Entrepreneurs have always been the
ones who drive the creation of innovation. True innovation is achieved through strong-willed teams
with the vision of helping the common good and generating economic profits. Most governments strive for economic
growth by encouraging entrepreneurship. Though in a culture
with truly entrepreneurial values and strong risk tolerance, it can be argued
that the government does not need to play a role at all. This is no
longer the case in the modern economic society. Governments now strategically intervene in the entrepreneurial
ecosystem and implement attractive policies to promote entrepreneurial success.
of government insertion in the entrepreneurial ecosystem is crucial. Precise intervention has long been
discussed by leaders of the free world. In 2014, leaders in the G20 Summit called for enhanced
economic growth through the promotion of competition, entrepreneurship, and
These leaders also believe youth unemployment could shrink through the
encouragement of entrepreneurship. For successful entrepreneurs to emerge, government
intervention must occur after initial success but before further growth as
claimed by Lerner in his article The
Future of Public Efforts to Boost Entrepreneurship and Venture Capital: “…60%
of the entrepreneurs in prior programs had been successful in meeting their
technical goals but nonetheless failed because the entrepreneurs were unable to
market their products or raise capital for further development” (7). Initial technical success hints of
hope, but the lack of marketing and capital promotes failure. Though entrepreneurs achieve their
initial goals, they require partners and government assistance to peruse the
The government assistance comes from established special programs which
intervene after the venture proves technical success.
Modern governments have designed programs to
offer services, incentives, subsides, and investors after entrepreneurs surpass
the initial research and development stage. Some cities offer local government services designed to educate entrepreneurs
in 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 it
also creates jobs and establishes international trade. In The
Role of Government Policy on Entrepreneurial Activity: Productive,
Underproduction, or Destructive by Minniti, the author describes similar methods
to reduce financial constraints on entrepreneurs: “…governments have tried to reduce
financial constraints faced by entrepreneurial ventures by adding instruments
like mutual credit guarantee and microfinance schemes to traditional bank
loans” (782). Some
governments offer new venture loans and mutual credit guarantees. This allows startups to obtain loans with no
interest for the first year and small percentages thereafter. This trend of government policies was boosted
by the success of several technological tycoons.
Steve Jobs of Apple,
Bill Gates of Microsoft, Jeff Bezos of Amazon, and Larry Page and Sergey Brin
of Google drew government attention to the potential of supporting entrepreneurs. The government’s goal is to establish an
entrepreneurial ecosystem off local foundations rather than attempting to
emulate Silicon Valley. This means growing existing industries and expanding
off their foundations rather than attempting to launch high-tech industries
from scratch. The Silicon Valley success encourages young
entrepreneurs to peruse new ideas: “Here the underlying assumption is that more venture capital
allows an increase in successful entrepreneurial activity” (Minniti 782).
Successful businesses push innovative ideas on developing ventures, increasing entrepreneurial
These successful businesses also uncover venture capitalists, shaping new partnerships
and investment opportunities for developing businesses. Developing an entrepreneurial ecosystem
to carry out these potentials requires strategical and efficient government policy.
challenges governments face is developing policies that are strategically
efficient but avoid effecting change through direct intervention in the
One approach focuses on growing the number of firms in business start-up
programs, financing venture capitalism, and investing in research and
This approach also includes business incubators, grants, tax incentives, and
Though these programs cannot guarantee success through direct intervention,
they indirectly centralize growth in the ecosystem and establish
entrepreneurial leadership within firms.
leadership within firms highlights further strategies perused by government initiatives. This strategy seeks to enhance entrepreneurial
networks through fostering expansion at the local level, national level, and
One of the greatest influences of success is the strategical intentions of the
team leading the startup.
These leaders must seek links with customers, suppliers, and other actors
within the ecosystem who can provide resources:
Entrepreneurs are tremendously
depended on partners.
Without experienced lawyers able to negotiate agreements, skilled marketing
gurus and engineers who are willing to work for low wages and a handful of
stock options, and customers who are willing to take a chance on a young firm,
success is unlikely.
Networking and partnerships are
crucial when entrepreneurs seek growth. Strong connections lead to future deals, allowing quicker
advancement through the stages.
Government leaders can direct government departments and agencies to focus on these
problem and develop effective policies. The perfect government leader has a deep understanding of
what the entrepreneurial ecosystem is and how it forms. This leader also understands the
government’s power and limitations, allowing for efficient and strategical
economic 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 of
development, governments strategically and efficiently intervene in the
Government leaders push the initialization of an entrepreneurial ecosystem to
the front of the list.
They ensure government policy is broadly focused to allow natural growth, not a
Government leaders ensure all sectors of industry are considered for startups
rather than solely focusing on technology. These government programs must provide strong leadership,
but delegate responsibility and ownership of the businesses and their
Overall, the government now strives to develop strategically efficient programs
that provide services, subsides, incentives, and investments for new entrepreneurs
who have achieved initial technical success.