The Weakness of Policy Efforts to
Promote Entrepreneuship – and
what to do about it.
Robert Eberhart
Associate Professor , UCLA

policy to promote economic
growth through
entrepreneurship
•Numerous national efforts to
increase new firm formation:
• Startup America, JOBS act - USA
• Gründerland Deutschland -
Germany
• Startup Visa Canada - Canada
• Innovation Britain - UK
• Startup Chile – Chile
• SME Initiative – Japan
• Newgen-IDEC - India
•little evidence that such efforts lead
to higher performing ventures or
economic growth
•evidence is that they lead to
founding lower performing firms
(Nanda, 2011, Eesley, Eberhart 2018)

The growth of entrepreneurship is not
delivering:
• Jobs
• entrepreneurship does not deliver
promised jobs
(Decker, Haltiwanger, Jarmin, and Miranda 2014)
• startups deliver less than half of
US jobs concentrated among a
very few firms
• declining jobs in all startup sectors
• startup jobs are short-term, and
unstable
• Shared prosperity

The focus is not even delivering
entrepreneurship
• A steadily declining organizational
phenomenon in the US, Japan,
many European countries
(Kaufman 2019, Statistics Japan)
• annual startup rate declined from
12.0 percent in the late 1980s to
below 8 percent just before the
Great Recession
• startup rate has declined in all
major sectors

policy to promote entrepreneurship often
fails
a good environment for
entrepreneurs:
• Stable government, currency, and tax structure
• Reliable and transparent court system for dispute
resolution
• Well-regulated market rules, exit institutions,
and property laws
• A growing economy with robust large company
activity
• government spending on advanced technology
What often happens
instead:
• Establish resource flows
• Establish incubators/accelerators
• Establish entrepreneurship teaching
programs
We need to create a demand for entrepreneurs, we focus instead on the supply of entrepreneurs

Why supply of
entrepreneur
efforts often fail
• The best entrepreneurs (of growth companies) are
older and experienced executives.
• Training focuses instead on inexperienced
youth who are likely to fail – supplying the
wrong people
• Good investments are based on market size, growth
rate, and the strategy to access that market
• Sponsored investment often focuses on
innovation and product – more of an
engineering task without market fit
• The entrepreneurs need local markets, supply and
customers
• Copying Silicon Valley often leads to
inappropriate and mal-adapted ventures and
support

What can be done? Increase
DEMAND
• Pass laws to remove any corruption, protect property, and
establish courts that offer a fair and predictable adjudication of
disputes
• Manage the government to avoid fiscal crisis and defend the
currency
• Allow and encourage large companies where appropriate,
entrepreneur need the for customers and as refuges when
their ventures fail, (they also promote equality)
• Government should be spending on advanced technology for it
own policy needs to provide a basis of profitable innovation
• Schools must emphasize a general, liberal education to
develop rounded and capable citizens who will lead

Thank you and welcome to Stanford.