Effect of Globalization on British Entrepreneurial Business essay

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Globalization on British Entrepreneurial Business

This work in writing proposes research focused on examining the effective that globalization has had upon entrepreneurship in Britain. Toward this end, this work will review the literature in this area of study and inquiry.

Research questions in this study include the following questions:

(1) What effect has globalization had upon British workers?

(2) Has the government in Britain responded effectively to the impact of globalization on the workers in Britain?

(3) What has the response of the UK government been to the impacts of globalization upon British workers?

The methodology chosen for the research proposed herein is qualitative in nature and involving an exhaustive review of literature in this area of study.

Preliminary Review of Literature

The work of Zahra, et al. (2008) entitled "Globalization of Social Entrepreneurship Opportunities" states that entrepreneurship "by new and established companies is a major source of wealth and job creation, economic and technological growth and social transformation. This transformation is made possible by the powerful forces entrepreneurship unleashes, where ordinary people conceive innovative ideas, organize production, assume risk, and engage customers to accumulate wealth or address pressing social causes, often across national borders." In a news report dated August 29, 2006, it was reported that globalization "…has made a real difference to the quality of life of working people in the UK and across the world…" (HRM Guide, 2006) However, it is reported that just as there are winners that there are also losers because "too many British workers are losing their jobs when companies move abroad or fail to compete." (HRM Guide, 2006)

It is argued in the work of Audretsch and Sanders (2008) in the work entitled "Globalization and the Rise of the Entrepreneurial Economy" that recent trends in the global economy have resulted in a "shift in developed countries' comparative advantage from mature industrial to early stage entrepreneurial production." (Audretsch and Sanders, 2008) It is held that since entrepreneurs "…also serve as the agents that move varieties between life cycle stages, their value added increases due to globalization and technical change. By contrast, the factors of production employed in the mature stage of the life cycle, e.g. low skilled northern labor, become less valuable. Thus, the model predicts the emergence of an entrepreneurial economy in the North as the South opens up to trade and industrializes." (Audretsch and Sanders, 2008) Additionally reported in the work of Audretsch and Sanders is the following:

"The polarization of labor demand and deindustrialization trend coincided with the reemergence of small and medium sized firms as the main generators of growth, employment and value added. When Birch (1981) first observed this reversal in a long trend of increasing scale and concentration in the developed economies it was not taken seriously right away as the evidence was mixed and the initial methodology could be criticized for several reasons. But the phenomenon turned out to be a lasting one when Acs and Audretsch (1990, 1993) surveyed the evidence for the 1980s. More recent surveys (e.g. Parker (2004), Versloot and van Praag (2007)) clearly establish the importance of entrepreneurship and small firm activity in the modern innovation driven economy." (Audretsch and Sanders, 2008, p.8)

The work of Passaris (2006) entitled "The Business of Globalization and the Globalization of Business" published in the Journal of Comparative International Management reports that globalization is not a new concept. It has evolved and matured over the centuries to reflect the priorities and ambitions of different generations." According to Passaris (2006), it is assumed that off-off-shoring makes a requirement of additional entrepreneurial resources being committed. The process of globalization in Britain is stated to have been compounded further by the Single European Market initiative at the European Union level." This has resulted in a complete restructuring of the British industry as organizations "of all sizes and economic activity streamlined, refocused and sought to form alliances or joint ventures with firms operating in international markets. The globalization process in Britain is increasingly recognized as a major driving force behind the reshaping of the socioeconomic and political structure of the country." (Passaris, 2006)

Firms that are growth-oriented that operate in the small business sector are stated to be playing roles that are significant in nature in the response to globalization which is a restructuring process in modern Britain. (Passaris, 2006) Small businesses are growing in their importance as they relate to globalization including the unique opportunities and threats faced by these businesses. (Etemad, 2004) Globalization is stated in the work of Etamad to be perceived as inclusive of various inward and outward aspects of economic activity to include:

(1) knowledge and flexibility allowing movement across national borders;

(2) the ability to take advantage of opportunities anywhere in the world;

(3) the capacity to move capital and source/distribute products/services in other countries;

(4) a commitment to transnational management of factors of production;

(5) a commitment to transnational management of factors of production;

(6) the capability to market and/or adapt a portfolio of products/services to specific markets successfully, and (7) the ability to be simultaneously active in a number of independent businesses and/or be members of strategic alliances in other countries. (Etemad, 2004)

It is reported that Tony Blair has been concerned about "the dynamics within the territorial boundary of Britain and less with corporations" arguing that Britain has jobs "within its territory that traditionally been worked by low-wage workers and low-wage participants who are also often on benefits, in poverty and excluded. These jobs are precarious and vulnerable in the globalized economy." (Sumner, 2007) Blair stated expectations that these jobs would not survive in Britain and that the successful pilot scheme, the 'Innovators Scheme' would be continued for an indefinite period of time. The scheme in two years time brought 112 of what are stated to be the "most talented high-tech business people to Britain. Under this scheme, the business entrepreneurs are reported to have set up 'high-tech businesses in areas such as e-commerce, electronic share dealing and music industry technology. The scheme is designed to create an economic entry route for people with business ideas that will foster an economic benefit for Britain by allowing them to enter the country for an initial eighteen months." (Sumner, 2007)

The entrepreneurs that desire to enter Britain are required to make provision of a business plan along with other supporting materials as well as demonstrating that their venture is a job creating one for Britain. Home Office Minister Beverley Hughes is reported as having stated of Britain as follows: "We are an open, trading nation and migrants contribute a great deal to our society and our economy. In a modern, global economy it is essential that we can attract the people and skills we need to create successful businesses and generate jobs and economic growth." (Successful Innovators, 2002 cited in: Sumner, 2007)

It is reported that there is a plentiful literature base on how globalization as resulted in states and political elites being forced to "tighten their belts, decrease the size of their pu8blic sectors to make their welfare states and labor markets 'leaner and meaner' and ultimately how it fosters a 'race to the bottom' among states in the global economy in order to attract foreign capital and foreign direct investment (FDI)…however in the British case study, the direction of causation is reversed, thus causing situation where globalization does not force the nation-state to curb benefits and social protection in an attempt to lure and/or keep menial jobs within national boundaries." (Sumner, 2007)

The evidence in fact supports the opposite in Britain as British political elites in the Labor Party "have perceived globalization to be a phenomenon that forces states to let those corporations seeking the lowest wage zone go elsewhere, thus giving state policymakers an imperative to fund the education of the poor so that they can work in higher wage jobs, and thus be lifted out of dependency on the state for social protection." (Sumner, 2007) It was the belief of the Blair government that globalization "threatened…prosperity; therefore its initiated a large push on the entrepreneurial side…" or in other words, the Blair government make a commitment to the creation of industrial programs that were designed for job production "endogenously in regions of the UK where people were unemployed or had historically suffered from higher levels of unemployment." (Sumner, 2007) It is reported that the Chancellor designated 2000 new enterprise areas that would serve to encourage "homegrown economy activity in the poorest areas of Britain…" (Sumner, 2007)

Findings and Recommendations

Findings in this brief and preliminary review of literature show that the British government has been one that is proactive and one that has addressed the needs of the poor in terms of educational provisions which has served to prepare this class of workers to enter higher wage jobs which has resulted in diminishing the negative impacts of globalization on entrepreneurship in Britain. Rather than provide workers with a future in which they are dependent upon the welfare…[continue]

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