Starting a Business is Easy (for Harvard Business Grads) – Real Time Economics

Starting a business is relatively easy in the U.S. for graduates of Harvard Business School.

But overall entrepreneurship in America is languishing,  a troubling development that may exacerbate growing inequality in the U.S.

“Perhaps entrepreneurship has become more accessible to well-connected, educated individuals like our survey respondents but less available to Americans in general,” Harvard Business School professors Michael Porter and Jan Rivkin, and senior fellow Karen Mills, wrote in a report based on a survey of the school’s grads. “If so, then starting a business may have become less a path to the middle class and more a way that the advantaged become more prosperous.”

The business school since 2011 has polled its alumni for their views on the economy. This year, 2,716 answered questions on aspects of the U.S. business environment, entrepreneurship and prosperity.

The results show U.S. respondents finding lower barriers to entrepreneurship than counterparts in other countries, a belief that entrepreneurship is more accessible in America than it was a decade ago, and relative ease accessing capital, talent and other ingredients necessary to a new venture.

But separate Commerce Department data show startups–firms less than a year old–make up a significantly smaller share of all companies and employment than during 1980s or 1990s. The authors worry that may be limiting one historical path to the middle class.

The survey also delves into the broader economy, finding an improving business environment and ability to compete in a global market.

“But prospects for U.S. workers are dimmer: survey respondents remain pessimistic on balance about the likelihood that firms will lift American living standards by paying higher wages and benefits in the near term,” the authors said. “Shared prosperity is not around the corner.”

Indeed, a tighter labor market may offer a short-run boost for wages, but Messrs. Porter and Rivkin said the trends they have identified predate the latest recession and reflect structural, rather than cyclical, issues.

Harvard Business School graduates are increasingly aware of the widening gap, with two-thirds of respondents saying it’s more important to address rising inequality, middle-class stagnation, rising poverty or limited economic mobility than to boost overall economic growth. A prosperous middle class is necessary to support demand, to fill the workforce and to maintain support for pro-business policies.

Mr. Rivkin in an interview said businesses could help reframe the debate about economic haves and have-nots.

“What if most of the haves agree the system is not working and has to change,” he said. “Maybe this is not about us versus them, rich versus poor, but a bunch of very strong forces in the economy and how might businesses, nonprofits, educators and individuals work together.”

Long-term solutions include a renewed focus on local, cross-sector efforts to improve education, workforce skills, infrastructure, basic research and development, and entrepreneurial support, he said.

Related reading:

Better Small-Business Lending Data Could Tell Us a Lot About the Economy

Too Little to Borrow? Small-Business Lending Lags

Two-Speed Recovery: Small Firms Lag Big Business



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8 September 2015 | 10:00 pm – Source:


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