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Archives of Business Research – Vol. 11, No. 3
Publication Date: March 25, 2023
DOI:10.14738/abr.113.14274.
Wood, V. R., Price, B. J., & Martens, H. (2023). Globalization in the 21st Century and Its Effects on Entrepreneurism and Innovation
Ecosystems: A Call to Action for Africa. Archives of Business Research, 11(3). 75-89.
Services for Science and Education – United Kingdom
Globalization in the 21st Century and Its Effects on
Entrepreneurism and Innovation Ecosystems: A Call to Action for
Africa
Van R. Wood, Ph.D.
Professor of Marketing, Philip Morris Endowed Chair in International Business and
Director-Center for International Business Advancement (CIBA – www.ciba.vcu.edu)
School of Business, Virginia Commonwealth University, Richmond, VA USA
Brandon J. Price, Ph.D.
International Professor of Entrepreneurship, Colleges of Business and Engineering,
Universidad Panamericana, Guadalajara, Jalisco, México, and President and Co-Founder,
Biogenin, S.A.P.I. de C.V., Guadalajara, Jalisco, México
Hans Martens, M.A
Political Science. Senior Advisor with the European Policy Centre, Brussels, Belgium.
Abstract
In this paper, we briefly discuss how globalization has, over the last thirty years,
influenced virtually every aspect of world political, economic, social and
environmental development. This discussion will set the stage for our overview of
innovation and entrepreneurism and economic development, gleaning insight from
a report from Ernst & Young (see The Power of Three 2013) and from another
report focusing data from 49 African countries (see - “Global Entrepreneurship
Monitor – 2018/2019 Annual Report”). This is then followed by insights
representing a “European perspective” on developing entrepreneurship in Africa.
Finally, we focus on what needs to be done to further grow entrepreneurism and
innovation in Africa and then provide a “call to action” to achieve this growth.
Keywords: Globalization, Innovation, Entrepreneurship, Economic Development
GLOBALIZATION - AN OVERVIEW AND INTRODUCTION
The 21st century has been characterized as the “Century of Technology”. The concepts of
knowledge, technology, entrepreneurship and innovation are central to the growing economic
doctrine - referred to as “innovation economics” – that positions them at the center of the
economic model, rather than as independent forces that are largely unaffected by economic
policies. The “economic doctrine” is now entirely global in nature. Globalization (although
being challenged by the rise of authoritarianism – see [5] - remains the “super story” of the 21st
century, and is the ultimate driver of entrepreneurship, innovation, and economic progress for
every country. The opportunity to “do good” and “do well” (make the world a better place,
while creating greater wealth and social justice) through global and regional trade is significant,
particularly in Africa [10].
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To provide the context for the focus of this paper a brief looks at “globalization” is valuable. In
many respects, globalization is a singular force that has brought about a better life to billions of
people around the world. When the Berlin Wall fell in 1989 and the Soviet Union imploded in
2001-2002, the old super story of our time – communism versus capitalism (central planning
vs. market-based resource allocation) was replaced by the era of globalization where the
barriers and walls that divided our world for seventy-five years disappeared [4] [8] [9].
Globalization describes a process by which nations, businesses and people have become more
interconnected (economically, socially, and culturally) across the globe [22]. With the old
barriers removed, the impact of globalization has accelerated, driven by - 1) falling
transportation and logistics costs for goods, services, and people, 2) diminishing trade barriers
that portend lower tariff and non-tariff impediments to global business, 3) increasing abilities,
due to advanced technologies, to communicate information, ideas, innovations, and market
insights quickly and inexpensively around the world, 4) an expanding world of investors now
able to participate in a broader global arena in search of promising opportunities, and 5) a mass
movement of rural populations to urban areas in search of either education that could lead
them to the globalized world and/or better employment opportunities created by the
globalized world and the subsequent massive growth of new middle classes around the world
[32] [31]. The other side of this coin should not be totally discounted, however. The anti- globalists, authoritarians and naysayer to globalization’s benefits need to be included in the
story, lest what has been gained be lost (see – Kagan, 2018).
