Some inhibitions die hard. One of them is the reluctance or states to invest public employee pension funds in small businesses and venture capital funds. Few states permit their pension fund managers to put money in much besides fortune 500 securities and U.S. Treasuries; even fewer actively do it.

But if the spirit of the Prudent Man is living anywhere near Lansing, Mich., it is dancing to a different tune. Recently, some of the state's $9 billion in pension dollars have been appearing in some rather unlikely places -- including young biotechnology companies and robotics start-ups.

The last time we looked (see INC., October 1982, page 95), Michigan had become one of a handful of states to revamp pension investment policies. The legislature voted that year to permit the state treasurer to put up to 5% of all pension assets in small companies or in venture capital firms.

Since then, the Michigan Department of Treasury has taken its new powers quite seriously. In the past 18 months, says Mike Finn, director of the department's venture capital division, the state has invested about $30 million directly in 18 companies and another $55 million in seven venture partnerships. At this time, the statute permits investment of around $450 million (or 5% of current assets).

Like any pension investor, says Finn, Michigan hopes to see superior returns for its retirees. But there is a second objective: the development of "small, technology-based companies in Michigan and the strengthening of the existing industrial base." Much of that base is, of course, tied to the auto industry. One business, in which $3 million of state pension assets have been invested, is Perceptron Inc., a Detroit-area manufacturer of machine vision systems. Its products are being sold to auto, appliance, and computer manufacturers seeking to improve the overall quality of assembly.

Is Michigan's new pension investment strategy going to succeed? As far as the numbers are concerned, it is much too early to tell. But Finn, for one, thinks that the recent changes are helping to create a more vibrant business environment in a state that has recently been running on empty. "Everywhere you look, the entrepreneurial spirit is catching on," he says. "People are leaving companies like Bendix, GM, and Burroughs to start their own businesses. And that just wasn't happening here a few years ago.