chapter  10
14 Pages

Features of firms in Theravada Buddhist Southeast Asia

One of the characteristics of the business environment of the Theravada Buddhist countries of Southeast Asia is the wide-scale existence of small entrepreneurial firms. Pride et al. (2008: 13) define an entrepreneur as “a person who risks time, effort, and money to start and operate a business.” While this definition applies to some of the business owners in the region, there are many entrepreneurs in the Theravada Buddhist countries of Southeast Asia who have very different motivations and approaches to starting a business from those found in this definition. Research indicates entrepreneurs have a variety of motivations for starting a new business, with financial rewards being only one of many motivators. In New Zealand, Pinfold (2001) reported entrepreneurs were motivated to achieve a variety of goals, including financial rewards, personal development, and independence. In a study conducted in Singapore, Choo and Wong (2006) found the top five motivators of entrepreneurs were: challenge, realization of dreams, taking advantage of creative talents, to be one’s own boss, and to have an interesting job. These five motivators would appear to be more lifestyle motivators rather than economic motivators. Choo and Wong also discovered financial goals were important considerations when deciding to start a business, but their results suggest lifestyle factors can also be powerful motivators for entrepreneurs and stereotyping all entrepreneurs as being driven by dreams of wealth may be misleading. Research by Hatcher and Terjesen (2007) indicates lifestyle and other non-economic considerations play a critical role in the decision to start a business for entrepreneurs in Thailand as well. It would appear the concept of entrepreneurship in developed countries has both similarities and differences with the concept of entrepreneurship in developing nations. In developed economies, there is an assumption that quality paid employment is available and entrepreneurs forsake the safety of a monthly pay check for the uncertainty and possibilities that come with having one’s own business (Shahidi and Smagulova 2007). Therefore, it is not surprising that in their study conducted in the United States, Thomas and Mueller (2000) reported entrepreneurs generally had an internal locus of control, high levels of energy,

and were risk takers. It is likely these traits are necessary as modern developed economies present many barriers to entry for potential entrepreneurs (Helms 2003: Imai and Kawagoe 2000). However, in developing economies, quality paid employment may not be available and entrepreneurs are often “pushed” into starting a business as opposed to be pulled into it by dreams of riches (Kalantaridis and Labrianidis 2004; Kristiansen 2002). In some cases, the primary motivator in starting a business can be survival and not the search for wealth or independence, as there is a lack of availability of any kind of paid employment in the environments found in the world’s least developed economies (Pitamber 2000). Research by Paulson and Townsend (2005) suggests many small-scale entrepreneurs in Thailand are also more motivated by push than pull factors. Entrepreneurs in the Theravada Buddhist regions of Southeast Asia share some common characteristics with entrepreneurs in other locations as well as some differences. Thomas and Mueller (2000) found some universal personality traits in entrepreneurs in different locations, but also they noticed some distinct variations of traits found in entrepreneurs coming from different cultural contexts. Entrepreneurship may be a universal phenomenon, but the exact nature of it would appear to differ to some degree from location to location. There may be a recognizable difference between the concept of entrepreneurship in the East and in the West. Moy et al. (2003), in their study of attitudes of students in Hong Kong, reported students in Hong Kong with intentions of becoming entrepreneurs were more likely to have more positive and conformist views than students in Western countries with similar intentions of becoming an entrepreneur. The desire to start one’s own business is often associated with having non-conformist views in Western societies. The results of this study are consistent with the observations by the author, who has found in universities in both Thailand and Vietnam the most common answer to the question of what do you want to do after you graduate is “to start my own business” (or take over my family’s business). In the United States and other Western countries, starting a business is normally considered a path toward independence and is often associated with rugged individualism. However, in Asia, entrepreneurship normally means joining an interdependent business network and therefore entrepreneurship in Asia may be considered more collectivist and less individualistic than in the West (Bjerke 2000). Owning a business in a Western context is normally considered a personal affair with relatively fewer businesses being passed down from generation to generation (Fairlie and Robb 2007). However, throughout Asia, the focus of entrepreneurship often shifts from the individual to the family (Shapiro et al. 2003). Thailand, like much of Asia and the other Theravada Buddhist countries of Southeast Asia, is dominated by the existence of family-owned firms (Suehiro and Wailerdsak 2004). Many business owners in Thailand and the other countries of the region are second or later-generation entrepreneurs who have taken over family businesses, and these later-generation entrepreneurs are generally better educated but less technically proficient than first-generation entrepreneurs

