By David T. Robinson
Professor Finance and the J. Rex Fuqua Distinguished Professor of International Management, Fuqua School of Business
Senior Strategist, Duke Innovation & Entrepreneurship Initiative
Is entrepreneurship on the decline in the US? If so, what can be done about it? Or is it even really on the decline? On February 12th, leading researchers from around the world gathered at Duke’s Innovation and Entrepreneurship Initiative for the 2016 National Bureau of Economic Research (NBER) Entrepreneurship and Economic Growth workshop. Workshop participants presented research that explored these questions, connecting entrepreneurship activity to economic growth outcomes at the local, regional and national level.
The papers presented sometimes opposing views of the current state of entrepreneurship in the US economy. Many US government statistical series that count employment in newly started firms suggest that entrepreneurship is declining in the US. Is this a cause for concern? If so, what should be done about it? A number of papers explored possible explanations for this decline, as well as potential policy tools for correcting it.
In contrast, other researchers at the conference directly challenged the very idea that substantive entrepreneurial activity is on the decline at all in the US. Moving from simple counts of employees at newly created firms—including the great many small businesses that have low growth potential and little intention to grow—to measures of entrepreneurship that place more weight on innovation, other teams of researchers found no evidence at all that entrepreneurship is on the decline in the US.
So who’s right? One possibility is that both sides are right. If creative entrepreneurship is holding steady but the rate of new business formation is declining, this could simply be a sign that fewer lifestyle or subsistence entrepreneurs are launching businesses, which in turn could reflect the fact that our labor markets may be more efficient than they used to be. But to hear the final answer on these questions we’ll have to wait until September, when the conference reconvenes to present updated research.