DISCOVERING THE ENTREPRENEURIAL POTENTIAL IN DIFFERENCES BETWEEN EUROPE AND CHINA

Transcription

1 ANDRZEJ KARDASZ Professor of Wrocław University of Economics TOMASZ DYCZKOWSKI Wrocław University of Economics DISCOVERING THE ENTREPRENEURIAL POTENTIAL IN DIFFERENCES BETWEEN EUROPE AND CHINA Keywords: entrepreneurship, Competence in EuroPreneurship, innovativeness, business creativity, open business model Abstract: The Competence in EuroPreneurship (COEUR) project aims at developing entrepreneurial competence of future market leaders for Europe. The sixth international COEUR idea generation workshop organised in 2009 in Guangzhou, China intended to confront business cultures of Europe and China, in order to break limitations of European entrepreneurial concepts, models and attitudes. The co-operation of students from various cultural backgrounds on common entrepreneurial ideas proved that the business model of the future should be open, what means that it combines: long-range thinking, innovativeness and universal language of market communication, where organisational, financial and marketing aspects follow and not precede business creativity. Suggested form of citation: KARDASZ A., DYCZKOWSKI T. (2009): Discovering the Entrepreneurial Potential in Differences between Europe and China, [in:] M. Dytczak (ed.): Multi-aspect Cooperation the European Union and China, Studia i Monografie z. 249, Politechnika Opolska, pp

2 1. INTRODUCTION THE COMPETENCE IN EUROPRENEURSHIP (COEUR) PROJECT The foundations for entrepreneurship theory and educational methodology were laid by American universities and institutions in the early 1970s. These concepts are generally considered global standards or at least global best-practices. It does not means, however, that the American models are universal or flexible enough to address problems of any economic system. Business initiatives and operations are strongly conditioned by local factors and therefore entrepreneurship should not be treated as a homogeneous phenomenon on a global scale [1, 2]. Specific characteristics and potential of the European Market resulted in developing European entrepreneurship culture defined as EuroPreneurship [see 3] which fuses global standardisation tendencies, often relying on American experiences and examples, with local entrepreneurial behaviour. The europreneurial culture on the one hand poses a challenge for entrepreneurs, but on the other creates opportunities to new businesses or value added to existing ones [1, 2]. In this context the idea of organising an international meeting for students of various majors emerged. The objective of the workshop was to build competence in European entrepreneurship by developing innovative business concepts with the European scope. In 2004 a network of four universities from Germany (Mainz), Poland (Wroclaw), Portugal (Lisbon) and Scotland (Aberdeen) initiated in Mainz the 1st Idea Generation Workshop on EuroPreneurship called Competence in EuroPreneurship (COEUR) [2]. The COEUR annual events, which later integrated new partners from France (Dijon) and the Czech Republic (Prague), were than successfully repeated at the partner institutions in Scotland (2005), Poland (2006), Portugal (2007) and France (2008). Based on results of accompanying research run within the COEUR project co-ordinated by professor Matthias Eickhoff from the University of Applied Sciences in Mainz and comprehensive evaluation of the concept performed by participants of every COEUR workshop, the following COEUR principles were formulated [4, 5]. 1) Despite economic, legal and cultural differences there exists a set of interdisciplinary and pan- European behavioural traits encouraging entrepreneurial thinking, which can be educated. 2) The young Europeans share values, aspirations and outlooks and these common features are much more important than any differences in this group. 3) The essential elements of a European entrepreneurship education are: creative problem defining and solving, self-responsible work as well as intercultural and team competencies. 4) The basic concept of COEUR workshops is to develop entrepreneurial ideas in intercultural teams in an inspiring educational environment. 5) The COEUR annual events aim at bringing together students and staff from different European countries to enable understanding of the European Market from multiple perspectives. 6) The COEUR workshops contribute to employability of participating students by providing them with key entrepreneurial and intrapreneurial competencies and intercultural experiences required from European businesspeople of the future. The COEUR concept applies blended learning approach, which integrates diverse learning methods. This objective is achieved through: multicultural teamwork, experimental learning, team coaching, experience sharing by entrepreneurs and professionals, presentation and feedback cycles and inspiring excursions or outdoor activities [4, 5]. 2. BUSINESS CREATIVITY IN FOCUS OF THE COEUR PROJECT Business planning has always been focused on in entrepreneurship education and still remains one of the most frequently used tools. The significance of business planning is globally accepted, as its efficiency was proved both by theoretical studies and practical applications. Consequently, a lot of successful activities and events have been established in this area. Nevertheless there appear opinions that successful entrepreneurial development is far more complex phenomenon and business planning starts to reveal its deficiencies [5]. At the stage of formulating the COEUR concept it became evident that this project would not add another business-plan contest to existing entrepreneurship education activities. Therefore COEUR

