THE STUDY OF IMPACT OF GLOBALIZATION ON ENTREPRENEURIAL OPPORTUNITIES, STRATEGIES AND PERFORMANCES: A CASE OF PAKISTAN
ABSTRACT
This study examines the impact of globalization along with other dimensions (Economical, Socio-cultural, technological and financial) on entrepreneurial opportunities, strategies and performance in Pakistan. The result shows that the western model when applied in Pakistan shows almost the same outcome as in western society, the only aspect showing inverse proportion is technology, while others are displaying direct proportion.
Results reveal that when the model which is best in western culture is applied in Pakistan, shows inverse proportion.
Key words: globalization, economical, socio-cultural, technological, financial and entrepreneurial opportunities, strategies and performance.
INTRODUCTION:
Entrepreneur, this term has been used in various literatures in many different forms, in some they are refer to as risk takers, who start their own business in the way they want to pursue it, while , some term them as innovators who change existing business processes according to their need. To us an entrepreneur is an individual who is highly self-motivated and wants to carry out things in his own ways. Entrepreneurship is not only just an economic activity, but it is basically the method in which individuals (Entrepreneurs) who are profoundly motivated or are innovators or risk takers, do things in a different way which has never been done earlier. Like the term entrepreneur, entrepreneurship also has been described in many different ways some refer to it as a way to create a new organization; some say that it is a method to exploit existing resources in a new way, while some refer to it as a way to exploit new opportunities. The aim of the study is to see that how globalization can affect an entrepreneur in pursuing different business opportunities.
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Globalization is one of the variables which has a major influence on entrepreneurial activities, that is it is one of the factor which affects the way an entrepreneur carry out his business in any particular region. Presently, it has been characterized as a phenomenon that has pushed all areas national, local, regional or global towards a single economic system. As it is evident from recent global business environment that various hurdles of trade has been reduced, for example tariffs reduction, or tax exemptions on imports and exports thus it is promoting entrepreneurial activities. Moreover globalization has firmly integrated world economy, which enabled entrepreneur not only to take advantage of new opportunities available in different regions but it also has open new gateways for them to attain all types of available technological and innovative knowledge. Hence it can be stated that globalization not only assists entrepreneur in pursuing new opportunities but it also helps them in designing strategies which as a result supports him not only in exploiting various opportunities but also in improving their performances.
Entrepreneurs can affect economy in various ways, as they play a vital growth-developing role in all developed and undeveloped countries. There are numerous researchers, who have proposed that this era is more diverted towards entrepreneurial economy rather than managerial economy. Entrepreneurs have strong characteristic of willingness to take risk, by introducing new and innovative ideas, not only they adopt these ideas but they also make solid efforts to make these ideas a successful reality even in this reign of economic crisis. Moreover not only they exploit and consume globally available business opportunities, but they also create new businesses which in turn create numerous job opportunities, new and innovative business process and strong competition, therefore altogether the increasing levels of entrepreneurial activities results in economic development. Globalization has brought all economies together, entrepreneurs take massive advantage of this phenomenon, because they can not only avail opportunities and resources’ in their region but they acquire them anywhere round the globe.
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Culture have strong effects on the way n individual behave in a economy, this sets up norms and values along with personalities and attitudes of individuals, hence we can say that ultimately there is a strong relationship between entrepreneurial activities and cultural specificity. Culture have a strong affect on how an individual feels, behave, act in daily lives, this factor distinguishes one society from another. Therefore we can say that entrepreneurs from different regions behave differently. In order to succeed in this global environment entrepreneurs study and analyze different cultures in which they propose to compete and carry out business activities.
Entrepreneurial activities cannot take place in a vacuum. Entrepreneurs need environment in order to compete and to trade. Environment also have a intense effect on entrepreneurial activities, they affect them at national level, that is that no matter what sort of economy entrepreneurial activities are taking place environment will affect them, in both positive and negative way.
There are numerous socio-cultural factors that can influence an individual to become an entrepreneur. Socio-cultural aspects influences the way an entrepreneur behave, take decisions and trade because these factors that are directly related to entrepreneurs background,i.e. his family, financial, cultural and religion background, his relationship with family members and friends.
As it has been witnessed that in recent decades that technology has evolved immensely, not only evolved but it is continuously improving, hence in order to successfully avail entrepreneurial opportunities, entrepreneur must readily and proactively adopt them. Globalization has not only integrated different markets but it also has integrated technological factors.
