An Introduction
1.2 Developing Cross-Border Entrepreneurship
cooperation frame work , the scope for exploiting production, trade, investment and technological complementarities will get widened which is expected to generate high level of border trade and thereby contributing to the overall development of the border area. These need to be supplemented with intra-commodity group and intra-commodity trade. Since trade complementarities are low in the SAARC region, emphasis on intra commodity group trade and intra-industry trade is expected to provide further stimulus to border trade expansion.
Therefore, strategically utilization of the long international border of the northeastern region is expected to complement other developmental efforts by bringing reckonable benefits through enhanced cross border economic relationships. In this direction, various measures like opening up of more land port customs stations, removal of infrastructural bottlenecks of the cross border routes, construction of trade centers at the border trade points, exchange of trade delegations, tariff rationalization etc. are being taken by both the involved countries to pave the way for enhanced cross border economic relationship development. De Wilde Antonie of International Finance Commission (2003) noted that trade relation between India and Bangladesh in general and northeast India and Bangladesh in particular is all set to take a new turn after the conclusive talk between the concerned governments during March, 2003 that addressed several important issues concerning cross border trade enhancement. To complements the efforts, the Chambers of Commerce and Industries and other related trade bodies of both Bangladesh and northeastern region of India are putting considerable efforts for expansion of economic relationship across the border against the backdrop of favorable policy level initiatives of the respective governments.
1.2 Developing Cross-Border Entrepreneurship
For enhanced economic relationship, it is essential that the entrepreneurs of the northeast region of India are able to expand their activities beyond the national border in a continuous
An Introduction 4
basis to tap market opportunities. The business climate needs to be favorable enough where not only the trade volume of the entrepreneurs who had already established trade relationship with their counterparts in Bangladesh get enhanced but also there is a considerable increase in the number of entrepreneurs involved in the cross border economic activities. However, in case of small scale entrepreneurs, expansion of activities beyond national border has not been so simple and straight forward as internationalization even in the form of export / import means territorial expansion of entrepreneurial activities across the border to exploit some specific advantage(s). There, in cross border business situation, the entrepreneurs need to cross two hurdles in achieving cross country relationship, as the borders tend to prevent freedom of movement (Clark, 1994). The first border relates to the perceptional differences in relation to entrepreneurship, management, and facts about the cross border market situation that are required for expansion of activities across the border. Secondly, different modes of internationalization require different strategies and decisions and therefore often less freedom of movements due to presence of border acts as constraints to position right strategies at place.
Consequently, crossing a national border has not been just like been crossing a community border even in free trade region. The cross border expansion of business, in reality, therefore, never becomes a straightforward passage for the entrepreneurs, though it may look like so at the first look. This point has been often overlooked both in literature of economics and in deliberations of greater economic cross border relationship. The issues of cross border relationships, traditionally, tend to consider borders more in relation to tariffs, quotas, duties, physical infrastructure and so on. In the context of internationalization of small business where entrepreneurs takes the center stage due to smallness of the business, issues other than traditional like tariff, quota etc becomes equally important, if not more (Houtum,2000).
Especially, in case of economic exchange between small enterprises there is little difference between the entrepreneur and his enterprise and hence it is important to incorporate the social
An Introduction 5
embeddedness of economic relation concerning why and how of economic behavior (Christensen, and Lindmark, 1993).
Spread of activities
The effect of the border
Home country Border region Neighbouring country
Figure 1: Discontinuity of Activities due to Presence of Border
Brocker (1984) estimated the impact of border as trade barriers and found that in Western European countries it is equal to the effect of 375 kilometers’ distance implying a reduction of international trade to the one –sixth of the value normally expected if the respective trade flow do not have to cross a border.
When an entrepreneur decides to do cross border trade to explore the new market, matters such as attraction towards the trade and traders of the opposite side and then negotiations
An Introduction 6
with the parties across the border emerges. In fact, few theoretical approaches available that treat the entire process of relationship-formation exhaustively from the beginning to the success of a cross-border economic relationship between two entrepreneurs. The literatures on the internationalization of businesses explain theoretically why and how entrepreneurs enter into economic relationships across borders primarily through three models; the transaction costs approach, the international network approach, and the psychic distance approach. However, a conclusive theory on the development of international economic relationships is not available (Houtum, 1998). Therefore, a combination of three approaches i.e. the international network approach with the transaction costs model and the psychic distance theory lead to a more realistic conceptualization of a new framework, a new rationale for the explanation of the international movement of small entrepreneurs (Houtum, 1998). A combination of these theories through some lights on how on stages few enterprises come into contact on the international level, intending a certain degree of business with an enterprise in the neighbouring country and less number actually develop mutual attraction and ultimately mutually agree to optimize business transactions.
The development of economic relationship between two independent entrepreneurs located in the two sides of the physical border between northeast India and Bangladesh, therefore, is not static but builds up through a dynamic process involving various entrepreneur/enterprise centric factors starting with of contact, attraction, interaction, transaction, and relation leading to success of such relationship. This process must be ably supported by favorable regulation/ trades practices centric factors like tariff, quota, infrastructure etc that come in to play in the progression of cross border economic relationships between the enterprises/
entrepreneurs for continuance of such economic activities. In short, the affiliation formation process between the cross border entrepreneurs along with favorable regulation/ trade practices synergies the growth of economic relationship formation between the entrepreneurs located in the two sides of the border of the neighboring countries.
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