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Destructive Entrepreneurship: How the Wrong Incentives Can Lead to Global Crises

Written By: Mariya 24 June 2010 Other Posts By: Mariya

For those of you with an international development or social entrepreneurship bent, you may want to check out the United Nations University panel discussion (website, webcast, powerpoint) from this morning featuring Wim Naude, a senior research fellow who spent two years on a UN-funded expedition to study the links between entrepreneurship and development. He defines “entrepreneurs” broadly as people who identify opportunities and create businesses around them and discusses the often ignored link between entrepreneurship and the rising frequency of both natural and man-made disasters in the last 20 years. Naude illuminates circumstances in which economic incentives are so mis-aligned that  entrepreneurial activities actually create or exacerbate global crises, such as in the recent financial crisis or the African civil wars fought over natural resources. In his own words, global development challenges cannot be resolved without attention to the entrepreneurship-incentive-institutional frameworks, including better understanding of the behavioural economics of entrepreneurs. Only by properly aligning the reward structure of entrepreneurial activity across individuals, businesses, and governments can the world’s critical problems be resolved by productive entrepreneurial efforts and not exacerbated by destructive ones.

Here’s the UNU description of the event:

In recent years a seemingly rising number of natural and human-made disasters have been impacting on global development. In this lecture, based on a two-year UNU-WIDER project into entrepreneurship and development, Wim Naudé will be exploring the extent to which the misallocation of entrepreneurial talent , due to inappropriate reward structures on global and national levels, may have exacerbated and even directly contributed to these disasters. Hence his lecture will consider entrepreneurial incentives in the contexts of earthquakes and droughts, conflicts over natural resources, the climate change challenge, and in the context of the recent global financial crisis. As entrepreneurs themselves may shape societies’ rewards structures, he asks whether novel expressions of entrepreneurship, including social, public, institutional and non-state sovereign entrepreneurship need to be scaled up in order to address pressing global challenges.

Links: Event Website, UStream Webcast, Powerpoint Presentation

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