The Entrepreneurial Imperative: How America's Economic Miracle Will Reshape the World (and Change Your Life) [Hardcover]

I was one of the first people to rush out and get this book. I assumed that a book written by the President of the Kauffman Foundation would have important insights into entrepreneurship. Boy, was I wrong!

The book is riddled with inaccuracies. For example, it says that only Israel is a more entrepreneurial country than the United States when the Kauffman Foundation's own research shows only a middling rate of entrepreneurship in the U.S., below that of Peru and Uganda of all places.

In another example, the book says that the current period is the most entrepreneurial in U.S. history, when, in fact, rates of entrepreneurship in the U.S. have been declining for decades.

But it is not just the facts that are a problem. The book's arguments are flawed too. The idea that U.S. foreign policy should focus on entrepreneurship smacks of the 1950s argument that "what's good for General Motors is good for the country". That seems naive, at best.

Similarly, the book is critical of US technology transfer operations. However, we would be hard pressed to improve a system that gave us a company like Google. Dr. Schramm should read the history of Stanford's involvement with Google before he criticize American universities' technology transfer operations.

Finally, the tone of the book is grating. It is both a polemic for entrepreneurship and a PR job for the Kauffman Foundation. Had I wanted that, I could have saved my money and read the materials that the Foundation gives away for free.

I bought this book because it appeared on Economist's list of recommended books. This was a mistake.

This book is written as a pamphlet, and its central theme is the glorification of American Enterpreneurial Capitalism. It is all about American self-glorification.

Unfortunately, this book is a poor pamphlet. Worse, it has got many of its facts plainly wrong. It is amazing that the CEO of the Kauffman Foundation, one of the largest supporters of entrepreneurship research in the US, would be so ignorant of basic research facts, as well as of economic growth in general.

The book defines entrepreneurship as "the process by which one or more people undertake economic risk to create a new organization...". Entrepreneurs, then, are people who take risk to create new organizations. So far so good. Too bad that this definition is not actually used in the book. Only 7 pages later, Schramm states that "Entrepreneurship is a mindset." It is unfortunate that this seems to be the definition that he really uses throughout his book.

A "mindset" is an infinitely pliable definition. Indeed, Schramm appears able to see this "mindset" whenever he so chooses and not see it when he does not care to. Sometimes Schramm's "entrepreneurship" appears to be best described as innovation. In other times he appears to refer to plain initiative, as in the case of those early "entrepreneurial" American university presidents Schramm appears to admire (now, how many new organizations did UC Berkeley president Daniel Coit Gilman start, and how much economic risk did he undertake during the process?).

Schramm reveals some of his ideological undercurrents by stating that there is only one country on this planet more "entrepreneurial" than the US. You guessed it: Israel. According to Schramm, Israel is the most "entrepreneurial" country on this planet.

Too bad that available data on new business foundings, new business ownership, and nascent entrepreneurs does not support Schramm's contention. Much of this data his own foundation has helped create.

It is also astonishing how Schramm ignores some 25-odd years of research by suggesting that "entrepreneurs" are special people who are distinctively different from the mainstream population. Schramm would be well advised to publish his discovery, as he seems to have succeeded where hundreds of researchers have failed over 25 years.

Schramm's argument rests on a few key premises: (1) America is the best country on this planet (except perhaps Israel); (2) American "Entrepreneurial Capitalism" is the best economic model there is (Schramm's model is, in essence, one of uninhibited market capitalism with little or no regulation and minimal government); (3) America should actively export this model to other countries so that World Peace would become possible. This is breathtakingly ideological and naive, given, e.g., the disaster USA has recently inflicted upon Iraq.

The closest equivalent of Schramm's economic model appears to be late 19th-century US. At least he does not hide his admiration of the robber barons of that age.

He gets too many facts wrong to list them all here. He maintains that America invented entrepreneurial capitalism. I wonder if he is familiar with the history of 18th and 19th-century England. Similarly, Tim Berners-Lee might be interested to learn that Americans invented the internet.

As an economist, Schramm comes across as surprisingly ignorant of mainstream economic growth theories. As his pamphlet is all about the creation of economic wealth, it is surprising that productivity does not feature anywhere in his story.

So, how good is Schramm's model? Schramm might be surprised to learn that in Sweden, whose 'socialist model' Schramm surely despises, a child born into low-income family is much more likely to advance to a higher income class during her life than is a child born into a poor family in the US.

In other words, to realize the 'American Dream', so extolled by Schramm, he would be well advised to move to Sweden.

In summary, this book is a waste of time and money. It is not a good source of facts, it does not accurately describe the entrepreneurial phenomenon, and it does not even begin to uncover the factors underlying economic growth.

The book The Entrepreneurial Imperative by Carl J. Schramm is subtitled "How America's Economic Miracle Will Reshape the World and Change Your Life".

This is not a book on entrepreneurship, but rather a book on why entrepreneurship (practice of, promotion of, as foreign policy) is important to the a public policy for future USA.

Right from page one the thesis is presented directly:

For the United States to survive and continue its economic and political leadership in the world, we must see entrepreneurship as our central comparative advantage. Nothing else can give us the necessary leverage to remain an economic superpower. Nothing else will allow us to continue to enjoy our standard of living. We either support and nature increasingly entrepreneurial activities in all aspect of our society and around the globe or run the very real risk that we will become progressively irrelevant on the world stage and suffer economically at home.

In short, entrepreneurship in business and universities; in our approach to both government and foreign policy; and in our personal lives is the only answer if we hope to continue to thrive.

Aren't there other solutions?

No.

The author offers these definitions:

* Entrepreneurship is the process in which one or more people undertake economic risk to create a new organization that will exploit a new technology or innovative process the generates value to others.
* The Entrepreneur is one who undertakes personal economic risk to create a new organization that will exploit a new technology or innovative process the generates value to others.

Those definitions work for me well enough for me.

I'd like to see what candidates for President in 2008 are going to talk this up - if any.

For foreign policy, this means promoting in entrepreneurial capitalism over democracy promoting (or even business/globalization in general) .

For domestic policy, this means creating environments were entrepreneurship is rewarded, and risks are reduced (less risk = more entrepreneurial activity). What might this mean: National systems of employer independent pension and health insurance systems (not gov run), and new financing and legal mechanisms.

For schools and universities, this means entrepreneurship should be taught and practiced.

This seems like an important book to me. At under 200 pages it is a quick read.