3 focused on the phase before business planning the initial, fuzzy phase of problem definition and creative idea development called business creativity and attempted to structure it [5]. Business creativity consists in a definition of a problem for which creative solutions need to be invented and developed. The challenge for these creative effort is to find an actual problem. This leads to distinguishing situations with an obvious way out from those which do not imply any clear answer. Entrepreneurs looking for easy paths have lots of followers and will unlikely establish extraordinary successful businesses or institutions. Discovering the crux of a true problem redefines current rules and tendencies, and creates an opportunity to major or even revolutionary change [5]. Creative output has to be controlled. Therefore the question of finding appropriate methods and tools, stimulating and steering the creative process, ought to be dealt with. If business creativity is to be educated than it is indispensible to have proofs that creativity is not an in-born capacity, but it can be enhanced with appropriate training. It should also be demonstrated that ideas developed with help of a creativity toolbox are of sufficient quality. The third thing is to prove that thanks to appropriate idea selection chances for success increase. The objective of COEUR in this respect is to formulate value propositions for a business, a social innovation or a bridge between profit and non-profit applications, which are characterised by new visionary strength and European dimension. This objective is achieved by placing culturally-mixed student teams in challenging working conditions in terms of requirements, time limits and competition and make them manage the creative process on their own. This way team members are the only responsible people for an ultimate success or a failure. This approach supports an opinion that entrepreneurs of the future should not be task- and rule-oriented managers, who stigmatise mistakes, but leaders, who are vision- and result-oriented and treat each experience including mistakes as a lesson learnt or investment [5]. 3. THE SIXTH COEUR WORKSHOP IN CHINA THE RATIONALE Each of the five editions of COEUR workshops, although took place in another European country and presented cultural or economic backgrounds of the hosting region, emphasised the priority of the pan-european entrepreneurial environment over a national level. This stemmed from the conviction, that as diversity of Europe is noticeable to European citizens, the outside world and the United States in particular perceives the Old Continent as a federation. It is always the European Union or the European Market that comes in the first place, and Germany, France, Great Britain etc. in the second. This conviction lead to enthusiastic reaction to the opportunity of extending a discussion on europreneurship on interactions between the European Market and the strongest economy of Asia the People s Republic of China. The first basic argument for such expansion was the fact that as the European Market is saturated, europreneurs will much often look for their opportunities beyond Europe. The second, and far more important, reason was that by focusing exclusively on Europe the COEUR project was in threat of being limited by too uniform European business education model. The international workshop organised in 2009 in co-operation with the Nanfang College of Sun Yat-sen University in Guangzhou aimed at breaking that limitations by facing business cultures of Europe and China. The major assumption for the COEUR 2009 workshop was to look beyond European or western, as the Chinese preferred to called it entrepreneurial behaviour, marked by uniform organisational, financial and marketing concepts. If future europreneurs in course of their education use the same literature, analyse the same case studies, and develop the same business models, then there is no possibility to avoid repeating visions, ideas and solutions. By experiencing cultural differences, they and their Chinese counterparts too were offered a chance to discover new business opportunities of very high potential. 4. CULTURAL TRAITS OF COEUR 2009 ENTREPRENEURIAL IDEAS The further part of the paper will examine relations between cultural aspects and quality of creative entrepreneurial concepts. The analysis is based on authors observations of teamwork in eleven cross-cultural groups and assessment of value propositions presented by them. These concepts

