Entrepreneurial Traits Revisited?

Justin Adelson at the MIT Entrepreneurship Center lets a recent episode of The Simpsons (obviously an important trend in the field) illustrate a discussion on entrepreneurial traits in entrepreneurship education. Adelson states that whether entrepreneurs are “made” or “born” is “is no longer relevant in this era.” The reason?

There are so many resources available to an individual that even if you are not born with entrepreneurial traits that make the Zuckerbergs successful you can still immerse yourself in the training.

Adelson’s post suggests that entrepreneurship education makes much difference for entrepreneurs. But at the same time, it has been shown that there is little connection between entrepreneurship education and economists’ understanding for the entrepreneurial function.

The issue of entrepreneurial traits and their practical significance may be of great importance for public policy and policy-related research. But from the point of view of economic theory, entrepreneurial traits should never have been of importance. In economics, scientific interest in entrepreneurship lies in the function of the entrepreneur rather than his (or her) psychological state or certain personality characteristics.

Are Business Plans Overrated?

Yes, says Kate Lister in Entrepreneur magazine, calling the business plan “‘largely a waste of time,” resulting in “a long-winded missive that’s out of date almost the moment the ink dries.” What venture capitalists really want, she argues, isn’t a lengthy written plan but a “killer executive summary and an introduction by a trusted advisor.” To my knowledge, there is little academic research on business plans. This paper summarizes some of the extant literatures, which suggests that business plans are written because entrepreneurs think they need one, not because such plans been shown to be effective.

Fewer Business Majors?

The Campus Entrepreneurship blog points us to some data reported by Inside Higher Ed suggesting a drop in business majors at US colleges and universities. As CE notes, “[m]any of those interested in building their own firms,  who eventually become self-employed, do not major in business,” indicating little cause for concern. Of course, the more general question of what aspects of entrepreneurship are teachable is a thorny one.

See also Peter Thiel’s unusual idea.

 

Private Equity News

Finance is critical to entrepreneurship. But we often think of entrepreneurship too narrowly, as the creation of new companies, rather than broader notions of innovation, discovery, and business judgment, which can be exercised in a variety of contexts. Hence, as entrepreneurship researchers, teachers, and practitioners, we are interested not only in early-stage venture funding, but also in funding — both private and public — for ongoing concerns. (Here is some of my own work on middle-market buyouts of mature companies.)

Today’s New York Times features some interesting comments from Henry Kravis, co-founder of the famous (or infamous, depending on your perspective) LBO firm Kohlberg Kravis Roberts. Kravis, like other large private-equity firms, is bullish on commodities and energy, and also on emerging markets. But don’t look for the mega deals:

Mr. Kravis warned not to expect any legendary takeovers, like the $25 billion leveraged buyout of RJR Nabisco in 1988 that made his firm a household name and spurred the book “Barbarians at the Gate.”

“Our business is not the mega deal,” he said, adding that 90 percent of K.K.R.’s acquisitions are companies worth less than $5 billion.

Stimulating Creativity

The New York Times summarizes recent work by Northwestern University neuroscientists on creativity, showing that “people were more likely to solve word puzzles with sudden insight when they were amused, having just seen a short comedy routine.” Perhaps entrepreneurs should take more time out for games, entertainment, or other distractions: “The very idea of doing a crossword or a Sudoku puzzle typically shifts the brain into an open, playful state that is itself a pleasing escape” — leading to more creative solutions to problems.

Social Entrepreneurship: Internet Access Edition

An interesting crowdfunded project seeks to buy a used communications satellite and reposition and reprogram it to provide free internet access to the world’s poorest regions. Great example of the private provision of a public good. (Via Gizmodo)

Microfinance in Trouble?

Microfinance has been touted as a critical input to entrepreneurial activity in developing countries. But the financial crisis and subsequent downturn have hurt the microlending industry, particularly in India. More than one commentator has compared microfinance to subprime lending (e.g., here and here, but see this for balance). Now the Economist sees Big Trouble for Microfinance. What’s next? Will tighter credit requirements stifle nascent entrepreneurs, or provide a more efficient allocation of scarce capital that spurs economic growth?

The Entrepreneurship Project for Agriculture

The Entrepreneurship Project for Agriculture is a training program to help people get started in their own production agriculture business. The project is run by McQuinn Chair Randy Westgren, McQuinn Center Assistant Director Peter Hofherr, Jill Lucht, and Kathleen Sprouse. The link above takes you to the project blog, which has all the details including videos, photos, on-the-ground reports, and other information about the program. The project is funded by the USDA-NIFA’s Beginning Farmer and Rancher Development Program.

The Emerging Strategic Entrepreneurship Field

I recently attended an excellent conference at the Copenhagen Business School on “Microfoundations of Strategic Entrepreneurship.” Strategic entrepreneurship is a new research field seeking to combine insights from entrepreneurship studies with the literature on firm strategy. Entrepreneurial activity typically takes place within firms, and firms are created and sustained by entrepreneurs, so one might expect that these fields have always been closely connected, but the research literatures in entrepreneurship and in firm strategy actually developed independently. See Nicolai Foss’s remarks on the field here, and my own impressions of the conference here. Here’s a paper that builds on the idea of entrepreneurship as a latent construct. See also this review paper on entrepreneurship and the theory of the firm.

Teaching Entrepreneurship using the Simpsons

Along with McQuinn Graduate Research Fellow Per Bylund and University of Missouri political science PhD candidate Chris Holbrook, I have written a chapter on teaching entrepreneurship using characters and situations from The Simpsons. Titled “‘They Have the Internet on Computers Now?’ Entrepreneurship and Economics in the Simpsons,” the chapter is forthcoming in Joshua C. Hall, Homer Economicus: The Simpsons and Economics (Springer, 2011). Use the link above to download a copy from SSRN.