Case Studes in Entrepreneurship, Family Businesses, Social Entrepreneurship

Code : ENT0020

Year :2007

Industry :Engineering, Electrical and Electronics

Region : Israel

Teaching Note:Available

Structured Assignment : Available

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Introduction: Israel has lived up to its name (meaning one who fought with God) – Jews withstanding historical struggles for centuries, exiling them quite often. After getting scattered across Europe for many centuries and as people always on the run, Jews lived as exiles on foreign soil, naturally yearning to go back to their land. Late 19th century and early 20th century made this impulse to return even more urgent. First, there was a groundswell to return to Israel because of a culturalmovement – that later became excessively political – called Zionism. Then, duringWorldWar II, Nazi Germany’s pogrom – to do away with the corrupted blood of the European Jews – wiped away three-quarters of them. The British accommodated the fleeing Jews in their chosen land, Palestine that was already populated by Arabs for centuries. Though this was done through a declaration in 1923, Jews and Arabs fought incessantly till the UN divided Palestine into an Arab and Jewish state in 1947. From then on, Israel has struggled to coexist with its neighbours and has had to endure suicide attacks, to which it retaliated by killing or mauling suspected attackers.

Proposals to broker peace between Israel and Palestine have calmed the unrest among them temporarily, only to resume with a violent event. Violent eruptions, for example in 2000, have drained Israeli economy of nearly $11 billion5 by 2002. Israel’s conflict massively hiked defense spending and scuttled away international investors. It even shrunk foreign exchange, Israel used to get through tourist visits to its holy sites. Silvan Shalom, Israel’s former finance minister, noted, “Investors are not coming. In Israel, people are afraid to go out to malls and restaurants like they used to. This brings high unemployment and makes the recession deeper. It is a cycle we are trying to escape.”6 Suicide bombers prevented many Israelis to shop at city centres. One attack after another has done little to renew the confidence of businesses;many traders have been forced to close their shops. Real estate prices plunged by 30%–50%; hotel occupancy was just 7%in Jerusalem while restaurants remained deserted. Although violence has become a part of Israeli life, the political and security concerns still hurt its economy. From a peak of $4.2 billion net private-equity and venture capital in 2000, it virtually sank to nothing in 2002.7 TheArab boycott of Israeli goods also deterred FDIs in Israel, thereby thwarting its economic growth.

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