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Globalization has created various opportunities for entrepreneurs to obtain financial aids in order to run their business earlier they had only limited opportunities but now they have numerous ways to obtain resources at the cost on which they desire.
After intensely scrutinizing the factors mentioned above we can conclude that globalization has a dominating effect on entrepreneurial activities, it not only provides them a suitable background but it also helps in various ways in which entrepreneurs can shape their strategies.
In the following, you will see our literature review, research methodology, reliability, data analysis and test along with some recommendations.
LITERATURE REVIEW:
The term entrepreneur has been defined in various ways, in some literature, they are called as risk takers ,who starts their own businesses, while some refer to them as innovators who prefer doing things in new ways and in some other they are those people who are highly motivated and wants to do things in their own ways.Enterprenuership is not like usual business activities, it is the method in which people who are highly motivated or are innovators or simply risk takers, who do things in a new and meaningful way which has never ever been done before. Entrepreneurs have an equivalent position, as to those people who are founders of new business. (Gartner, 1985).
Entrepreneurship implies a high degree of taking risk, and proactive and innovative approaches to strategy making in order to compete in global market. (Allen, 1995; Drucker, 1995; Hitt, Hoskisson and Ireland, 1994; Pisano, 1990; Zahra and Garris, 2001).
Entrepreneurs are creative which means that entrepreneurs create desire in the consumers by creating something new in the society ( Buchholz and Rosenthal, 2005 : 307).
The base for the initiation of the process of entrepreneurship lies, in person, intuition, society and cultures. It is a much more Holistic than simply an economic function (Morrison; 1998a) .entrepreneurial activity has been majorly affected by globalization. Globalization in the recent decades has created a complex, interdependent and interrelated world, which has never ever been witnessed earlier. (Ian Goblin and tiffany Vogel, 2010).The term globalization itself is very hard to understand. Despite various publications and debates, it still remains a black box. Currently it is described as a phenomenon which pushes all areas, national, regional, local or global, etc, towards a single economic system. (Olivier Crevoisier, 2000).Globalization reduces the barriers amongst different countries via reduction in tariffs and increased trade activities(Alistair Mckinnon;2003).Economic growth is affected by entrepreneurship in many different ways, (Andre’ Van Stel, Martin carree, Roy Thurik; 2004) as globalization has strongly integrated world economic systems (Sen., 1999; Irwin, 2002; Bhagwati, 2004) therefore various entrepreneurs take advantage of it in exploiting new opportunities.(Samuealson; 2004).Moreover globalization has open various gateways for entrepreneurs to gain technological or innovative knowledge.
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Culture is one of the factors that distinguish one nation from another but globalization has created a platform for people around the globe to understand different cultures. There are many articles that relate; the process of entrepreneurship with culture, that is, culture is also one of the major variables that play an important role in successfully pursuing entrepreneurial activities. The initiation of entrepreneurship is related with certain cultural and societal factors, whereas at the same time various non-cultural and contextual aspects plays key role in shaping up the different entrepreneurial behaviors and actions. There is a significant relationship between the entrepreneurship and cultural specificity (Morrison, 1998b).
Recent literatures has put emphasis on the fact that entrepreneurs play an important role in the exploitation of technological opportunity because of which ,the impact of entrepreneurship and growth becomes a very important research question (Carree and Thurik,; 2003).
Globalization also affects societal dimensions of entrepreneurship; some researcher argues that many social norms derive people into the process of entrepreneurship despite of low individual profits (Giannetti and Simonov; 2003).
Entrepreneurial activities do not take place in a vacuum; the environment-strategy-performance paradigm suggests that the environment plays a key role in shaping up the entrepreneurial strategies (Covin & Covin; 1990; Covin & Slevin; 1991; Dess, Lumpkin, & Covin; 1997; McDougall, Robinson, & DeNisi; 1992; Tan ;1996; Zahra ;1993).Entrepreneurs are alert towards the available opportunities in the environment (Kirzner, 1997, p. 72), mainly there are two major contextual variables, namely, cultural and national environments, that have been identified to account for differences in entrepreneurial behavior (North, ;1990; Shane; 1994).moreover one of the factor that helps running all these activities in a planned manner is finances. Before globalization entrepreneurs had only limited available resources but as the economies got closer these limitations reduced and entrepreneurs found an open doorway through which they can access and obtain funds from all round the globe.(Arie;2010).Hence, globalization and various other factors like culture ,environment etc plays a key role in creating new opportunities for entrepreneurs as well as in designing strategies which cannot just only help them exploit the opportunity but also improve their performances.
