Innovation and Entrepreneurship

Innovation and Entrepreneurship

Successful Start-ups and Businesses in Emerging Economies

Edited by Ruta Aidis and Friederike Welter

Little is known about innovative and successful enterprises in the countries that, until 1990, were part of the Soviet Union. Most previous research has extensively covered barriers to entrepreneurship and innovation that exist in these countries, some of which undoubtedly represent a hostile and harsh environment for any entrepreneurial activity. In this book, a different perspective is introduced. The focus is shifted to the innovative potential that these environments provide, demonstrating how entrepreneurs have been able to convert possibilities in hostile business environments into successful businesses. Through this collection of six in-depth case studies, the authors illustrate how successful and innovative businesses were able to develop in countries such as Russia, Belarus, Kazakhstan, Kyrgyztan, Moldova and Ukraine. Each case study presents an overview of the country’s key economic indicators and the role of small and medium-sized enterprises (SMEs) in the economy, followed by the presentation of a case study of a successful SME.

Chapter 5: Surviving Uncertainty through Exchange and Patronage Networks: A Bsiness Case from Kyrgyzstan

Gül Berna Özcan

Subjects: business and management, entrepreneurship, organisational innovation, innovation and technology, organisational innovation

Extract

5. Surviving uncertainty through exchange and patronage networks: a business case from Kyrgyzstan Gül Berna Özcan INTRODUCTION Economic and political uncertainty in transition hampers economic development. Yet uncertainty also creates new opportunities for entrepreneurs and can bring massive gains in emerging market economies from the many gaps that exist in the chain of production, service delivery and consumption. However, managing uncertainty is a crucial day-to-day challenge for entrepreneurs, especially when property rights are not fully secured, legal and institutional structures are weak and enforcement is arbitrary. Social networks are often the most reliable and efficient ways of dealing with pervasive uncertainty and day-to-day business problems for entrepreneurs. As we illustrate in the following case study from the tourism industry in Osh, located in southern Kyrgyzstan, such networks provide a degree of stability and opportunities for businesses to develop. In this chapter we illustrate the ways in which innovative entrepreneurship emerged during the meltdown of the Soviet command structure and its industrial base. This is accompanied by governance issues related to the weak state capacity in the newly independent states of Central Asia. However, entrepreneurial innovativeness in post-Soviet transition takes markedly different forms and demonstrates different characteristics than would be found in its counterparts in capitalist Western societies. The innovative challenge in transition countries tends to be less concerned with technological and product development and more profoundly based on managerial ability to deal with uncertainty in business start-up and to develop a successful survival strategy. On the...

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