What are some of the entrepreneurship trends we have seen in the United States over the last two decades? What should policymakers do to foster entrepreneurship? What are some of the lessons from how entrepreneurship was fostered after the financial crisis that are applicable in today’s uncertain times?
Donna Kelley, a professor at Babson College and a GEM researcher, provided insights to these questions on episode #1 of the Global Entrepreneurship Monitor Podcast.
Listen to the episode directly on Anchor, Spotify or iTunes or search "Global Entrepreneurship Monitor Podcast" in iTunes.
The following is a select adapted transcript based on the podcast interview.
Kevin Anselmo (host): Donna, welcome to the show.
Donna Kelley: Thank you.
Kevin Anselmo: I know you've been involved in GEM research for many years. Can you talk a little bit about what are some of the key findings from the most recent US National Report?
Donna Kelley: So what we see in the United States is that entrepreneurship has continued to increase gradually. We had a market decline in entrepreneurial activity in the 2009 and 2010 surveys and that was just after the recession. And then in 2011, entrepreneurship started to bounce back and has been increasing ever since. So we've had that as a positive indicator. And what we also started to see was established business activity started to bump up as well. Usually we'll have a time lag where if you have changes in entrepreneurship, you might see changes in mature business activity a little bit later. So we did have declines and on through established business activity, around like 2013 / 2014. So now that's back up. Entrepreneurship tends to be seen very positively in the US. So we have very positive attitudes about the presence of lots of opportunities around you. So people see lots of opportunities for starting businesses. It's actually been pretty consistent over the last 10 years - 56% of Americans think they have the ability to start a business. And so capability perception is really high. So in the United States, we have a lot of potential entrepreneurs as well as people that would generally support entrepreneurship through those positives.
Kevin Anselmo: So we're in a US presidential election season in which there's a lot of polarization - a lot of fighting. But one thing that both parties probably agree on is that there's a need to increase entrepreneurship. Entrepreneurship is important. Now how both parties would go about tackling that challenge would be quite different. GEM obviously is not a political organization. But if you were to talk to policymakers, what are some key insights that you think policymakers should be aware of? And obviously, it will vary from state to state and from a regional and national level, but any sort of general principles that you would share with policymakers based on the research?
Donna Kelley: I would think about entrepreneurship as something that's important to stimulate throughout anyone's career ideally. I might be a little bit biased because I'm from Babson. Ideally, people would have entrepreneurship as a toolkit that they could enact at any point in their career. So say you're at a point where you lose a job and it's maybe it's a down economy. Maybe your company has laid you off. And because maybe age bias or whatever, you're not able to find a job. Being able to pull out those tools that you have to be able to start a business and really take charge of your own employment and your own income generation is something that really everybody should have. So that's really one thing that I would say is that we need to understand that entrepreneurship may last throughout somebody's career, they may go in and out of employment, starting a business, so forth. The other thing is that you want to think of entrepreneurship as not just starting an independent business. Oftentimes, in the United States, we think of entrepreneurship as a tech company that gets venture capital, started by a white male college dropout. And we need to understand that entrepreneurship is really much more than that. You might be entrepreneurial for the companies you work for; you might go back to a family business and be entrepreneurial. You may do it in your older age. You know, entrepreneurship can affect really all societal groups, women, men, different ethnicities, people that have migrated to the United States, and so forth. So entrepreneurship can serve multiple contexts and multiple groups of people and throughout your entire life.
Kevin Anselmo: So you have a really unique view on entrepreneurship around the world as one of the co-authors of the GEM 2019/2020 Global Report having been involved with GEM for many years. Any thoughts on what's something that the United States can take from some of the other countries that you've studied? Also what is best practice based on what's happening in the United States that other countries can learn from?
