Which words do you associate with “entrepreneur”? Risk taker? Ambitious?Creative? Smart? Energized? Henry Ford? Steve Jobs? Clarence Birdseye? The words and names convey a recipe for success. And yet, according to a recent FT article from Tim Harford, the ingredients are not quite what you would have expected.
1. Is there an entrepreneurial spirit? The researchers did not discover it. However, they did say that intelligence and patience were more prevalent among those who started businesses.
2. Is there a common key to success? The most important resource is the ability to fund the project. An inheritance, for example, facilitates business creation as would available venture capital money.
3. Family counts. Children of the self-employed tend to start their own businesses.
4. Where you live counts. Countries with lower taxes and less red tape tend to have more entrepreneurs.
You might enjoy this article from yesterday’s NY Times about a “tech incubator” for entrepreneurs.
The Economic Lesson
New businesses propel economic growth if they create new technology and ideas or employ underutilized resources. Economists can use production possibilities graphs to illustrate economic growth. On production possibilities graphs, a bowed out curve is drawn which illustrates that country’s maximum production capability. Then, when an entrepreneur like Henry Ford invents the Model T, the production possibilities curve shifts to the right.