Introduction
The book titled The Entrepreneurial State is a recent publication, having been published in 2013. The book was published by Anthem Press. It is authored by Mariana Mazzucato, one of the key figures in the debate surrounding various economic issues in contemporary society. In the book, Mazzucato seeks to unravel the disparities between the private sector and the public sector.
The book notes that in most societies, the public sector is characterised by sluggishness of the services provided by the government to the people. In the book, Mazzucato (2013, p. 1) provides the reader with a detailed account of the role that should be played by the public sector with regards to investments and other issues of interest to the life of the common man.
Interestingly, the author examines investments made under the auspices of entrepreneurship and does not pay much attention to other forms of investment. The book examines a number of sectors in the economy. Some of the key sectors examined include the green revolution and the internet.
In this paper, the student provides a critical review of The Entrepreneurial State. The purpose of this review is to critically examine some of the elements addressed in the book and the manner in which Mazzucato addresses such elements.
In actual sense, this critical review looks at how the author (Mazzucato) is able to diagnose the faults found in the strategic decisions made by the various stakeholders in the society. The stakeholders whose strategic decisions are examined by Mazzucato and reviewed in this paper include the ‘strategists’ of any given society.
In the opinion of Mazzucato (2013, p. 1), some of the strategists referred to in this book are crucial to the socio-economic development of any society. They include, among others, private companies, governments, and other such agencies in the society.
In addition to the above strategists, the author points out that the individuals in the society are an important part of socio-economic development. In fact, the individuals can be regarded as some of the most important strategists in a given community.
In this book review, the student seeks to outline how the author (Mazzucato) helps the reader to develop a new perspective from which to view strategic decisions made by key stakeholders in a society. In this regard, the various elements, some of which are mentioned above, are viewed as crucial to the society.
In conclusion, the critical book review will highlight any missing concepts that the author may have overlooked in writing the book. Most importantly, the critical book review seeks to determine whether the author’s main hypothesis (as set out in the first few chapters of the book) is justified in the text or not.
The Entrepreneurial State: A Critical Review
Diagnosis of the Faults made in the Process of Formulating Strategic Decisions
In the outline of the book, Mazzucato (2013, p. 7) appreciates the key role played by the public sector in the society. He says that the public sector, which is represented (or, in some cases, represents) the state has a key role to play in making the various strategic decisions. To this end, the author affirms that there are many organisations in the society that make flawed strategic decisions as they carry out their duties in the society.
While putting forward their sentiments in the first chapter, Mazzucato (2013, p. 9) points out that a ‘crisis ideology’ is a clear sign that elements in the society end up arriving at poor strategic decisions no matter how hard they try. In addition, the author looks at the element of labour and how the same impacts on decisions arrived at by an organisation operating in a given society.
Organisations make a wide range of decisions in a bid to respond to the various challenges which arise in the community and within the organisations themselves. In the opinion of Mazzucato (2013, p. 9), such challenges are considered as crises in the life of the organisations. To this end, any decision made with regard to an existing crisis must be formulated with various specifics in mind.
The author opines that most organisations fail to take a firm stand on matters to do with response to crisis. In the recent past, many organisations have simply ignored to address pre-existing challenges in the society due to lack of a guiding ideology.
According to Mazzucato, the main strategists in any particular setting tend to make decisions based on the risk factor. Mazzucato (2013, p. 9) affirms that some people fear to address the various risk elements in a given business endeavour. As a result, many people are bound to make wrong decisions.
The author makes use of the book’s third chapter to explain how the state should address risk factors in their respective establishments. In this chapter, the author explains how the state is responsible for most of the landmark decisions made by the government and other strategists. For example, the state’s policies on taxes and such other issues determine how business organisations operate in the country.
In the 9th chapter of the book, Mazzucato (2013, p. 185) examines two phenomena that directly affect the decisions made by the various stakeholders in the society. The two are the socialisation of risk and privatisation of rewards. To this end, Mazzucato makes use of the chapter to enable the reader understand how companies end up making wrong decisions.
The author is of the opinion that risk begets rewards. In other words, some of the processes viewed as highly risky are the ones that are highly rewarding. An example is made of mankind’s ancestors, the cave men. The ancestors would have starved to death if they had not risked their lives and went out into the wild to get food. If that had happened, then the viability of the current generation would have remained ambiguous.
Mazzucato (2013, p. 187) explains that rational decisions are avoided by mankind ‘against’ awards. The author goes further to explain that in most cases, decisions are made in such a way that the rewards effectively offset the risks. For this reason, the author suggests that irrational decisions are arrived at if the risk element is removed from the overall equation.
The pressure that results from risky situations prevents persons from developing unnecessary greed in the market. An example of the same is observed in the debacle associated with sub-prime mortgages.
In this case, the state guaranteed to cover any risks that such institutions took in the property market at that time. As a result, the various financial institutions operating in the property market were not under pressure to avoid risky situations.
New Strategic Directions
In the book, Mazzucato (2013, p. 154) helps the audience to take into account other strategic directions that strategists can take in a bid to improve the welfare of the society. In this regard, such directions have an effect on individuals and other lead strategists within a society.
