Policy Dialogue on Entrepreneurship

New Perspectives on R&D and Innovation

mark.nospam@nospam.pfidc.org (mmarich) — Tue, 10 Nov 2009 08:16:00 -0600

On October 22, the European Investment Bank (EIB) held a “Conference in Economics and Finance 2009”, which brought together academics, policy makers and companies to discuss R&D and innovation-related policy issues. Among the topics discussed were the size and productivity effects of investment in R&D and other intangibles, the determinants of R&D, and patenting issues. However, the financing of innovation played centre-stage. Participants examined whether finance is different for young innovative firms and how to overcome their financing constraints.

The proceedings from the conference are a great resource for policymakers. The presentations are available in this link. Some examples are:

•   A policy to boost R&D: does the R&D tax credit work? by Jacques Mairesse, CREST/UNU MERIT and Damien Lentile ENS/ Paris School of Economics
•   The R&D patent relationship: an industry perspective by J. Danguy, G. de Rassenfosse and Bruno Van Pottelsberghe
•   Financing innovation by Bronwyn H. Hall, University of California at Berkeley and University of Maastricht

The papers presented at the conference will be published in Volume 14 (2009) of the EIB Papers.

Sarbanes-Oxley Exemption for Small Businesses

mark.nospam@nospam.pfidc.org (mmarich) — Tue, 10 Nov 2009 08:13:00 -0600

On Wednesday November 4th, the House Financial Services Committee approved legislation that would permanently exempt some small businesses from having to comply with provisions of the Sarbanes-Oxley Act. The amendment would exempt companies with a market cap of less than $75 million from having to comply with financial reporting provisions of the 2002 Act, Section 404. That language was backed by the White House.

The amendment, approved by a 37-32 vote, was sponsored by Democrat John Adler and Republican Scott Garrett, and voted for by nine other committee Democrats.

According to the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute, this measure will simplify audit requirements for small businesses, and free the resources of these innovative firms for the creation of new products, new technologies, and new jobs rather than accounting minutiae. The Center points to new research from economist Kenneth Lehn of the University of Pittsburgh showing that auditing costs reduce firms’ research and development spending and business investment, two important precursors for job growth.

Global Entrepreneurship Week... Coming Soon to a Venue Near You

mark.nospam@nospam.pfidc.org (mmarich) — Mon, 09 Nov 2009 18:16:00 -0600

What do Snoop Dogg, Prince Charles & Secretary of State Hillary Rodham Clinton have in common? They are just a few of the VIPs and world leaders involved in Global Entrepreneurship Week, an initiative taking 87 countries by storm next week. Some of the other notable supporters include: Yukio Hatoyama, Prime Minister of Japan; Sir Richard Branson, founder of the Virgin Group; Prince Abdelaziz Ben Abdullah, Saudi Arabia; Gordon Brown, UK Prime Minister; Nicolas Sarkozy, President of France; John Atta Mills, President of Ghana; Mohammed VI, King of Morocco; and, Princess Maxima, Netherlands.

Founded by the Kauffman Foundation and Make Your Mark campaign, the Week is comprised of tens of thousands of activities to inspire, connect, mentor and engage future innovators.

In the days ahead, we'll bring you an update on some of the policy-related highlights happening during the Week -- like 'Achieving Scale in Entrepreneurship' which is being held by the International Finance Corporation (IFC) in Washington, DC. In the meantime, check out the Activities Calendar to find events happening near you.

Cultural Capital for Entrepreneurs

mark.nospam@nospam.pfidc.org (jortmans) — Mon, 09 Nov 2009 18:03:00 -0600

The record number of pro-entrepreneurship legal and regulatory reforms in the past year among the economies studied by the World Bank’s Doing Business project is welcome news during a time of global economic recession. Prioritizing reforms and learning from global best practices hold enormous potential to unleash entrepreneurship. To maximize this potential, leaders must also promote a culture that embraces entrepreneurship.

