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Where do entrepreneur’s come from?

by Marquette Turner

in Money & Business, Wise Guy

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.”

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