Role for Business in Supporting Economic Development

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Table of Contents

Introduction
Responsibilities of Business Within Society
Responsibilities of Business Within Developing Economy
Potentially Successful Strategies
Practical Measures
Outcomes and Recommendations
Conclusion
Reference List

Introduction

The economic development of countries is a rather complex and multifaceted phenomenon that depends on a number of factors and cannot be considered a consequence of one process. Various sources used as a financial base serve as resources for creating certain conditions for growth, and the more effectively states interact with these funds, the higher chances they have to create a sustainable economy. When analysing the sphere of business, including small private enterprises and the sector of large entrepreneurship, it is worth noting that this industry is an essential background for the financial development of countries since a significant part of funds goes to the budget at the expense of taxes and other investments. The successful interaction of state boards with the representatives of market structures makes it possible to strengthen those areas that need support and ensure steady financial flows. Therefore, the role of business in supporting economic development is significant.

As a target area for analysis, sub-Saharan Africa regions will be considered in the context of the impact of business enterprises on the economic performance of countries. The significance of this interaction will also be assessed in relation to the responsibility of the business sphere. Arguments will be given in support of the importance of market enterprises’ participation in social issues. Potentially effective strategies will be considered in order to understand how it is possible to strengthen contact and expand the opportunities gained through business input. In addition, real practical measures will be assessed to review interaction options and benefits for the economies of the countries of the region in question. Based on the analysis of the proposed sub-topics, conclusions will be made, and recommendations will be given regarding improving the current situation. In general, the field of business, including all stakeholders, may be a crucial component in maintaining sustainable economic development and supporting governments’ efforts to create solid budgets.

Responsibilities of Business Within Society

In order to assess the role of business in the context of helping society, it is necessary to consider this issue from the perspective of a particular region to present appropriate arguments in support of certain assumptions. When analysing the degree of economic development of sub-Saharan Africa, it can be noted that in some areas, the level of well-being of the population is extremely low. This outcome is largely due to the lack of budget funds and an insufficiently developed branch of market relations. According to Chetty, Naidoo and Seetharam (2015), to establish the effective interaction of business with a social sphere, it is essential to create such working conditions under which individual managers could get enough opportunities and powers to implement potentially productive ideas. However, in the absence of any material base, it is difficult to organise a stable functioning system where entrepreneurship would influence changes in people’s lives positively. Therefore, despite positive prospects, in the region in question, it is not always possible to maintain the appropriate symbiosis of business and society.

Any business can become a significant driving force if relevant backgrounds exist, for instance, to promote certain goods or services. Nevertheless, as Amaeshi and Idemudia (2015, p. 211) argue, “the continent suffers from weak institutions and distressed civil societies”. As a result, many entrepreneurs cannot ensure stable capital gains due to the financial problems of the population and the lack of demand. This, in turn, has a negative effect on the economy that cannot develop normally in the absence of tax replenishment. Any business activity usually involves not only personal gain but also stimulating development, especially when it comes to sub-Saharan Africa. However, few entrepreneurs may afford themselves to engage in charity work and offer relevant strategies for market relations to the detriment of their own benefit. Therefore, challenges arise constantly, despite the need of the region for help.

Today, the responsibilities of business within society may have different manifestations. For instance, the activities of individual organisations can be aimed at stimulating the development of individual areas or maintaining an appropriate level of innovation. Kolk and Rivera-Santos (2016) introduce the concept of corporate social responsibility and highlight such areas of its manifestation as performing an environmentally friendly business, promoting individual market industries, introducing new useful products and other valuable practices. In the conditions of an underdeveloped economy and the lack of a strong budget, such a mechanism is an extremely important condition for help since the activities associated with entrepreneurship may have valuable implications. Creating additional jobs, assistance to low-income groups of the population and other bonuses are the crucial aspects of business activity. All these factors may be considered in terms of the responsibilities of entrepreneurship within society.

