The Myth of the Maori Entrepreneur

We have invented a new way to differentiate ourselves as Maori from everyone else where little or no difference exists. We have created a pou whakapono called the Maori entrepreneur. It’s a pretentious myth unless you change the definition of entrepreneur to mean what you want it to mean, in this case to mean any Maori who starts a business or even thinks of starting a business.

Type “Maori entrepreneurship” into Google; I did just now and up came 4,030 results. You will find out that Maori are the third most entrepreneurial indigenous people in the world, the third most entrepreneurial people in the world, or even that Maori are the most entrepreneurial people in the world. You will discover that Maori are more entrepreneurial than Pakeha. You will see infinite variations on the theme quoted time and time again by politicians, bureaucrats, business people and academics. It makes you proud to be Maori because maybe that means that you’re an entrepreneur; a member of the latest new iwi, Ngai Te Ngira-tuitui.

I grew up in a Maori owned business. It was a business with a whakapapa, handed down through three generations to my father, the fourth in line to own and operate the business. I didn’t stand in line though, joining the army instead. However I did fly home and operated the business for a whole two weeks after my father died and before I handed it over to my younger brother. It was mainly a shearing and fencing contracting company that also took on a lot of other rural jobs on contract. It was a common Maori business for those times; many of my father’s brothers and cousins were also contractors.

In our hapu there were about eight whanau businesses including farming businesses, and between them they employed most of the whanau and hapu during the shearing, crutching and fencing seasons. In the off seasons the people worked at the freezing works or at the fruit and vegetable canneries, and on local farms. The whanau who worked in our business would also depend on the business to tide them over the winter when there was little work available. They would draw regular interest-free advances or loans that would be repaid out of their wages during the season. That was common practice in all of the whanau businesses.

When the farming sector did well the whanau businesses did well. When the whanau businesses did well all of the whanau in the hapu did well, and facilities at the marae were built and well maintained. A new LDS chapel was built.

My father, his brothers and cousins were businessmen, although they all still thought of themselves as working men. They had grown up as working men in similar businesses and still worked in their own businesses. They did not give themselves pretentious labels such as entrepreneur, or even businessman. The most they would own to was contractor but true to their roots they were still working men. They were known by the workers as the Maori Boss.

In my turn I set up and operated a city based business of my own. The common pretentious term was consultant but true to my roots I always thought of myself as a contractor, because that’s what I did. I contracted to do whatever it was that my clients needed done that I was capable of doing. Sometimes they wanted to consult and benefit from my greater expertise but most often they just wanted me to do stuff.

I learnt very quickly that it was just like the shearing and fencing contracting business. There were good times and there were lean times as there probably are in most small businesses and I had to make sure I put something aside for the winter. Was I an entrepreneur and did I think of myself as an entrepreneur. Well I did take some risk and one or two of my business ventures fell over and the money I invested in them was lost but no, I was just a common or garden contractor in the guise of a businessman. I occasionally tried my hand at the entrepreneurial stuff but mostly, like most people in business, I preferred the low risk stuff.

The term entrepreneur used to describe those who applied considerable innovation to their enterprise, and who took considerable risk as well, not just the usual old risk of having a mortgage over your house to fund your business. The entrepreneur would put everything on the line and when he or she crashed and burned would climb back out of the wreck and do it all again and again. The entrepreneur did it with his or her own money and with money from investors who were willing to share in the risk. These days the investors are called venture capitalists. Sometimes they are called gullible whanau.

The common or garden businessperson on the other hand would sell the boat, borrow from his or her parents, and invite the bank to invest in the business. The bank would have no capital at risk because it would, and still does, take a mortgage over a house and over the business assets to make sure that it doesn’t lose its money. The bank is not in the business of financing entrepreneurs. That’s for venture capitalists.

These days it seems that entrepreneur now means anyone who has started a business and even anyone who is thinking of starting a business. And that is exactly the wide and loose definition that started this myth of the Maori entrepreneur. It all started with:

 “Global Entrepreneurship Monitor – New Zealand 2001 (Frederick, H.H., and Carswell P.J., 2001, New Zealand Centre for Innovation and Entrepreneurship Research, Unitec Institute of Technology, Auckland).

“At UNITEC we define an innovation as something new which has the potential of changing relationships. That is a wide definition, but it includes any new service or product that could change an economic (buy me!), social (opt for me!), political (vote for me!), or even cultural (listen or look at me!) relationship. But an innovation uncommercialised or unexploited is an innovation wasted. So we define entrepreneurship as the commercialisation of innovation”.

