How discouraging SMEs is like bringing Kings and Kingship back?

King and Kingship: The most successful system of running a business.

Louis XVI was the last king of France (1774 – 92) before the fall of the monarchy during the French Revolution. Wajid Ali Shah (1822-87) was the last king in India. There are few nations where the king still rules the country successfully. Mohammed VI is currently the King of Morocco. He ascended to the throne on 23 July 1999 upon the death of his father, King Hassan II.

King and Kingdoms have been very successful power system revolving around money during old times. The kingship structure is like; one king – all powerful, his kingdom – a land mass and the subjects – common people of the kingdom who would work for the king and the kingdom. King would appoint ministers which would support and provide for the subjects of the kingdom.

People now think that kings and kingdoms are gone by and they are free souls now. They are free to eat, live, work and make their own decisions. But I think, if we observe our life minutely, our work and the people we work for; then we would realize kingship structures exists even today!

Drawing parallelism between a kingship and a company.

Let’s ask few questions to ourselves. Who do we work for? The answer would be some XYZ corporation. If the same question would have been asked to our great great grand father. The answer would have been some ABC King. This parallelism can be drawn for other questions as well. Like, who decide how much we should be paid? How much we should work? Today big corporations decide how much we should be paid for our work. Today they make the rules and policies for the people via governments. These are the things kings would do in old days via his ministers.

In nutshell, today’s big corporations can be mapped one-to-one with yesterday’s kings and kingdoms. The only difference seems to be the region of influence. Big corporations can now access anybody anywhere but the kings could only control their people and their land. Never the less, if we talk about logical/virtual region of influence, then big corporations too have their own region of influence. Many a time a big corporation would be found competing with another corporation to expand its region of influence. We see big corporation eating away small ones every now and then. No wonder the word ‘war’ is associated with trade now – Trade War!

How we have been doing things wrong in name of developing super-markets?

I am neither against the kingship nor big corporations but, the inherent flaws associated with them. If cronyism was attached to kingship so is imperialism with big corporations. The cronyism and imperialism has caused great agony to general people and devoid them of their rightful access to resource and opportunities. This caused siphoning of wealth, power and freedom from many hands to few. And, when these happened; history witnessed formation of a new system in the society mostly followed by chaos. Since the King and kingship didn’t work. Imperialism or the crony capitalism won’t work too.

When super markets and malls started to open up in the developing world, it instantly started to create job opportunities for the people. It hired people as security guard, cashiers and helpers in malls. At first it seemed to be employing the educated unemployed youths but, at the same time it was becoming recipe of disaster for small shop owners physically distributed within the cities and towns. The general people who could buy from local shops started to flock to super markets.

In one hand it was giving jobs for hundreds of dollars to people; on the other hand shop owners earning thousands of dollars were losing their business. When you were paying happily the discounted bills at the cash counters, 90% profit were actually going to the corporate and the rest 10% tickle down to the people as salaries. So by allowing this type of business we were actually pushing more and more wealth and power to big corporations.

Big companies are not the driving force behind a country stable economy.

Its a common misconception that big corporations are the driving force of an economy. And, its capital add up to the GDP of a country, employs more people and give birth to innovations. The fact is contrary to this conception. It is the small and medium size companies that contribute to an healthy economy. It is like a large company working in a decentralized and independent way.

Failing of an individual company in such an economy does not effect much to overall health of an economy. Also, any negative effect of one enterprise does not have a cascading effect on others. Thus SMEs (Small and Medium Enterprises) are the more stable pillar of an economy. An economy having healthy SMEs base, will always be able to avoid any recession in the market.

SMEs are most dominant in Switzerland with more than 99 % of the approximately 330,000 companies in Switzerland employing fewer than 250 employees. Two thirds of all jobs are in these companies. That’s why it is no wonder that Switzerland is considered the most stable economy of the world. The other economies which are considered stable are Canada and United Kingdom. According to the Business Development Bank of Canada (BDC), there are 1.2 million businesses in Canada. Of those, 97.9% have fewer than 100 employees which makes Canada a hub of SMEs. Similarly, in UK 99.3% of private business were SMEs and employs 60% of all private sector employment. It should be now evident that SMEs not only makes an economy stronger and stable also employs majority of the workforce.

SMEs are not only the contributor towards a country’s economy but it drives the innovation too. Historically, small businesses and entrepreneurs, particularly those in the high tech space, have driven innovation, invention and the creation of new industries. In the U.S., 65% of net new jobs have been created by Small Businesses over the past 17 years. According to data from U.S., 13-14 times more patents are created per Small Business employee than by Fortune 1000 employees. This data should be an eye opener for those who says, big corporations drives economy and innovation.

SMEs: The success key for the developing nations of the world!

Small and medium enterprises (SMEs) thus holds the key for success in a country where large workforce are unemployed. Or, for those countries which have less capital to invest on big infrastructures for job creation. So the countries like India, Pakistan, Bangladesh, Nigeria, Brazil and Russia need to strengthen their economies more than any other country in the world. Because, they are either poor or have a large workforce unemployed. Among all the countries, Bangladesh seems to have the most successful Eco-system for SMEs. Thanks to the Nobel laureate Mohammad Yunus for founding Grameen Bank – a micro-finance organization and community development bank. This has lead Bangladesh in eradicating the extreme poverty and has been the driving force towards improving her GDP in recent years.

A new business model is around the corner!

Hence, discouraging and removing SMEs from market is like bringing kings and kingdoms of old time. Many counties in recent time have witnessed their government system changing from dictatorship or kingship to a democratic form of government. If people around the world can realize that a healthy political system in today’s time is a democratic political system so why can’t there be a democratic trade and business system.

The advent of crypt-currencies gave birth a an entirely new idea of distributed, decentralized and democratic currency. People have endorsed it and lot of work is being done in this field. In my opinion days are very near where people will endorse the idea of democratic distributed trade and business. The apt time for distributed, decentralized and democratic business model maybe around the corner but waiting for a great recession in world economy which is imminent now.

6 thoughts on “How discouraging SMEs is like bringing Kings and Kingship back?

  1. Tabish says:

    Correctly said . Analysis regarding corporate structure is awesome….

    1. tno says:

      Thank you Tabish!

  2. Bhuvanesh Arya says:

    Very much informative and this blog always give me a new path to think on every topic it touches.
    I always find myself engaged in your thoughts and the points you bring out and sometimes it jolts me that the reality was this much far from us.
    Thanks for sharing such information.
    Looking for more

    1. tno says:

      I really appreciate how you relate things from my blog to real life find something knowledgeable every time. Thank you!

  3. Amit says:

    Very nice and well written article.

    1. tno says:

      Thank you Amit!

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