NO, according to a new study from the Kauffman Foundation (did you expect someone else to publish an entrepreneurship study? — yes, there is a monopoly in entrepreneurship research, but that is a discussion for another day).
The Venture Capital Blog at the WSJ highlights the research by Dane Stanler and Paul Kedrosky. They find that recessions, taxes, venture capital levels, and entrepreneurship education do little to affect new firm foundation. In fact, they found that during the period 1977-2005, start-up levels remained nearly constant (fluctuating between 3-6% a year). Here is a snippet from the WSJ:
Even entrepreneurship education and venture capital don’t seem to have a noticeable effect on start-up creation. The late 1970s to early 2000s “experienced a veritable explosion in efforts to promote and increase new-firm formation,” the authors write, pointing out that more than 2,000 universities offered entrepreneurship courses in 2005 compared with 200 in the late 1970s. At the same time, the amount of capital raised by venture firms rose to $100 billion in 2000 from $424 million in 1978, all the while the levels of start-up formation remained flat.
Awhile back we posted on the SBA study by Chad Moutray that found entrepreneurs are not business majors. This led to a paper by yours truly asking if all the money spent on entrepreneurship education was wasteful?
More questions: Are new firms the correct variable to measure? Are all start-ups equal? What about job creation? Is that really what we are after here? Or living standards and incomes? Lots more questions to be investigated surround entrepreneurship education and new venture creation. What are your thoughts on these studies?