30 ISSUES IN 30 DAYS
12:44 pm
Fri October 5, 2012

30 Issues: Government Help for Start-ups and Entrepreneurs

Is there a role for government in helping entrepreneurs?  Should the free market rule? Here are the big questions — and some answers.

Q: So, how do you get entrepreneurship to thrive? And can governments help?

A: That is the key question, and it's a tough one because both Republicans and Democrats do want to encourage entrepreneurship. And entrepreneurship itself is experiencing a tremendous boom right now, as those who work with young people and start-up businesses will tell you. The rise of internet business have made people believe that one person — a Steve Jobs, a Mark Zuckerberg — or two people — like Larry Page and Sergey Brin of Google — could launch a business that could grow into something sustainable and substantial.

But the right environment is key. And it turns out that what entrepreneurs need when they start out is unique. They literally are helped or hurt  by their surroundings.

Hugh Courtney, dean of Northeastern's D'Amore-McKim School of Business, says that businesses often need to be close to other businesses to thrive. "It really takes an entrepreneurial ecosystem overall, and by that I mean a strong network that has all the complimentary resources necessary to birth new businesses ... that's the logic behind incubators and venture accelerators."

Q: What is the role of accelerators and incubators?

A: Courtney says that one of the most important things government can do is actually help create these spaces, which allow, say, a start-up lawyer to be in the same building with a start-up software company and a start-up graphic designer along with dozens of new businesses. And what you'll find is the software people saying: Hey, we need a website that is going to attract people — and turning to the graphic designer for help. And someone realizes they need patent or tax help, so they might turn to the lawyer.

And the government can play a role here, in creating these entrepreneurship zones, in figuring out: OK, to really heat up, these companies need proximity to each other and to support services. Government — local, state and federal — can help with that.

Q: Have there been areas in the country or the world that have have used government effectively to build businesses? 

A: Yes. Hugh Courtney points to South Korea, for example, which rose to become a great industrial power in large part because the government was making a coordinated effort — putting money into not only education but into those tools that small business need to thrive in the beginning of their lives.

Another interesting case study on the role of the government trying to help entrepreneurship within the U.S. comes from Pittsburgh. The city is a story of success, but, as it turned out, there was a bit of a dark lining in the silver cloud. There were, he says, "a very exciting set of technology-based businesses coming out of the University of Pittsburgh and Carnegie Mellon." But the government didn't do enough to get those businesses out of the infant stage. And "a lot of those entrepreneurs relocated to Silicon Valley over time, where the rest of the ecosystem was actually in place to support the growth of those businesses."

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