TRESVISTA FINANCIAL SERVICES
Necessity
entrepreneurship
tends to be
proportionately
higher in low
and medium
income countries
than in high
income countries
zero and often results in deflation. While conventional
entrepreneurs take a hit by either closing their ventures or
delaying its start for a much favorable time, there are few
individuals who bring in a slight growth in the economy
by starting their own businesses, as a measure of last resort
triggered by high job cuts. These types of entrepreneurs
increase activity in markets by creating jobs, increasing
disposable income and thereby, affecting demand in the
economy. This, along with concentrated efforts by the
government and established firms, kick-starts the economy
leading to a shift from trough to growth. In a way, necessitybased entrepreneurs help the economy attain the troughstage and start the recovery/growth-stage.
16
INDUSTRY INTELLIGENCE | October 2011
We find that, entrepreneurship
and
economic
growth
complement each other at
every phase of a business
cycle. At growth stage, the
motive is to take advantage of
the market opportunities while
at trough, the motive is to
survive. We conclude that, as
a leading indicator of business
cycle, entrepreneurial activity
governs, limits and stimulates
the growth and recessionary
phases of an economy.