Correlations between entrepreneurship framework and economic performances.

Zirra, Daniela

1. INTRODUCTION

In actual circumstances of economic evolution, it is more and more difficult to realise economic performance and to evaluate how a public decision can stimulate entrepreneurial activity, new firms creation, the ambitions of entrepreneurs and managers to create wealth. Also, it is very important to have all the elements for measuring the effects of allocating funds to sustain economic development, to increase the dynamic of companies' activity and to improve the characteristics of business environment, with all the consequences involved.

For this reason, entrepreneurship (E-ship), as phenomena that create and exchange value (SCADPlus, 2008), need a specific and complex framework which is capable to stimulate and support the economic performances of firms in the new era. At international level there are various models of E-ship framework, but they need to be improved and updated such as the requirements and the dynamic of internal and international environment are asking. In these conditions, an E-ship framework must provide flexible and updated services, especially for the new born firms.

2. AN EFFECTIVE E-SHIP FRAMEWORK

Into a dynamic business environment, considering here the rapid technological, economic, social and political changing, SMEs development is a very difficult and complex process, but with many benefits, including human resources development, social cohesion, economic growth, increasing employment, a better flexibility and adaptability of individuals and organizations, competitiveness of national economies, etc.

Also, we have to mention the close correlations between a stable and performing entrepreneurship framework and long-term company performance. This is the reason of the central position in economic development strategies and the importance accorded to E-ship in present day economy, not only in developing countries, but in highest developed regions too. OECD has already elaborated a Demand and Supply Side Model of E-ship Framework (Ahmad & Hoffman, 2008). We appreciate that an adapted Model of this modern concept of the E-ship framework could be represented as in Figure-1.

[FIGURE 1 OMITTED]

E-ship meaning in modern economy is to offer the basis for the healthy circumstances of increasing and stimulating SMEs sustainable development. In actual stage, without an entrepreneurial education and culture, continuous learning abilities and skills it is very difficult to realise positive effects for business performances and SMEs environment.

The elements with a direct influence on E-ship performance, and as a propagate effect with a strong influence on business performances, are:

* External Factors Influence (EFI): individual incentives, culture and motivation, education system, infrastructure, framework conditions.

* Demand Opportunities (DO): technological transfer, R&D, communication, market access conditions, competition.

* Supply Abilities (SA): financial capital, business angel, venture capital, social capital, the quality of human capital.

All the three elements mentioned above represents the key factors which could be named the group of determinants for E-ship Performance (E-SP) and E-ship Impact (E-SI). In the same time, we cannot ignore that E-SP have an indirect influence on EFI, which is changing periodically because of economic and social conditions, in continuous changing and evolution.

As examples for the elements which represent criteria for appreciation the E-SP and E-SI, included also in the adapted Model, we can mention:

* E-SP: the rhythm of firm creation, business density, self-employment, new business survival, high growth firms.

* E-SI: poverty reduction, job creation ratio, productivity growth, economic growth, increasing of firm size.

But, the elements with a very strong influence on business performance are extremely diverse (OECD, 2007). For this reasons it is difficult to mark them out into distinguished categories.

According to the Statistical Business Registers (based on Administrative Registers), E-ship is the effort made to initiate an economic activity in the formal sector. The OECD/Eurostat Approach is to create a framework for Business Demography Statistics. This approach is very important because it gives us the opportunity to create more effective strategies to stimulate and support new firm creation and economic performance of existing firms.

3. WHY TO SUPPORT AND STIMULATE E-SHIP

The general aim of business support policies in EU industrialized areas is to increase competitiveness through various kinds of interventions (European Committee, 2007), especially for SMEs development, such as:

* Providing training, financial, information, conciliation and business services.

* Granting funds for investments and high technology transfer.

* Improving communication and transport infrastructure.

We have to mention again that one of the key for a sustainable economic performance is to increase the competitiveness of SMEs and the dynamic of E-ship (Klapper et. al., 2007). For example, if the goal of government is to increase the flexibility and adaptability of workforce on management level, than the place of an E-ship stimulating policy is: INPUT--state subsidy for SMEs human resources development in business management; COMPONENT Increasing E-ship; TARGET--Increasing workers quality (abilities and skills); GOAL--Increase the flexibility and adaptability of workforce on management level, with direct effects on economic performance.

