Point of View

North Carolina needs to help people create their own jobs

February 5, 2013 

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Conventional wisdom assumes that the only way to go about job creation is to lower the costs of doing business so businesses will hire more workers.

But there’s another way: We should help the enterprising unemployed employ themselves. Earning a degree to land a job can take years, but entrepreneurial “boot-camps” can make a difference in merely months for people determined to take their economic futures into their own hands.

Mid-career professionals, still energetic retirees, college-educated homemakers and returning active-duty military members already have most of the skills they need to be successful.

Recent research conducted at N.C. State University suggests that a comprehensive approach to entrepreneurial education can lead to small businesses that create the most jobs. According to the Census Bureau, nearly all net job creation in the United States since 1980 has occurred in firms less than five years old.

In an empirical, controlled study of 4,000 university alumni, we found that entrepreneurship happens when you have three things: the right person with experiential education in a supportive environment.

1) The person. Traits commonly associated with entrepreneurship – confidence, risk tolerance, flexibility, hard working, persistent – are equally characteristic of successful people in all professions. We found three predispositions, however, that reliably distinguish entrepreneurs from non-entrepreneurs: Entrepreneurs are more likely to learn from and capitalize on failure; they hate bureaucracies and value personal freedom and autonomy above almost anything else; and they are more often motivated by passion than money.

2) Education. In this country, we unfortunately equate entrepreneurship education with accounting, finance and other business courses. While these skills may be useful to managers of existing businesses, they do not necessarily create entrepreneurs. Our research found that business skills work indirectly alongside predispositions, social skills and hands-on experiences to create the necessary entrepreneurial “agency” of desire, confidence and know-how that generates new businesses.

3) Environment. The multi-faceted, often tacit expertise that’s needed makes local environments the ideal incubators of new enterprise creation – just as family environments help protect and nurture children. If families, churches, schools, universities, employers or governments impose conditions hostile to entrepreneurship, it won’t happen.

Perhaps our most important finding was that entrepreneurial agency can be cultivated. The supply of entrepreneurs in society is elastic. And policymakers can impose conditions that can either encourage or discourage entrepreneurship.

What does this mean for North Carolina? Leading in entrepreneurship requires an economic climate that supports individual freedom, work, savings and small business investment. Innovative entrepreneurship requires highly educated workers, more R&D and power structures that minimize government and corporate hierarchies. We must empower individuals, schools, universities, communities small businesses to take the initiative and emphasize education and competitive small-business innovation instead of corporate welfare or cronyism.

Our K-12 educational system must stop socializing every student to go out and get a job working for somebody else. We need to encourage students to be creative problem-solvers, to learn how to take calculated risks and to value failure as a learning opportunity. High school curricula could include an enterprise solution to a community problem as a capstone graduation project.

Our colleges should be required to teach students how to make a living doing what they most love to do. Universities should emulate Carnegie Mellon’s model of combining faculty and students from across three disciplines such as design, business and engineering to “do” technology innovation. Innovation is born in university labs, yet only a small fraction of these discoveries are commercialized.

Why not reallocate some of the dollars spent on corporate freebies to expanding our entrepreneurial base? What would happen to our unemployment rate if all North Carolinians had the know-how to harness their individual talents and passions into a sustainable income-producing enterprise?

In fact, many of the people least likely to find jobs in today’s economy may actually have the best chances for entrepreneurial success because of their experience in overcoming adversity. Released prison inmates come to mind.

Our efforts to get North Carolinians re-employed are not producing the results we need. Maybe the time has come to experiment with entrepreneurial approaches to job creation.

Elaine C. Rideout, Ph.D., served in the Reagan White House and is a Kauffman Fellow in Entrepreneurship and adjunct professor with the Entrepreneurship Initiative at N.C. State University.

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