Entrepreneurship and innovation: the unpleasant truth

Entrepreneurship and Innovation: The Popular Religion

Entrepreneurs are widely regarded as agents behind growth and innovation. They are, as we say, carriers and shakers who create new industries, unseat current leaders from their thrones and open new borders for all. Popular cultural elements increase the number one success story one after another – from Mark Zuckerberg, Facebook, who was glorious in the "The Social Network" film, to Eles Musk from Tesla, an immigrant who became a household name, to Google & # 39; s Sergey Brin, what search engine name has officially been spoken in English.

So convincing is the story of entrepreneurship technology and success that many countries – including developing countries that believe they are behind – develop a comprehensive policy to support and promote entrepreneurship and even set up large resources to invest in startups with government-controlled venture capital programs. But is this fascination and belief in entrepreneurs justified? How likely are employers to push the technical border and bring the changes that the government wants? Entrepreneur Professor Sergey Anokhin of Kent State University says difficult evidence is far less convincing than popular culture makes you believe.

Dark Side of Entrepreneurship

In a study of 35 countries over a seven-year period, Professor Anokhin of Kent State and Prof. Joakim Wincent from Sweden, Lulea University of Technology showed that there is no generally positive relationship between entrepreneurship and innovation . Although the world's leading economy, like the United States, the positive relationship between the first part and innovation could be true. For the developing world, the context is actually negative. Such countries are more likely to see innovation that is proposed by existing companies, not the start. With some exceptions, employers are engaged in other types of opportunities based on imitation and discrimination of others & # 39; ideas and have not produced truly progressive "big" innovations. On average, initial work is not more effective than existing companies. Accordingly, if municipalities support entrepreneurship, economic impact can occur and innovation is less likely to occur. In fact, effective technology development in emerging economies is often associated with aggressive entrepreneurship of large companies, not individual entrepreneurs. Such is, for example, South Korea with his chaebols .

The figure below shows a tremendously different impact on the speed of innovation and technological development (as recommended by patent applications) across countries. Only rich countries can expect more entrepreneurship to lead to more innovation, says Dr. Anokhin. For less developed countries, as the plot shows, the rise in starting velocity will only lead to less, not innovation. The problem, according to Sergey Anokhin, is that developing countries often look at a leading economy when they try to shape their own policies. Furthermore, literature from world lists is, of course, very textbooks used by students around the world, and do not take development economics & # 39; context of the account. Together, it often captures policy makers by anticipating a relationship between entrepreneurship and innovation that will not hold in certain parts of their world. The business strategy will not lead to expected effects and limited funding will be wasted to support activities that are mostly harmful.

What does it mean?

It's time to admit that the relationship between entrepreneurship and innovation changes across countries, says Professor Anokhin. Therefore, the World Economic Forum's Global Agenda Council acknowledges that entrepreneurship efforts to Silicon Valley success stories do not have to resonate in other parts of the world. Strategies aimed at encouraging entrepreneurship to promote innovation in the country may well be misunderstood. Instead of taking into account response measures that take into account regional specific factors.


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