Note: This analysis is not peer-reviewed or cross-checked so caution is needed in drawing any conclusions, but I put this out there in hopes that it might spark conversation. Moreover, this study is correlational in design. I use no fancy natural or quasi-experiments to get at the causality of media (which is a very hard problem!).
So there has been a lot talk about how the media hype machine is setting wannabe entrepreneurs up for failure. That is, it's encouraging folks who may not be serious to try their hand at starting a business when they probably shouldn't. Below are some charts on the relationship between media, legitimacy and entrepreneurship that attempt to understand media's impact. I look forward to hearing any thoughts or ideas you might have.
On the Data:
The data come from the Global Entrepreneurship Monitor's individual level surveys for years 2006-2008 where they survey folks from over 100 countries. Prior years did not have questions about media. There are about 250,000 individual level observations from nearly 50 countries in this particular analysis.
Intentions = Folks who are thinking about starting a business (i.e. business plan phase, talking about it)
Entry = Not just talk. They have either made some profits in the last 12 months or paid employees for at least 3.
Media = Have you seen success stories of new ventures in the public media?
Legitimacy = Is entrepreneurship a desirable career choice in your country?
Below are some descriptive statistics at the the country-level. The countries are sorted by the percentage of individuals (using a random sample) who saw success stories of new ventures in the public media. I break it down by high and middle income countries as defined by the World Bank. Eyeballing it, it appears there might be some sort of relationship between media and intentions in middle income countries. Again, this is just descriptive and it doesn't control for any other factors.
Please click on image to see a larger version
Below is the interaction effect between the level of legitimacy of entrepreneurship in a country and the media success stories of entrepreneurship. I look at their joint impact on an individual's likelihood to have entrepreneurial intentions and entry into the market. In this analysis, I control for as many relevant individual and country-level factors as I can such as: age, education, wealth, GDP, competitive pressure, property rights, and much more. The red and blue colored symbols show where the effects are significant at the 95% level.
In effect I am asking this question:
If we increase media by 1 standard deviation from the mean, how might this affect an individuals' intentions and entry contingent on how cool entrepreneurship already is in their country?
One possible interpretation is that in countries where entrepreneurship is not cool, media boosts entry more than intentions on a relative basis. I say relative because in absolute terms the number of people with entrepreneurial intentions is always greater than those who actually succeed in entering the market and this analysis looks at % not absolute numbers. Obviously, many people drop out of entrepreneurship once reality hits them.
In contrast, in countries where entrepreneurship is already cool, or at least very acceptable, increasing media probably contributes to the hype machine so intentions will increase more relative to entry.
So again, it may be that the media success stories of entrepreneurs helps entrepreneurs in countries where entrepreneurship is not very accepted, but less so in countries where it is already accepted.
One other thing to note is that media increases both intentions and entry no matter what. So one might argue that who cares if media creates hype that causes more people to have intentions than they should. It also increases entry. So maybe that gal who was going to join a hedge fund or consulting firm instead started her own business and was successful... though success in this case is NOT in performance, but simply in entry so I can't say much about how successful they truly were - only that they reached one particularly important milestone. This is a limitation of the data.
I look forward to hearing other interpretations and again, this is purely correlational so it is likely to be wrong in many ways
Please click on link to see larger version
Teece's 1986 piece on profiting from innovation makes the following claim:
"The trend in international business towards what Miles and Snow  call "dynamic networks" - characterized by vertical disintegration and contracting - ought thus be viewed with concern. (Business Week, March 3, 1986, has referred to the same phenomenon as the Hollow Corporation.) "Dynamic networks" may not so much reflect innovative organizational forms, but the disassembly of the modern corporation because of deterioration in national capacities, manufacturing in particular, which are complementary to technological innovation.
Dynamic networks may therefore signal not so much the rejuvenation of American enterprise, but its piecemeal demise.
Over 20 years later, Andy Grove, co-founder and former Intel CEO, makes the following claim in a piece about how to bring jobs back to America.
"I believe the answer has to do with a general undervaluing of manufacturing—the idea that as long as "knowledge work" stays in the U.S., it doesn't matter what happens to factory jobs. It's not just newspaper commentators who spread this idea. Consider this passage by Princeton University economist Alan S. Blinder: "The TV manufacturing industry really started here, and at one point employed many workers. But as TV sets became 'just a commodity,' their production moved offshore to locations with much lower wages. And nowadays the number of television sets manufactured in the U.S. is zero. A failure? No, a success."
I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today's "commodity" manufacturing can lock you out of tomorrow's emerging industry."
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I had the great opportunity to attend and speak at StartUp DC's Ideas Summit which took place January 31, 2012. They held a crowd-sourced competition for ideas to be included in the event and I was fortunate enough to get first place among dozens of fantastic ideas.
There were over 100 folks at the event including Aneesh Chopra and Deputy Mayor Victor L. Hoskins. Five DC universities announced a partnership to connect students to startups.
The event was held at the fabulous Geekeasy, the DC's tech startup co-working community.
Below is my talk about finding high-quality, and preferably, centralized meetup spaces. The kind folks at meetup.com provided some preliminary charts on meetup statistics. They recently released official data at the New York Tech Meetup. The full video of the idea summit can be found here.
Lastly, WashPo has a nice summary of the event here.
A lot has been said about the proposed start up visa legislation that would grant immigrants visas in exchange for starting certain types of businesses here in the US.
This is long overdue and a great development. Let's hope this legislation passes.
