There should be less favoritism toward incumbent firms in order to enhance entrepreneurship, according to an industry expert.
Philip Auerswald, founding executive director of the Global Entrepreneurship Research Network, speaks at the Startup Istanbul 2015 Conference.
“Giving less favor to incumbent companies is the most critical element to support entrepreneurship so that new firms will have more room to grow, said Philip Auerswald, founding executive director and the cochair of the Global Entrepreneurship Research Network told The Korea Herald.
“The most important element to foster entrepreneurship is simply this: to favor incumbent firms less. Incumbent firms in any country are the basis of that country’s economic strength,” he said.
The expert noted that Chinese e-commerce giant Alibaba and U.S. automotive firm Tesla Motors are among a few high-growth and innovative entrepreneurial firms creating exceptional value for society.
Following is the text of a written interview with Auerswald, who also cofounded and coedits Innovations, a quarterly journal from MIT Press about entrepreneurial solutions to global challenges.
Korea Herald: Could you tell us more about the Ewing Marion Kauffman Foundation -- its history, mission, people and activities?
Philip Auerswald: The Ewing Marion Kauffman Foundation was established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman. Based in Kansas City, Missouri, the Kauffman Foundation is among the largest private foundations in the United States with an asset base of approximately $2 billion. The Kauffman Foundation’s vision is to foster a society of economically independent individuals who are engaged citizens in their communities. In service of this vision, the foundation focuses its grant making and operations on two areas -- education and entrepreneurship -- which our founder, Ewing Kauffman, saw as two ends of a continuum. The foundation believes that a quality education is the foundation for self-sufficiency, preparing young people for success in college and in life. Many young adults will work in businesses started by entrepreneurs. Some will become entrepreneurs themselves, providing jobs and wealth for society.
KH: Could you explain how the EMKF started Global Entrepreneurship Week?
Auerswald: Global Entrepreneurship Week started with an idea. What if there was a global movement to inspire people everywhere to unleash their ideas and take the next step in their entrepreneurial journey?
Representatives from 37 countries were on hand when GEW was announced in 2007 by Jonathan Ortmans, president of GEW, Carl Schramm, former president and CEO of the Kauffman Foundation and Gordon Brown, former prime minister of the United Kingdom. Included in those 37 countries were the first 18 host organizations to commit their countries to the campaign.
By November 2008, host organizations in 77 countries had officially signed on -- and 3 million people participated in 25,022 events and activities.
KH: What activities is the EMKF now focusing on?
Auerswald: The Kauffman Foundation focused its grant making and operations on two areas -- educational achievement and entrepreneurial success -- which its founder, Ewing Kauffman, believed were critical in developing self-sufficient people and a vibrant economy and society.
Ewing Kauffman believed that youth prepared to succeed in college will go on to lead productive, economically independent lives. The Kauffman Foundation’s education work focuses heavily on access to high quality public school options and postsecondary opportunities intended to improve academic and life outcomes for lower income urban students in Kansas City.
Ewing Kauffman recognized that his path to success could and should be achieved by many more people. In its entrepreneurship work, the foundation develops and supports programs that provide entrepreneurs with the education, tools, skills and connections they need to start and grow businesses. The foundation also works to create a more entrepreneur-friendly environment, including lowering barriers to success and raising awareness of the important role entrepreneurs play in the economy.
KH: Having visited Korea, what is your opinion of Korean entrepreneurship?
Auerswald: I have been very impressed with the growth of the entrepreneurial ecosystem in Korea in the past three years. This is a global movement, of course, so we have seen strong growth in many places during the same time. But my impression is that Korea’s entrepreneurship ecosystem has been particularly rapid and robust.
KH: What is most important to foster entrepreneurship? How can people be encouraged to think of entrepreneurship as important?
Auerswald: Today I was at a GEW 2015 research event at the World Bank where some leading researchers were discussing this question. We reached a strong consensus that the most important element to foster entrepreneurship is simply this: to favor incumbent firms less. Incumbent firms in any country are the basis of that country’s economic strength. But an environment where the strongest existing businesses are given too many advantages is one that does not leave room for new firms to grow. Of course the growth of new firms is the definition of entrepreneurship. So, for that reason, the most important element is for entrepreneurship policy to favor incumbents less.
KH: “Entrepreneurship” is still a new concept to many Koreans. How would you define entrepreneurship?
Auerswald: The definition is simple: Entrepreneurship is the process of creating and growing a business. Some entrepreneurship is simple, and some entrepreneurial ventures do not grow very much. These entrepreneurs create important value for society, even if they are not particularly high-growth or innovative. A few particularly high-growth and innovative entrepreneurial firms create exceptional value for society. Today there are examples like Alibaba or Tesla Motors, but there are many other examples, of course.
KH: As the chair of the Global Entrepreneurship Research Network, what is the importance of research-based policymaking and what makes GERN’s research projects impactful?
Auerswald: The Global Entrepreneurship Research Network is dedicated to providing and aligning more robust evidence and research to inform smarter policies and programs to advance entrepreneurial activity and new firm formation.
The Global Entrepreneurship Research Network is a working coalition of institutions funding research as a tool in realizing the full potential of entrepreneurship to create inclusive prosperity on a global scale. Its objectives are to develop the next generation of entrepreneurship research, share lessons and knowledge and establish open, standardized data resources. Each member organization is a leader in its nation or region in promoting entrepreneurship.
GERN members -- including the Kauffman Foundation, OECD, Princeton University, the World Bank and other global leaders in the field -- undertake joint projects that map entrepreneurship ecosystems, evaluate the efficacy of entrepreneurship programs (including accelerators) and validate research methodologies (such as those that involve the use of government datasets).