Growing impact of Startups around the World.
Author: Laveena Uchil.
1. Research Objective:
To find out the growing importance of Startups around the world economy.
2. Introduction:
Startup refers to new emerging business venture which can be developed into a feasible business model through innovative solutions. Start-ups are extremely high-risk ventures which are usually formed by visionary entrepreneurs who are ready to take risks to solve a customer problem or fill a gap in the market. Startups play an important role in the economy by creating new job opportunities & reducing unemployment among local people in an economy. Apart from employment creation startups also bring social & environmental change in the economy. Through this study we aim to understand the impacts created by start-ups around the world.
2. Research methodology:
The articles related to the problem have been taken from proquest peer reviewed journals. The articles are from India as well as other countries, the articles so reviewed have been put into pattern and generalised trends have been observed to find out what are the major positive impacts of startups in the world economy.
3. Literature Review:
3.1. Provides Job autonomy:
Anderson, et al. (2021) says Job Autonomy is the scope of freedom and latitude of individuals in the organization to conduct and make decisions about their tasks, which can lead to increase in creativity of employees and managers in the start-up. As innovation is at the core of the startups, not only the founders and managers tend to exhibit creative behaviors, but also the employees. Thus, it is assumed by assumed by Anderson et al. (2021) in their research that there is coexistence of an environment conducive to innovation can be driven by job autonomy.
3.2. Impacts Employees’ Tacit Knowledge Sharing:
Pu et al. (2022) in their research say entrepreneurs have a leadership style that inspires subordinates by creating vision, win the subordinates commitment & devoting themselves to discovering & creating strategic value. This leadership style can directly affective employees’ willingness and behavior and can indirectly affect employees’ tacit knowledge sharing (i.e. sharing knowledge gained through living experience) thorough affective commitment. As per their research in China Pu et al. (2022) found that affective commitment plays a mediating role between entrepreneur leadership & tacit knowledge sharing. The higher the entrepreneurial leadership in start-ups, the stronger the affective commitment & tacit knowledge sharing of the employees.
3.3. Creates Job Opportunities:
The covid-19 pandemic have provided an varied range of opportunities as well as constraints for startups. Maritz et al. (2020) says that COVID-19 imposes many such constraints, including disruption of supply chains, work activities, products and service delivery modes. Due to the loss of efficiency, there is a trade-off between profitability and growth which are even stronger at times of Covid-19, causing a massive loss of jobs. In Australia, it was expected that 3.4 million people to be out of work as a consequence of COVID-19. In order to recreate these jobs, entrepreneurs need to better manage the new constraints to value creation, and attract resources to grow, by improving profitability at the same time. Globally, we can see entrepreneurs doing this by offering their products and services through different channels, different infrastructures, and changing their products and services to meet new demands.
3.4. Results in Innovation:
Muhammad FS. et al (2021) says open models of innovation are considered to be essential in order to gain a competitive edge for start-ups in the market. Innovativeness reflects a company’s ability to use new technologies and to move towards developing creative ideas for developing new products. Customer-orientated entrepreneurship will likely try to innovate by presenting new products and services, which ultimately accelerates their business success. Previous studies have stated that innovativeness could lead to the development of new methods and could help to gain considerable success in entrepreneurial projects. It improves the learning capabilities of individuals and results in a better performance of the start-ups.
3.5. Results in technological innovation:
Elia, G (2021) found that through a digital society incubator, startups can implement technological innovation. A digital society incubator is a knowledge hub performing a critical analysis of real-time impacts of digital transformation on how individuals, organizations, and societies work, interact, and live. The incubator acts as a platform for open conversation, research, and education for scholars and practitioners interested in understanding change and driving positive transformations by co-creating and sharing knowledge that contributes to a better future. Digital technologies act as a backbone for startups that supports interactions and collaborations among all of the actors involved in the entrepreneurial process, by providing support to organize and access resources, design products, and match demand of the consumers.
3.6. Positively influences the Local economy:
Wolniak, R. (2021). et al. say that startup are very valuable source of innovation. & civilization. Creation & developments of startups/ local entrepreneurship lead to an increase in recognition of a region. They lead to dynamic local development by attracting new sectorial investors & creating jobs. In the long term, profitable startups contribute to the increase in income levels of the local community, hence improving the quality of life of people living in the region.
3.7. Empowers Women:
Neto, et al (2020) says that many women leaders who work in start-ups strive to reduce gender gaps & try to strengthen the representation of female workers. These women leaders prioritize to hire women even though there is no explicit quota policy in the selection process. The participants of the interview conducted by Nato el al., also confirmed that they actively participate in female events and conferences with the aim to strengthen the female collective in start-ups. Traditional organizations have posed a lot of barriers for women to take up positions in senior management level but start-up have provided better opportunities to grow & has imposed fewer barriers compared to a traditional corporate organization.
3.8. Addresses Social Concerns through Social Entrepreneurship:
Many startups exist with a social aim as their primary motive. As Shah, et al. (2022) called startup as social problem solvers & act as catalysts for social transformation. Startups which are motivated by social goals such as providing basic needs such as food clothing & shelter & other basic needs. They are different than other startup/ organization where in the main aim of a social startup will be social transformation & social change where as that of a commercial startup will be monetary power & political or other power. Many a times Social Startups also make valuable contribution pre-, post-, and during disasters, in acting as a buffer to reduce the shock of the disaster and engage in activism and advocacy on behalf of communities.
3.9. Leads to Sustainable regional development:
Bărbulescu, et al. (2021) found out in their research that the entrepreneurial ecosystem has a significant contributor of sustainable regional development. They say that entrepreneurs should also be actively involved in building harmonious relationships, both with the employees and with the company’s external environment, which could give rise to social entrepreneurship with beneficial effects for sustainable development. The entrepreneurs should be actively involved in the development and restructuring of businesses on sustainable bases, including an orientation towards employees and society as a whole. Start-ups can closely collaborate with public sector, academic institutes & citizens to ensure sustainable development. These collaboration helps start-ups by studying the needs to the population & developing innovative products to these needs.
3.10. Encourages Green Entrepreneurship:
Many emerging startups have been focusing on reducing environmental degradation. As per Savastano, et al. (2022) green entrepreneurship refers to an individual and institutional attempt to popularize their eco-friendly practices through market or non-market routes. Green entrepreneurship can also be defined as a new business startup focusing on the environmental services sector. Green entrepreneurship combines technological advancements with profit orientation to alleviate the environmental footprints of human activities on the natural environment, and to address environmental issues like degradation of soil, change in climate, and losses related to biodiversity.
4. Conclusion:
In the recent years there has been an emerging trend in the global market where new startups are being set up every day. In the past few years these startups have gained a lot of importance due it’s positive influence on the societal & economic development. Through this study we have understood that startups provide autonomy of work to the employees which results in greater satisfaction among the employees. Startups also encourage tacit knowledge sharing among the employees, which enhances the skills of the employees. Startups have also positively impacted the local economy by creating jobs & bringing new innovative products to solve customer problems through technological innovations. Many startups are addressing social issues through encouraging women empowerment & are reducing the gender gap in the industry. Many startups have also been focusing on sustainable development by building harmonious relationships, both with the employees and with the company’s external environment. Startups have also been focusing on sustainable development & are addressing environmental issues through green entrepreneurship. Therefore, we can say that startups are crucial for the overall development & sustenance of the world.
References:
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