Economic Outlook - December 2007
If you want to start a high-tech or science-heavy business in the South, there’s Florida, Georgia, North Carolina, Virginia and everyone else, says Andrew Holton, assistant director for research at The Program on Public Life at UNC Chapel Hill. Those states lead the pack, often by wide margins, in most of the conventional indicators of innovation and risk-taking. Holton led a study of entrepreneurial climates in 12 Southern states.
How do you define entrepreneur?
In today’s rhetoric, an entrepreneur is what a small-business owner or company founder was. There are probably some scholars and business people who would take issue with that definition. I’m reacting to the way I hear and see the policy community using the term.
What conditions favor entrepreneurship?
High levels of education, specifically heavy investment in higher education.
You say the South has two tiers of entrepreneurial climate.
North Carolina, Florida, Georgia and Virginia have much more evolved infrastructures for entrepreneurship. When you look at the amount of venture capital, when you look at the education level of the population, the research-and-development dollars, the numbers for those four states are significantly higher.
But there doesn’t seem to be a strong link between entrepreneurship, as defined in other studies, and some things often associated with it, including R&D spending and venture-capital investment.
We found that fascinating. It goes back to, “What is an entrepreneur?” There has been an effort in the rural South, specifically on the Gulf Coast, to help people transition from lost jobs into more self-sufficient entrepreneurial jobs. But those are not the innovative technology-oriented jobs that some people think of as entrepreneurial. The study you referred to had a much broader definition of an entrepreneur than people in the tech and science industries.
Besides Research Triangle Park, what has North Carolina done to help itself?
The Council for Entrepreneurial Development supports and guides people who have good ideas and new businesses. The number of colleges, community colleges and universities, public and private, this state has, for its size, is phenomenal.
North Carolina had more patents per 1,000 people than any other Southern state in 2006. How well does patent activity predict future entrepreneurial activity?
IBM files for an awful lot of patents, and it has a research center in North Carolina. The state is fortunate to have several emerged companies that are doing great high-tech work, but they are not necessarily producing entrepreneurs.
What does the private sector do to support entrepreneurship here?
Folks here realize there is strength in numbers and in creating cluster identities in this state. When we had a meeting recently about ways the state could better support new-company growth and entrepreneurship, we had just as many private-sector people come to UNC for the six-hour session as we did from the academy and from government. Also, biotech companies have worked with the community-college system to develop curricula and affect the way students are educated. That indirectly supports entrepreneurship.
But they’re just training their work force.
That creates a lot of employees who may go off and do their own thing. What is North Carolina’s educational system doing to nurture entrepreneurs? Through the business school here and the Kenan Institute, there is a Carolina entrepreneurial initiative, which has a minor in entrepreneurship. That allows folks who are studying other majors to develop some of the basic finance and accounting skills but also how to think outside the box, to assess risk and do those things that it takes to start a company.
What more could the system do?
Put students in touch with people in the field. Professional schools have been doing that for a while, but it would be good to let undergraduates know that the paradigm of graduating to work in a big company or a factory is not the only one available — maybe not even the future of North Carolina.
What more does the state need to do to help entrepreneurs?
It needs to continue a proactive economic-development policy, continue to increase the capacity of our public-education system.
Imagine a guy who works at UNC supporting more resources for education.
You didn’t say I couldn’t be predictable.
Did this experience make you want to start a business?
It has made me appreciate and believe in the power of failure. That’s the one thing you hear from everybody who’s starting companies and trying to figure it out: You have to be willing to fail. People survive failure all the time.