LAUSANNE, SWITZERLAND--(Marketwire - Nov 9, 2011) - Prospective entrepreneurs believe the single most important resource they can be provided with in starting a business is an experienced mentor who can give advice and guidance, according to a new study from IMD, a top-ranked business school in Switzerland.
The report, which was completed by IMD Professor Stuart Read with colleagues from the United States and India, also noted that aspiring entrepreneurs favor "hybrid" or part-time entrepreneurship, which involves attempting to set up a new venture while already secure in another job.
According to the study, the average would-be business owner with an MBA wants a support package worth over three quarters of a million dollars to branch out on his/her own. However, this team of researchers discovered budding entrepreneurs have comparatively little interest in commonplace incentives such as networking opportunities and office space, and do not consider the provision of financing capital most important.
Governments are increasingly pinning their hopes on innovative start-up ventures to stimulate economic growth in the wake of the global financial crisis, but policy efforts to encourage entrepreneurship may need to be reshaped if they are to tap into what really motivates business builders. This research suggests the inducements currently being offered might only scratch the surface of the resources potential entrepreneurs genuinely desire.
"One of the difficulties facing public policy efforts to encourage entrepreneurship is policymakers lack the data from which to act. We have a veritable mini-industry of advisers, bureaucrats and other players pursuing magic bullets designed to promote entrepreneurial activity, but without data there's a disconnect. This research casts new light on what it takes to persuade individuals to launch their own companies," said study co-author IMD Professor Stuart Read, who has participated in six start-ups himself and is co-author of the book "Effectual Entrepreneurship."
Using an Internet-based questionnaire, the research examined nearly 200 graduating MBA students in the US, the majority of them with no prior entrepreneurial experience. Students were presented with seven resources -- support, funding, funding source, personal compensation, future employment, health insurance and office space. Within each of these categories were a number of levels of resource -- for example, initial funding of $100,000, $1 million or $5 million towards the respondent's new business. Students were asked to grade the likelihood of them trying to launch a company based on each of the various levels of the seven different resource categories. The high value repeatedly placed on entrepreneurial mentoring and advice emerged as a key and consistent theme among those questioned.
"At present we have only a limited understanding of how to match entrepreneurs with appropriate advisers who can best guide them," said Read. "Given that this is the single most important resource, policymakers and researchers need to consider this issue. For instance, perhaps networking events -- which were perceived to be low-worth -- could be redesigned from superficial introductions towards connecting suitable mentors and mentees."
The average subject's overall basket of resources (e.g. things deemed necessary or useful to create a new venture) totaled more than $782,000 -- including the $141,805 calculated to be the monetary worth of a guaranteed job. The study also revealed that would-be entrepreneurs perceive healthcare to be especially desirable.
"In general, the differences between the perceived and actual worth of resources could help design support packages that are not just attractive but cost-effective. For example, our subjects had an inflated perception of healthcare's value -- meaning it had a high perceived value compared to its relatively low cost -- which marks it out as a useful incentive mechanism for entrepreneurship," concluded Read.
Professor Stuart Read co-authored the study discussed here, The Market for Entrepreneurs, with Nicholas Dew (Naval Postgraduate School, Monterey) and Anusha Ramesh (Indian Institute of Management, Bangalore). Read and Dew are also co-authors of the book "Effectual Entrepreneurship" published in early 2011.
About IMD
Based in Switzerland, IMD is consistently top-ranked among business schools worldwide. With more than 60 years' experience, IMD takes a real world, real learning approach to executive education. IMD offers pioneering and collaborative solutions to address clients' challenges. Our perspective is international -- we understand the complexity of the global environment. Real-impact executive learning and leadership development at IMD enables participants to learn more, deliver more and be more. (www.imd.org).
Learn more about the book "Effectual Entrepreneurship"
http://www.imd.org/news/Creating-entrepreneurs-that-create-opportunities-the-Effectual-Entrepreneurship-textbook.cfm
See Stuart Read's biography
www.imd.org/read