Daily Bulletin


The Conversation

  • Written by Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of Technology

The first thing is that the term entrepreneurship means different things to different people. So the starting point of any discussion is to agree not to use the term. People often mean start-ups – new businesses – when they use the ‘e’ word. So let’s look at the evidence on the importance of start-ups to the economy.

Most startups die young

Most start-ups, about 50 %, die within 5 years . Most start-ups never grow; never employ anyone, other than the owner; have low sales and low productivity. This feature of start-ups is common to all the developed countries where the evidence has been scrutinised. Survey work by Scott Shane, who is visiting the Wade Institute this week, shows that bulk of people who start a business do so for the pleasure of working for themselves. They do not want to grow and they do not have the ambition to make it happen.

We really mean the hi-risk hi-tech ones

But one suspects that this is not what most politicians mean by the entrepreneurial economy. They mean the next Bill Gates or Steve Jobs. The people who drive hi-tech, hi-risk companies which live beyond the first few years and grow explosively via internal innovation and business takeover. It is however, notoriously hard to systematically identify the factors that create these people. It is easy to reverse the pathway of successes, but harder to recall the pathway of equally deserving colleagues who failed.

How much is due to genes?

We know that location has something to do with success. All major episodes of innovation have occurred in clusters – from the industrial revolution in N England and Scotland to Silicon Valley today. But research by Shane on 1200 identical twins in the UK, has revealed that genetic factors associated with the lead founder play a part. Some people are just born with the personal qualities that make successful hi-risk innovation business people. Doggedness, determination, a thick skin and ambition.

Personal traits matter

A quick glance at the Olympic events makes it abundantly clear that you need to be born with certain physical qualities to even put you within medal contention – long arms and legs seem to matter for most events. Does this also apply to other activities? It does make one wonder how far we should screen and encourage people for different occupations based on their personal characteristics. Related work in Australia by Ham, Junankar and Wells, uses the household panel survey (HILDA) and found that average marginal effect of parental status on occupational choice is small but the effect of the personality trait ‘conscientiousness’ is large and similar in impact as educational attainment.

Should public policy use this information to identify people with the greatest potential to become the next mega-business innovator? Or should we leave it up to the market to do the sorting for us? (Leaving aside the issue of how much do the rest of us benefit from the presence of these stars in our economy). It’s the old struggle between equity and growth. These are some of the issues, uncomfortable as they may be, that we are confronting.

Authors: Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of Technology

Read more http://theconversation.com/so-what-do-we-really-know-about-entrepreneurship-64005

Writers Wanted

Buying A Home In Australia: How To Prepare Financially

arrow_forward

Record year of growth for Tweed based business The Electrical Co

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Scott Morrison's interview with Ray Hadley, 2GB

RAY HADLEY: Prime Minister, good morning to you.   PRIME MINISTER: G’day, Ray.   HADLEY: Gee, you’ve had a week.   PRIME MINISTER: Well, there's been a lot of weeks like this. This time last...

Scott Morrison - avatar Scott Morrison

Ray Hadley's interview with Scott Morrison

RAY HADLEY: I'm going to go straight to the Prime Minister, Scott Morrison is on the line right now. Prime Minister, good morning to you.    PRIME MINISTER: Good morning, Ray.   HADLEY: Just d...

Ray Hadley - avatar Ray Hadley

Defence and Veterans suicide Royal Commission

Today the Government has formally established a Royal Commission into Defence and Veteran Suicide following approval by the Governor-General.   Prime Minister Scott Morrison said the Royal Commi...

Scott Morrison - avatar Scott Morrison

Business News

Record year of growth for Tweed based business The Electrical Co

While many businesses struggled to stay afloat during the COVID-19 affected 2021 financial year, Tweed Heads based The Electrical Co. completed more than 50,000 smart meter installations across Aust...

a contributor - avatar a contributor

The Most Common Reasons why Employees End Up Leaving a Company

It is important for businesses to make sure they find the right people for their open positions. That is why a lot of companies are relying on professional outplacement services. A lot of companie...

NewsServices.com - avatar NewsServices.com

The little Aussie face sock startup is riding the personalized gift game

In a world where everybody has different desires, interests, and goals, what can be better than giving them things that meet their individual requirements. Personalized gifts have taken on the mar...

NewsServices.com - avatar NewsServices.com