Published on January 13, 2006

There must be at least 100 countries, provinces or states that have formulated strategies designed to produce the next Silicon Valley, which was so successful developing high-technology firms in California.

In fact, when new efforts are announced the hope is usually expressed that large numbers of hi-tech firms will soon begin to appear. However, research shows that when these efforts are successful, which is not all that often, a time frame of 20 to 30 years might be a more appropriate goal.

It stands to reason that these clean, hi-tech firms, which usually pay higher salaries as well, are desired by government as a way to stimulate economic growth.

I’m not saying hi-tech is not good, but it may be that low-tech is also a useful and quicker way to develop both an entrepreneurial national or regional culture and the economic benefits associated with entrepreneurship.

California often touts its Silicon Valley, but one of the most successful entrepreneurial successes in California involved Korean immigrants who started retail firms in Los Angeles during the 1960s and 70s. Many of their businesses were decidedly low-tech and included small grocery stores, shoe repair shops, appliance shops and photo finishers.

In many cases, these firms focused exclusively on serving the Korean immigrant community. However, as an ethnic group their level of entrepreneurial activity was far above that of the region.

Research shows that people who have an entrepreneur as a parent are far more likely to become an entrepreneur themselves. I do not have specific data to support it, but my guess is that the children of many of these first-generation entrepreneurs have also become entrepreneurs and started businesses that are larger, more sophisticated and in some cases hi-tech.

I know that many people are excited about the new software parks and the efforts to make Rayong province the “Detroit of the East,” and these are both worthy efforts. These types of efforts are long-term, with the emphasis on “long”. Also, they may require substantial investment in infrastructure and education for them to remain competitive.

Lower-tech and locally located entrepreneurship requires much less investment, although even low-tech requires some spending on education and infrastructure.

I know that the One Tambon One Product (Otop) programme has received a lot of negative press, but much of this results from the practice of all politicians – at least all the ones I’ve ever met or read about – to inflate the benefits and outcomes from programmes that they develop.

However, Otop has one advantage that has not been stressed: its role in helping to build a national entrepreneurial culture, where the expectation is that people will go out and start a business. And when they fail, this will be no deterrent to making additional efforts to start a successful business.

A recent story in The Nation highlighted just how this process works. A woman operating a beauty salon in Phuket developed a chemical-free wax for hair removal. She started out by using the product in her shop, then moved on to local distribution, then expanded distribution through Otop exhibitions to other hair-removal salons.

Demand for hair removal is rising dramatically. The US and European markets are worth just over Bt40 billion combined – and growing dramatically. And more and more men are using hair-removal products – even though the waxing process sounds like it hurts – which should drive revenues even higher. Link this to the fact that the absence of chemicals is an attractive selling point today, and the potential exists for a product that could be very successful.

There are probably several million people in Thailand trying to do the same thing as our wax producer in Phuket. Expanding this pool of entrepreneurs is the way to develop a national entrepreneurial culture. Once that culture is broadly developed in all regions of the country, the stage will be set for the next generation of entrepreneurs.

This next generation can make the country a hot bed for higher-technology products and services, and the development of products with broad geographic appeal and brand recognition, which then acts to further reinforce the entrepreneurial culture.

In many places entrepreneurial education is part of the curriculum in primary schools, and there are outlets for students to engage in entrepreneurial activity.

This all adds up to making the achievement of longer-term, national entrepreneurial goals more likely.

Dr Butler contributes to The Nation on management issues.

Dr John E Butler

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