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Interrelationship between Management and Entrepreneurship

June 20, 2011

Interrelationship between Management and Entrepreneurship.

According to John McMillan and Christopher Woodruff, entrepreneurship dates back to the time of reforms in Europe, Asia and China. During this time,entreprenuers were underestimated due to the fact that setting up business was risky in an economy undergoing deep reforms.Entreprenuers and managers of start-up manufacturing firms had to face challenges of corrupt government officials who wanted to extort money from them.

Most managers who were interviewed said that corruption deters investment. The presence of private agencies which argues that it protects the activities of the entrepreneurs, was yet another stumbling block to theirs success, but views from some of the managers from selected countries like Russia, 90% were in support to the move that entrepreneurs should give money to the private agencies for protection.

Another thing was about building and managing good relationship with specific customers and suppliers as this was the key to success of entrepreneurs because the courts and law system are sometime unreliable in settling dispute arising between the parties concerned. This kind of self –enforcing contract and mutual understanding have helped many entrepreneurs’ succeed.Self-help, argue McMillan, is not a lasting solution for entrepreneurs in creating market institutions, but there should be a need to have formal contractual assurance. The government’s role in managing a stable platform for entrepreneurs’ self-help is to cushion them from unstable macroeconomic conditions which make it hard to predict the trading behaviour. This adds to the uncertainty about which line of business is going to be profitable, disrupting inter-firm relationship.


McMillan, J. & Woodruff, C. (2002). The central role of entrepreneurs in transition economies.

Journal of economic perspectives, volume 16, (3) pp 153-170