Belarusian entrepreneurs discuss the topic “Are you ready to start a business?” on the talk show “Vybor” (Choice). Eighty percent said “no.”
What drives someone to become an entrepreneur? Are there any specific demographic, financial, personal, or educational characteristics that are common to entrepreneurs? What makes for a successful entrepreneur, particularly in transitional economic environments? What are the driving factors behind the perseverance of private entrepreneurship in a business climate that is not well-developed to welcome entrepreneurs?
The Belarusian Economic Research and Outreach Center (BEROC) surveyed 200 small business owners to identify the key characteristics of entrepreneurs in Belarus. In a detailed report entitled Portrait of a Belarusian Entrepreneur, BEROC presents its findings, which may be somewhat unexpected to some.
For example, despite steadily climbing the World Bank’s Doing Business ranking (although the local business community is highly critical of the ranking), the Belarusian economy continues to experience the highest inflation in the world and has seen its currency sharply devaluate since 2010. These are harsh economic conditions under which to live, no less to do business. BEROC’s report shows that private small business contributed only about 12.4 percent of GDP in 2010. This is a meager statistic compared to most developed or developing economies.
One of the most interesting statistics in BEROC’s report is in regard to corruption and trust. Entrepreneurs have a much lower tolerance for corruption, theft, and fraud than do non-entrepreneurs. For example, entrepreneurs are less likely to consider purchasing stolen property (8 percent say it’s ok) than non-entrepreneurs (15 percent say it’s ok). Fewer entrepreneurs (30 percent) would consider not paying their fare on public transportation than non-entrepreneurs (39 percent). This information is particularly enlightening in because the overall perception of corruption in Belarus is one of the highest in the world. Last year Belarus ranked 123rd out of 176 countries in Transparency International’s annual the Corruption Perceptions Index.
Entrepreneurs also have a much higher level of trust toward their society, their peers, colleagues, subordinates, and employees than compared with non-entrepreneurs. In all 12 categories of people, ranging from “friends” and “family” to “local authorities” and “foreigners,” entrepreneurs overwhelmingly responded with a higher trust factor. For example, 74 percent of entrepreneurs said they trust their subordinates, compared with 63 percent of non-entrepreneurs. Fifty-four percent of entrepreneurs said that they trust other entrepreneurs, compared with only 37 percent of non-entrepreneurs who trust entrepreneurs.
Some basic statistics on entrepreneurs in Belarus are that they are more likely to be male, married, and have more children than non-entrepreneurs. Interestingly, entrepreneurs are less likely to emigrate than those who do not own businesses. This information indicates that small business ownership can help provide for a stable and steadily growing entrepreneurial population base, attracting those with skills and capital to invest in the country.
These points underscore the importance of developing a sound national policy that encourages entrepreneurship. Entrepreneurs do not only create value for the country through the products and services they bring to the market, but also serve as long-term investors in their country’s economy and provide the basis for long-term economic well-being. Belarusian policymakers, the business community, and the wider population would do well to study the message of BEROC’s report and adopt policies that encourage the growth of private entrepreneurship as the key to enduring national prosperity.
Elena Suhir is Senior Program Officer for Eastern Europe and Eurasia at CIPE.