In 2016, a joint project between Heriot-Watt University and Emirates College of Technology, funded by the Abu Dhabi Department of Education and Knowledge, examined the entrepreneurial orientation of UAE small and medium enterprises (SMEs).
The findings paint a stark picture of the challenges that hindered the growth of the SME sector at the time. The study highlighted the common 49:51 ownership structure, limited availability of financial products for SMEs, and a regulatory environment inhibitive of the risks of starting a business. Fast forward a decade, and the SME landscape in the UAE has undergone a remarkable shift.
Since the introduction of the SME Law (Law No. 2) in 2014, the last ten years have seen major changes in the ways entrepreneurship has been encouraged. Initiatives such as the National SME programme, the inclusiveness of the Industrial Strategy, and the progressive Ministry of Possibilities and Future Industries Lab, to name only a few, evidence the national interest in developing the SME sector.
Overcoming leadership challenges as new entrepreneurs
Starting a new firm comes with many challenges though, regardless of the industry. One often overlooked area is leadership. Classical entrepreneurship is often regarded as a ‘special’ domain, a notion validated by years of research with individuals who birth new ideas, challenge established norms and build business enterprises from the ground up.
Entrepreneurs are often passionate about their offering, zealously working to make their new firm successful. In fact, many really do describe their start-up as their ‘baby’, such is the emotional investment. But these founders almost always cannot realise their ambitions without other people. A compelling vision alone cannot guarantee success. Success depends on assembling the right people — partners, skilled team members, and experienced advisors who bring essential expertise to the table.
According to the UAE government, SMEs contribute up to two-thirds of non-oil GDP and more than 40 per cent of employment. While this includes SME-based jobs in the oil and gas sector, SMEs in the tourism, construction, real estate, and retail segments are also increasingly employing people, and there are innumerable new SME-based job opportunities in finance, manufacturing, and green energy, as per Business Link UAE.
Turning risks into opportunities
The transition from entrepreneur to leader is not simple, albeit. Often entrepreneurs are specialists in their industry but may have no leadership experience. They may not appreciate that the motivations of those seeking employment with them may not be quite as impassioned.
This is a major challenge for start-ups: often entrepreneurs work for free because of their emotional ties to the success of their enterprise. Others will not work for free, and in fact, compared to other jobs, a start-up may be relatively less competitive in terms of salary.
A job in a start-up is also high-risk; start-up phase is a precarious time for a business and the longevity of jobs cannot be guaranteed. But this risk, this precarity, all this excitement about a new enterprise can also be presented as a huge opportunity for talented people. The entrepreneur has to communicate that excitement, that passion, and infect the team with it.
New hires need to be inspired and enthused by the opportunity from the very beginning – who wouldn’t want to have been one of the founding team at Apple or Red Bull or Alibaba?
A recent research paper published in the International Review of Entrepreneurship sheds light on a crucial yet often underestimated aspect of building thriving ventures: the power of co-creation and shared value. The study explores the strategies employed by leaders who guided their teams to remarkable success, uncovering insights that challenge traditional notions of compensation and motivation.
Talented, performing staff are not commodities or human resources, they become fellow entrepreneurs. Clearly, entrepreneurs are best equipped if they understand how people-leadership can optimise engagement in this challenging but exciting part of the employment sector.
By Professor Laura Galloway, Edinburgh Business School, Heriot-Watt University
