Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Creative Entrepreneurship

          Last February 29, an auspicious day for thinking out of the box, the Business Economics Association, a student organization of the University of Asia and the Pacific, organized Economic Summit 2012:  Tapping the Human Creative Potential.  This was the first time the BEA put together the various schools and institutes of UA&P to address a current national issue.  The speakers and students were not limited to the School of Economics but included the schools of management, education, the humanities, political economy and integrated marketing communications.  The multidisciplinary nature of the topic, i.e. creativity, enterprise and economic growth, made it necessary to involve the various sciences represented by the different schools and institutes.  This initiative fits very well the university-wide effort in UA&P to encourage multidisciplinary research, dialogue and communication.  I was assigned the topic "Creativity and Economic Growth."

          I first addressed the question of whether or not the title of this article, "Creative Entrepreneurship," involves a tautology.  Isn't entrepreneurship necessarily creative?  The economists in the crowd were reminded of the Schumpeterian (after Joseph A. Schumpeter) theory of economic development.  According to this Austrian economist who taught at Harvard for many years until his death in 1950, economic development occurs in cycles revolving around a series of innovations.  The innovator is the key to a rise in income after a period of relative stagnation.  By definition, the innovator is a creative person.  In today's management parlance, he is a right-brained individual, able to break out of the straight jacket of traditional ways of doing things by thinking out of the box.  He introduces either a new product to satisfy an existing need (like the personal computer or the mobile phone); or a new way of producing the same product or service (like call centers for consumer service); or new markets for the same products (like discovering the bottom of the pyramid for consumer products such as toothpaste, shampoo or telephone services); or a new source of raw materials (like jatropha for biofuel); or new ways of marketing or distributing a product (like electronic marketing).  These different ways of innovating produced the growth phases of business cycles over the last two hundred or more years:  the textile industry-led growth in the 18th century; then that of steel; chemicals; automobile; electronics; petroleum; alternative sources of energy; IT and IT-related services;  biotechnology; and nanotechnology. 

          I pointed out, however, that in the Schumpeterian model, the creative person or the innovator is not necessarily the entrepreneur.  In fact, in most instances, the inventor, innovator or creative person is not the entrepreneur.  The role of the entrepreneur in the Schumpeterian model is that of the organizer of all the factors of production needed to implement an innovation.  He puts together the innovator with the capitalist, the banks, and the human resources to transform the innovation into a business.  In some exceptional instances, the innovator is also the entrepreneur as in the case of Henry Ford who both thought of and implemented the idea of a mass-manufactured car.  Often, though, an innovator is handicapped by a very imaginative mind and is unable to focus on such down-earth details as where to get the capital, how to hire effective managers and most importantly how to market the good or service which is the product of the innovation.  As far as I could gather from the book Social Network about Mark Zukkerberg, this youngest billionaire in the U.S. today played the role more of an entrepreneur than an innovator.  He counted on his Harvard dormmates to do the thinking out of the box (in fact, he was even charged by twin brothers for copying their ideas).  His talent was to put together the initial capital (mostly from his parents and friends), the innovators, and the starting management team.  He also fulfilled the second indispensable requirement for an entrepreneur:  he took the risk of failing.  Thus, the entrepreneur is an implementor of an innovation and a risk-taker.

          Is creativity a result of nature or nurture.  Most students of the phenomenon of creativity would answer both.  Part of it is in the biological makeup of the brain (right vs. left).  It is for this reason that women are supposed to be more creative than men because they are supposed to be more right-brained than the male species.  Creative individuals who also become good entrepreneurs, especially in the Philippine setting, are usually females because in addition to an imaginative mind, Filipinas are usually more prone to pay attention to details than their male counterparts.  But a creative mind can also be nurtured by the appropriate child rearing practices of enlightened parents and an academic curriculum that is steeped in the humanities, literature, the arts (music and fine arts).  At UA&P, our avowed goal is to help our students--whether male or female--to be whole-brained by exposing them to the whole spectrum of the liberal arts.  We have anecdotical information that many of our graduates end up as entrepreneurs or within a corporate setting as "intrapreneurs", i.e corporate employees who are both innovative and not averse to risk.

          Because of the publication called Arankada, produced by the seven foreign chambers of commerce in the Philippines, the business community is now talking about a new industry sector called the "creative industries."  This is a catch-all for any economic activity that requires creative talents, such as fashion, music, entertainment, animation, film making, graphic design, storytelling, culinary arts, wood carving, furniture making, architecture, etc.  Filipinos and Filipinas excel in these creative fields.  The problem, however, is the difficulty of measuring the value contribution of creativity in all these sectors of economic activity.  I challenged the budding economists present in the audience to work with the National Statistics Office so that in the future, the national income accounting can include a separate measure for the so-called "creative industries."

       In the meantime, we can just encourage the creative citizens of the Philippines to apply their talents to the different sectors where creativity can add much value to merely mass manufactured products.  The usual example I give is in garments export.  We have long lost the battle in the export of mass manufactured garments products such as shirts, jeans, ready-to-wear pants, pajamas, etc which can be produced at the lowest costs possible with the use of very cheap labor.   Philippine labor is no longer cheap, compared to the manpower in Vietnam, Indonesia, Cambodia, Myanmar, etc.  We have, however, maintained our competitiveness in garments products that require a minimum of creative work, e.g. ladies langeries and embroidered children's dresses. We can also cite the international fame of fashion designers from the Philippines such as Monique Lhullier who dresses some of the most famous personalities of Hollywood.  For comments, my email address is bernardo.villegas@uap.asia.