4 included the whole spectrum of business and non-commercial ideas, such as: organisation of European-style celebrations for Chinese students (Cultural Interacting Fun), cultural festivals in major European cities (Cultural Olympics), electronic metanewspaper (Unity inews), multinational restaurants (My Zone), herbal cigarettes (Healtherette), student-employer intermediary offices (T.O.B.), chopsticks recycling (GREEN Creations), ready vegetarian meals (All Good), Chinese cultural centres (China Center), heated underwear (H.O.T.) and a portable text scanner and translator (Genius Translator). The cultural dimension of particular projects was recognized on a basis of various symptoms to be noticed in presentations of value propositions and in promotion materials (mainly in advertisements in a form of a poster). These features included: direct indication of cultural profile, use of native words or expressions (for Scottish culture this meant Gaelic), reference to national symbols, presentation of people including celebrities who are unambiguously associated with particular countries or accompanying music typical for certain regions. Identification of cultural dimension enabled to recognise dominant features of the two cultural environments (table 1). 1. Closed concept with focus on problem identification and solving 2. Immediate results based on combination of existing solutions (shorter intro- Cultural Profile of COEUR 2009 Concepts Element Asian Profile European Profile Problem definition 1. Open concept with focus on opportunities 2. Long-term vision based on solutions which need to be developed (longer introductory phase) ductory phase) Solution 3. Domination of product-oriented ideas 4. Focus on new technologies or arts Business model 5. Private financing 6. For-profit orientation Commercialisation 7. Strong emotional load and enthusiasm 8. High input of creativity and artistic imagination Source: own presentation. Table Domination of service-oriented ideas 4. Focus on entertainment or communication 5. Consideration of public support 6. Non-profit orientation (to some extent) 7. Careful business planning 8. Trust in marketing techniques Considering entrepreneurial challenge different approaches were adapted in Oriental and European concepts. The European methodology involved problem-recognition and solving style, the good example of which was T.O.B. If students need experience or money, and small and mediumsized companies have to cut cost, the obvious answer is to create a student-employer intermediary office. This approach is characterised by a possibility of quick commercialisation of an offer without much effort spend on developing base for a company. The Oriental approach, on the contrary, seemed to be more open and evolving. For example the Genius Translator was first meant to help Chinese students to recognise English words, but soon became a multi-task device containing printed and handwritten text scanner, Chinese characters recognition software and voice-dictionaries everything in a portable, pocket device. This complexity implies longer preparatory phase for necessary research, prototyping and product testing, what means that such idea is rather a long-term vision than ready solution. In respect to value proposition, the Oriental approach was characterised by focus on hi-tech products. The best examples were heated underwear, which involved heat absorbing material, and the aforementioned text scanner. This fascination in technology and conviction that technology is a panacea for any problem seems to stem from the fact that the Chinese society made a jump over the technological revolution. When in Europe products employing certain technologies were first adjusted then improved and finally when obsolete replaced by next models, in China the most recent technology may be the first in use, and the technological advance is therefore more visible. The other factor that contributes to the described situation is a global transfer of production to China. If the vast majority of electronic devices is produced in China, then such offer must be dominant in this business culture. In European business style, where key resource is information and resource in scarce is time, young en-

5 trepreneurs offer either information services (T.O.B. or Unity inews) or pay attention to organising free time (Cultural Olympics, Cultural Interacting Fun). When business model is analysed the Oriental approach appears much more commercially oriented than the European one. Asian entrepreneurs were perceived as people, who accept the whole financial risk for the idea development, with the intention to create a profitable company. In highly competitive market this determination for success is extremely important. The European business model involves some elements of social entrepreneurship, which intends to increase living standards. It does not necessarily bring the highest possible profit, but on the other hand social entrepreneurs look for financial support of the public sector in order to finance their ideas. The side effect may be, though, that in order to survive such projects as Cultural Olympics, Cultural Interacting Fun or T.O.B. must rely on different kinds of sponsorship and financial support, what affects their feasibility. With regard to converting ideas into marketable offer the analysis of COEUR 2009 entrepreneurial ideas demonstrated different approaches to building customer relations. The European oriented projects tended to threat commercialisation phase as a process which has to be well designed and conducted. The customers appeared as consumers who desire products and services, and the main task of a company is to draw people s attention to particular offer by using appealing market communication tools. That attitude poses, however, risk that actual customers needs may be ignored. Such project as herbal cigarettes (Healtherette) confirmed this thesis. The customers do not want to substitute cigarettes with their healthier equivalents, but to reduced their stress and keep healthy at the same time. In this respect the Oriental ideas demonstrated, on the contrary, more emotional approach to entrepreneurship. The text scanner was therefore presented not as a cool gadget but as a life buoy to enable communication in the most difficult situations or as a magic wand that makes interpersonal barriers disappear. In addition, an artistic style of market communication was a consequence of pursuit to create not a product, but the visionary, quality, well-designed solution. Obviously, the limited number of projects, and the subjective identification of cultural traits, cause that described cultural profiles must not be treated as universal. They will act, however, as a reference basis for the authors to further observations in next editions of COEUR workshops, which will not only include the Chinese university, but as planned integrate a Latin American partner, and ultimately evolve to COEUR-Mundus Workshop. 5. KEY FACTORS OF SUCCESS IN INTERNATIONAL ENTREPRENEURIAL PROJECTS The last part of the paper will confront the previously identified cultural traits of COEUR 2009 projects with assessments of a jury, which comprised three members academics of various cultural backgrounds. The first was a Chinese native, an expert in Chinese culture, familiar with European environment due to being graduated in Europe. The second arbiter was a former entrepreneur and entrepreneurial consultant for developing countries, of Portugal origin, who spent several years living in Macao. The last expert was a German marketing professor, founder of an institute for entrepreneurial behaviour. This mix of cultural and professional backgrounds guaranteed thorough analysis of business concepts and a multidimensional perspective for assessments. The analysis presented hereafter (table 2) should enable to judge whether better cultural understanding brings value added to entrepreneurial concepts, what was the assumption not only to the described workshop, but to the COEUR project in general. The values in the first two columns, describing cultural dimension, reflect presence of cultural traits in three aspects of each project: its background, its target audience and language of marketing communication. In each case the authors, on the basis of presentations of value propositions and promotion materials, distributed points among Oriental and European profile of the idea considering an advantage of one dimension over another. The score was given as follows: equal presence of both cultural dimension: 50% each; slight advantage of one dimension over the other: 60%:40%; moderate advantage of one dimension over the other: 70%:30%; demonstrated superiority of one dimension over the other: 80%:20%; extreme superiority of one dimension over the other: 90%:10%;

