Question

In paragraph form answer the following:

The economies of countries such as, Russia and China, have historically been operated through centralized bureaucracies. What can be done to infuse such economies with a commitment to corporate entrepreneurship and the resulting innovation? Is there a place for these economic concepts within these political systems?

Answer 1

Economies operated through centralized bureaucracies typically find it challenging to foster entrepreneurship and innovation without conscious effort. Because the resources and policies are heavily favored towards State owned enterprises, private entrepreneurs find it challenging to operate and innovate. Not only do private entrepreneurs face challenges, overall priority of innovation goes down as state owned enterprises do not find incentive to innovate and to drive entrepreneurship.

Due to the same reasons, Russia and China have realized importance of entrepreneurship, which is key basis for innovation and creating employment at large scale. Governments must consciously encourage private organizations to innovate and invest in R&D. This can be done through providing tax incentives, fostering academia-industry partnerships, reorganizing their policies for entrepreneurs to set-up and close companies, reframing labor laws for private investments, and most importantly setting up and enforcing appropriate patent laws. Along with policies, another key change required is access to funding and access to talent and technologies. State owned enterprises because of their size will not face challenge in securing funding, but it is not the same case with small entrepreneurs. Thus, it is imperative for governments to facilitate funding either from state organizations or private lenders as well as foreign investors.

In this age of globalization, technology has to be applied for solving issues and find new businesses. This cannot be done through earlier way of central run systems or large organizations. Innovation is now heavily driven in many new areas by small private companies. Thus, for technical progress as well as job creation, corporate entrepreneurship needs to find place even in economies like China and Russia. In fact these two nations are taking multiple actions in this phenomena. Skolkovo Technopark, Alibaba, Xiaomi are examples of such initiatives.