Responsibilities of Business Within Developing Economy

When considering the role and responsibilities of business within the developing economy, it is also essential to focus on a specific region so that the arguments could be most substantiated. According to Rivera-Santos et al. (2015), economic challenges in sub-Saharan Africa have a number of negative implications, in particular, armed conflicts in certain countries due to public discontent with their low social status. Therefore, it is necessary to take into account that entrepreneurship in the region under consideration may not only be the way of earning and strengthening a market economy but also a mechanism for solving related problems. For instance, in case a sufficient number of unemployed receive jobs, this can reduce the risk of aggression. Consequently, economic indicators will grow, which will be the natural outcome of entrepreneurial activity.

Another advantage that business development can bring is the growth of technology and, as a result, a greater turnover of products within the continent. The participation of the authorities is mandatory in this issue since, as Amankwah-Amoah, Osabutey and Egbetokun (2018, p. 171) state, “government policy should potentially chart technology and innovation trajectories that would contribute to economic development”. Nevertheless, a significant role in solving this problem falls to the share of entrepreneurs who should not only use relevant market innovations but also stimulate their continuous improvement. For instance, it is possible to refer to agricultural complexes that are valued in African countries and are the means of earning for many businesspeople. According to Kühn, Stiglbauer and Fifka (2018), the level of agricultural development in sub-Saharan Africa is limited due to the region’s underdeveloped economy. Consequently, stakeholders’ task is to not only capitalise on the implementation of relevant complexes but also help specific countries improve their existing bases to strengthen this industry. Such activities will allow entrepreneurs to make a significant contribution to the promotion of agriculture and, at the same time, will become a key to a stable business.

In general, the region in question is an open platform for establishing a mutually beneficial system of interaction between the business sector and economy. Vermeire and Bruton (2016, p. 259) remark that today, sub-Saharan Africa is the territory “of great entrepreneurial opportunity”. Stakeholders can open many new ventures in countries with developing economies since the local market is not oversaturated with a large range of goods and services. As a result of such opportunities, the representatives of the business sphere can help form the financial power of states, thereby performing their immediate function. Therefore, the responsibility of entrepreneurs within developed economies is significant and may be regarded as one of the stimulating drivers.

Potentially Successful Strategies

To achieve successful interaction between business and economy, it is essential to not only develop the internal systems of productive communication but also draw attention to the practices of developed nations. For instance, Tanzanian experience proves that excessive tax increases as the way of achieving as much financial replenishment of the budget as possible affects business negatively, and entrepreneurs are not ready to open new areas of selling their goods due to excessive pressure from the authorities (BTI 2018: Tanzania country report 2018). It is crucial to focus on those strategies that may allow promoting business development in specific conditions, while taking into account the current economic characteristics. As Soubbotina (2004) notes, it is pointless to start a new project to create a network of farms in areas where there are problems with water and land resources. To maintain a sustainable business, it is essential to use all the available opportunities to the maximum so that a certain venture could not only develop but also be useful to society and the state. Therefore, the preliminary assessment of external factors that may affect a particular project is an important procedure.

One of the potentially successful strategies is utilising the current growth opportunities of the region under consideration. According to Brookings (2019), today, Africa undergoes an industrial revolution, and in order to take advantage of business opportunities, it is necessary to take into account emerging industries and to develop them to the full extent. For instance, the agro-industrial complex requires large investments, but in case of successful maintaining a stable mode of operation, revenues may be substantial, which will have a positive effect on the budget. The research conducted by The World Bank (2019) provides information that freer credit conditions can also be an essential condition for improving the business situation in sub-Saharan Africa. An opportunity to participate in the formal sector will open up additional prospects for expanding the business of individual firms, and the role of entrepreneurs may increase.

Finally, the analysis of the leading world powers’ strategies is the mechanism that can offer relevant business development principles in the context of the non-saturation of the market. According to the International Monetary Fund (2018), the financial assets of countries in the sub-Saharan Africa region largely depend on the volumes of goods exported. Consequently, potentially successful strategies may include the revaluation of commodity prices in order to increase the cost of specific products to earn more money. Such a step may be associated with some risks, for instance, the lack of demand in case of increased costs. Nevertheless, establishing business relations and engaging investors through partnership agreements are the tools that will keep customers and, thus, will contribute to earning more by maintaining the previous export figures. Therefore, business is a significant and indispensable component in such a system.