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Globalization:
It is a process which desegregate the world into one massive market (Sonia and Kansal; 2009).
This literature review deals with the issues of entrepreneurship and globalization. In many ways globalization has a remarkable affect on entrepreneurial enterprises. The changing international environment in the fields of finance, human resources, technology, politics, economics, and social conditions has made various opportunities for the entrepreneurial enterprises to expand their international businesses at a much faster pace than ever (Sameer Kumar, Dan Liu ; 2005).As we all know that global environment is changing dramatically, earlier only large companies were competing in the international market whereas small companies or entrepreneurs stayed local or regional,howerever globalization made it possible for even small firms to access customers, suppliers or distributors all around the world(Hamid Etemad and Richard Wright).Entrepreneurs take advantage of emerging opportunities through free trade agreements in other countries which is a major result of globalization (Alistair Mckinnon;2003).
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a survey conducted of 242 questionnaires in Quebec and Canada in 1994, revealed that , 44% respondents were in favor of globalization saying, that it open access to new markets, lowers the cost of inputs and intensify the need to improve competitiveness in order to survive, whereas those against it said that it is just a menace and it cost them their loyal customers, which they lost to new entrants i.e. American products,(Julien and joyal;1994) thus the double sword globalization have a common theme, it creates opportunities for entrepreneurs through capitalizing on lower tariffs whereas it also introduces threats, which requires entrepreneurs to strive hard in order to achieve a sustainable competitive advantage (Alistair Mckinnon;2003).Globalization and entrepreneurship are two related concepts we cannot discuss either in isolation, it has been argued that due to globalization developed countries has shifted from an industrial to an entrepreneurial model of production.( Audretsch ;2007).
Economical:
There are numerous ways in which entrepreneurs can affect economic growth, they may introduce essential innovations by entering new markets with new products or any new production processing methods ( Stel,Carree,and Thurik;2004).Entrepreneurial activities plays a growth-stimulating role in both developed and developing countries. Few researchers also argue that now days the trend is more inclined towards entrepreneurial economies rather than managed economies (Stel et, al.).Entrepreneurs have strong characteristics which not only enable them to flourish in this reign of globalization but it also strengthen them to face current economic crisis, as they have the ability and willingness to go forward and adopt new ways and accept risks attached to them (McMorrow;2010).Any nation’s expected entrepreneurial activity can be measured in terms of Per capita GDP based on purchase power parity (Butler,Ko,Chamornmarn;2004).According to neo-classical view it has been theorized that various functions of market as well decisions made by agent’s of that particular market, plays a key role in determining market equilibrium, but today many researcher especially Kinzner suggested that entrepreneur is the one who exploits available profit gaining opportunities in the market by learning and discovering new processes which as a result forces the market towards the equilibrium position(Freytag and Thurik;2007).Entrepreneurs create new business and further these businesses create job opportunities, strong competition and also it introduces new and innovative methods of production, hence high level of entrepreneurship contributes directly towards high level of economic growth(Acs;2006).Globalization have a massive impact on the level of employment relations and work arrangements all round the world, they create various self-employment and employment opportunities(Carr and Chen;2001).Currently globalization have resulted in the emanation of reticulate global networks that assists in communication and interaction all round the globe via which market areas can obtain worldwide coverage, therefore it reduces the transaction, transportation and interaction costs ,forming a united portfolio of new market opportunities for novel types of business firms. The factor of cheap and convenient communication potentials and knowledge spillovers all round the globe becomes one of the major critical success factors for entrepreneurs (Nijkamp; 2000).
