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UL0019 – Relationship of the Government and Entrepreneurship

Why does the government have to be involved in the development of entrepreneurship, many may ask?

Developing the right ecosystem for Entrepreneurship Development and one where start-ups can start smoothly and strive should be every government’s role.  For an entrepreneurial environment to help companies start and grow, you need the government to provide a proper regulatory system that would not only provide the structure for companies to conduct business, but also give them the freedom to experiment and try new things. Many governments forget that rules and regulations should facilitate and not stifle company creation and growth.

With entrepreneurship and startups especially, the main need is for EXPERIMENTATION. Entrepreneurs have to be able to test out their hypothesis and to be able to try out their new ideas on the market. The government has to allow for entrepreneurs to be able to work freely and easily for this to happen.

Unfortunately many governments put in place regulations which support big companies while stifling smaller companies. Many a time governments assume that rules which suit big companies should also be easy for smaller companies and start-ups to adapt to. Well they are wrong.  There must be some structure and there must be some rules but it is best to have minimal rules than to over prescribe.

The other issue is of the society’s mindset on how success is defined. For example, in Singapore, the definition of success in the past was so narrowly defined as one of having achieved academic excellence, obtaining a government scholarship, and landing a good administrative services job or a job in a very large multinational company or large government-linked company. This was the environment created by the government in the past. Since a whole generation has been ingrained with such beliefs right from their school days, it becomes difficult to change their thinking. The only way out for the existing generation is, once again, for the government to play a prominent role in getting things started and getting Singaporeans off from their inertia. So in Singapore the entrepreneurship drive was started by the government but once the momentum gets going, the government must take a few steps back, slowly, one step at a time, until the whole entrepreneurship momentum can be sustained on its own as it is driven by the private sector. Once this has happened, the government can continue to play the role of the facilitator and creator of a much more conducive environment that can sustain the momentum.

This will of course work on the premise that the government believes it does not have to be directly involved in shaping the landscape and that the private sector can sustain the momentum by itself. If the government still feels it should be the biggest player, then we do not see any chance for an entrepreneurial economy to emerge. Such a plan will be doomed for failure if the same approach is adopted by the government – that is, to implement policies, rules, and regulations suited more for the bigger government-linked companies and multinational companies, and for the government to be directly involved in doing business.

Knowing When to Make an Exit
So how can the government be less involved? At the very least, the government getting less involved in business, less involved in picking winners, and less involved in influencing the outcome of companies is already a big step. What the government can do for a start is to not get involved in the things I just mentioned. These steps are definitely very proactive steps as opposed to the belief that the government should not and cannot be involved. And if the government is not engaged in planning these exits, there is little chance of the private sector doing very much more, which is what is really needed to make entrepreneurship thrive in Singapore.

The first step in the whole entrepreneurship journey has to therefore start with the government, but it does not and will not end with the government. So in the long-term, when we reach a steady state, we will not need to depend on the government. Neither will the government be able to do much once the momentum is in place. We are glad that in Singapore we have seen good momentum in recreating the entrepreneurial economy and the government has played a significant role in facilitating this.

About EntreCity

The idea behind EntreCity is to help entrepreneurs build successful businesses. We want to achieve this by helping people build an entrepreneurial mindset and to arm them with the technical tools to start and grow businesses. Whether or not you are ready to start a business, EntreCity aims to help everyone to think with an entrepreneurial mindset.

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