Global Downturn: the impact of the recession on entrepreneurs
This report looks at the impact the global financial and economic crisis is having on sustainable enterprise, entrepreneurs, perceptions of entrepreneurs and decent work across the world. It argues that small companies, irrespective of location, are approaching the crisis in a similar way: they are reducing risks, not borrowing and trying not to let their workforces go in the interests of economic sustainability It looks at individual and own account workers and their experiences on the basis of a qualitative survey of entrepreneurial practitioners in policy and business and argues that the challenge for policy is to provide the mechanisms for turning sole trader or own account business into entities that are sustainable and that provide decent and enduring work, both for the individual entrepreneur or founder and potentially for the communities around them.
It suggests that much of the policy effort thus far in the recession has taken the approach of providing guarantees to credit through the orthodox banking system. Demand for finance remains low and this is because the perceived personal risks for the individual entrepreneur are perceived to be high at present. The notable exception to this is in microcredit where supply and demand have increased. However, much of this is going towards replacement income rather than sustainability.
The report concludes that the key issue for developing sustainable enterprises is to look at the personal risks that entrepreneurs take in engaging in the labour market through enterprise activity, be they business founders or own account or informal workers. Entrepreneurs and business leaders alike are keen to point out that the downturn itself represents an opportunity for the private sector to lead the way in developing a new and more sustainable modus operandi, but that a real understanding of what motivates, and what inhibits entrepreneurs is vital. These are broader than financial wealth and include value creation as well, in the form of family and community welfare as well as issues of environmental sustainability. If the social partners are to find a route to achieving sustainable enterprises by encouraging entrepreneurial activity in any form, then the key is in addressing the nature of risk that entrepreneurs face. These differ depending on the socio-economic context in which the entrepreneur is operating but they originate from the same source: that the increasingly individualised nature of the labour market pushes the responsibility for sustainability on to the individual where it would have been with large scale businesses or governments in the past.