“To capture this distinction, for the purposes of the GEM research our definition is an entrepreneur is a person attempting to create a new business enterprise either through spotting a new opportunity or out of necessity, job loss or redundancy”.

That definition reflects a North American linguistic viewpoint rather than that commonly found in New Zealand, Australia and Britain where we are much less grandiose than our American friends; ngawari even. We usually regard entrepreneurial activity as the visionary, innovative and risk taking part of the overall SME (small and medium enterprise) sector. The Total Entrepreneurial Activity (TEA) Index used at Unitec to measure entrepreneurship opts for the American definition and includes all nascent (yet to be started) and newly started businesses.

The 2001 report contains a short section on Maori entrepreneurship. However it was their 2005 report that was the catalyst for the more grandiose claims about Maori entrepreneurship.

The Unitec Global Entrepreneurship Monitor: Towards High Growth Enterprise in New Zealand 03/04” (Frederick, H.H., 2005, New Zealand Centre for Innovation and Entrepreneurship Research Report Series, Vol 3, No 1, Unitec Institute of Technology, Auckland).

Their 2005 report stated:

“Overall our research shows that at both national and international levels, the extent and growth of Mäori entrepreneurship remains comparable if not better than the entrepreneurial strengths shown by other ethnicities, indeed by entire GEM nations. With a TEA rate of 17.1%, Mäori have surpassed all of the nations in GEM with the exception of Uganda, Venezuela, and Argentina. If Mäori were their own country, Aotearoa would rank as the fourth most entrepreneurial country in the world”.

Scientifically speaking, to be considered as definitive research it would have to be replicated and verified by other researchers. Te Putatara is not aware of any other research to confirm those findings. It would also have to be compared with statistical census data from 2001 and 2006. At the moment there appears to be significant variation between Unitec data and Statistics NZ data.

Even if we do use the American definition of entrepreneur we need to look a little deeper into why there are so many business startups by Maori. One reason might be that New Zealand is the easiest, fastest and one of the cheapest countries in the OECD in which to register a company. There is no minimum paid up capital requirement and only a registration fee is required. There may be other reasons.

Statistically in New Zealand about one in ten businesses fail in the first year of operation and 70% capsize within the first five years. I had a couple of those on the way but it was fun trying and important lessons were learned even while the capital investment was lost. I think most business people would prefer to wait to prove their success before they applied the grandiose labels to themselves, and by then they wouldn’t need to.

That then is the source of our new pou whakapono, our Maori entrepreneurship myth. Perhaps it makes us feel good and perhaps to the uninitiated it makes us look good. And perhaps too in the eyes of the thousands of real business people out there, Maori and otherwise, we are being just a bit too pretentious; whakahihi.

It’s the politicians, propagandists, mythmakers, policy makers and the Maori elites whose needs are served by the Maori entrepreneurship myth, not the people who are out there doing the business, and certainly not the Maori people in general. Perhaps it’s main purpose is to attract government funding to support or subsidise a relatively small percentage of Maori businesses.

We should probably measure our entrepreneurial aspirations against the criteria outlined by management guru Peter Drucker (in “Innovation and Entrepreneurship) rather than adopt the definition that created the myth.

“This defines entrepreneur and entrepreneurship – the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” 

“Entrepreneurship rests on a theory of economy and society. The theory sees change as normal and indeed as healthy. And it sees the major task in society – and especially in the economy – as doing something different rather than doing better what is already being done. That is basically what [John-Baptiste] Say, two hundred years ago, meant when he coined the term entrepreneur. It was intended as a manifesto and as a declaration of dissent: the entrepreneur upsets and disorganizes. As Joseph Schumpeter formulated it, his task is “creative destruction.” 

Most businesses just do what many other businesses do. The entrepreneur breaks new ground and does something different, that perhaps no-one has thought of doing before.

For the last word on the matter in a discussion at LinkedIn Richard Branson, the founder of the Virgin Group, had this to say:

“The article [in the Economist] points out the confusion around the purpose of entrepreneurship, as well as the motives behind what makes entrepreneurs tick. As the term has to encompass so many different personalities, businesses and viewpoints, it is only natural that misconceptions crop up. Nevertheless, there are some common traits in entrepreneurs – such as finding “worth in the worthless and possibility in the impossible”.

And this:

However, I completely disagree with his [Daniel Isenberg’s] view that “the main motivator for entrepreneurs is the chance of making big money”. If you get into entrepreneurship driven by profit, you are a lot more likely to fail. The entrepreneurs who succeed usually want to make a difference to people’s lives, not just their own bank balances. The desire to change things for the better is the motivation for taking risks and pursuing seemingly impossible business ideas“.

See also: The Maori Economy – a fanciful notion