6 total absence of one cultural dimension: 100%:0%. Class Cultural Dimension and the Assessments of COEUR 2009 Concepts Project (Brand Name) Table 2. The Assessment of Cultural Dimension the Jury Asian European Culture Load Final score Spread Oriental GREEN Creations 100,0% 0,0% 70,0% 65,3% 28,0% Bi- or multicultural China Center 66,7% 33,3% 76,7% 65,7% 13,0% H.O.T. 63,3% 36,7% 83,3% 75,7% 8,0% Genius Translator 60,0% 40,0% 91,7% 79,3% 18,0% Cultural Interacting Fun 56,7% 43,3% 80,0% 77,0% 3,0% My Zone 46,7% 53,3% 73,3% 71,3% 8,0% Unity inews 43,3% 56,7% 86,7% 71,0% 11,0% TOTAL 56,1% 43,9% 81,9% 73,3% 10,2% European Healtherette 23,3% 76,7% 78,3% 60,0% 20,0% Cultural Olympics 13,3% 86,7% 86,7% 70,7% 16,0% All Good 10,0% 90,0% 56,7% 55,0% 45,0% T.O.B. 0,0% 100,0% 63,3% 68,0% 28,0% TOTAL 11,7% 88,3% 71,3% 63,4% 27,3% Source: own presentation. The scores in columns 3 and 4 (table 2) represent average result of evaluation of the three aforementioned cultural factors influencing entrepreneurial concepts. These characteristics enabled to divide creative concepts into three groups: Oriental, bi- or multicultural and European one. The third measure describing cultural dimension of each project is already the first based on the opinion of the jury, but not yet related to the quality of entrepreneurial projects. The jury was to decide whether particular team understood cultural aspects of their ideas, in particular those referring to: customer needs, habits and market relations. This criterion labelled as culture load shows how much cultural elements were present in each offer. The value in column 5 equals a total number of points given by all members of the jury divided by the maximum score available. The opinions of the jury on quality of creative concepts, presented in column 6 (table 2), comprised the following factors: 1) vision which underlies a concept for a product or service; 2) definition of a market where a product or service is going to be offered, and identification of customers needs which are addressed; 3) feasibility of an idea, in terms of technology, financing and organisation; 4) general impression made by a presentation of a business concept, in particular strength of all arguments presented by a team; 5) information content of promotion materials which were used for the presentation. The score presented in column 6 (table 2) reflects a total number of points given by the jury within all the above-mentioned assessment criteria, divided by the maximum number of points available. Whereas the spread (column 7) demonstrates differences in assessments of the most enthusiastic and the most critical jury member. In should be explained that the analysis presented in this paper excluded two other assessment criteria used by the jury, which were not related to the quality of ideas but exclusively to creativity of promotion materials. The assessment of an artistic vision is important for the general perception of an idea, it tells, however, little about an actual design of promotion materials when a product or service is launched at the market as such activity is likely to be outsourced to professional agencies. Therefore, in contrast to all the aspects reflecting vision and development strategy for particular creative ideas, these purely artistic factors were excluded from the analysis. Having compared cultural aspects of the projects with assessments of their quality, it can be said, that out of three classes of ideas the most appreciated was the one containing bi- and multicultural projects. Such concepts were given on average 73.3% of the maximum number of point from the

