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Panel Detail:

Tuesday, April 24, 2007
2:10 PM - 3:25 PM

Making Entrepreneurship Global

Moderator:

Kenneth Morse, Senior Lecturer and Managing Director, MIT Entrepreneurship Center

Panelists on this session are, from left, Umair Khan of Folio3, Alan Patricof of Greycroft LLC and Carl Schramm of the Ewing Marion Kauffman Foundation.

Carl Schramm noted that in the United States, "one half of all new job creation comes from firms that are less than five years old." This figure indicates just how important the entrepreneur is to a nation′s economic growth, he said. It is important that an economy have a mix of older, larger, more established businesses, as well as newer, smaller, ventures. To that end, a society must create incentives toward productive entrepreneurial behavior, as well as disincentives toward nonproductive behavior.

Though they agreed it was a complex issue, the panelists all felt that one of the keys to defining an entrepreneur is a willingness to take risk. Alan Patricof noted that entrepreneurs are risk-takers by nature. While some innovations and technological breakthroughs can take place at universities, real entrepreneurial activity usually takes place outside the confines of academia.

The societal and environmental factors that promote an entrepreneurial culture break down into two categories. The first of these is access to capital. While there are people everywhere who have good ideas, many of them have no means to bring these ideas to market. Particularly in developing countries, individuals often lack access to the capital necessary to turn their ideas into reality. Many countries lack the institutional mechanisms that allow for profitable exit strategies for investments. In turn, this leads to reluctance to undertake initial investments and provide capital for startups. Improving available exit strategies and access to capital is a key to promoting entrepreneurship around the globe, particularly in developing countries.

The second factor that promotes or hinders an entrepreneurial environment is the stigma attached to business failure. One of the reasons the U.S. enjoys a robust entrepreneurial environment is that the stigma of business failure isn′t lasting. In fact, many individuals whose businesses fail learn from their experiences and go on to start successful business later in their careers. The panel noted that "failure is the mother of success." They noted, however, that in many countries it is seen as shameful to fail at starting a business. By taking steps to change this cultural perception, nations can facilitate a more entrepreneurial culture.

Woven throughout the panel's discussion was the fact that entrepreneurship is a global phenomenon. The panel noted that one of the problems faced by developing economies is that often their brightest minds come to the United States for schooling. These bright young individuals often start companies in the U.S. rather than return to their home countries. A second dimension of the global theme was that every entrepreneur should globalize his or her business from the very start. As an example, Umair Kan noted that there are tremendous cost savings that a startup can achieve by outsourcing development and production.

While the panel discussed a variety of topics, the theme remained the same: Because entrepreneurship is so vital to a country′s economic growth, governments should do everything that they can in order to encourage the activities of entrepreneurs. Schramm noted that entrepreneurs have pulled the United States out of the last five recessions, a mark of how important the entrepreneur is to the national economy.

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