New Paper Provides Clues to Optimal Environment for Growing Entrepreneurs – Entrepreneurship : Can The Touch Be Taught?

The National Bureau for Economic Research has produced a paper that provides clues to the optimal breeding ground of entrepreneurs.

From: Southern Compass is compiled from reports from the Southern Technology Council, the Southern Global Strategies Council, the Council on the Southern Economy, the Council on a New Economy Workforce, the Council on the Southern Community and Southern Growth staff.

The paper, Entrepreneurial Spawning: Public Corporations and the Genesis of New Ventures, 1986-1999, suggests that "regions may need to attract firms with existing pools of workers who have the ‘training and conditioning’ to become entrepreneurs." The authors analyzed factors that affect the total number of venture capital-backed tech companies spawned by public companies during a sample period from 1986-1999 and found that the stimulation of entrepreneurial activity in a region with a small number of existing entrepreneurial companies is a difficult task.

Providing capital to would-be entrepreneurs is not as effective as having the skilled, trained workforce in an entrepreneurial culture. The research also suggested that less-diversified companies focused on a single line of business produce 19 percent more entrepreneurial ventures than do multi-faceted corporations. The paper can be purchased for $5 at http://papers.nber.org/papers/W9816

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Entrepreneurship : Can The Touch Be Taught?

By JEFF BAILEY
Staff Reporter of THE WALL STREET JOURNAL

Can you teach someone to be an entrepreneur?

With more than 1,500 U.S. colleges offering some sort of entrepreneurship classes — by the Ewing Marion Kauffman Foundation’s count — someone certainly thinks so.

From a shallow backwater of graduate business education, which traditionally has prepared students for life in big corporations and the service firms that feed off big corporations, classes and programs designed specifically to encourage entrepreneurs have spread widely in recent years.

Why? Partly to satisfy demand from young people who don’t want to be corporate drones. And partly because many business and academic leaders believe the economy would benefit from having more and better entrepreneurs. They’re the people who start and build growth companies, boosting employment and wealth.
[Sam Zell]

So, the Kauffman Foundation, based in Kansas City, Mo., is preparing to give a total of $25 million to a handful of universities that come up with the most promising plan for entrepreneurship training. Sam Zell, Chicago billionaire and dealer in distressed assets, and his now-deceased partner, Robert H. Lurie, gave $10 million to the University of Michigan to fund an Institute for Entrepreneurial Studies bearing their names. And Michael Polsky, a Ukrainian immigrant who made a fortune building independent power plants, gave $7 million to the University of Chicago to fund a Center on Entrepreneurship bearing his name.

They must all believe you can teach entrepreneurship , right?

Not exactly. "As far as teaching purely entrepreneurial skills," says Mr. Polsky, also a Chicagoan, "I’m a believer — you can’t teach them."

Says Kauffman’s president and chief executive officer, Carl Schramm: "I don’t think you can."

Adds Mr. Zell, trying to be encouraging: "It’s not an all-or-nothing thing." His institute, he hopes, "helps people discover the talents they have."

Indeed, it is a widely held belief among established entrepreneurs that they possess an innate trait that spurred them to take risks, devote long hours and lead others to make a business a success, be it a start-up, a turnaround, an acquisition or some other business challenge. Asked if his alma mater, Michigan, sparked or shaped his entrepreneurial dreams or successes, Mr. Zell replies: "No. I never even thought about my schooling and my business in the same vein."

Mr. Polsky, who graduated from Chicago’s graduate school of business, says, "I certainly learned a lot of business skills" at graduate school. But he adds: "A lot of entrepreneurial skills are very personal skills."

So, why all the classes and programs? Because Mr. Zell, who is probably 100% entrepreneur if such a thing could be measured, is right: It isn’t an all-or-nothing thing. Many people have slight or strong entrepreneurial leanings — they may measure 25% or 75% on the Zell meter — that could be more fully developed by training.

And for those who do measure 100%, entrepreneurship classes may draw them to a business school. And, once there, they’ll likely also learn more traditional management skills that will help them, too.

Mr. Schramm, the Kauffman Foundation chief, believes the failure rate among new businesses would be greatly reduced if driving ambition was more frequently paired with nuts-and-bolts financial and management training.

And Mr. Polsky offers another benefit of entrepreneurship training: Some people, not actually cut out for the risk and worry, will take the classes and, he says, "recognize that it’s not for them." Amen, says Mr. Zell: "The whole bubble of the dot-com era created an awful lot of people who perceived themselves as entrepreneurs."

The word entrepreneur (Webster’s: from French entreprendre, to undertake: one who organizes, manages and assumes the risks of a business or enterprise) seemed to crawl out of the woodwork in the 1980s.

Oddly enough, corporate types began embracing it as proof that they weren’t, well, corporate types. In the 1990s, it became increasingly associated with start-ups, a rather narrow field. And in some circles, Mr. Polsky says, "a lot of people equate entrepreneur as the guy who made a lot of money."

Mr. Zell lists these traits as entrepreneurial: high-energy level; the word failure is nonexistent; lonely; thinks about solutions even if it’s not his role; a leader; a certain amount of living on the edge; a significant need for recognition; and most important, understands that if you ever have to take a vote, you’ve lost.

Those kinds of people, of course, aren’t always hanging around the business school. So, the Kauffman Foundation wants universities to broaden the reach of their entrepreneurship programs.

"It’s much more likely they’re coming out of an engineering school than a business school," Mr. Schramm says. "And God help you if you’re in the college of veterinarian science and you come across a new gene."

Write to Jeff Bailey at [email protected]