That said, there is another source of entrepreneurship that the US is also preventing and that source is MBA students who are saddled with enormous debt. A common comment heard in the hallways of MBA schools is "Yes, I would love to join or start a business, but my hundred plus grand in debt makes this impossible."
So what could be done about this problem?
- Nothing, it's not a problem. Those who chose to get an MBA should have known the costs and constraints that it would impose. No need to encourage more moral hazard from MBA students....
- Create loan forgiveness programs/scholarships like those offered by both schools and governments specifically for those MBAs (or undergrads) who decide to start or join a startup.
- Create loan deferment programs.
While there are a few schools that are offering to repay part of the loan MBA students incur there could be more. And as far as I know, there is no government program that offers loan forgiveness for MBA students who decide to go the start up route. That said, I'm not too sure that would be such a good idea.
Alternatively, perhaps allowing MBA students to defer their MBA loans for a certain number of years would be a better idea. This would allow them to pursue their dream and see if it works out without the immediate fear of having to pay back their massive loans. If their venture doesn't work out, then it's back to the corporate world. They would still be accountable. Now, the government already offers deferment for economic hardships but it is a complicated process to get approval for (and maintain) and it lasts only up to three years. More importantly, it only covers, as far as I know, certain types of loans. Many of the private, non-federal loans, may not be covered. Thus, ideally there would a loan deferment program for anyone who decides to create a qualified startup regardless of where their loans come from.
Right now, there are many MBA students who would love to pursue their startup dreams but who feel their only choice is to work with established companies in order to pay off their loans. This is one more source of constraint to entrepreneurship that is holding this country back. While allowing immigrants to start businesses in this country in exchange for visas is a hugely important policy goal, I would argue that helping our MBAs start businesses would be a close second.
I'll be giving a talk at the DC Meetup group on "Webscraping with R" on June 24.
If you're interested in learning more about R or webscraping in general come join us.
Each business school, and each department/sub discipline within that school, has a set of journals that measure faculty performance. On the strategy side of the department of management and organization at U of Maryland's business school these six journals are considered A-level.
Academy of Management Review
The mission of the Academy of Management Review (AMR) is to publish new theoretical insights that advance our understanding of management and organizations. AMR is receptive to a variety of perspectives, including those seeking to improve the effectiveness of, as well as those critical of, management and organizations. Submissions to AMR must extend theory in ways that permit the development of testable knowledge-based claims. To do this, researchers can develop new management and organization theory, significantly challenge or clarify existing theory, synthesize recent advances and ideas into fresh, if not entirely new theory, or initiate a search for new theory by identifying and delineating a novel theoretical problem. The contributions of AMR articles often are grounded in "normal science disciplines" of economics, psychology, sociology, or social psychology as well as nontraditional perspectives, such as the humanities. AMR publishes novel, insightful and carefully crafted conceptual work that challenges conventional wisdom concerning all aspects of organizations and their roles in society.
Academy of Management Journal
The mission of the Academy of Management Journal is to publish empirical research that tests, extends, or builds management theory and contributes to management practice. All empirical methods -- including, but not limited to, qualitative, quantitative, field, laboratory, and combination methods -- are welcome. To be published in AMJ, a manuscript must make strong empirical and theoretical contributions and highlight the significance of those contributions to the management field. Thus, preference is given to submissions that test, extend, or build strong theoretical frameworks while empirically examining issues with high importance for management theory and practice. AMJ is not tied to any particular discipline, level of analysis, or national context.
Strategic Management Journal
The journal publishes original material concerned with all aspects of strategic management. It is devoted to the improvement and further development of the theory and practice of strategic management and it is designed to appeal to both practising managers and academics. Papers acceptable to an editorial board acting as referees are published. The journal also publishes communications in the form of research notes or comments from readers on published papers or current issues. Editorial comments and invited papers on practices and developments in strategic management appear from time to time as warranted by new developments. Overall, SMJ provides a communication forum for advancing strategic management theory and practice. Such major topics as strategic resource allocation; organization structure; leadership; entrepreneurship and organizational purpose; methods and techniques for evaluating and understanding competitive, technological, social, and political environments; planning processes; and strategic decision processes are included in the journal.
Administrative Science Quarterly
ASQ regularly publishes the best theoretical and empirical papers based on dissertations and on the evolving and new work of more established scholars. Look to ASQ for new work from young scholars with fresh views, opening new areas of inquiry, and from more seasoned scholars deepening earlier work and staking out new terrain.
ASQ publishes the best organizational theory papers from a number of disciplines, including organizational behavior and theory, sociology, psychology and social psychology, strategic management, economics, public administration, and industrial relations. Look to ASQ for work that transcends the bounds of particular disciplines to speak to a broad audience.
Organization Science is ranked among the top journals in management by the Social Science Citation Index in terms of impact and is widely recognized in the fields of strategy, management, and organization theory. Organization Science provides one umbrella for the publication of research from all over the world in fields such as organization theory, strategic management, sociology, economics, political science, history, information science, systems theory, communication theory, artificial intelligence, and psychology.
Management Science is a scholarly journal that publishes scientific research into the practice of management. Our scope includes articles that address management issues with tools from foundational fields such as computer science, economics, mathematics, operations research, political science, psychology, sociology, and statistics, as well as cross-functional, multidisciplinary research that reflects the diversity of the management science professions. Our interest extends to managerial issues in diverse organizational forms, such as for-profit and nonprofit firms, private and public sector institutions, and formal and informal networks of individuals. We welcome theoretical, empirical, prescriptive, and descriptive contributions.