Practical Measures

Practical measures aimed at promoting business in the countries of sub-Saharan Africa in order to support the economies of individual states may be associated with innovative development. Asongu and Nwachukwu (2018) note that the introduction of information and communication technology in the field of entrepreneurship can help expand opportunities for private ventures, which is a potentially valuable step for state budgets. Modern enterprise management tools will contribute to streamlining all the operational processes and such areas as logistics, communication with the target audience and other aspects of a successful business. Asongu and Tchamyou (2016) confirm the significance of this measure and cite the concept of the knowledge economy, which means using the achievements of progress rationally. The authors argue that investing in innovations can enable African countries to stimulate business, thereby strengthening their economic positions (Asongu & Tchamyou 2016). Therefore, such a step may be productive if it is successfully implemented, for instance, by introducing modern computerised forecasting systems.

Since the aforementioned area of agriculture may be improved by using relevant mechanisms for soil cultivation, irrigation and other purposes, technological progress is also a priority in this sphere of business. Osei-Kyei and Chan (2016) propose to pay attention to the transport industry and utilise modern advances in this field in order to optimise the activities of private agricultural enterprises. Increasing the yield of valuable crops will increase exports and, consequently, replenish national budgets. As a result, another valuable step is to train competent staff. According to van Uden, Knoben and Vermeulen (2017), involving specialists who can work with modern technologies is essential for quality entrepreneurship. However, the issue of training professionals is quite acute since not all potential employees have an appropriate educational base. Therefore, to maintain high-quality business activities, it is crucial to stimulate workers’ preparedness by offering specific opportunities, for instance, learning operations on particular mechanisms.

Another valuable practical step to stimulate developing economies through entrepreneurship is the organisation of special business incubators. As Lose and Tengeh (2015) state, this method involves creating small and medium-sized enterprises that provide different types of services and make a common contribution to the replenishment of the public sector. Such an approach may be effective, and the authors propose to start from southern Africa where the potential for promoting such steps is optimal (Lose & Tengeh 2015). For instance, increasing tourism opportunities can be a productive measure to attract investors’ interest in the region in question, and a constant influx of guests may contribute to developing local economies sustainably and productively. Thus, the practical measures considered can help sub-Saharan Africa regions strengthen their budgets and gain authority from business partners.

Outcomes and Recommendations

Based on the analysed business functions in the context of interaction with the developing economies of the sub-Saharan Africa region, it can be noted that introducing innovations is a valuable and productive solution for promoting new opportunities. As Donou-Adonsou, Lim and Mathey (2016) note, technological advances through the utilisation of modern Internet capabilities may help form different entrepreneurial models, thereby increasing the range of products and services. As a recommendation, local businesspeople can be offered to involve professional analysts to develop and implement relevant digital planning and risk minimisation strategies. Such a measure will simplify the decision-making process and promote appropriate tactical steps as efficiently as possible.

Another result of business analysis in the region under consideration is the need to assess and involve the practices of developed countries in order to optimise economies. According to Kodongo and Ojah (2016), the areas of transport, tourism, agriculture and other important industries may be improved by introducing those technologies that have proven their effectiveness, for instance, increasing the value of export goods. Consequently, in order for such innovations not to lead to negative outcomes, such as the failure of procurement partners, it is essential to carry out analytical work aimed at monitoring market interests. Stimulating the development of certain industries can be productive if all the changes are relevant to the current needs of the target audience and are of interest to investors. Therefore, to maintain economic development, it is required to create specific conditions under which entrepreneurs will be able to promote their ventures freely.

