- Centre for Enterprise and Entrepreneurship Studies
Some might assume that on the face of it, sport is sport, with little real meaning, and exists for enjoyment and appreciation only. However, with a little scratch under the surface, it can teach us much about real life and how rules, as well as perceptions of those rules, govern activity. Indeed, tennis can teach us much about the role of institutions which govern economic activity; it shows the importance of rules and regulations, as well as norms, values and perceptions of those rules.
At Wimbledon, which starts today, the rules are clear and transparent. Not simply the rules which govern the game itself but also the rules of the All England Tennis Club, which include requiring participants to wear all white (something that has been criticised by major players).
At the same time, there are specific norms, for example, the conduct of the crowd, which contrasts with other major competitions such as the US Open. Furthermore, the rewards are earned and retained, with the winner of the men’s and women’s singles both receiving over £1 million.
Tennis is a relatively simple game and easy to learn. It doesn’t take long to understand that you must, for example, get the ball over the net, that it can only bounce once, to take alternate sides for the serve, and (while it may be anachronistic) the scoring system is easy to pick up. Although Roger Federer, probably the calmest player to ever be a tennis champion, may get frustrated with the rules from time to time, he plays to the same rules as every other player in the world, whether they are a top 10 professional or someone playing in their local park.
Understanding the rules makes activity easy to undertake. It is easy to pick up tennis, and in the same way it is easy to undertake entrepreneurial activity where rules are straightforward and easy to follow. In the UK, the rules which govern entrepreneurial activity are easy to follow, meaning that people can start businesses with little barriers. Also, entrepreneurship is (generally) well respected with positive societal perceptions of entrepreneurs.
However, in some other countries the rules are much more complex and change rapidly, as in the case of crisis-hit Greece and many transition economies. This means that entrepreneurs struggle to understand the complexity of the rules and regulations which they are required to follow. For example, tax codes can change quickly meaning that the entrepreneur loses more of their profit/reward. In turn, this means that perceptions of opportunities are weakened, with many people not considering entrepreneurship as an option due to its complexity or unclear reward structure.
Where rules are simple to follow and perceptions are positive, entrepreneurship creates its own feedback cycle (where part of the output is used for new input), as successful entrepreneurs influence the views and motivations of others in society. As David Foster Wallace said in his famous New York Times essay on Roger Federer: “Genius is not replicable. Inspiration, though, is contagious and multiform.”
In the same way every tennis player cannot hope to emulate Federer’s record haul of Grand Slam titles, not every budding entrepreneur can hope to emulate Steve Jobs or Bill Gates in terms of achievement, personality and drive. However, role models and knowledge of the rules of the game, mean that actions are replicable. Thus for countries hoping to foster higher levels of entrepreneurial activity, which has the potential to positively impact on employment, innovation and productivity, creating a positive feedback cycle through effective rules and a positive culture is of paramount importance.
This is exemplified in a country such as the US where rules are clear and stable, and where there is also a positive entrepreneurial culture which provides societal clues to follow, with many people believing that if one individual they are familiar with can be a successful entrepreneur then so can they.
In many economies, how the rules are upheld is important. In tennis, while rules are often broken, as in the case of Novak Djokovic’s on court coaching, there are sanctions to redress indiscretions. From Nick Kyrgios’ unsporting behaviour to Maria Sharapova’s failed drugs test, sanctions are imposed on those who do not follow the rules. Similarly, enforcement of rules is important if entrepreneurship is to be rewarded and to prevent abuse of positions of power.
In a paper on corruption in transition economies, my co-author (Tim Vorley, Sheffield University Management School) and I show that where sanctions are absent, rules will not be followed. If people do not think they will be taken to court for avoiding or circumventing rules, for example by hiding some or all of their activities from the tax man, then they will not follow the regulations which they consider burdensome.
Such is the case in transition economies where rules can be unclear and can change quickly and are often considered to be overly bureaucratic. Where the perception exists that avoiding rules is rife, corrupt activity will occur which is not socially or economically productive. This demonstrates that it is not just the rules that are written down which are important, but also the perceptions of those rules. If people believe that everyone is avoiding the rules then informal and/or illegal activity will prevail. In addition, it can be perceived that the rewards go to the most corrupt and who are most able to use their power to prevail over the competition, and not to the best entrepreneurs who act legitimately.
While the rules of tennis are long established and clear, in many countries the rules which govern entrepreneurship are less clear. This is unsurprising in the transition economies which previously had centrally planned economies and where entrepreneurship was prohibited and thus confined to illegal and illicit markets.
Getting the institutional framework right is no easy task. It requires a focus on the rules and regulations which govern activity, as well as the norms and values which determine whether those rules will be followed and the overall perception of entrepreneurship as a career option. In general reforms have been slow in the transition countries. There has been increased emphasis on improving the formal rules and regulations but the values and norms have been slow to catch up, meaning that many people do not consider that entrepreneurship is an option for them, or consider it to be for corrupt individuals out to take advantage of their position.
Overall, policy makers seeking to foster higher levels of entrepreneurial activity that are economically and socially productive could do worse than watching Wimbledon. The competition over the coming weeks will show that rules and regulations are important for aiding clarity about process and practice; that norms and values can actively support the effectiveness of rules through the cheering of good play and disapproval of poor sportsmanship.
Those stepping out of line by not following rules and accepted codes of conduct will be punished. And the best, in terms of perfecting their strategy within the rules and adapting to conditions, are more likely to win and keep the rewards.
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The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.