By Simon Johnson
“Entrepreneurship Without Borders” is an MIT Sloan class, primarily designed for MBA students. The course looks at economic growth, financial crises, and the distribution of income through the details of entrepreneurship in various parts of the global economy. Below is a summary of class #1, from September 4, 2013. The full running order of classes is here; all readings are freely available, with the exception of Harvard Business School cases. The course consists of 12 sessions through mid-October, and summaries or other perspectives will appear regularly in this space.
Entrepreneurship is a broad and sometimes amorphous concept, particularly when we try to compare business conditions around the world. Who has a lot of entrepreneurs and what does that mean? Should policymakers always want more people to start their own firms? Who exactly is an entrepreneur and does using the same definition make sense in all places?
The Global Entrepreneurship Monitor (GEM) has done a great service by bringing clarity and some transparent data into this discussion. (The specifics below refer to their 2012 report.)
A particular strength is that GEM looks, through opinion surveys, at what the broader public believes about starting their own business – including whether they think there are opportunities, whether they have the right personal capabilities to be an entrepreneur, and whether they are afraid of failing.
Three points are striking. First, in many countries people would be very happy – or are actively striving – to become entrepreneurs (Table 2.2 in the GEM report). These numbers are impressive, although perhaps sometimes higher than might be plausible. Some countries with low entrepreneurial intentions include: Russia, Norway, Japan, and South Korea. But these are exceptions – entrepreneurship has appeal in many places; don’t let anyone tell you otherwise.
Second, in lower income countries there are more perceived opportunities and more early stage entrepreneurs (business up to 3 ½ years old) – but the established business ownership rate is only a bit higher than in richer countries. Presumably, much of this is driven by the lack of other good employment opportunities, so many people engage in informal small-scale activity that does not generate many jobs and perhaps not even stable income. Compared with most other rich countries, the US has slightly higher early stage entrepreneurial activity.
Third, Greece and Spain have shown a big decline in perceived opportunities since 2008 – while there has been no such decline in Scandinavia (Figure 2.2). This is presumably the effect of the euro crisis – and helps explain the lack of an economic recovery. This is not always the pattern in crises – e.g., when the real exchange rate depreciates, that often encourages new business formation for exports or to compete against imports.
Overall, there is a general perception that the US has an advantage in some dimension of entrepreneurship, but this is hard to see in these numbers. GEM may not be fully picking up the potential for technological breakthroughs developed by entrepreneurs.
These data raise a number of important policy questions (see also this perspective).
- Should governments try to increase the number of entrepreneurs?
- What is the best way to help encourage people to set up their own businesses?
- What do entrepreneurs really need to have? What would be nice to have?
- Should we think in terms of “forms” of entrepreneurship, with some being more likely to have a more positive effect on productivity and economic growth than others?
While this course will not provide full answers to all these questions, we will find some perspectives by taking the detailed viewpoint of entrepreneurs and people working to help them around the world.
Specifically, the running order of our remaining classes will be divided into three parts.
Part I: Understanding the environment for entrepreneurs – what is good, bad, indifferent and why
#2: Recovery from the euro crisis. We will talk with someone who is working to help the private sector boom in Portugal.
#3: The Big Puzzle: why doesn’t everyone want a lot of entrepreneurs trying to find ways to apply new technology – or just generating new jobs by starting companies?
Part II: So you want to help entrepreneurs develop – what should you do?
#4: Endeavor, the gold standard for global entrepreneurship promotion. We look in detail at a specific selection panel in Jordan (HBS case) and talk with an expert about the broader experience.
#5: We discuss alternative models, including recent ideas from Chile (HBS case). What exactly do entrepreneurs need and want? How exactly do you attract global talent and then persuade them to stay put?
#6: Women have been excluded from many economic opportunities around the world, but at least in some places this is now changing. How much difference will this make – and how could or should US policy help?
#7: Perhaps it is all really about access to capital – and nothing else really matters? We look at one specific case in Germany (HBS case).
Part III: New Frontiers
#8: A specific new venture in Africa, on which Sloan MBA students worked last year (and developed the case material). We talk with the entrepreneur.
#9: Social housing in India: should we think more broadly about what is entrepreneurship and how new models can be transformative? (HBS case)
#10 and #11 are sessions that will be scheduled based on material suggested by students
#12: we come back to the original questions – how can you get more entrepreneurs and how much of a priority should this be?
9 thoughts on “Entrepreneurship Around the World: An MIT Course”
‘The course looks at economic growth, financial crises, and the distribution of income through the details of entrepreneurship….’