Consequently, the book invites the reader to consider new elements like the green revolution and alternative energy that equally impact on human life in the society. In addition, the author allows the audience to look into such issues as technology and its place in the matrix of decision making in the society. The aforementioned components help businesses to make decisions that are well informed.
In recent times, the author explains, issues surrounding food production have generated a heated debate. For example, many people continue to argue on the viability and safety of genetically modified organisms in the society today. Key players in this debate include the consumers, policy makers, and food experts, most of whom are scientists (Mazzucato 2013, p. 146).
According to the author, decisions pertaining to the production and consumption of food must take into account the stakeholders involved. For example, as much as policy makers are interested in enhancing food security, they must be aware of the fact that some food has negative impacts on the health of the consumer.
At this juncture, the book brings into focus the issue of the green revolution. In their writing, the author admits to the fact that consumers require organic organisms to enhance food security. As such, many organisations are involved in such kinds of productions.
Thus, strategic directions in such cases will ultimately depend on how each strategist has aligned their ideas and beliefs with the variables in their respective markets. Such kind of thinking is capable of breathing new life into economies that are sluggish in the public sector (Mazzucato, 2013, p. 163).
In the paragraphs above, it was mentioned that technology is an emerging variable that strategists have to take into consideration whenever they are deliberating on certain issues. According to Mazzucato (2013, p. 194), organisations must embrace new technologies if at all they expect to remain relevant in the market.
For instance, a manufacturing company must factor in the new technology of production in their operations if they expect to increase their output in terms of volume and quality. The author (Mazzucato) appreciates that in contemporary society, there is a marked increase in entrepreneurial spirit among players in the private and public sectors.
To this end, the book looks into the source of many such technologies. In addition, Mazzucato analyses how such technologies affect the quality of life of community members.
According to Mazzucato (2013, p. 196), the state remains the major source and determinant of entrepreneurial drive among companies. Consequently, the numerous technologies that exist are credited to this drive. For example, the tax policies adopted by the state determine the pace at which technology develops.
Economies with a sluggish public sector need to be alive to the fact that it is the state that needs to encourage entrepreneurship. It is the state that spurs the development of new technologies in the society. The author cites the example of the I-phone.
The device is a piece of technology whose existence would not have been possible without the input of the state. The state has created a favourable environment to facilitate the emergence and growth of start-up companies in the society. Such policies encourage technological advancements in the world today.
The pressure to provide clean and sustainable energy informs the author’s sentiments on matters to do with alternative sources of energy. In the book, wind and solar are featured as the best alternative sources of energy for present and future societies (Mazzucato, 2013, p. 204).
In this regard, strategists have a new variable to inform the decisions they make. For example, they have to factor in the need for clean and sustainable source of energy in making decisions touching on their companies’ operations.
The book mentions several success stories that are attributed to alternative sources of energy in the society. From the sentiments brought forth in the book, it is clear that the author seeks to encourage the government to take a leading role in developing alternative sources of energy.
Important Components not Discussed in the Book
The book is part of the texts recommended in the study of strategies in businesses. To this end, it is important to acknowledge Heller (2009) and his key elements of strategy (par. 5). Heller (2009) talks of, among other things, the ‘competencies’ of an organisation and the importance of financial forecasts.
The two are among the five important components of strategy. However, the book by Mazzucato is silent on these components of strategy. As a text meant to give direction on matters to do with how industry players can develop strategy, Mazzucato should have addressed the issue of components of strategy when writing the book.
Heller (2009, par. 5) indicates that developing a financial forecast is a sure way of making informed decisions in business. The book by Mazzucato should come clear and explain some of the ways through which organisations can develop a financial forecast mechanism for growth.
In this regard, the book should highlight the role of the government in developing financial forecast systems. Many governments’ financial processes are shrouded in mystery. To help in demystifying government operations, the book should shed some light on financial forecasting.
Another element that the book is silent about, and which should be mentioned, is the issue of business competencies. According to Heller (2009, par. 2), competencies are some of the traits an organisation should cultivate to ensure that the demands of consumers are met while at the same time preventing competition from imitating their products.
A book like Mazzucato’s should address the issue of competencies in detail. However, Mazzucato did not do this. Given that the book intends to demolish myths surrounding strategy decisions, the author should highlight some of the reasons why organisations should strive for competencies. Again, Mazzucato did not do this.
A book touching on the topic addressed by Mazzucato should discuss the different forms of competencies that exist in the market. Mazzucato does not address this issue adequately in the current book.
Heller (2009, par. 3) indicates that competencies can take different forms. Some of them include the reliable process and the customer-client relationship. The book should examine the culture of product development since this is one of the variables that necessitate decision making.
Having looked at the various sections of the book as discussed above, the author of this paper concludes that the text did meet its objectives. However, there are sections that should have been included. The book clarifies the many myths surrounding public and private sectors in the society.
References
Heller, I 2009, The five components of a business strategy. Web.
Mazzucato, M 2013, The entrepreneurial state, Anthem Press, London.