Is there something in our national psyche that stops us being good entrepreneurs, asks Michael Casey
Entrepreneurship is one of the five factors of production that drive economies. It is probably the most important one since in its absence it would be very difficult to mobilise the other factors: labour, natural resources, capital and technology.
It is tempting to say that Ireland must produce excellent entrepreneurs; otherwise how could the Celtic Tiger economy have come into being? But that would be a little too facile, bearing in mind that we depend heavily on investment from abroad, mainly the US, and that, perhaps more importantly, the investment brings with it embodied technology and entrepreneurship.
The fact is that Ireland's status as the most hi-tech country in Europe has little to do with us and almost everything to do with our tax incentives which attract the investment, the know-how and the fruits of American research and development (R&D).
It needs to be stressed that fast-growing consumer spending based on credit has also kept the Irish economy going for several years. But this cannot continue indefinitely unless matched by increased production - which, of course, depends on entrepreneurship.
The evidence that does exist would suggest that the Irish gene pool (loosely defined so as to include aspects of nurture as well as nature) does not produce entrepreneurs in great numbers. By contrast, we seem to produce extraordinarily talented people in the arts, especially music and literature, and in sport.
There are, of course, several excellent entrepreneurs of note but hardly enough, and those of world-class calibre are few in number. The R&D spend in Ireland is infamously low and the rate of product development and innovation is not impressive by international standards.
The deficiencies in information and communication technology, especially broadband, are well known. In addition, the traditional manufacturing sector has been, and continues to be, in decline, shedding about 10,000 jobs per year. Fortunately, these job losses are made good by US investment and by the service sector, though the latter produces rather low-productivity jobs which may not be sustainable.
In the 30-odd years since the first oil crisis, we have made little or no advances in seeking out energy substitutes. A glance at the stock exchange listings shows that there are few important companies under Irish control, and many of these are banks/institutions which are not renowned for entrepreneurship. In general, it would appear that we are still rather more interested in possessing than in performing, to paraphrase Joe Lee.
Whenever a multinational company leaves Ireland there is an understandable chorus of regret, followed by a demand that the government and the IDA should immediately do a trawl to bring in another company from abroad and so replace the lost jobs.
It is very common for a spokesperson for the local Chamber of Commerce to make this plea on behalf of his or her community. There is never the slightest suggestion that local entrepreneurship might come to the rescue. It seems to be assumed that this is inadequate or does not exist.
At some level this was recognised by the architects of our economic take-off who formulated the strategy of attracting in foreign investment and entrepreneurship. Maybe this policy ultimately served to inhibit the emergence of an Irish entrepreneurial class, though this was never the intention.
We should not be surprised by any of this. A country which has been so wounded physically, morally and spiritually during long years of oppression will naturally find it difficult to produce people of confident, risk-taking ability. After independence the new State and the church acted as forces of conservatism. No doubt many enterprising people emigrated, especially to the US.
Parents encouraged their children to get secure jobs in the Civil Service. The emphasis on education led to a professional class which looked down its nose at people in business. Indeed, the jaundiced view taken of entrepreneurs is encapsulated in the abusive term, "chancer".
Moreover, there seems to be an almost pathological fear of failure and of "getting above oneself", as the withering phrase has it. In a small society there is nowhere to hide. It is not surprising that we are already back-tracking on hard-won achievements in the area of freedom of information.
Then, stylising the position slightly, just as social and cultural norms were becoming somewhat more welcoming to the emergence of an entrepreneurial class, it transpired that the prevailing model of enterprise was one of cunning and stroke-play. The more diligent employers and producers were seen as plodders. The heroes were those who pulled strokes, ie, made money for little effort or risk, usually on the basis of cronyism and inside information. Risk-taking was for the race-track, not for business. Profit was not the return on risk but rather the pay-off for being in the know.
Unfortunately,despite tribunals of inquiry and the exposure of shameful business practices in almost every walk of life, the lure of stroke-play is still strong, and seems to appeal to something in the Irish character. But from the standpoint of development it is disastrous, partly because it is a zero-sum game as far as the community is concerned. There is no communal value added by this type of behaviour; Peter is robbed to pay Paul.
After years of abnormally high economic growth it does not seem as if an Irish entrepreneurial class has yet emerged - though the situation is probably improving.