Socio-cultural factor:
Society and it’s culture plays a key role in the process of initiating entrepreneurship (Morrison;1998).Socio-cultural aspects of a particular society determines the way entrepreneur act and perform, as it is directly related to the background from which entrepreneurs come from(Gamini and Senathiraja;2003),this includes that what type of relation do they have with their families, their financial backgrounds(Gibb, jr. ;1994)and different culture and religions from which they belong(Butler,Ko,Chamornmarn;2004).Major factors that promotes and supports entrepreneurial activities are networking and leadership. Networking is social relationship and interactions with the stakeholders. Networks in the social structures refer to structural conglomeration which is concerned with the values of the social systems and the network of relations. Structural dimension refer to the relationship and linkages among the people and the social links which provides the means to the entrepreneur to gain access to the resources (Granovetter, 1992).
Social linkages have some facets e.g. network ties, which shows the existence and non existence of the network; network configuration, which describes the ways of connections and appropriate organization, being interlinked ties that is useful in various ways (Nahapiet and Ghoshal, 1998).
Studies proves that social networking and interaction are one of the vital factors in facilitating innovation and creativity, innovation and creativity in the entrepreneurship is just like fuel to the engine(Ruef,2002; Tsai & Ghoshal, 1998; Gabby & Zuckerman, 1998; Hansen, 1998).
Leadership is the process of influencing the other and refers to a critical and complex phenomenon (Hunt, 2004).
There is a overlapping between leadership and entrepreneurship (Czarniawska-Joerges & Wolff, 1991; Vecchio, 2003).
and also the integrated link between the leadership and entrepreneurship(Starr, 1992) Entrepreneurial leaders are the ones that creates visionary scenarios (Gupta, Millan, and Surie, 2004) and also involve idea generation, idea formation and idea enhancement(Mumford, 2002).
Leadership qualities influence the entrepreneurs and other individuals by effectively select and choose the relevant objectives and effectively pursue the strategies, enhance the motivation of the entrepreneurs to achieve those objectives, learning and sharing knowledge and increase cooperation from environment(Yulkl , 2002).
Societal norms in respect to current environment promotes individuals to carry out the process on entrepreneurship (Meeka, Pachecob, York; 2009).
Culture is one of the most vital factors of aggressive competitive survival in national economy of any individual entrepreneur or a business unit. Culture is a very strong powers that shapes up the values, norms as well as personality and attitudes of individuals, a group or entire society (Aniysa Thomas and Stephen Mueller)..Entrepreneurial culture has become one of the widely used expression at business level, as it explains that what type of social and personal attitude will help entrepreneurs in prevailing and supporting their activities(Morrison ;1998).
Technological:
In the past few decades, it has been witnessed that, there has been an accelerated change of technology as well as diffusion of it in companies and societies around the globe (Karagozogulu and Lindell; 1998)In order to survive and grow in this vastly changing global environment, it is necessary that entrepreneurs must adopt technological advancements in order to improve their company’s processes(Gagnon,Sicotte and posada;2000).Recent researches has shifted the attention from cultural and psychological aspects of entrepreneurship towards the exploiting of new and innovative profit-seeking methods(Shane and Venkataraman;2000).In long-term economic growth technology change is one of the important factor(solow; 1957, Zolta´n J. A´cs
Attila Varga; 2005).Moreover technology has made this world a global village. Low cost of worldwide communication and increased functionality of communication system has drastically impacted the affect of globalization, internet has made it very convenient for entrepreneurs to access new market, and to exploit new opportunities, adopt new researches (Mckinon ;2003).
Technology created a phenomenon innovation, when it introduced internet, it was a greatest invention, it made foreign trade easier for small businesses, moreover it made international trade in services convenient and cheap as it can transfer enormous amount of data at great distances in nominal prices (Levey; 2004).
In the past few decades it has been witnessed that technological advancement has accelerated (Karagozogulu and Lindell; 1998).In order to survive and grow this immensely changing technological era, countries all round the globe must adopt it as soon as possible in order to improve their method of processing (Gagnon,Sicotte and posada;2000).Globalization has integrated the entire world into a single market system (Sonia and Kansal;2009).Globalization has not only combined all the market systems it has also integrated technological development amongst all the countries around the globe, because of this all the businesses in business sector are adopting common business system instead of developing their own(Gamini and Senathiraja;2003).
Financial:
One of the major effect one effects of globalization is increase in the opportunities for obtaining finance. Earlier, entrepreneurs and other companies were only confined to limited available sources of finance, but as the world economy integrated, these limitations decreased. Due to globalization, now entrepreneurs can access to various money market to obtain investment funds to nearly all countries all round the globe(Arie;2010).Financial globalization is beneficial to the investors all around the world, it plays a key role in generating major economic benefits, it enables investors to all round the world to share risks better, moreover it also allows free flow of capital where it’s productivity is at its peak, it also provide opportunities to different countries to collect all the profits in respect of their competitive advantages (Stulz ;1999a) and it is not only confined to investors but also entrepreneurs as they can easily find funds which, was not possible earlier.
