The more entrepreneurs, the better.
Right?
Wrong.
At least, that’s the word according to Scott Shane, G’91, GrW’92, a renowned researcher on all things entrepreneurship. Shane, a professor at Case Western Reserve University’s Weatherhead School of Management, raised some eyebrows—and drew some criticism, too—with the publication of his recent book, The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors and Policy Makers Live By. The book is being released in paperback later this month.
Built around Shane’s rigorous examination of American entrepreneurship, the book lays out some less-than-pleasant realities about the quality of our nation’s entrepreneurs and their impact on the overall economy—realities that some people, it seems, aren’t yet willing to accept.
“I think people are in denial,” says Shane, the author of 11 books on entrepreneurship and innovation management. “I think people are actually mad at me for writing this.”
Shane began work on the book, he says, after years of hearing the same old clichés about entrepreneurship—but not seeing any actual data to back them up. With this book, Shane intended to finally challenge those clichés.
Ultimately, he proved many of them to be false.
“One of the biggest myths is this idea that America is a particularly entrepreneurial place, and that it’s actually becoming more so over time,” he says. “If you look at the data … you realize that, on a whole host of measures, the United States is actually pretty middling compared to other countries and that, over time, there’s been a declining trend. The U.S. is neither the most entrepreneurial nation nor is it getting more entrepreneurial. But if you asked a student or a person on the street, they would tell you the opposite.”
Those same people, Shane says, would likely also say they believe entrepreneurial activity to be, by rule, a good thing—that more people starting more companies would create more jobs and, by extension, eventually stimulate the economy.
It would seem to make sense, too. Unfortunately, says Shane, it’s not true—because for every Steve Jobs, and for every Meg Whitman, there are thousands of entrepreneurs who fail. And bad businesses, or failed businesses, don’t do the economy any good.
As he writes in the book: “Instead of naively believing that all entrepreneurship is good, we need to recognize that only a select few entrepreneurs will create the businesses that will take people out of poverty, encourage innovation, create jobs, reduce unemployment, make markets more competitive and enhance economic growth. … We need to think like venture capitalists and concentrate our time and money on extraordinary entrepreneurs and worry less about the typical ones.”
Shane says while the book has stirred up some controversy—some say, for instance, his definition of entrepreneurship is far too broad—it has also served to make his students at Weatherhead think a bit more deeply about their future plans. Many of those students, he says, have been operating under the assumption that, for example, venture capital will be out there waiting for them.
“It has forced the students to realize,” Shane says, “that a lot of what they want to happen is actually very rare—and unlikely to happen.”
Shane is currently putting the finishing touches on yet another book. Born Entrepreneurs, Born Leaders: How Your Genes Affect Your Work Life, to be published later this year, will be the first book to examine the role that genetics play in shaping our behavior in the workplace.