Building an educated workforce and having sensible requirements for starting a business, trading across borders, paying taxes, accessing capital and commercializing innovation can all influence the rate at which people start companies. For example, after accounting for differences in per capita income across nations, countries with easier and less expensive procedures for registering new businesses have higher rates of new business creation, according to an analysis of the 2008 World Bank Group Entrepreneurship Survey.

Making things simple for entrepreneurs and getting out of the way as much as possible clearly do a lot to encourage entrepreneurship. Yet, if, for example, business failure is a stigma, too many entrepreneurs might never translate their ideas into new ventures. Culturally, entrepreneurial economies reflect a more open source risk-taking character. This intangible, cultural characteristic is very hard for leaders to stimulate. The regulatory reforms provide impetus for this change, but pro-entrepreneurship thinking must be alive not only in the private sector but also in government and educational institutions.

All of us have roles to play. Policymakers must continue to work to minimize the barriers standing between entrepreneurs and the realization of their ideas. Government can also be entrepreneurial itself. For example, the public transportation system in Bogota, Colombia has enhanced efficiency in part by reengineering passenger flow. Similar innovative, collaborative practices are improving waste management. In Curitiba, recycling initiatives are trading bus tokens, food and school supplies for trash collection in low income neighborhoods.

Academia, from universities to elementary schools, in turn must help instill the entrepreneurial mindset in youth and encourage new generations to explore entrepreneurship as a career path. Creative thinking and prudent risk-taking are no different than any other skill set; they are likely to become useless unless nurtured through education and experience. This is not currently the case in most schools – at least not in the U.S. So far, at the primary and secondary level, there is little encouragement of creativity, entrepreneurial thinking or opportunity-recognition. Policymakers should address this issue while continuing to support entrepreneurial universities. Universities play a critical and central role in transferring knowledge, ideas and cultural values from one generation to the next in all academic fields. Universities are an ideal place for young people to explore their entrepreneurial potential – and they should be viewed as catalysts for an entrepreneurial society.

The demand for more entrepreneurial thinking is there. Young people across the globe are eager to test their ideas in the marketplace. The success of Global Entrepreneurship Week is representative of this enthusiasm toward a more open culture that appreciates risk-taking. Momentum is building for this year’s celebration of global entrepreneurship, taking place November 16-22.

History makes clear that countries cannot have sustained economic development without a burst of entrepreneurial energy. Our leaders and every one of us should support entrepreneurship not only by ensuring they have access to resources, such as human and financial capital, but also by building a culture that appreciates entrepreneurship. Clearly, all of us have enormous self-interest in supporting promising individuals who have the creativity, talent and ambition to make a difference. They bring to the world great ideas, many of which translate into jobs, wealth, economic growth and opportunity for countless generations to follow.

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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.

This Week in Entrepreneurship Policy

mark.nospam@nospam.pfidc.org (mmarich) — Mon, 09 Nov 2009 07:04:00 -0600

Tuesday, November 10, 2009
Senate Energy and Natural Resources Committee - Hearing
"Hearing to receive testimony on policy options for reducing greenhouse gas emissions"
10:00 am
Dirksen Senate Office Building, Rm 366
[more info]

Tuesday, November 10, 2009
Senate Finance Committee - Hearing
"Climate Change Legislation: Considerations for Future Jobs"
10:00 am
Dirksen Senate Office Building, Rm 215
[more info]

Census Data Analysis Shows New and Young Firms Drive Job Creation

mark.nospam@nospam.pfidc.org (mmarich) — Thu, 05 Nov 2009 15:58:00 -0600

Today, the Ewing Marion Kauffman Foundation released the study Where will the Jobs come from? which shows that companies less than five years old created nearly two-thirds of net new jobs in 2007. These firms create more net new jobs than their older counterparts, as well as a higher average number of jobs per firm. Furthermore, there is a substantial set of rapidly growing businesses within this group of companies.

This analysis of U.S. Census Bureau data could not be timelier. The Bureau of Labor Statistics update on U.S. employment is due out on Nov. 6. While we might see some improvement, numbers will likely still show a dismal picture for American workers.