You forgot to include the kitchen sink.
How about this example of ‘find a need and fill it’;
Since entrepreneurs generally belong to the group perceived by banks as “risky”, they are currently being discriminated by regulators from having access to bank credit in competitive terms.
That happens because banks are allowed to hold much much less capital when lending to “The Infallible”, than when lending to “The Risky”; which allows the banks to earn much much higher risk-adjusted returns on equity when lending to the former, than when lending to the latter.
Which means that “The Risky”, such as the entrepreneurs, do either not get bank credit or have to pay a much higher rate to make up for such regulatory imposed competitive disadvantage.
It would be nice if MIT included this… but perhaps it does not want to dirty its hands with such banal and lowly issues as bank regulations.
Do you wonder what Mark Twain would have to say about current bank regulations?
“Crowdfunding allows entrepreneurs to get capital for their business by allowing individuals to make financial contributions through the Internet. Given the increased interest MBAs have in entrepreneurship, it’s not surprising that more MBAs are using crowdfunding to build their businesses. Crowdfunding may become even more prevalent if new crowdfunding legislation gets passed.” (http://tr.im/4csjm)
“……as a professor of public health at Harvard, a professional who has worked closely with Larry Summers…..” the Larry I know is ‘warm’, ‘fuzzy’, and of course, a bit ‘cheeky’ (http://tr.im/4crhh)
The U.S. remains the sole, military power around the world (http://tr.im/4crfj): “This is a strategic geopolitical conflict about natural resources, religion and money, and it really has nothing to do with chemical weapons at all…..If Qatar is able to get natural gas flowing into Europe that will be a significant blow to Russia. So the conflict in Syria is actually much more about a pipeline than it is about the future of the Syrian people.” U.S. soldiers yet to declare ‘Mutiny on the Bounty’: “I didn’t sign up to kill the poor for the rich,” reads another posting on the Armed Forces Tea Party page, which isn’t officially affiliated with the military. However, “….you didn’t join to push your ideology, you join to serve. Now quit making (hand-made, held up) signs and get the “f” back to work” (http://snipurl.com/27rlnf9)
“The Bradley Manning Support Network is responsible for 100% of Manning’s legal fees, as well as international education efforts. Funded by 21,000 individuals, the Support Network has mustered $1.4 million in Manning’s defense.” Funds may also cover the costs of hormone therapy, possible surgery; therefore, putting to rest once and for all, any other concerns regarding Obamacare and the taxpayer. Pvt. Manning has also petitioned for a presidential pardon: http://pardon.bradleymanning.org/cover. “In response to a question from an AP reporter later that day, stated that President Obama would consider a request for a pardon from Pvt. Manning if filed.” Best regards, http://tinyurl.com/mplpnb9 . P.S. Next time, I will use: http://www.youtube.com/watch?v=bxWpggGEsqs
Banking has only had a 50 year window which it served the Nation.
Finance is a function of the market, and the government has been the one to finance entrepreneurs long before the market.
Craig Timberg and Barton Gellman AUG 29
Documents offer a look at program expected to cost $278 million in the current fiscal year. “Your cheat sheet to America’s secret intelligence budget:”
Let’s get one economic algorithm detail clear once and for all time – the so-called spy apparatus that bloomed after 911 was an embezzlement of Middle Class taxpayer money. They took your money and used it to make you poor enough so that you don’t matter anymore in their scheme of things.
Simple science is UNKNOWN by the craven monkey brains. You use up all the oil in the world and you kill the planet with pollution.
What kind of “global” economy is there in place that IGNORES this?
This is GREAT NEWS! And just in time!!!!!
Sun Sep 08, 2013 at 08:30 AM PDT
Student loan bubble ready to burst
“The announcement that the nation’s largest bank was pulling out of the student loan market has caused much speculation.
The move is eerily reminiscent of the subprime shutdown that happened in 2007. Each time a bank shuttered its subprime unit, the news was presented in much the same way that JPMorgan is spinning the end of its student lending.”
“JP Morgan pulling out of a bubble market after several years of parabolic increases in debt has caused many people to recall the smart money leaving the subprime housing market in 2006-2007 just before the entire financial system imploded.
Student loan debt is now the largest form of unsecured debt in the country today, surpassing credit cards and auto loans. Student loans were 3rd on the list just 8 years ago”
Heya! I’m at work surfing around your blog from my new iphone 4!
Just wanted to say I love reading through your blog
and look forward to all your posts! Carry on the superb work!
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