An Award for Entrepreneurship Research

My paper with Nicolai J. Foss, “Alertness, Action, and the Antecedents of Entrepreneurship,” has won the 2010 Best Paper Award from the Journal of Private Enterprise. The paper appeared in a special issue exploring Israel Kirzner’s contributions to entrepreneurship theory. For more about the research activities of the McQuinn Center see our research page.

The Swedish Model?

More on Nordic entrepreneurship: In today’s Wall Street Journal Europe, Swedish MP Johnny Munkhammar writes about the Swedish Model and why the Nordic country survived the financial crisis relatively unscathed. Munkhammar’s historical summary does not quite correspond to the facts (especially to this writer’s interpretation) but, more fundamentally, the piece suggests, implicitly, a deep-rooted connection between economic freedoms and entrepreneurship. Indeed, the eased regulations in the health care industry are claimed to have caused “a robust surge in entrepreneurship.”

Entrepreneurship in the Welfare State

In a recent opinion piece, Dalibor Rohac claims that we have much to learn from the Nordic welfare states in terms of wealth-creation and prosperity. Writes Rohac:

When Americans think of Scandinavia, what comes to mind is probably Ikea, breathtaking landscapes and maybe Ingmar Bergman’s movies.

Bergman may have been an innovator of sorts, but in terms of entrepreneurship Ikea is undoubtedly a success story in many ways; it is also one of the very few examples of globally successful Swedish firms in the recent several decades. Looking at the facts, a great many of the big players in the Swedish economy (and exports) were all founded in the latter half of the 19th century or in the first two decades of the 20th century. After that? In addition to Ikea — basically nothing.

As a matter of fact, the private sector of the Swedish economy saw basically no job creation at all 1950-2005.

Prospects for Startups in 2011

Jeff Cornwall isn’t too optimistic:

If you are already in business, remain cautious and prudent. Build your cash as best you can, and avoid additional debt at all costs.

If you are hoping to start a new business in 2011, know that there are still opportunities out there. But approach any new business startup with as lean and bootstrapped a game plan as possible.

Surprisingly, there is little research literature on entrepreneurial activity over the course of the business cycle. A recent paper by P. Koellinger and Roy Thurik examines self-employment rates over time across 22 OECD countries and finds that self-employment leads GDP, rather than being pro-cyclical or independent of overall economic activity. Some implications:

The present analyses show that entrepreneurship not only plays a role in the structural sense but also in the cyclical sense. The intrinsic forces of the entrepreneurial economy could help fight the crisis. . . . First, the effect of unemployment on entrepreneurship depends upon the level of unemployment benefits (Koellinger and Minniti 2009). Demand stimulation through raising unemployment benefits, which is the European instinct, is detrimental to recovery. Second, the cry for more regulation after the demise of the banking sector should not lead to an increase in other (entrepreneurial) parts of the economy.17 Third, when also non-banking firms start applying for financial support arguing that they are “system players,” the question should be raised whether to support incumbent industries or future ones which may grow out of current entrepreneurial initiatives.

Entrepreneurship in Detroit

Entrepreneurship is often conceived as the recognition of opportunities for redeploying resources to higher-valued uses. But this requires a particular institutional environment, including protection of person and property. Where these protections are absent, underutilized resources remain. Downt0wn Detroit provides a vivid example, as Scott Masten explains at our sister blog.

More on the Simpsons

Our chapter on entrepreneurship in The Simpsons is discussed in the 31 December 2010 issue of the Singapore Business Times. The reporter includes my favorite line from the chapter, highlighting the role of error in the entrepreneurial process: “entrepreneurship is as much about the ‘Doh!’ as the dough.”