In the new era, it can be notice that we are going towards an entrepreneurial society. In these conditions, if the goal of an organisation is to increase competitiveness or to maintain it at a high level, the modern management must be in principle entrepreneurial, for all kind of firms, including micro, small and medium too (SMEs). This requirement is more necessary in a very dynamic, aggressive and competitive environment. In this direction, if we are referring on the managerial team of a company, it is often used the concept of dynamic abilities, which could be classified in three categories (Teece, 2007), such as:

* Ability for identifying the new market opportunities, like technological, investments, informational, commercial, financial, etc. and the risks or the potential sources of risks from the economic and social environment.

* Capacity of a correct quantification or measuring the opportunities, risks and trends of a complex and continuous changing economy.

* Skills to catch on the opportunities and to transform them in sustainable business or in real factors for enhance company performances, through reengineering the assets of the organisation and the structure of its activities.

It must be noticed that the public strategies devoted to stimulate SMEs development must be based on correct, in time and relevant information.

All of these conditions are necessary to give the opportunity and to create a technical support for all interested decision makers for a better design, implement and evaluate the effectiveness of resources allocated and used to support SMEs. But, having the information could be a difficult process (Klapper et. al., 2007). We could outline here many influence factors with a strong impact on the quality of gathering and processing data (Table 2).

4. E-SHIP DEVELOPMENT PROJECT

The Human Resources Development Project Phare/2004/016-772.04.02.02.01.01.811, named "Today Managers, Entrepreneurs Tomorrow! Project for entrepreneurial and managerial skills development" itself is promoting the development of E-ship through increasing the quality of all level management for industrial sector. Based on the results of our research, we found that new firms creation depends essentially on policies, institutions and tax systems, specific for each country. Also, we can use 2 indicators for measuring the dynamic of entrepreneurial activity or new born firms (Klapper et. al., 2007): business entry (AER--Average Entry Rates) and density rate (ABD--Average Business Density). Based on WB Study, using data available from 84 countries, we can appreciate that the highest ABD per 1,000 active people, by region, in 2003-2005 is registered in Industrialized Countries (64.23%) and the lowest in Asia (1.57%). The highest AER, by region, in 2003-2005, using data from 82 countries is found also in Industrialized Countries (10.24%) and the lowest in Asia (6.7%). In Romania, ABD is evaluating ascendant in the last 2-3 years, but the indicator is still 2.5 less than EU media. So, the propagate goal of the project, is to create a network between business and high education, for a better evolution of the specialists supply for managerial activities in Romania, using the infrastructure and the experience of all the organisations involved in the project.

5. CONCLUSION

Yet, taking into account the evolution of science and technologies, the continuous changing of business environment, building an effective E-ship framework represents a permanent challenge. In these conditions, the main important requirements for a high performance of national economies are: the E-ship services must be updated based on the most relevant, complete and correct information; a continuous process of developing entrepreneurial abilities and skills; more collaborative projects between firms, universities and public sector.

6. REFERENCES

Activities of the EU (2008), SCADPlus: A modern policy for SMEs, http://europa.eu/scadplus Accessed: 2008-03-05

Ahmad, N. & Hoffman, A. N. (2008), A Framework for Addressing and Measuring Entrepreneurship, OECD Statistics Working Paper. Washington D.C.: OECD, p. 10, Available from: http://www.oecd.org/std/research Accessed: 2008-01-24

European Committee (2007), Evaluating Socio Economic Development, Sourcebook 1: Themes and Policy Areas Enterprise Policy, Available from: http://evalsed.info Accessed 2008-03-12

Klapper, L.; Amit, R.; Guillen, M. F. & Quesada, M. D. (2007), Entrepreneurship and Firm Formation Across Countries. World Bank Policy Research Working Paper 4313. Washington D.C.: World Bank, Development Research Group, Finance and Private Sector Team, pp.2-15, Available from: http://go.worldbank.org Accessed: 2008-14-03

OECD Entrepreneurship Indicators Project: Overview (2007), World Bank Seminar on Entrepreneurship and Development, Washington D.C., Available from: http://oecd.org/statistics/industry-services/entrepreneurship Accessed: 2008-03-09

Teece, D.J. (2007), The role of managers, entrepreneurs and the literati in enterprise performance and economic growth, International Journal of Technological, Learning, Innovation and Development, Vol. 1, No 1, August 2007, pp. 48-61, ISSN 1753-1950

Tab. 1. Influence factors on gathering and processing data.

No Influence factors Description

1. Data availability Not compiling data about new entry
 business or collecting data but not
 processing them

2. Data "purity" Legal or institutional reforms which
 change the rules for registration firms
 or the status of the firms

3. Limitations regarding Not in all countries exists requirements
 data on firm closures for reporting the closure of the
4. businesses

 The existence of Created only for tax purpose, without
 "shell" corporations being active businesses