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Entrepreneurship and Innovation: The Bothersome Truth

Entrepreneurs are broadly believed to be the agents behind monetary progress 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 Public Network" movie, to Tesla's Elon Musk, an zugezogener 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 considerable funds to invest in startups via government-run endeavor capital programs. But is this fascination with and belief in entrepreneurs rationalized? How likely are internet marketers to enhance the technical frontier and bring about the sort of change that government authorities want? Entrepreneurship Professor Sergey Anokhin from Kent Express University says the proof is far less effective 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 United states of america the positive website link between startup rates and innovation may be true, for the developing companies the relationship is definitely negative. Such countries are more inclined to see innovation championed by the existing companies, not startup companies. With few exceptions, business people there pursue opportunities of your different kind that depend on imitation and dissemination of others' ideas, and are certainly not equipped to produce truly advanced "grand" innovations. In average, startups are less efficient than existing businesses. Accordingly, if local authorities support entrepreneurship, monetary performance may suffer, and development is less likely to occur. Actually successful technical development in emerging companies is often associated with an aggressive entrepreneurial habit of large corporations, not individual entrepreneurs. Such is the case, for illustration, 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 get more entrepreneurship to cause more innovation, says Doctor Anokhin. For the reduced 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 guidelines. Moreover, quite naturally, the very textbooks that the students across the world use, are written by the scholars from the world's leading countries, , nor take developing economies' framework into account. Taken jointly, attempting to locks coverage makers in assuming the relationship between entrepreneurship and innovation that will not hold in their particular parts of the globe. The pro-entrepreneurship policies is not going to bring about the results expected, and the limited resources will be squandered to support activities that are largely detrimental.

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