There's been a lot of hand-wringing over the past few years about the declining rates of entrepreneurship in the United States. Small businesses have always been key to the country's economic success, but they still aren't being created at the levels seen before the financial crisis.
The Kauffman Foundation wants to get past the kvetching stage and address the situation. That's why it gathered 40 of the best minds in the country last summer in a forum it calls the New Entrepreneurial Growth Agenda.
"The goal was for us, and those we worked with, to get some ideas that could be applied and put into practice," said Dane Stangler, vice president of research and policy at Kauffman.
The fruits of the consortium were announced earlier in the month, as part of Kauffman's seventh-annual state of entrepreneurship address, in Washington, D.C. And this week the organization rolled out a website with dozens of essays on topics including economics, entrepreneurship trends, technology, and politics.
While the content can seem a bit dense and academic at times--the essays are, after all, written by some of the nation's leading thinkers on business issues--the website is a potentially valuable resource for policy makers and anyone thinking about starting a new business. Here are four key takeaways.
1. Innovation doesn't mean invention
Technology will, of course, continue to lead the way in entrepreneurship. But rather than creating totally new inventions, such as the ones that defined much of the 19th and 20th centuries, more businesses will innovate by recombining extant technology to create new forms. Harvard Business School professor William Kerr arrived at that prediction by analyzing patent application data stretching back to the 1800s. He discovered that the number of patents using novel technology fell to 0.5 percent of the total since 1970, compared to 30 percent in the 1800s.
2. Some cities don't encourage growth
There's a keen interest in the best cities for entrepreneurship and business growth, but not all cities want to foster business growth, Kauffman's research suggests. Some, like San Francisco, are running out of space and hence are opposed to adding jobs that increase the population. Environmental concerns stemming from expanded business growth also create friction. Some Rust Belt cities such as Detroit and Youngstown, Ohio, are held back from growing due to "petty, insular" politics and suspicions about the arrival of outsiders who might disrupt the status quo, researchers suggest.
3. Bernie Sanders is right: The system is rigged
In tandem with declining entrepreneurship, the U.S. has moved from a dynamic political system that supports pluralism to one that's fixed and supports entrenched interests. That in turn increases barriers to entry for startups, because entrenched political players look to "economic winners" for support to stay in power, argues Lee Drutman, a senior fellow at the public policy think tank New America. One solution is to get more entrepreneurs involved in politics and policy-making by creating a small-donor matching system that would give candidates more independence from large partisan donors.
4. Addressing the jobs gap
One of the most common problems entrepreneurs say they have is finding enough qualified workers to fill positions. The problem may be an extension of a more systemic issue, argues David Nordsfors, the chief executive of IIIJ Foundation, a nonprofit working to solve unemployment. Nordfors proposes changing the focus of jobs from one that emphasizes tasks to one that centers on people. In the former scenario, production may rise through innovation that increases efficiency, but the likelihood of workers feeling disengaged is high. In the latter example, production rises because workers feel valued, and are more likely to create value in the economy by participating in innovation.