[ESSEC Knowledge] by Jan Lepoutre - Professor of Entrepreneurship and Strategy at ESSEC Business School, Academic Director of its Center for Entrepreneurship and Innovation.
The debate over the benefits and drawbacks of economic growth is at the forefront of social, political, and economic discussions. Economic growth is seen as crucial for economic well-being and societal welfare, yet it can also contribute to environmental degradation, including climate change, biodiversity loss, pollution, and resource depletion. The search for new models that decouple economic value creation from environmental harm and promote social well-being has become essential.
To foster these new models, entrepreneurship plays a pivotal role. Entrepreneurs develop innovative solutions and ventures that can replace outdated practices and products. While entrepreneurial success is highly desirable, it's challenging to achieve. Entrepreneurship involves seizing opportunities when their existence is uncertain. Even experienced entrepreneurs and investors often encounter more failures than successes in their pursuit of entrepreneurial opportunities. Additionally, it's difficult to predict whether new entrepreneurial ideas will lead to socially beneficial solutions.
A study by Jan Lepoutre and Augustina Oguntoye compared the emergence of mobile money in Kenya (exemplified by M-Pesa) with its non-emergence in Nigeria. Despite the two countries' similar socio-economic and technological development, M-Pesa thrived in Kenya while facing difficulties in Nigeria. The research showed that the key difference lay in the governmental ability to oversee and control the social impact and risks of financial innovation. The Kenyan government's participation in M-Pesa's development allowed for a learning process and the creation of a regulatory framework, whereas Nigeria lacked the capacity to do so effectively.
The paper's lessons extend beyond financial services, emphasizing the importance of entrepreneurial ecosystems in absorbing the costs of errors, turning mistakes into knowledge, and addressing constraints. Entrepreneurial ecosystems are witnessing substantial financial capital influx, as seen in the rise of unicorns, but non-financial constraints like talent, regulatory challenges, and societal legitimacy can still hinder entrepreneurial development.
ESSEC Business School is making significant investments in developing talent that can navigate the complex landscape of opportunity development. By preparing students to understand not only the economic but also the environmental, social, organizational, and human challenges inherent in entrepreneurship, they are better equipped to contribute to overcoming these challenges and driving entrepreneurial development.