Saturday, June 28, 2008

Entrepreneurs get it!!

Yesterday, I was part of an informal session with some very successful entrepreneurs who graduated from IIM-A, the premier business school in India. Among the panel were the guys who have made and (by the way, I always book my Indian trips with makemytrip) successful. My question to them was how they got around government regulation and procedures and if as a start up they needed to invest heavily in a person or a team that deals exclusively with government agencies. The answer from several entrepreneurs in the crowd was that they avoided dealing with the government as much as possible. Traditional manufacturing requires a lot of interaction with the government. There is not so much involvement in the services sector. If there was a requirement for long term presence in the market such as would require government agencies, then they would plan to invest in such capital. A young entrepreneur who graduated last year mentioned that when it comes to start ups it is better to handle all accounts yourself or give it to a partner who you trust. It does not help to delegate in this area. Seems like these successes are in-spite of the government and entrepreneurs find a way. 
The other idea that kept coming up was spontaneous order, and that entrepreneurship follows a spontaneous order system. Well! They did not exactly use this term, but they did say it evolves and goes in different directions. Spurious discoveries are also something that seem to be very common. All of this goes to say that the Kirznerian entrepreneur is very much relevant to today's discussion, and Hayek's ideas are very much alive with the entrepreneurial community, even if they do not know these names and the theories these academics expounded. 
I had a chance to talk to a couple of entrepreneurs who were seated next to me. These were seasoned guys and they got the incentives idea right. One of the gentlemen told me, "there is no such thing as an honest or a dishonest man. People react and respond to situations. If the rules are such that you will not get your work done without a bribe, people bribe, otherwise they won't". He knew economics and this was a guy who had never been to a B school or done any professional course. He understood the power and relevance of incentives. All of the entrepreneurs I talked to yesterday had sound economic principles and knew public choice, even if they had not heard of public choice or Buchanan or Tullock. They had the ideas right!!
Hats off to you guys! Indian Entrepreneurs Rock!!!

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