In the first article in this series, I shared some insights from my journey in starting Tax Management NZ. Now I’ll make some observations on how some of New Zealanders’ shared values create a great environment for entrepreneurs and why that is important.
Entrepreneurs create businesses that provide jobs and the tax revenue which sustains government activity such as health, education, welfare and security.
We are currently experiencing significant business disruption driven by technological change – the internet, computing applications and nanotechnology, to name but a few. In this environment, where old industries are declining and providing less jobs and tax revenue, it is even more important that New Zealand has a strong cohort of up-and-coming entrepreneurs to create ‘new environment’ industries.
Forging a career as an entrepreneur is not like becoming a lawyer, teacher or doctor. In those careers, success through the education system provides a high likelihood of entry into that vocation. Entrepreneurs are an entirely different breed. Formal education may help, but it will certainly not guarantee success. Furthermore, many new or start-up businesses will often fail.
We need an environment that encourages people to get out there and have a go, not label them failures if their first (or second or third…) business does not succeed.
Insofar as values are concerned, a society that appreciates entrepreneurs and business will encourage more Kiwis to ‘give it a go’. If society views business as inherently bad, this will dissuade young people from starting new companies.
Where does New Zealand stand?
A number of Kiwi values are very conducive to business:
- Our ‘number 8 wire’ mentality encourages us to find a better way.
- We naturally support the underdog or someone who wants to challenge the odds. In starting Tax Management NZ, I benefited from the goodwill of many people who listened to my ideas and offered suggestions.
- Our general lack of class structure or racial prejudice generally means there are none of the unnecessary barriers that exist in other countries.
- Our small size as a nation means that networks are easier to build.
In her book Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, Deirdre Nansen McCloskey attributes the spread of wealth to the Anglo-Dutch moral vision, which praises the value of hard work, innovation, earthly happiness, prosperity, liberty, dignity and equality of ordinary people.
To that list I would also add the equality of women. While most New Zealanders would accept these values as ‘self-evident’, it is helpful not to take them for granted. This Anglo-Dutch vision is only a few centuries old and there are still many countries that do not share these ideals.
Unhelpful attitudes need to be challenged
There are, however, attitudes that can generally be labelled ‘anti-business’ and undervalue the role of entrepreneurs. They have various tentacles – often with some factual basis, but which are taken out of context and ignore good that business creates for New Zealand.
Some of the unhelpful attitudes that exist are:
- Business exploits workers.
- Business degrades the environment.
- Business disrupts community.
- Business finds smart ways to avoid paying tax.
There are examples of all of the above, but they are far from universal. Looking at the entire picture, this is a minor part of business and the benefits to New Zealand Inc. in terms of jobs and tax contributions far outweigh these.
Other attitudes that have less basis include:
- Business is inherently bad.
- If someone becomes wealthy through business, they are contributing to the poverty of others.
- Successful businesspeople made the homeless’ plight worse.
The issue of income inequality may be impacted by an increase in the number of successful businesspeople. However, this is a complex issue. A reduction in poverty is likely to be aided by more successful entrepreneurs creating more jobs.
In analysing the 2016 National Business Review’s Rich List (paid content), it is surprising that most of the 200 featured are entrepreneurs who have created their own wealth. In the process, they have created tens of thousands of jobs. Of the few who have inherited wealth, such as the Spencer, Todd and Goodfellow families, its origin can usually be traced back to within three generations. There is another group comprising the likes of Bill Gallagher and Stephen Tyndall who took over, and significantly expanded, modest family businesses.
Long may that continue.
NEXT BLOG POSTS: I will look at the impact of Kiwi entrepreneurship on New Zealand’s educational and financial environments.
Ian Kuperus is the founder director of Tax Management NZ and the winner of the Services Category at the 2013 EY Entrepreneur of the Year Awards.