7 jury, what was noticeably higher than in case of Asian- or European-oriented projects. This group comprised the top three projects as well, which collected more than 75% of the total number of points. The bi- and multicultural ideas were also characterised by far lower spread of assessments by the jury. Interestingly, they demonstrated higher degree of cultural understanding (by over 10%) than projects focusing on one cultural area only. This fact suggests that global customers may accept multicultural offers easier than those deeply rooted in a single culture. Multicultural character does not imply a universal style where cultural elements are reduced to the commonly accepted values. On the contrary, the culture plays more important role in such undertakings. The monocultural projects were marked lower by the member of the jury from the same cultural background and higher by those from the other cultural sphere. This suggests that business ideas derived from the same culture as that of their target audience are assessed more critically than those considered as exotic and therefore more interesting for customers. In general it can be noticed that the projects of higher cultural load differed to the smaller degree in opinions of the jury. In case of five projects with the cultural load assessed for at least 80% of points, the spread equalled to 11.2%, whereas for the rest it reached 23.7% on average. The grades for that group were also higher. Out of six projects which were given at least 70% of the maximum score by the jury, five were recognised as containing high cultural load they were given at least 80% of points for this criterion. The exception was the international restaurant, which may not have differed to the sufficient extent to myriads of restaurants (Chinese, Indian, Italian etc.) offering all kinds of meals from regional cuisines. It is also interesting that although all the projects were slightly more (by 12%) rooted in or targeted on the European cultural zone, the top three ideas (Genius Translator, Cultural Interacting Fun and H.O.T.) contained more Chinese elements, especially in terms of promotion methods (the 1st and the 3rd) or customer orientation (the 2nd). The high load of Chinese elements in the winning projects is a proof for attractiveness of that culture or in other words its high market potential. 6. CONCLUSION THE LESSON LEARNT The global economy opens new opportunities, but also poses challenges and magnifies risks for entrepreneurs. International expansion enables to find new markets for products and services, the prospects of which would otherwise be limited on local markets. International co-operation creates an opportunity for transferring technologies or even for exchange of ideas and attitudes, too. But to benefit from global economy entrepreneurs must be aware of cultural aspects. China has been perceived as the land of business opportunities in a very specific context. On one hand it offered low production cost due to the entirely different society structure, where cost cuts result from extensive use of manpower rather than from introduction of modern technologies. Many European companies transferred therefore their production to China, creating oases of technology. At present the Chinese society is trying to provide intellectual capital for those companies. Education, especially at the highest level, is oriented on international co-operation. This is the signal for Europe that soon Chinese employees may become key human resource for many companies, since they understand both cultures what will always be a challenge for the Europeans. On the other hand China along with other developing economies was a recipient of knowledge-based services. As the European consulting market was saturated and companies were no longer that interested in outsourcing further functional areas, developing economies offered a chance to sell the same solutions for the second time. The situation is changing now and the growing intellectual capital of the Far East causes that the services flow will stop. The future lies in interaction, and the European businesspeople need to learn from their Chinese counterparts. The COEUR 2009 event provided arguments that monocultural or universal with low cultural load offers are less appealing to contemporary global consumers. The customers seem to look for multicultural offers, characterised by good understanding of local tastes and, at the same time, bringing some fresh elements to the market. The Oriental culture which permeates much more intensively all areas of life than the European may therefore be a very attractive element of a business concept.

8 Moreover, the recent financial crises proved that economies of Europe experienced financial distress in the United States much stronger than economies of CIBR (China, India, Brazil, Russia). Therefore if European companies want to mitigate their strategic risk they should diversify activities by building stronger ties with non-american leading economies. REFERENCES: [1] EICKHOFF M. (2004): Mut zu unternehmerischem Handeln machen, Jahrbuch Wirtschaftswissenschaften , Fachhochschule Mainz. [2] EICKHOFF M. (2005): Unternehmerische Visionen für Europa, Forum No 1/2005, Fachhochschule Mainz. [3] EICKHOFF M., JAKOB Ch. (2005): Beyond Business Planning The Role of Creativity in Sustainable Entrepreneurial Development, [in:] Jöstingmeier B., Boeddrich H. (eds.): Cross-Cultural Innovation. Wiesbaden, Oldenbourg Wissenschaftsverlag. [4] EICKHOFF M., MÜLLER S. (2006): COEUR-Idea Generation Workshops Developing Euro- Preneurship Through Intercultural Learning in University Networks, Riga, 6th International Entrepreneurship Forum. [5] EICKHOFF M., MÜLLER S. (2008): The Business Creativity Module. Introduction into the Module and its backgrounds, [in:] Manual of the COEUR Business Creativity Module (in print).