Entrepreneurs have always been theones who drive the creation of innovation. True innovation is achieved through strong-willed teamswith the vision of helping the common good and generating economic profits. Most governments strive for economicgrowth by encouraging entrepreneurship. Though in a culturewith truly entrepreneurial values and strong risk tolerance, it can be arguedthat the government does not need to play a role at all. This is nolonger the case in the modern economic society.
Governments now strategically intervene in the entrepreneurialecosystem and implement attractive policies to promote entrepreneurial success. The timingof government insertion in the entrepreneurial ecosystem is crucial. Precise intervention has long beendiscussed by leaders of the free world. In 2014, leaders in the G20 Summit called for enhancedeconomic growth through the promotion of competition, entrepreneurship, andinnovation.These leaders also believe youth unemployment could shrink through theencouragement of entrepreneurship.
For successful entrepreneurs to emerge, governmentintervention must occur after initial success but before further growth asclaimed by Lerner in his article TheFuture of Public Efforts to Boost Entrepreneurship and Venture Capital: “…60%of the entrepreneurs in prior programs had been successful in meeting theirtechnical goals but nonetheless failed because the entrepreneurs were unable tomarket their products or raise capital for further development” (7). Initial technical success hints ofhope, but the lack of marketing and capital promotes failure. Though entrepreneurs achieve theirinitial goals, they require partners and government assistance to peruse thenext level.The government assistance comes from established special programs whichintervene after the venture proves technical success. Modern governments have designed programs tooffer services, incentives, subsides, and investors after entrepreneurs surpassthe initial research and development stage. Some cities offer local government services designed to educate entrepreneursin tactics from business model development to labor laws and accounting. Countries such as Chile offer entrepreneurs$40,000 in grants in exchange for moving your business to Chile for six months. This not only helps the entrepreneur, but italso creates jobs and establishes international trade.
In TheRole of Government Policy on Entrepreneurial Activity: Productive,Underproduction, or Destructive by Minniti, the author describes similar methodsto reduce financial constraints on entrepreneurs: “…governments have tried to reducefinancial constraints faced by entrepreneurial ventures by adding instrumentslike mutual credit guarantee and microfinance schemes to traditional bankloans” (782). Somegovernments offer new venture loans and mutual credit guarantees. This allows startups to obtain loans with nointerest for the first year and small percentages thereafter. This trend of government policies was boostedby the success of several technological tycoons.Steve Jobs of Apple,Bill Gates of Microsoft, Jeff Bezos of Amazon, and Larry Page and Sergey Brinof Google drew government attention to the potential of supporting entrepreneurs. The government’s goal is to establish anentrepreneurial ecosystem off local foundations rather than attempting toemulate Silicon Valley.
This means growing existing industries and expandingoff their foundations rather than attempting to launch high-tech industriesfrom scratch. The Silicon Valley success encourages youngentrepreneurs to peruse new ideas: “Here the underlying assumption is that more venture capitalallows an increase in successful entrepreneurial activity” (Minniti 782).Successful businesses push innovative ideas on developing ventures, increasing entrepreneurialactivity.These successful businesses also uncover venture capitalists, shaping new partnershipsand investment opportunities for developing businesses. Developing an entrepreneurial ecosystemto carry out these potentials requires strategical and efficient government policy. Thechallenges governments face is developing policies that are strategicallyefficient but avoid effecting change through direct intervention in theentrepreneurial ecosystem.
One approach focuses on growing the number of firms in business start-upprograms, financing venture capitalism, and investing in research anddevelopment programs.This approach also includes business incubators, grants, tax incentives, andsupport programs.Though these programs cannot guarantee success through direct intervention,they indirectly centralize growth in the ecosystem and establishentrepreneurial leadership within firms.Entrepreneurialleadership within firms highlights further strategies perused by government initiatives. This strategy seeks to enhance entrepreneurialnetworks through fostering expansion at the local level, national level, andinternational level.One of the greatest influences of success is the strategical intentions of theteam leading the startup.These leaders must seek links with customers, suppliers, and other actorswithin the ecosystem who can provide resources:Entrepreneurs are tremendouslydepended on partners.Without experienced lawyers able to negotiate agreements, skilled marketinggurus and engineers who are willing to work for low wages and a handful ofstock options, and customers who are willing to take a chance on a young firm,success is unlikely.
(Lerner 9)Networking and partnerships arecrucial when entrepreneurs seek growth. Strong connections lead to future deals, allowing quickeradvancement through the stages.Government leaders can direct government departments and agencies to focus on theseproblem and develop effective policies. The perfect government leader has a deep understanding ofwhat the entrepreneurial ecosystem is and how it forms. This leader also understands thegovernment’s power and limitations, allowing for efficient and strategicaloutcomes.
Moderneconomic success is achieved through the development of strong entrepreneurs. These entrepreneurs create jobs,pump money into the economy, and fund startups. To help these entrepreneurs peruse higher levels ofdevelopment, governments strategically and efficiently intervene in theentrepreneurial ecosystem.Government leaders push the initialization of an entrepreneurial ecosystem tothe front of the list.They ensure government policy is broadly focused to allow natural growth, not atop-down solution.Government leaders ensure all sectors of industry are considered for startupsrather than solely focusing on technology. These government programs must provide strong leadership,but delegate responsibility and ownership of the businesses and theirmanagement teams.Overall, the government now strives to develop strategically efficient programsthat provide services, subsides, incentives, and investments for new entrepreneurswho have achieved initial technical success.