In this fourth and final article in a series called “The Big Small” Bryan Ritchie and Nick Swisher discuss the decades long decline of entrepreneurship, the consequences associated with this and why and how the IDEA Center is determined to be part of the solution that helps reverse this trend.
In our first “Big Small” article, “The Economic Benefits of Startups,” we explain how startups are responsible for all net job growth in the United States, experience growth rates substantially higher than other firms and have a fundamental impact on overall economic productivity in our economy. In our second article, “Startups: the Engine of Innovation,” we explore how startups are responsible for a great deal of the innovation that happens, and in so doing, routinely open new markets, upend others and ultimately, change the world. And in our third article, “The Entrepreneurial Path Creates Key Skill Sets and Traits,” we describe how entrepreneurs develop important character traits and skill sets that make them extremely valuable to society as both leaders and contributors to business and to our communities. In short, the argument, which the data support, is that startups are essential to the economy, to society and to our lives.
Despite this–and despite all we hear in the media about startups, entrepreneurs and Silicon Valley–the reality is that entrepreneurship is on the decline in the United States and has been for over three decades. What’s more, and perhaps even more concerning, younger generations are even less entrepreneurial than the already not-so-entrepreneurial older generations. According to Derek Thompson of The Atlantic, “The reality is that the typical American entrepreneur isn’t that hover-boarding kid in a hoodie; it’s his mom or dad. In face, the only age group with rising entrepreneurial activity in the last two decades is people between 55 and 65.”
Many economists says that this is nothing short of a looming crisis. According to John Lettieri, the cofounder and senior director for policy and strategy at the Economic Innovation Group, “U.S. economic dynamism is the fundamental challenge of our time, and the decline of entrepreneurship is its central and most problematic feature. This decline has far-reaching implications…Historically, the churn caused by a steady influx of new businesses has acted as a kind of shock absorber for our economy. This is no longer the case. Even as the global economy has undergone massive transformations driven by technology and globalization, the U.S. economy is rapidly becoming less flexible, less able to adapt and less efficient at allocating resources-including its most precious resource: human capital…The consequences are dire. A less entrepreneurial America is one with increasingly limited opportunities to realize the American Dream.