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History of Entrepreneurism and Labor Characteristics

David Audretsch.Fittingly, David B. Audretsch delivered a review of the history of entrepreneurship in his lecture in early December, the first of the newly established Academy for Entrepreneurial Leadership. According to Audretsch, the role of entrepreneurship and small business has evolved considerably since the Second World War and is considered today to be a strategic competitive investment in global markets.

Audretsch, the Ameritech Chair of Economic Development and the director of the Institute for Development Strategies at Indiana University, discussed the emergence of the entrepreneurial society. The pre-entrepreneurial society was based largely on structure, and capital and labor were the two most important factors in the economy.

"What kind of people do you need for labor?" Audretsch asked rhetorically about the labor force of the earlier economy. He illustrated the answer using an anecdote from his childhood. Audretsch recalled his first grade report card, with categories for getting along well with others, obeying the rules, and doing what he was told. The story provided a transition to a discussion about the traits of laborers in the first economy. They were the predictable, obedient, conforming individuals who showed deference to authority.

Next Audretsch introduced the concept of knowledge as a key factor in economic growth. Such knowledge is in the form of ideas, and its importance lies in the increased potential for what Audretsch referred to as "the spillover of knowledge," which occurs when new ideas are built from old ones. Ideas are not exclusive to the firms from which they originate, noted Audretsch, and can be used by other firms. "The value of ideas is contestable," he said, but stressed their part in paving the way for an entrepreneurial society. In addition to support for knowledge creation, the new economy must also have the capability to turn knowledge into products and services.

In his summary, Audretsch compared the former capital-based economy to the economy that allows for entrepreneurial success, where a competitive advantage is based on innovative activity and new knowledge. In contrast to a managed economy where homogeneity and rigidity reign, an entrepreneurial society cannot work without novelty, creativity, diversity, and challenge to authority. He spoke about entrepreneurial policy, which is focused on trying to generate and commercialize new ideas.

"People take ideas in one context, try to commercialize them, then they fail and get back into the mix," he said speaking of the talent pool that is vital to the entrepreneurial economy. Economic growth in the entrepreneurial model is dependent upon people who are sensitive to opportunities...and will act on those opportunities.

In addition to his roles at Indiana University, David B. Audretsch directs a research program on entrepreneurship, growth and public policy at the Max Planck Institute and is a research fellow of the Centre for Economic Policy Research in London. Audretsch's research has focused on the links between entrepreneurship, government policy, innovation, economic development and global competitiveness. A scholar with more than 100 journal articles and thirty books to his credit, he has consulted with the World Bank, National Academy of Sciences, numerous US agencies and commissions as well as the United Nations, the European Parliament, and numerous private corporations, state governments, and a number of European governments.

--Rosalyn Yates
December 2004