Notwithstanding the naysayers to this force, globalization means that hundreds of millions, if
not billions of formerly disenfranchised people can now compete in world markets and achieve
a better life. To fully understand globalization two things are useful – 1) a sense of the world
today from a broad-perspective and 2) a sense of the monumental changes happening in the
emerging markets of the world. Consider these realities. The percent of people living on one
dollar a day or less has dropped from 40% in 1981 to 18% in 2004 and is predicted to be less
than 10% by 2025 Over the last 25 years, China has lifted 400 million out of poverty (and
poverty is falling in countries housing 80% of the world population). During the same period,
two to three billion people have newly entered the world of business and trade. Goldman Sachs
(an investment bank) predicts that by 2040 five emerging-market countries – China, India,
Brazil, Russia, and Mexico will have a larger economic output than the G-7 countries - the 7
Western nations that now dominate global affairs including the US, Canada, Great Britain,
France, Germany, Italy, and Japan [32] [29]. In brief, globalization, over the last quarter century,
has allowed for the creation of enormous wealth and has given unprecedented opportunities
for a better life to billions of people around the world.
As stated previously, globalization has become the “super story” of our time. With this has come
the willingness of organizations of all sorts (for-profit, not-for-profit, multinational
corporations - MNCs, small to medium-sized enterprises - SMEs, non-governmental
organizations - NGOs, etc.) to venture out into the far reaches of the planet to capture markets,
secure supply alternatives, and aid those left at the “bottom of the pyramid” [21] [29], those
who might not have been considered as viable markets in the past. The U.S. and other
organizations based in the “developed” markets, in particular, began to expand overseas as
never before (realizing the 96% of the people and approximately 65% of the world’s productive
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Wood, V. R., Price, B. J., & Martens, H. (2023). Globalization in the 21st Century and Its Effects on Entrepreneurism and Innovation Ecosystems: A Call
to Action for Africa. Archives of Business Research, 11(3). 75-89.
URL: http://dx.doi.org/10.14738/abr.113.14274
resources lay outside the U.S. border [32] [30]. These “emerging markets” are now beginning
to be fully engaged in this expansion (both globally and regionally) driven by the spirit of
innovation and entrepreneurism and its perceived promise for growth and prosperity [29].
Africa is a prime example of such.
INNOVATION AND ENTREPRENEURISM AND ECONOMIC DEVELOPMENT IN AFRICA
How is “innovation” really defined, and how might that definition be used as a basis for
measuring entrepreneurial and economic development of a country, or a group of countries?
Countries with rapidly growing economies are today recognizing the pivotal role played by
entrepreneurs in initiating and sustaining high economic growth rates and are therefore
increasingly taking measures to foster greater entrepreneurship and innovation [1] [2].
One approach to understanding entrepreneurism is to examine the wealth of “best practices”
and “innovative initiatives” that countries can adapt to their own specific circumstances –
highlighted by the so-called “five pillars” of entrepreneurial ecosystems [24] - namely,
• Access to funding
• Entrepreneurship Culture
• Taxes and Regulation
• Education and Training
• Coordinated Support
With respect to entrepreneurial ecosystems, abundant information already exists on the G20
economies. Indeed, these economies have been scored across the five pillars listed above. For
the emerging markets, particularly those represented by African economies, which have a
continent-wide richness in resources – both natural and people – there is much to be learned
about how these best practices may be adapted.
There is no doubt that developing entrepreneurship will drive innovation, and this again will
be the way forward for modernizing Africa’s economies and thus creating wealth and improved
social conditions [13]. But groundbreaking initiatives must be taken by Africans in partnership
with meaningful and dedicated regional and global allies. Indeed, if this groundwork is not done
there is a risk that global entrepreneurism will favor other parts of the world where incentives
and human energy to realize such now exists (e.g., India, Latin America, S.E. Asia, etc.). This is
critical for African embrace of innovation and entrepreneurism lest it become dependent on
the old-fashioned style of economy that has long served “colonial” interests more than the
interests of the populations of African countries.
Creating ecosystems that will stimulate innovation and entrepreneurship will require many
efforts – from governments and markets, including focusing on future-related education, active
participation in the globalization process, creating an economic and social culture that
promotes risk-taking and creating legislative and regulatory systems that are conducive to
“idea generation” [18] [19]. These are all critical to innovation and entrepreneurship as they
attract the “capital” (both human and financial) behind the operationalization of ideas. Such
developments also call for renewed relationships with the G20 countries – not just in the form
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Services for Science and Education – United Kingdom
of development aid, but also in trade policies and other economic relations (as perspective on
this, focusing on Europe is provided later in this paper).
