Friends often proudly tell the writer that Filipinos are entrepreneurial and they don’t necessarily have to be big but they thrive. And the writer remembers a pretty recent trip he took from SLEX all the way to Antipolo and around Laguna Lake and back to SLEX. Indeed, in every other corner if not every, one would see business activity – not exactly like Chinatown but still dense. And decades ago the writer had travelled the country a few times representing his employer and worked with SMEs – aside from having already put up a family business.
In far away Italy, WSJ (14th Nov) reports: “Italy's economy today is only about 3% bigger than a decade ago. Many factors have contributed to the country's stagnation—from its rickety education system to its low rates of employment among women, youths and older workers. But a central reason, say economists, is that its private sector consists mostly of small mom-and-pop businesses that seem unable to grow . . . Unions, meanwhile, are opposed to government proposals to loosen Italy's labor laws. They have vowed to paralyze the country with strikes if the government attempts to pass such measures.
“Behind the country's stunted businesses lie the habits and fears of a long line of family entrepreneurs who cling to control of their companies late into life. Hemmed in by a thicket of regulation and legal restrictions, many of these families have learned to survive by doing business within networks of trusted customers and suppliers, rather than taking risks by dealing with outsiders . . . These firms have less propensity to innovate, engage less in research and development and rarely penetrate emerging markets," said Mario Draghi, ECB President and former Bank of Italy head, in a recent speech.
There is something beyond entrepreneurship. When the writer first arrived in Eastern Europe, he saw two very different entrepreneurs. And it is not difficult to figure out why he committed to assist one but not the other.
The bigger one had friends amongst a group of former communist rulers and was out to leverage the relationship and get into different businesses, having already acquired one. [And so the writer simply grins when he hears socialist-leaning Filipinos romanticize the purity of socialism.] But he wanted his first business sold to a Western MNC because he really did not understand the business; and was not prepared to spend time nurturing it. But he had hoped to make a killing – make hay while the sun shines, and get into other businesses. His connections were pointing him supposedly in the right directions – even when he did not understand the other businesses too! Fast-forward: the first business shrank to a mere shadow of its former self, and could not attract buyers – not MNCs, not locals. Not even the writer’s friends, who earlier considered it, would buy the business.
The smaller one, only a fraction of the business of the other, had the desire to grow the business. “Our country is small and we need to learn to do business in a bigger market, like the region.” (In the Philippines, our big population, on top of our parochial instincts, spoils us – i.e., we focus on the local market and don’t develop the wherewithal to compete in less friendly markets. And that’s not how Olympians are made!) But with a new found motivation following the collapse of communism, they wanted to dip into other businesses too. And the writer urged them to focus (in order to attain ‘nirvana’ a.k.a. competitive advantage) on two core businesses, one each for the two brothers. With that caveat, they made minor investments in other businesses. Fast-forward: with the global recession these other investments went south. But they now have two very much larger businesses; and these two – each is into several but related businesses – more than compensated for their bad bets.
The bottom line: there is something beyond entrepreneurship. And the writer’s friends are now committed to building an institution not a fiefdom. And they educated their children to respect the vision and its requisite values. In the 21st century, could they really afford otherwise knowing what nirvana is? But which tradition-bound – e.g., inward-looking, values family, monopoly and oligarchic power instead of technology and innovation power – Filipinos or Italians would struggle to accept?
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