Conclusion

The role of business in stimulating economic development is essential, and maintaining appropriate conditions for entrepreneurship may help replenish budgets and strengthen the positions of states. When using the example of sub-Saharan Africa, it can be noted that the introduction of innovations and the analysis of topical areas are important measures for assessing the existing opportunities for empowering individual enterprises. The significance of business within society is high and can be expressed in corporate social responsibility promoted by various ventures. The considered strategic decisions and practical steps may be useful as the effective measures of expanding the powers of business and engaging investors.

Reference List

Amaeshi, K & Idemudia, U 2015, ‘Africapitalism: a management idea for business in Africa?’, Africa Journal of Management, vol. 1, no. 2, pp. 210-223.

Amankwah-Amoah, J, Osabutey, EL & Egbetokun, A 2018, Contemporary challenges and opportunities of doing business in Africa: the emerging roles and effects of technologies’, Technological Forecasting and Social Change, vol. 131, pp. 171-174.

Asongu, SA & Nwachukwu, JC 2018, ‘Openness, ICT and entrepreneurship in sub-Saharan Africa’, Information Technology & People, vol. 31, no. 1, pp. 278-303.

Asongu, SA & Tchamyou, VS 2016, ‘The impact of entrepreneurship on knowledge economy in Africa’, Journal of Entrepreneurship in Emerging Economies, vol. 8, no. 1, pp. 101-131.

BTI 2018: Tanzania country report 2018, Web.

Chetty, S, Naidoo, R & Seetharam, Y 2015, The impact of corporate social responsibility on firms’ financial performance in South Africa’, Contemporary Economics, vol. 9, no. 2, pp. 193-214.

Donou-Adonsou, F, Lim, S & Mathey, SA 2016, ‘Technological progress and economic growth in Sub-Saharan Africa: evidence from telecommunications infrastructure’, International Advances in Economic Research, vol. 22, no. 1, pp. 65-75.

Brookings 2019, Foresight Africa: top priorities for the continent in 2019, Brookings, Washington, D.C.

International Monetary Fund 2018, Regional economic outlook: Sub-Saharan Africa, International Monetary Fund, Washington, D.C.

Kodongo, O & Ojah, K 2016, ‘Does infrastructure really explain economic growth in Sub-Saharan Africa?’, Review of Development Finance, vol. 6, no. 2, pp. 105-125.

Lose, T & Tengeh, R 2015, ‘The sustainability and challenges of business incubators in the Western Cape Province, South Africa’, Sustainability, vol. 7, no. 10, pp. 14344-14357.

Kolk, A & Rivera-Santos, M 2018, ‘The state of research on Africa in business and management: insights from a systematic review of key international journals’, Business & Society, vol. 57, no. 3, pp. 415-436.

Kühn, AL, Stiglbauer, M & Fifka, MS 2018, ‘Contents and determinants of corporate social responsibility website reporting in Sub-Saharan Africa: a seven-country study’, Business & Society, vol. 57, no. 3, pp. 437-480.

Osei-Kyei, R & Chan, AP 2016, ‘Developing transport infrastructure in Sub-Saharan Africa through public-private partnerships: policy practice and implications’, Transport Reviews, vol. 36, no. 2, pp. 170-186.

Rivera-Santos, M, Holt, D, Littlewood, D & Kolk, A 2015, ‘Social entrepreneurship in sub-Saharan Africa’. Academy of Management Perspectives, vol. 29, no. 1, pp. 72-91.

Soubbotina TP 2004, Beyond economic growth: an introduction to sustainable development, 2nd edn, The World Bank, Washington, D.C.

van Uden, A, Knoben, J & Vermeulen, P 2017, ‘Human capital and innovation in Sub-Saharan countries: a firm-level study’, Innovation, vol. 19, no. 2, pp. 103-124.

Vermeire, JA & Bruton, GD 2016, ‘Entrepreneurial opportunities and poverty in Sub-Saharan Africa: a review & agenda for the future’, Africa Journal of Management, vol. 2, no. 3, pp. 258-280.

The World Bank 2019, Global economic prospects: darkening skies, The World Bank, Washington, D.C.

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