Entrepreneurial opportunities, strategies and performance:
Globalization has an immense effect on all entrepreneurial enterprises; it caused a very prominent change in international business environment in terms of social, financial, economical and technological factors. These factors created numerous opportunities, which can be exploited by entrepreneurs in order to expand business internationally or to create new and innovative ventures (Kumar and Liu; 2005).Globalization help entrepreneurs to access markets all round the globe which not only promote the entrepreneurial activity but also helps entrepreneurs in formulating various low cost strategies, because they can easily access different suppliers for raw materials and can select one, who bests supports their interests, i.e. to earn more profits(McKinnon;2003).As entrepreneurs have open access to a huge market, they can not only exploit opportunities in developed market but they can also take up many available opportunities in undiscovered markets(McKinnon;2003).
After comprehensively scrutinizing the above literature it can be concluded that globalization plays a key role in the creation of new entrepreneurial opportunities not only this it also creates a platform in shaping various strategies that assists entrepreneurs to compete, grow and survive in this global environment and improve their performances.
THEORETICAL FRAMEWORK:
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HYPOTHESIS:
Six groups of work hypothesis related to the impact of globalization on entrepreneurial opportunities, strategies and performance were raised in this study.
H1: Globalization is positively related to entrepreneurial opportunities, strategies and performance.
H2: Economical dimension is positively related to entrepreneurial opportunities, strategies and performance.
H3: Socio-Cultural dimension is positively related to entrepreneurial opportunities, strategies and performance.
H4: Financial dimension is positively related to entrepreneurial opportunities, strategies and performance.
H5: Technological dimension is positively related to entrepreneurial opportunities, strategies and performance.
METHODOLOGY:
Focus:
The prime focus of this study is entrepreneurs, who were defined as individuals who initiated an entrepreneurial event and started a venture (Gartner, 1985; Low & MacMillan, 1988).
More specifically, the researchers included owners and employees who were directly or indirectly involved in managing the business at the time of the survey. The main objective of this research is to determine the relationship of entrepreneurial opportunities, strategies and performance mainly with globalization, along with economical, environmental, socio-cultural, technological and financial dimensions using following western model to find that whether this model can be related or not related to eastern society.
Research
“Convenience sampling’’ was used in this study. Questionnaires was filled by owners and employees who were directly or indirectly involved in managing any type of business.
Procedures:
Researchers designed questionnaires using secondary data sources, to conduct survey for this study. The questionnaire were designed in a way that at first researchers asked question related to demographics (age, qualification, job duration and job status),then questions were asked related to all variables, both dependent and independent, the scale used for all variables except technology was seven point likert scale, where 1=strongly disagree,2=disagree,3=somewhat disagree,4=neutral,5 somewhat agree,6=agree,7=strongly agree. For technology three point likert scale was used, where 1= yes, 2=maybe, 3=no. In order to obtain reliable results, the questionnaires were distributed to people related to entrepreneurship, i.e. people having complete knowledge of how entrepreneurial activities are conducted. The data then collected was analyzed using SPSS software, to find out reliability, correlation and regression of all above mentioned variables.
Response:
All the respondents cooperated very well and the data collected was very appreciable and acceptable as shown by the reliability of 0.664 of entrepreneurial opportunities, strategies and performance.
Data analysis:
The relationship amongst independent variables, (Globalization, economical, socio-cultural, financial and technological) with dependent variable, (entrepreneurial opportunities, strategies and performance) is tested through correlation.
The correlation between technological dimension and entrepreneurial opportunities, strategies and performance is negative (-0.243) and is significant at the 0.05 level, moreover the, while all other variables are positively correlated.
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Regression analysis:
Globalization is explaining 80.4% of entrepreneurial opportunities, strategies and performance , the beta is 0.896 and there is high significance level between them and H1 is accepted because P0.05 so H2 is rejected.
Socio-cultural dimension is explaining 5.7% of entrepreneurial opportunities, strategies and performance the beta is 0.238 and p