Donna Kelley: Well, the United States has is its entrepreneurial culture. You know, we celebrate entrepreneurs and the media highlights entrepreneurs. Probably what the United States could do better is highlight more of a variety of entrepreneurs. So it's not like I said, just the tech companies. It's women that are doing, you know, unique things in businesses that we don't typical hear about. And so thinking more broadly about what constitutes an innovation - it's not just technology. It can really affect any industries and a lot of these areas of business are being transformed right now. What we could learn from other countries is the amount of internationalization that entrepreneurs engage in from other countries. Well, it may be that some of these countries are smaller. So they see these opportunities elsewhere, whereas the United States has a very advanced infrastructure and institutional structure for entrepreneurship. They can rely on the legal system. So sometimes Americans may be nervous about venturing into other parts of the world where they may not be able to count on what the ecosystem is going to do in terms of supporting them. But Americans really need to learn to venture out, try new things and think of the world as their operating ground as opposed to just the familiar, diverse, large United States, which, you know, again, it offers a lot of opportunities, but we really do need to think globally with our entrepreneurs.
Kevin Anselmo: Donna, can you talk a little bit about some of the key demographic information that you were able to learn from the latest research about entrepreneurs United States and looking at ethnicity, gender, etc?
Donna Kelley: Sure. So, in the United States, we typically have, I guess, a pretty average age profile that most of the time, it's 25 to 34 year olds and the 35 to 44 year olds that are starting businesses. For women, we've typically have about seven women entrepreneurs for every 10 men entrepreneurs. But in the 2020 results, it was a much stronger ratio: nine women for every 10 men. Now we've never had that happen in over 21 years of GEM. So that's a really interesting result. We'll have to see if that's some kind of an abnormality.
Kevin Anselmo: Any thoughts about the uptick in female entrepreneurship - any reason why you think that's occurred over the years?
Donna Kelley: Well, there's been a lot more attention on it. I think in the United States we could highlight women entrepreneurs more. There tends to be less intervention on the government’s part in the United States. Whereas in other countries, they might start more programs around women’s entrepreneurship. There is more attention paid to Women's Entrepreneurship globally. And we start to see this in the results like, you know, for example, in the Middle East. I think it's something that we really need to track further and look at it but there is a lot of interest. You know, at Babson, we talk all the time about getting mentors; getting women mentors that entrepreneurs can relate to. So if I'm a woman, I may not be able to relate to young white males that are tech entrepreneurs. So it's important to get those kind of role models.
Kevin Anselmo: You mentioned in one of your initial responses, a little bit about the motivations to start a business. What have learned from your research about motivations?
Donna Kelley: Yeah, in terms of fear of failure, it's important to know that in a developed country, fear of failure might be fueled by opportunity costs. So say, a college graduate, especially Babson graduate, might think, should I start a business, which is riskier, or should I get a job, especially if I have college loans. And so oftentimes fear of failure can be at least influenced by the fact that there may be good alternatives. If I'm in a society where there are fewer alternatives for jobs, I really don't have as much to lose. But in the United States, I might have a lot to lose. In the United States, there is more of a risk taking or acceptance of risk taking. So it may be the case that if I've tried to start a business and I failed, many companies would really value that.
Kevin Anselmo: Great. Finally, I want to ask you a little bit about education and obviously, you offer a really unique perspective on this both as a practitioner and a researcher. Can you talk a little bit about what do you think the United States is doing well, in terms of educating entrepreneurs, and where do you think there are opportunities?
Donna Kelley: Yeah, we don't tend to educate or provide entrepreneurial education at the school level. And that's probably because we have a lot of state and federal requirements for education. But entrepreneurship, education, obviously, comes into play more in college. And we know that the majority of entrepreneurs are college educated. So back, you know, 40 years ago, we used to think of entrepreneurship as a replacement for a college education. sIn the United States, most of the colleges offer entrepreneurship courses. And Babson was a leader in this. And what's really important is how entrepreneurship is taught. And what Babson does is promote a real experiential hands0on type of education. It’s much less effective to be lecturing, and even doing just class discussions and even cases are a little bit less effective than just getting students to try things. So that type of education is really important. Probably what the United States could do more of is making sure that people in other disciplines other than business are taking entrepreneurship courses and trying things. So really what we want is that the engineers and liberal arts majors and science majors are experiencing entrepreneurship even though they may not get a business degree. They would still know how to start a business.
Learn more about Donna Kelley.