at lower costs (Vinig and Kluijver, 2007).

However, the globally oriented companies had their weaknesses. McKinnon, Smith and Thomson (2015) noted that the fashion companies such as Burberry have been accused of paying lower taxes in the countries where they outsource their manufacturing. The companies usually do not pay taxes because they are not domiciled in those countries. This denies the government of these countries revenues and results in poor service delivery. The fashion companies have also been accused of exploiting local workers by paying low wages and by overworking the workers in sweat ships. Companies such as Burberry have been accused of contracting manufacturers who use child labour and underpay their workers. This negates the advantages of the global in regard to entrepreneurship and business (Guo, He and Li, 2015).

Evaluation of local businesses  

On the other hand, local oriented companies have several positive impacts on entrepreneurship and business. Audretsch and Keilbach (2007) noted that local oriented companies were eco sensitive and hence contributed to the conservation of the local ecological environment and resources. This implies that local oriented businesses focused on preservation of the local resources and environment. This had positive contribution to entrepreneurship and business because it meant that they developed sustainable ways of doing business which benefitted the local businesses and entrepreneurs. For instance, Dandie has developed solar power systems for its manufacturing facilities which reduces carbon imprints made by the company (Crawford, 2013).

The other main advantage of local oriented business is the creation of jobs for the local population. The company created jobs for the local people as they employed local people and made use of the local skills (Guo, He and Li, 2015). They made the local people have a source of livelihood which encouraged other forms of entrepreneurship.

Nevertheless, the local oriented businesses and companies such as Dandie have been accused of perpetuating poverty (Gorman, 2014). McKinnon Smith and Thomson (2015) noted that the localised business did not provide the local with competitive skills that could make them look for jobs elsewhere. There was no skills transfer in the local companies because there were liminated skills required or the skilled utilised by local oriented business were skills available in that locality.

Locally oriented business do not create infrastructures compared with the global business because they invested little amount of capital in infrastructure (Dimitratos et al., 2013). Lack of infrastructure limited entrepreneurship and business within the areas where the local business was located. This is unlike the globalised which created infrastructures that support other business and entrepreneurship.  For instance, companies such as Burberry could fund factories and access roads to their factories. Also governments tended to support the global businesses with infrastructure in order to attract more foreign direct investment as possessed to local businesses (Guo, He and Li, 2015).

Conclusion

Therefore, once can aver that the globalised businesses were better than local businesses despite their short comings. This is because they created job opportunities; they also increased employment opportunities in the countries where they operated which in turn created entrepreneurship and business opportunities (McKinnon et al., 2015). In addition, it was noted that global business lead to skills transfer which empowered the locals to look for other jobs or to create their own employment opportunities. Also global business creased infrastructure or attracted government investment infrastructure which eased the cost of doing business and attracted their entrepreneurs and businesses to location where there was global business. Despite the advantages of local oriented companies such as creation of local jobs and preservation of environment, the local oriented businesses lacked capacity for skills transfers and attraction of infrastructure development which hindered entrepreneurship and business (Othman, Othman and Ismail, 2012). Consequently, it can be deduced that global oriented business are better than local oriented businesses for entrepreneurship and business.

References

Audretsch, D. and Keilbach, M. (2007) ‘The localisation of entrepreneurship capital: Evidence from Germany’, Regional Science, 86(3), pp. 351-365.  

Crawford, D. (2013) Dandie Fashions and the 1960s Kings Road peacocks. Available at: https://www.candysays.co.uk/blogs/vintage-blog/7232698-dandie-fashions-and-the-1960s-kings-road-peacocks (Accessed 30 November 2015).   

Dimitratos, P., Plakoyiannaki, E., Pitsoulaki, A. and Tüselmann, F. (2010) ‘The global smaller firm in international entrepreneurship’, International Business Review, 19(6), pp. 589-606.          

Gorman, P. (2014) A pop culture treasure trove: Freddie Hornik’s Granny Takes A Trip scrapbook. Available at: http://www.paulgormanis.com/?tag=dandie-fashions (Accessed 10 May 2010).   

Guo, Q., He, C. and Li, D. (2015) ‘Entrepreneurship in China: The role of localisation and urbanisation economies’, Urban Studies, 4(5), pp. 24-45.

Haar, J. (2012) Globalization and Entrepreneurship in Latin America: The Impact of Globalization on Latin America. Florida: Task Force: Centre For hemispheric Policy.

Johnston, K. (2010) The Impact of Globalization on Entrepreneurs. Available at: https://yourbusiness.azcentral.com/impact-globalization-entrepreneurs-9998.html (Accessed 10 May 2013).  

Kumar, S. and Liu, D. (2012) Impact of globalisation on entrepreneurial enterprises in the world markets. Available at: https://www.inderscienceonline.com/doi/abs/10.1504/IJMED.2005.006026?journalCode=ijed (Accessed 30 November 2014). 

McKinnon, S., Smith, J. and Thomson, J. (2015) ‘Window to the World: Using Technology to Internationalise Entrepreneurship Education’, Journal of Perspectives in Applied Academic Practice, 3(3), pp. 15-23.

Othman, N., Othman, N. and Ismail, R. (2012) ‘Impact of Globalization on Entrepreneurship Education and Entrepreneurial Skills in Higher Education Institutions’, International Conference on Economics, Trade and Development, 5(1), pp. 23-44.  

Prange, C. and Verdier, S. (2011) ‘Dynamic capabilities, internationalization processes and performance’, Journal of World Business, 46(1), pp.126-133.  

Prashantham, S. (2016) When globalisation meets entrepreneurship it can be a force for good. Available at: https://theconversation.com/when-globalisation-meets-entrepreneurship-it-can-be-a-force-for-good-64415 (Accessed 30 November 2015). 

Vinig, T. and Kluijver, J. (2007) ‘Does Globalization Impact Entrepreneurship? Comparative Study of Country Level Indicators’, Information Systems, 7(8), pp. 7-8.   

Published by Samuel Ng'ang'a Mwangi

One day I had too much to tell but there was no one to tell the story. I had to write articles, print them and then give them out to anyone who cared to read. Author of "So You Want To Get Into Courtship?" A Guide To Purposeful Christian Courtship. I write and rewrite on my blog www.mwelisa.com.

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