Romania and the Need for a New Entrepreneurial Culture

819 views Published on 1st November 2010

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Key Points

1.Too few business ventures tackle deep social issues and poverty that affect large parts of the country.

2. Youth have the greatest potential to bridge gaps between businesses and the poor because they are more connected, idealistic, and have an action-oriented mindset geared for change.

3. Romania needs communication between urban middle class youth and those of poorer semi-urban communities. By providing new spaces—both digital and physical—for dialogue and interaction, youth from different backgrounds and socioeconomic classes could share ideas and support the establishment of joint social enterprises.

Starting up a business in Romania is no longer an unreachable quest that can only be pursued by an elite of bold and resourceful individuals. On the contrary, self-employment is seen as the ideal way of earning a living, as opposed to being employed in established companies. Even though the business environment is far from being completely stable and accommodating, those who wish to start up a company do not lack access to information, financial resources, or management knowledge.

However, the question that drives my curiosity is how many Romanian start-up owners are actually entrepreneurs. In my opinion, the difference between these two types of agents is fundamental. While start-up owners try to make the best out of a transient business opportunity simply for the sake of profits, entrepreneurs try to create authentic and sustainable added value, by introducing something new or something that has a positive impact on society. In fact, I consider the relatively new term “social entrepreneurship” to be more or less redundant, since all truly entrepreneurial activities should be inherently social. Since I am an aspiring entrepreneur myself, I have been evaluating for some time now the social business opportunities available in my country, and the threats that come along with them. This essay expresses my concerns and the challenges I identified in Romania, but also my enthusiasm for the potential in the country, out of which a new vision for our future can emerge.

The Challenge and the Need for a New Entrepreneurial Culture

If we accept that all genuine entrepreneurship is social, I can say that I am skeptical about the entrepreneurial nature of start-ups in my country. One of the reasons for my doubts is that the motivations of the people who start new businesses are usually highly individualistic and focused on self-fulfillment. According to a study conducted by the Centre for Entrepreneurship and Business Research, Romanians’ main motivations for starting a business are the improvement of their standard of living, the presence of an individual personal plan, and the attainment of higher social status and respect. As many other Eastern European counterparts, since the early 1990s we have been striving to emulate the American way of doing business, which combined with our Balkan influences and our former communist heritage sometimes resulted in a ruthless and opportunistic business culture. While all this is not a bad thing in itself, it clashes with the spirit of community and social responsibility.
 
Another reason why I think Romanian entrepreneurship finds it hard to be social is that social issues affecting the country seem to be strongly separated from the business environment. To illustrate this, let me give an overview of poverty in Romania.

In the past ten years, the country has witnessed sustained economic growth, which caused a substantial decline in the absolute poverty rate from 35.9% in 2000 to 13.8% in 2006  and 5.7% in 2008.  In spite of this good news, poverty is still severely concentrated in certain geographical areas and social groups. For example, in 2006 more than 70% of poor Romanians were living in rural areas, with the poorest region of Romania, the North-East, over four times poorer than the capital city of Bucharest.  These figures have not significantly changed since then. Yet, most of the economic activity is concentrated in the urban areas of the centre and west, as well as in the capital city. While regional disparities are common all across developing countries, it is interesting to note that the line between Romania’s businessmen and its poor can be so accurately drawn on the map, thus highlighting a “geographic gap.”

Furthermore, a recent World Bank report on poverty in Romania finds that poor children are channeled into low-return education paths, while wealthier children tend to attend general secondary and tertiary education institutions. Consequently, this will have implications for social mobility, contributing to the persistence of poverty across generations. In other words, the people who are “better off” are separated from the poor not only geographically, but also in time, thus emphasizing a “generation gap.”

Last but not least, I would argue that there is a “psychological gap” between the poor and the rest of the Romanians, a phenomenon which I encountered in my daily interactions, both in professional environments and personal settings. The example that best describes my point of view is rather trivial but highly representative. The Romanian winner of the European Young Journalist Award in 2008 wrote a powerful and objective article about the issues affecting the poor in a certain region of the country. Foreign audiences greatly appreciated her contribution and several websites published her work.  However, when reading her article online, I was surprised to see a vast amount of comments from other Romanians who were highly dissatisfied with the fact that the country was being depicted as poor and vulnerable. The readers were refusing to acknowledge the existence of impoverished groups and were eager to talk only about the country’s development and strengths.

Looking at these three gaps, I would conclude that the potential entrepreneurs of the country simply do not “see” the less fortunate, as the developed part of Romania appears to be suffering from a sort of “social myopia.” Since poverty is closely related to other essential development issues such as education, health, or access to technology, the gaps mark a strong divide between the agents that produce growth and those who need to receive it, or better said who need to become an active part of it.   

In conclusion, the puzzling matter which I notice in my country is that although we have a great number of talented people with reasonable access to resources and an enormous potential to provoke radical change, there is a social “wall” that blocks genuine entrepreneurship. Usually, when saying that a country needs to develop an entrepreneurial culture, one refers to lowering risk-adversity, ensuring the support of the state in regulating and promoting new businesses, and giving individuals incentives to take up the path of self-employment. However, when I say that Romania needs to develop an entrepreneurial culture, I refer to redefining new businesses to serve the purpose of social change parallel to profits. I am not saying that all entrepreneurial activities should solve the problems affecting Romania from one day to another, but they should be much more responsible and whenever possible, they should strive to have an impact on society for the better. Thus, the purpose of this essay is to call out for new entrepreneurs and a new entrepreneurial culture.

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By Ioana Benjamin-Schonberger

Ioana has a background in business administration and marketing, holding a Bachelor’s degree from the Bucharest University of Economics and currently pursuing MSc in Strategic Marketing at Maastricht University, Netherlands. Having a strong interest in development issues and avid entrepreneurial aspirations, she is now working as an intern at CDI Brazil, a well-known NGO in South America that strives to empower low-income communities through technology and information. Her previous experience includes working as a brand consultant assistant in her home-country, Romania, and conducting various research projects in the Benelux area.

This essay was a winner in the Center for International Private Enterprise's (CIPE) 2010 International Youth Essay Contest. For more information on the essay contest and to read the rest of the winning essays please visit www.cipe.org/essay


 


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