The truth about entrepreneurship
July 10th, 2009 by jonathanThis month world-renowned academic Zoltan Acs came into Make Your Mark to discuss his ideas about entrepreneurship - the interview is available on our website - HERE.
There are two things he says, in particular, that I think you might disagree with -
1) Entrepreneurship is only for middle class people, not for poor people
2) We shouldn’t encourage entrepreneurship - only high growth entrepreneurship
What he says makes me feel uneasy. Firstly, I think that in many ways he’s right. Why should we encourage entrepreneurship as a panacea for disadvantage?
The psychologist Abraham Maslow talked about a hierarchy of needs - with the most basic being physiological (food, heat, water, shelter), then security, then friendship, then achievement, then self-actualisation. Where does entrepreneurship fit here? - probably around achievement and self-actualisation. If people can’t provide for themselves and their families, why should entrepreneurship be a goal?
But, it doesn’t seem quite right. Isn’t entrepreneurship more about mindsets - a way of thinking and approaching the world? Entrepreneurship is about taking what you have and making something amazing. Entrepreneurs are the people who say ‘it doesn’t have to be like this’.
By encouraging entrepreneurship in disadvantaged areas are we not giving people the tools to help themselves out of poverty?
July 10th, 2009 at 12:11 pm
I agree with Acs. Capitalis the scarce resource in poor communities and entrepreneurship is not the most effective use given the high failure rates of startups. A copper mine or a Wal-Mart store is much more effective in terms of job creation and improved standard of living.
He is also correct about high growth entrepreneurship. High growth companies create thousands of jobs and add-on technologies. Small business entrepreneurship creates Bertram yacht owners and mansion builders.
July 10th, 2009 at 2:48 pm
Overall, I think dividing people into groups on the basis of existing wealth is futile. How can you possibly say that all poor people will set up bad businesses, and richer will set up high-growth industries?
Even if there is evidence that poorer entrepreneurs set up smaller and less successful businesses, surely our focus should be on WHY that is true. I don’t for one second believe it’s something that we should accept as a necessary evil.
There are some disadvantages of being poor, which directly impact on the ability to run a successful business - possibly knowing fewer well-connected people to give advice, or invest in a business is the most important one. I believe we need to work on creating better social capital for those who cannot grow their businesses alone- and do not already know people that could help them.
Social mobility studies, such as the DCSF report, show that people with more ambition achieve greater things. If we put poorer entrepreneurs into contact with people that can introduce them to a wider range of contacts and opportunties I think we’d be a lot better off than if we simply wrote off a whole section of society.
July 10th, 2009 at 4:10 pm
There’s something in the air at the moment - check out this blog
http://gigaom.com/2009/07/04/americas-secret-innovation-weapon-immigration/
The idea is, if only a few people (1/5000) are innovators it doesn’t make sense to educate people more, when you could just import them…
‘Broad-based mathematics education will strengthen our nation by improving our workforce, but that is not best path to innovation…It’s time for a more strategic and aggressive immigration policy, one that targets the best and brightest around the globe’