Obviously, reform steps to be taken will depend on the characteristics of the individual
countries and their present level of development. However, determining where to make
changes that have the best effect could be based on the comprehensive metrics developed in
the G20 countries, which – if properly transferred into the African context – can be used to
establish best practices and to prescribe optimal pathways for future steps to take. A brief
elaboration is in order.
Entrepreneurial businesses create jobs on an impressive scale, accounting for more than half
of all new employment in most G20 economies since 2000. Fostering entrepreneurship should
be, clearly, a vital component of any country’s plan for economic growth and development.
There are numerous studies that purport to “measure” entrepreneurism levels in various
geographies, including individual countries. In most reports, a variety of factors are considered,
including the “framework” or context of doing business in a particular country, societal values,
and attributes of individuals who endeavor to become entrepreneurs. The most recent of these
reports includes data on African countries [12]. In this study, a broad array of factors and
attributes are measured for 49 different economies – spanning demographics, the diversity of
entrepreneurship activities, and the impact and sustainability of these activities. Apart from
the data, this report also introduces the “National Entrepreneurship Context Index (NECI),”
which purports to assess the environment for entrepreneurship – and applies that to a total of
54 economies spanning every region and continent, including East and South Asia,
Europe/North America, Latin America and the Caribbean, and the Middle East/Africa. The NECI
derives from 12 framework conditions; for example, government policies, entrepreneurship
education, access to financing, and cultural and social norms. One of the central factors
measured was the degree to which total entrepreneurial activity in a country stem from “new
innovative ideas” (e.g., a new phone app) or from “simple necessity for income” (e.g., selling
food on the street). It is generally thought that entrepreneurism based on new innovative ideas
contributes to economic development much more than does entrepreneurism based on simple
necessity for income.
Note Figure 1 from the Global Entrepreneurship Model (GEM) report, which shows Angola’s
Total Entrepreneurial Activity (TEA) to be 42% (meaning that 42% of adults aged 18-64 are
engaged in early-state entrepreneurism – the largest percentage for any country studied) – but
that also has a relatively small percentage of innovative-driven TEA. The closest economy to
Angola by this measure is Guatemala, with a TEA of 28%, but Guatemala has a much higher
percentage (~40%) of its TEA being innovation-driven. By comparison, the GEM study states
that the United States – considered by most to be the epicenter of entrepreneurship – has a TEA
of 17%, with innovation-driven activity being about a third of that total.
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Wood, V. R., Price, B. J., & Martens, H. (2023). Globalization in the 21st Century and Its Effects on Entrepreneurism and Innovation Ecosystems: A Call
to Action for Africa. Archives of Business Research, 11(3). 75-89.
URL: http://dx.doi.org/10.14738/abr.113.14274
Fig. 1 - Total Entrepreneurial Activity (TEA) and portion driven by innovation - Middle
East/Africa
While this data is interesting and informative (providing initial insights into the percentage of
entrepreneurism that contributes most to development), they represent only a broad profile of
certain conditions within individual countries. The total National Entrepreneurship Context
Index - NECI (comprising 12 individual factors) is published for 54 economies, of which six are
African. African nations in the ranking were Egypt (34th), Sudan (45th), Morocco (47th),
Madagascar (49th), Angola (50th) and Mozambique (54th). Again, while offering a perspective,
the report does not show the weighting of each of the 12 factors, so it is unclear which
contribute or do not contribute to the ranking of each country. As such, there is only limited
insight from which to draw a prescriptive “call to action” for African nations wanting to increase
meaningful entrepreneurism and innovation. Perhaps a more practical and useful rating system
is the one used for the G20 economies, in a report issued by Ernst & Young [24] entitled “The
Power of Three.” This report details findings and ratings for individual entrepreneurship
measures from each of the G20 economies. The term “power of three” refers to the coordinated
efforts of governments, entrepreneurs, and corporations. The categories studied and reported,
referred to as the “five pillars of entrepreneurial development,” include -(1) Access to Funding,
10%
15%
5%
20%
25%
30%
35%
40%
Innovative TEA