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March 18, 2004
Governors' Entrepreneurship Agenda
The National Governors Association has issued a comprehensive agenda to support entrepreneurial activity in this country. It is important that public policy is beginning to acknowledge the role of entrepreneurship in this economy and that our leaders are wrestling with how to reshape the regulatory morass to free up this engine of economic growth.
The report outlines the role of entrepreneurship today:
1. 70% of economic growth and one-third of differential economic growth comes from entrepreneurial activity.
2. 35% of Fortune 500 companies are displaced every three to four years, and many of the new entrants are companies still operated by the founding entrepreneurs.
3. The INC 500 firms grow at an average rate of 1,312% per year.
The governor?s proposed agenda includes the following recommendations:
1. ?Integrate entrepreneurship into state economic development efforts?. What is most intriguing about this recommendation is that it includes a refocus of traditional state economic development efforts toward the support of entrepreneurial economic development.
2. ?States should use the education system to nurture and encourage future entrepreneurs?. Research has consistently shown that the single most important determinant of entrepreneurial success is education about business formation and growth. This means change in business education at the university level. Rather than teach entrepreneurship as a side discipline over in the corner, we need to reinvent business education to meet the needs of the entrepreneurial economy.
3. ?Incubate entrepreneurial companies?. Businesses benefit from support in their early formation. Such programs need to be carefully planned, as some incubation and support programs have worked much better than others.
4. ?Invest in diverse sources of risk capital for the state?s entrepreneurs and growth companies.? This agenda item is important as it recognizes that too many economic development agencies have historically put all of their eggs in the venture capitalists basket. In some regions, there may never be a deal that fits a venture capitalist. Rural areas may need very specialized approaches to assure that funding is available. So supporting the array of funding options that will meet the myriad of needs that entrepreneurs and growing companies face is essential.
5. ??Get out of the way? through regulatory reform and streamlining?. In addition to educating entrepreneurs, getting out of their way has proven to be the other most important key to unleashing entrepreneurial development. Studies have shown over and over again that small business faces a disproportionate level of governmental regulation. These laws and rules are set up with larger employers in mind, but the impact on smaller businesses is too often overlooked.
This agenda is critically important as it not only helps to support our entrepreneurial economic recovery, but it does so at the state level, which is where the attention needs to be focused for most of these issues.
This report was funded though a grant by the Kauffman Foundation and was reported by the National Dialogue on Entrepreneurship.
Posted March 18, 2004 06:06 PM
at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
