Cause & effect view for Entrepreneurship & Innovation
Hi to all,
If I may submit my personal view on the issue, the starting point is to understand which of the two terms used in this group title is the cause and which is the effect, leading to success, growth & job creation.
My experience, originating from several startup initiatives, involvement in FP & national R&D projects, has led me to conclude that the sequence is quite clear:
Entrepreneurship is a stand of life of the people we call entrepreneurs, either forced or aspired. The entrepreneurial motivation is always about making a difference in the society; local, national or global. A baker who opens a new bakery in the neighborhood is an entrepreneur, a new retailer who rolls out a franchise chain is an entrepreneur, a computer geek who starts a new web service is an entrepreneur.
If these entrepreneurs can manage to capture a market segment, local-national-global, then their differentiation in effect is a market innovation that has allowed them to attract customers. If the means that they have used to capture the market are based on proprietary technical knowledge (IP), then in effect we have technological innovation.
The sustainable nature of this path, as a result, will generate growth out of market competition and will generate new jobs in the new enterprises. Of course the level of entrepreneurship maturity & scale are the factors that determine the scale & size of the growth / job creation.
As a conclusion to this though, I would state that entrepreneurship is the cause, innovation is the effect of successful enterprise.
Now, how can one accelerate the result, i.e. growth & jobs, I believe is obvious. We need to create the conditions that will make more and more EU citizens turn towards entrepreneurship, ideally make it a fashion! The influence channels are known, they include formal education in schools & universities, media and social recognition.
Further to this, entrepreneurship must be open to whoever believes can manage to do it. The states / EU should remove any obstacles / red-tape that stand in this way. This includes taxation, for young SMEs and up to a specific level of revenues. Special state initiatives, like seed funding and mentoring should be available as an attractive alternative to unemployment benefits, again removed from usual red tape of state aid initiatives.
I hope my experience will be useful to the group!
Group audience:
Comments
My idea of an Entreprenuer is
My idea of an Entreprenuer is nothing like your own. Opening a bakery is simply an attempt at self employment. If that were the case we can say any self employed person is an Entrepreneur, so why bother with a new term for self employment?
I'll stick to the old J.B. Say definition. "The Entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield".
Capturing a market is just that. i.e. good marketing. Believing that because a person is more perceptive and persuasive makes them an "entreprenuer" is a bit like calling a camera man an aueter. They have a skillset but not a new vision in approaching the way something can be done (better, quicker, faster, cheaper, DIFFERENTLY).
I'll agree with you that Entreprenuership is a primary cause and Innovation the effect. Seven sources of Inovation, according to Drucker are:
Inside the organisation
1. The unexpected – unexpected success, failure
2. The incongruity – between reality as it is and assumed to be or ought to be
3. Process need
4. Changes in market or industry structure
and outside the organisation or industry, are caused by changes/shifts in
1. Demographics
2. Changes in (social) perception, mood, and meaning
3. New knowledge, scientific and non-scientific
The problem arises, by suggesting governments remove barriers, is that it misses the fact that governments are the primary cause of stifling innovation, simply because they create, by holding on to outdated institutions, the social attitudes which can defeat any budding entrepreneur.
I'll agree with you about the influence(r)s. But you can see (for e.g.) how unsuccessful the formal education system is here by counting the number of graduates on unemployement queues. So this one institution in which Innovation needs to take place. The old processes of formal education institution are, without doubt, entirely archaic. How much more proof would any society need?
As for media, outside public institutions, that's already changed. That's why social networking tools have proved to be so attractive. But they are ALL privately owned media, so socially, they are only innovative indicators of how our publically-owned institutions can create new media utilities.
I'm a bit of a fan of Ayn Rand when it comes to what governments can do to help Entrepreneurs. "What can we do?" they ask. "Get out of the way!" John Galt replies.
I see your point about the
I see your point about the definition of entrepreneur, however this is how one gets added value, it's not the drive that makes one an entrepreneur. The drive of an entrepreneur originates from his stance of life, away from comfort zones.
If an unemployed person (negative productivity) can create a sustainable bakery (positive productivity) and at the same time he can inspire his peers to do something similar, for me this is an entrepreneur too.
I totally agree with you on the rest of your comments, however in EU one notices again & again different speeds in societies. For example, with respect to entrepreneurship in UK you are quite ahead from countries like Greece. If I am not mistaken, a startup company with revenues <72k GBP is exempt of VAT. In Greece you don't... and if you miss to submit a zero revenue VAT monthly statement you get fined...
Entrepreneurship is a real world entity and any help given to it must be real & pragmatic... not only policy!