(Chung and Yuen 2003). In Asia, carrying on the family business is often thought of as a family obligation, while not going into the family business may be considered selfish and overly individualistic. It has been shown Asian entrepreneurs on average may have more conservative and family-oriented values than do Western entrepreneurs. It should be kept in mind that career advancement opportunities for outsiders in family-owned firms are limited, often resulting in non-family paid employees leaving their employers in order to seek out their own entrepreneurial opportunities in order to have an opportunity for advancement and job security. There are few government-enforced workforce legal protections in the region, and therefore an employee’s career is often subject to the arbitrary decision making of the owner of the firm, and becoming an entrepreneur is often a path to increased financial and professional security and not necessarily a more risky decision than working in someone else’s family-owned firm with no legal protection. Entrepreneurship in different locations is shaped to a large extent by the available alternatives. Ambitious individuals in the West often have the option of starting a business or climbing the corporate ladder in seeking professional success, while the second option is often quite limited in the Theravada Buddhist countries of Southeast Asia where family ownership of companies is more common than ownership by corporation. The institutional environments found in the Theravada Buddhist countries of Southeast Asia have a direct impact on entrepreneurship in the region. As a visitor to the region quickly discovers, a thriving informal economic sector exists and the streets are filled with people seeking financial opportunities, which Kamrava (1999: 47) reported was natural where a “mixed” economy was present, as is currently seen in Myanmar/Burma, Laos, and to some extent Cambodia and Thailand. Bowen and De Clercq (2008) found the higher the level of corruption found in a nation, the more entrepreneurial efforts will move away from more productive activities in the formal sector toward generally less productive activities in the informal sector. Therefore, as corruption is not unknown in the region, it can be speculated a large amount of entrepreneurial effort is expended within the informal sectors of the economies in order to avoid having to go through official channels. Laos is a country where the majority of the population is rural and where subsistence agricultural and small-scale trading make up most of the economic activities undertaken in the country. This pattern has not greatly changed from pre-colonial times, through the period of French domination, and now into the present communist period (Prakoonheang 2001). However, beginning with the New Economic Mechanism policy in 1986, more private SMEs have arisen and it has been reported that family-owned SMEs make up 74 percent of the total number of businesses in the country (Southiseng and Walsh 2008). Rehbein (2007a: 60) reported, “almost all Lao households engage in some form of trading,” even when individuals are officially classified as employees. Entrepreneurs in Laos face many of the same challenges as entrepreneurs in other developing economies. Lack of capital, limited demand due to the small

size of the market, a highly competitive environment, lack of access to technology, and inconsistent application of government policies have all been cited as obstacles small business owners face (Southiseng and Walsh 2008: 2). Also, as noted in the case studies in Chapter 4, finding and retaining skilled and professional labor has proven to be problematic for some firms. The primary workforce for many small entrepreneurial firms in Laos is family members, and this often results in family considerations taking precedence over financial considerations in the decision making of the business, but it also decreases recruiting and selection costs (Southiseng and Walsh 2008: 12, 20). The competitive environment in Vientiane was found to be more intense than in other parts of the country; furthermore, products from Thailand, China, and Vietnam can be found in retail markets throughout the country, demonstrating that while Laos is often considered isolated from the rest of the world, there are extensive international business connections throughout the nation (Southiseng and Walsh 2008: 21), even if many of these connections and business transactions are not incorporated into the official statistics. Entrepreneurs in Laos would appear to share some similar traits with entrepreneurs in the other Theravada Buddhists countries of Southeast Asia. As expected, Southiseng and Walsh (2008: 15) found a combination of education, experience, conceptual skills, and technical abilities were associated with entrepreneurial success; however, the idea of the ambitious and driven business owners was tempered with the bo pen yang dok (never mind/don’t worry about it) attitude that is common in the country. Southiseng and Walsh (2008: 14) found business owners enjoyed the flexibility of having their own business and often took advantage of their independence to spend time with family or in relaxation as opposed to constantly working to grow their business. In addition, business owners enjoyed being able to meet directly with customers and employ their own individual management style. Southiseng and Walsh also reported most entrepreneurial firms in Laos PDR were self-financed, short-term oriented, and had no plans to expand internationally. The short-term orientation found in Laotian entrepreneurs is similar to findings in other businesses in the Theravada Buddhist countries of Southeast Asia and may be associated with the Theravada Buddhist teachings of impermanence, while the moderation of ambition would appear to be aligned with following the middle path. The teachings of Theravada Buddhism stress the individual nature of the path to enlightenment, and it would appear entrepreneurs in Laos also follow an individualistic path toward economic activities to a considerable extent. As in Laos, there is a vibrant entrepreneurial spirit found in Cambodia. In a similar fashion to the findings of Southiseng and Walsh (2008) in Laos PDR, Hawks (2005: 110) found an individualistic and short-term strain to entrepreneurship in Cambodia and wrote:

An interesting point among the SME owners interviewed is the focus on the owner himself or herself as the exclusive factor in determining the future of

the company. A company’s success seemed to be tied to the owner rather than putting in place an organizational structure that would last beyond the owner and that would focus on growth.