Entrepreneurship and Innovation: The Annoying Truth

Entrepreneurs are broadly believed to be the agents behind monetary expansion and innovation. They are, we are told, the movers and shakers who create new industries, overthrow current leaders from their thrones, and open new frontiers for everyone. Well-liked culture tirelessly propagates one success story after another - from Facebook's Tag Zuckerberg, who had recently been glorified in "The Sociable Network" movie, to Tesla's Elon Musk, an zuzügler who became a home name, to Google's Sergey Brin, whose internet search engine name has legally become a verb in English.

So persuasive is the narrative of the entrepreneurial technological prowess and success, that many countries - including developing countries that feel they are lagging behind - develop comprehensive policies to support and promote entrepreneurship and even set aside big funds to invest in startups via government-run endeavor capital programs. But is this fascination with and belief in entrepreneurs validated? How likely are internet marketers to enhance the technical frontier and bring about the sort of change that authorities want? Entrepreneurship Professor Sergey Anokhin from Kent Point out University says the facts is far less genuine than the popular culture makes you believe sergey anokhin.

The dark side of entrepreneurship

In a study of 35 countries over a 7-year period, Professor Anokhin from Kent State and Professor Joakim Wincent from Sweden's Lulea University of Technology show that there is no universally positive relationship between entrepreneurship and innovation. While for the world's leading economies including the Us the positive website link between startup rates and innovation may be true, for the developing financial systems the relationship is in fact negative. Such countries are more inclined to see innovation championed by the existing companies, not online companies. With few exceptions, business owners there pursue opportunities of your different kind that derive from imitation and dissemination of others' ideas, and are generally not equipped to produce truly advanced "grand" innovations. About average, startups are less efficient than existing businesses. Accordingly, if local authorities support entrepreneurship, monetary performance may suffer, and advancement is less likely to occur. Actually successful scientific development in emerging companies is often associated with an aggressive entrepreneurial tendencies of large corporations, not individual entrepreneurs. Such is the case, for example, of South Korea having its chaebols.

The figure below shows the vastly different impact of startup rates on innovation and technical development (as measured by patent applications) across countries. Only rich countries can anticipate more entrepreneurship to cause more innovation, says Doctor Anokhin. For the less developed countries, as the plot demonstrates, an increase in startup rates will only lead to less, not more ground breaking activities. The problem, according to Sergey Anokhin, is that developing countries often look up to the leading economies when trying to design their own plans. Moreover, quite naturally, the very textbooks that the students across the world use, are written by the scholars from the world's leading countries, and don't take developing economies' situation into account. Taken collectively, attempting to locks coverage makers in assuming the relationship between entrepreneurship and innovation that will not hold in their particular parts of the soil. The pro-entrepreneurship policies will not likely bring about the results expected, and the limited resources will be lost to support activities that are largely detrimental.
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