The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By [Hardcover]

This book is the perfect example of the folks whose communication style goes like this: they tell you what they are going to tell you, they tell you, and then they tell you what they told you! And just for good measure (or to fill up more pages) this guy adds a numerical list of what he told you! Since the hardcover version I have runs just 165 pages before endnotes, you have to wonder if this is really a business magazine article, stretched waaaayyyyy out.

From reading business and economic development literature, I have often seen a distinction made between lifestyle entrepreneurs and other entrepreneurs. Shane makes no such distinction and I think the statistics he uses to bust myths are highly questionable. Do we really think policy-making in this important area should conflate every attorney who hangs a shingle to do real estate closings or draft wills, with businesses that aspire to develop new products, technologies?

On the other hand, if you are reading this because you want to leave your law firm and open a solo practice, or sell baked goods prepared in your home (lifestyle entrepreneurs) this book could be quite useful.

What disappointed me about this book is that it is not really about "entrepreneurs" as I and many other people understand the term, that of people who create businesses that are generally meant to employ others, but rather about the self-employed. Many of the self-employed, such as freelance writers, podiatrists, those working as consultants for tax-reasons, are not entrepreneurs in the same sense as Bill Gates, Michael Dell, or the founder of a restaurant near your home are. To my mind it's a bit of apples and oranges to lump these two widely disparate groups together, and then draw conclusions about them, and even worse, to push for policies that do not differentiate between these two groups.

Using this definition, which includes many people not working full-time, and many who cannot find full-time jobs, Shane arrives at conclusions such as that entrepreneurs earn less than than the industry average, that striving to work as an entrepreneur is generally unwise, and more. In my opinion Shane's conclusions do not "shatter myths," but merely reiterate what has long been known, thereby confusing his readers.

A more accurate, and less myth-making, title for this book would have been "Aggregate Data about the Self-Employed." Somewhat worryingly, this book lists "East Germany" as a "country" existing in 1999! Might there be other crass inaccuracies in it? I cannot recommend this book.

Basic Argument: The public, investors, and policy makers mistakenly believe a number of myths about the value of entrepreneurship for the society. Research disproves many of these myths but nevertheless shows an underlying dynamic that can improve the selection of entrepreneurial ventures that will create value for the society.

Shane identifies and discusses 67 myths and key realities (truths) grounded in fully cited research. He addresses the topic from the perspective of industries, entrepreneurial traits, startup models, financing, entrepreneurial tasks, entrepreneurial success, women as entrepreneurs, black entrepreneurs, and the value of the average startup. His definition of entrepreneur includes self-employed as well as employers who startup any type of business, thus not limiting the population to those starting firms to create new products or use new methods by Schumpeter's definition. Shane's concluding chapter provides his insight into how to select valuable entrepreneurial ventures.

Strengths: The grounding of his arguments in identifying myths and drawing conclusions as to truths is well done. He even tackled the sensitive areas of black and women entrepreneurs without inappropriate political correctness. His conclusions validate the activities of business schools, angel investors, and venture capitalists.

Weaknesses: One has to `slog' through the long discussion of myths without knowing that there is `light at the end of the tunnel' in the conclusions. He understated the distinction between entrepreneurship by necessity and by opportunity as brought out by the GEM report. (Acs 2004) This confuses the myth/truth aspect of much of his discussion.

Applicability: The conclusions validate a new direction for academic research and the appendix of cited research when keyed to the 67 myths/truths would provide valuable reference data for future work.

Useful learning: The broad definition of entrepreneur in use by the public, politicians, and occasionally academics greatly reduces the value of any popular discussion of its merits or consequences.