Entrepreneurship 422 - Chapter 1
What entrepreneurship change with ages in the different types of economies?
- concentration of entrepreneurs in ages 35 - 44 - Factor driven economies have the least drop off with age showing that older people still need to support themselves
What does job creation look like amount the different economies in relation to enrepreneurs
- innovation economies have the highest proportion of individuals acting on their own
DIJA
Dow Jones Industrial Average
Why is entrepreneurship important?
- Stimulates innovation - Creates jobs - Needs are constantly changing → adaptability, identifying and meeting new needs - Answer needs before we know they are there - Making an ineffective product obsolete - Keeps large companies honest
What percent of jobs created in the private sector in 2014 were through entrepreneurship?
2/3rds
Entrepreneurship is most common in what age ranges?
25 - 34 and 35 - 44
How many businesses are in the U.S?
28 million
What percent of U.S businesses are small?
99.9%
What is considered a small business?
A business with 500 or fewer employees
factor-driven economy
A nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production.
Bayh-Dole Act
Allows for the transfer of exclusive control over many government funded inventions to universities and businesses operating with federal contracts for the purpose of further development and commercialization.
Global Entrepreneurship Monitor (GEM)
An annual assessment of the national level of entrepreneurial activity across countries, started as a partnership between London Business School and Babson College.
What is to note about anglo saxon economic systems?
Anglo-Saxon economic systems have a high prevalence rate of high-expectation entrepreneurial activity
Why did entrepreneurship increase in the 1970s? Financials
Available funds have continually supported entrepreneurial ventures
What are the phases of the entrepreneurship process and GEM indicators?
Conception, firm birth, and persistence
Why did entrepreneurship increase in the 1970s? Government
In 1978 , Congress reduced the capital gains tax and eased the ERISA prudent man rule which inhibited pension funds from investing in venture capital funds. - minimized anti competitive behavior
Where is TEA the highest?
In factor driven economies with necessity motivated entrepreneurs
Where is TEA (opportunity) the highest?
In innovation driven economies
Where is TEA the lowest?
In innovation driven economies
Why did entrepreneurship increase in the 1970s? Human Infrastructure
Increased web of human infrastructure willing to support the efforts of aspiring entrepreneurs
What does the GEM report say about entrepreneurship ecosystems?
Innovation economies have better infrastructure and policies
What percent of firms receive venture capital?
Less than 1%
What are the two types of entrepreneurship within the Total-Early-Stage Entrepreneurial Activity (TEA)
Nascent entrepreneur and owner managers
Why did entrepreneurship increase in the 1970s? Cultural and Social
No first-hand memory if the great depression. Therefore, job security was less important. Big business had a negative connotation after Vietnam. Downsizing led to many bright people being fired who started businesses, other social changes opened the doors for minority entrepreneurs to start businesses
nascent entrepreneurs
People who are trying to start a business from scratch but have not yet done so
Are small company's or big companies more innovative?
Small companies produce 16 times more patents per year
How are TEA and GEM related?
TEA is a major indicator for GEM
What are the three main measures of entrepreneurial opportunity?
TEA, TEA - opportunity, TEA - necessity,
GEM Model - What drives entrepreneurial activity?
That people perceive opportunities and have the skills and motivation to exploit them
Why did entrepreneurship increase in the 1970s? Physical Infrastructure
The WWW is a great equalizer for small businesses. Additionally, outsourcing and the reduction in cost or communication due to the breakup of AT&T
What does GEM capture?
The creation of new firms and the inevitable destruction of inefficient or out modeled existing firms
Why did entrepreneurship increase in the 1970s? Education
There is now widely available education and training for aspiring entreprenuers
What are the main objectives of GEM?
To gather data that measure the entrepreneurial activity of nations and other data related to entrepreneurial activity to determine what national characteristics occur to explain how this is related to different levels of growth
What is the gender distribution of early stage entrepreneurial activity?
Women are less inclined than men to engage in entrepreneurship but women in factor-driven economics have the highest TEA rates relative to men
Efficiency-driven economy
a nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity is a major goal
Innovation-driven economy
a nation where the major forces for jobs, revenues, and taxes come from high-value added production based on new ideas and technologies and from professional services based on higher education
Entrepreneur
a person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials
What is GEM a function of?
activities associated with established firms and entrepreneurial ventures
What are the three phases of economic development?
factor driven, efficiency driven, and innovation driven
Owner-managers
managers of a new business that is no more than 3.5 years old
Necessity (TEA)
percentage of the adult population that is trying to start a business because all other options for work are either absent or unsatisfactory
Opportunity (TEA)
percentage of the adult population trying to start a business due to a perceived opportunity
Total Entrepreneurial Activity (TEA)
the percentage of the population of each country between the ages of 18 and 64, who are either a nascent entrepreneur or owner-manager of a new business
entrepreneurial revolution
transformed U.S economy in the late 20th century
