Where Do Entrepreneurs Come From?

Last Updated Mar 18, 2008 9:50 AM EDT

Who is likely to motivate another person to become an entrepreneur? Friends? Family? Mentors?

Interesting new research out of Harvard Business School suggests a key influence on would-be entrepreneurs are co-workers who themselves have had entrepreneurial experience.

According to professor Ramana Nanda in an interview with Julia Hanna of HBS Working Knowledge:
Aside from being a source of ideas and opportunities, these former entrepreneurs offer a positive impression of what it's like to own your own business -- even if that business may have failed.
In related research, Nanda discovered that certain types of funding are more likely than others to create successful entrepreneurial activity. Market-driven funding sources (banks, for example) are more effective at generating entrepreneurial success stories than government programs offering low-cost loans to all new ventures.

These two insights could prove important to policy makers looking to encourage profitable new enterprises.

"There are different ways that governments can try to spur entrepreneurial activity," Nanda says. "Each approach has its own costs and benefits, whether it's a direct subsidy, a loan guarantee program, or a venture capital model where the government is a direct investor."

The work could be especially timely for US legislators engaged in the work of using government to help the country recover from the economic slowdown.
  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.