“This study sends an important message to policymakers that young firms need extra support in the early years of formation so they can grow into viable job creators,” said Robert Litan, vice president of Research and Policy at the Kauffman Foundation and one of the study’s authors. “Sometimes a single barrier, such as limited access to credit for business growth, can mean the difference between survival and failure. We must create an environment that aids firm formation and growth if we are going to turn employment around.”

Homepreneurs' Impact on the Economy

mark.nospam@nospam.pfidc.org (mmarich) — Wed, 04 Nov 2009 12:38:00 -0600

A new analysis by Emergent Research, Homepreneurs: A Vital Economic Force, argues that home-based businesses are not only operating successfully, but also making contributions to employment and the economy. The researchers analyzed data from U.S. Census and the Small Business Success Index, along with Small Business Administration research.

While only 35% of home-based businesses generate more than $125,000 in revenue compared to 75% for non-home based businesses, homepreneurs do appear to contribute to the US economy. According to this study, they account for more than half of all U.S. businesses and employ more people than venture-backed companies. Jointly, homepreneurs employ one in 10 private-sector workers, or a total of 13 million people.

The Emergent Research analysis predicts that the number of home-based businesses is likely to increase over the next few years due to advances in technology and converging demographic, social and economic trends (e.g., baby boomers, women, Gen Y and others are increasingly interested in running their own businesses).

For examples and stories about homepreneurs, read this BusinessWeek article. These entrepreneurs are running everything from Web development firms to construction businesses.

Innovation in Recessionary Times

mark.nospam@nospam.pfidc.org (mmarich) — Tue, 03 Nov 2009 20:06:00 -0600

It appears that the recession has forced the corporate sector to improve its approach to innovation. Booz & Company’s annual study of corporate R&D spending revealed that most companies have continued with their innovation programs despite the economic downturn, and that many are even increasing their spending on innovation.

Here are a few highlights from the report, Profits Down, Spending Steady: The Global Innovation 1000:

•   More than two-thirds of companies in this year’s study maintained or increased R&D spending
•   R&D budgets rose 5.7 percent in 2008
•   70 percent of the companies surveyed plan to maintain or increase R&D outlays in 2009
•   Spending patterns varied by industry. Nine of the top ten R&D spenders in the auto industry cut back, but software and Internet companies generally bolstered research efforts. Eight of the top ten R&D spenders in the software and Internet sector increased their spending.

China Aims to Bolster High-tech Sector with VC funds

mark.nospam@nospam.pfidc.org (mmarich) — Tue, 03 Nov 2009 20:02:00 -0600

In an effort to support the country's growing high-tech sector, China's economic planning agency, the National Development and Reform Commission, announced the launch of venture capital funds totaling 9 billion yuan (equivalent to USD $1.32 billion). The funds are jointly backed by the state (1 billion yuan), seven provincial governments (1.2 billion yuan) and private investors (6.8 billion yuan).

The money will be spread among a total of 20 venture capital funds. The funds are expected to the benefit electronic and information industries, the biological and pharmaceutical sector and environmental and energy-related projects.

Federal Grants for Youth Entrepreneurship

mark.nospam@nospam.pfidc.org (mmarich) — Tue, 03 Nov 2009 20:00:00 -0600

On Oct. 29, the U.S. State Department's Office of the Middle East Partnership Initiative (NEA/PI) announced on grants.gov that it expects to award a maximum of two discretionary cooperative agreements for projects that will encourage youth entrepreneurship in the Middle East and North Africa.

This funding opportunity is open to institutions of higher education, non-profits, for-profits, and small businesses. The award ceiling is $1,500,000.

The funding opportunity notice states: “We are asking applicants to develop projects to foster a culture of entrepreneurship in youth. Illustrative, but not necessarily comprehensive, aspects might include entrepreneurial skill-building, idea generation, business incubation, competition, access to capital, access to employment, and development of entrepreneurship networks (including possibly virtual networks) to connect entrepreneurs with each other as well as with a broader range of stake-holders.”

The funding opportunity number is NEAPI-09-CA-019-MENA-102909 (CFDA 19.500). The application closing date is Nov. 30.