To take risks one has to be courageous. Another way of putting this is to say that the good entrepreneur has to be willing and able to take responsibility for his or her decisions. It is in this area of responsibility that we seem to be weakest. The private and public sectors seem to be populated by managers and executives who find it difficult to take responsibility for their actions. It is a failing not found to the same extent in other countries.
Despite all the rhetoric about corporate governance, ethics in business, strategic visions, and so on, most Irish people in senior positions are reluctant to take responsibility. Corporate executives are rarely sanctioned by their shareholders. Ministers never resign and bureaucrats are rarely even named. Who has accepted responsibility for even one of the many mistakes made in relation to infrastructural projects over the last decade?
In many areas of the public sector there is a tendency to avoid making decisions or even recommendations. This, of course, is one reason why consultants are hired so frequently; they protect the career administrator from responsibility. This mindset clearly freezes the status quo. Change is perceived to be a dangerous option because the losers always complain vociferously while the winners tend to stay quiet. One can have a much safer life by avoiding decisions that might lead to change. This is, of course, the polar opposite of enterprise.
The terms of reference of many senior committees can be revealing. They tend to include words like "discuss", "examine", "co-ordinate", "advise". Rarely, if ever, do they include the key word, "decide".
The minutes of meetings can be instructive for what is not revealed. Even an insider would be hard-pressed to fathom what views were expressed or even what topics were discussed. The minutes would typically never refer to any difference of opinion between committee members. In the event that such minutes ever had to be produced at a tribunal of inquiry, they would serve no useful purpose. Where there are no fingerprints, no responsibility needs to be taken. It is sometimes known as opaque transparency.
Indeed, nowadays, committees tend to be set up not to thresh out some complex problem and come to a conclusion, let alone a decision, but rather to allow individuals to hidebehind collective responsibility. In other words, committees give some degree of protection, though not as much as consultants.
A classic example of failure to take responsibility is information technology (IT). In many cases consultants are hired for the protective reasons already outlined. In other cases the opposite occurs. Top management are so cautious about spending money on IT that they turn down requests for systems that could enhance efficiency. No one wants to take responsibility for computerisation because mistakes could be made. It is much safer to leave things as they are. If efficiency suffers - as it will - this is far less visible than a failed IT system with management's name all over it. Avoidance behaviour is the norm not the exception.
Responsibility is also abdicated by moving it upstairs. Sometimes an executive or management board will push the decision-making up to the senior board, which is usually a non-executive one. This is all right as far as it goes - and indeed it has all the appearance of due deference - but what if the junior board wants a particular decision to go through? Then it has an incentive to downplay the risks to the more senior board which will ultimately carry the can, leaving the executives with the decision they want but without the responsibility.
The fact is that most of the important decisions relevant to our standard of living are made in the US and the EU. With most important decisions made abroad it is difficult for us to practise the art of decision-making, even if we wanted to.
With a timid approach to decision-making and responsibility - allied to low skill levels - taxpayers' money will continue to be wasted. The health sector is a case in point. Shortage of beds is probably not the core of the problem; it is far more likely that too many beds are being blocked by patients because doctors and hospital administrators don't want to take the responsibility for discharging patients too soon. In recent years fear of litigation may have played a part but, in general, it is a question of mindset.
Irish people have many admirable qualities but entrepreneurship does not seem to rank that highly. Risk-aversion is hard-wired into us. The trouble is that we cannot legislate ourselves out of avoidance behaviour, any more than we can legislate for morality. And we are clever enough to find loopholes in any set of rules. Indeed, the effort that goes into being seen to follow the codes of corporate governance - while really circumventing them - must involve a considerable waste of resources and talent.
At the macro level, we are now dependent on US investment, entrepreneurship and technology, maybe even addicted to it. (That is why we could not oppose the use of Shannon airport for military purposes.) We should at least be aware of this and reflect on what such a level of dependency implies for the future.
The real danger is that, without entrepreneurship, we will continue to lose economic and other forms of autonomy. The further we proceed along this path, the greater looms the spectre of becoming a client state, allowing the US (or the EU) to make decisions for us in virtually every area, including foreign affairs. This would be an ironic turn of events for a country that fought so hard for independence.
Michael Casey is former assistant director general of the Central Bank