“UAE needs to cultivate culture of failure for SMEs sector to thrive”
Decriminalising bankruptcy is the first step to creating a healthy culture of failure says Professor of Finance at SME roundtable.
December 6, 2012 4:58 by kippreport
“The biggest challenge for Dubai’s SME market is the ability to create a culture where failure is not only tolerated, but it is also welcomed and is viewed as a natural part of risk taking and building success” said Professor David Robinson, member of the Global Agenda Council on Financing & Capital and a Professor of Finance Fuqua School of Business, Duke University.
Professor Robinson was speaking at a roundtable discussion organised by the UAE government as a part of the World Economic Forum Summit on the Global Agenda Council (GAC) which started on 12th November 2012. Held at the Mohammed Bin Rashid Establishment for SME Development (Dubai SME) in Business Village, the roundtable was attended by H.E. Abdul Baset Al Janahi, CEO of Dubai SME and a number of Dubai SME’s development partners.
“You can not expect growth with out expecting risk. You can not take a risk with out expecting some failure. To me this is a real challenge; we need to change business culture and values so that failure is welcomed” added Robinson who recommended UAE reconsider the bankruptcy process so that there is more transparency and forgiveness around bankruptcy: “In other words, we need to create a business environment where somebody is not put in prison if a cheque bounces.”
Robinson was joined by Professor Virginia Cha, Professor of Entrepreneurship Science, INSEAD and the Entrepreneurship Initiative Chief, Research and Innovation, at theInstituteofSystems Science, NUS, who shared her experience with developing SMEs inSingapore. Cha stressed the need to be an overhaul in the way governments think of and support SMEs.
“Young people do not lack ideas. Capital will find their way to these entrepreneurs. Governments do not need to intervene. However, what is the problem? The problem is growth. It is very difficult for a start up to achieve growth and growth is what creates jobs. If you just have a start up that is creating a two-three man team that is not creating jobs for you, it is not creating jobs for anybody. It is just creating a nice lifestyle for employment for the entrepreneur. It is only when you have a start up that has grown to a hundred or a thousand employees, that’s when you have achieved your purpose.” said Cha.
Contrary to conventional wisdom for start ups, Cha disregards the current model of entrepreneurship which prioritises innovation of growth: “I am going to tell my students, you grow first and you figure out the innovation part later. If you start with a great idea but you do not grow, it doesn’t matter how good your idea is, you are going to die.”