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Startup Internationalization. Social Foundations of Entrepreneurship

1.

Startup
Internationalization
Social Foundations of
Entrepreneurship
Ryan S. Coles, PhD
© Ryan S. Coles

About Me: Social Scientist
Tenure-Track Professor at UConn
▪ M.S./PhD at Cornell
▪ B.A./M.S. at BYU
Topics
▪ Building Businesses in Emerging Markets
▪ Building Businesses Around Emerging Tech
Contexts
▪ U.S., Mexico, Peru, Paraguay, Jordan,
Ghana, Iraq & China

3.

About Me: Entrepreneur
Co-Founder
Minority Owner

4.

About Me: Family Man

5.

About Peter
Ecologist
▪ B.S. and M.S. at UConn.
▪ Focused on fisheries science.
Founder
▪ Pisces Atlantic - since 2018
My likes
▪ Nature and outdoor adventure.
▪ Getting to know new people.
▪ Reading, learning, challenging myself.

6.

About Me: Massyl
Education:
▪ Chemical Engineering
○ Chemistry
○ Entrepreneurship
Experience:
▪ Founder: PatentPlusAI
▪ Intellectual Property Specialist
▪ Translator: ENG, AR, FR
Lab Research:
▪ Solar Cells, Batteries, Hydrogen
Energy, Polymers

7.

Tell us about YOU
▪ Why are you doing this MS degree?
▪ What’s your best childhood memory?
▪ What’s on your bucket list?
▪ What is your proudest accomplishment
in your life so far?

8.

Let’s Get Centered
https://www.youtube.com/watch?v=8Ffhv3-8Sjw

9.

Let’s Get Centered
"The happiest you've ever been,
won't be the happiest you'll ever be."

10.

Social Foundations of Entrepreneurship
Startup Friendly
Societies
Societies Friendly
to Your Startup

11.

Why does this matter for YOU?
1. Your surroundings matter in terms of having power to create
sustainable businesses and to enter new markets.
2. You need to consider hard & soft social structure when you
are deciding whether to enter a new market.
3. You need to consider hard & soft social structure as you
strategically navigate the new market you choose to enter.
4. Your participation in elections, and wider civil society, can
create conditions that makes entrepreneurship more
accessible for you and others.

12.

Startup
Internationalization
Startup Friendly Societies
Ryan S. Coles, PhD
© Ryan S. Coles

13.

What is Entrepreneurship?

14.

What is Entrepreneurship?
Creating a new organization, or re-organizing an
existing organization, in order to exploit
opportunities
Tolbert & Coles (2018)

15.

Society & Entrepreneurship
Entrepreneurial talent is normally distributed
across society, but accessibility of
entrepreneurship is not normally distributed.
Frid, Wyman, & Coffey (2016)

16.

Society & Entrepreneurship
What social conditions make entrepreneurship
more accessible as a career path?

17.

Entrepreneurial Nation
1. Lower taxes
2. Reduce regulations
3. Make it easier to register
a new business
4. Invest in basic scientific
research
5. Levy a tax on stock
buybacks to provide more
subsidies for health
insurance

18.

Entrepreneurial Nation
What did you choose?

19.

Tax Rates

20.

Tax Rates

21.

Tax Rates

22.

Tax Rates
• Income and investment tax rates don’t seem to matter.
• ¾ of funds invested in start-ups are provided by investors who are not
subject to individual capital gains tax
• Less than 1/3 of reported capital gains are the result of appreciation
of corporate equity
• Effective corporate tax rates could impact entrepreneurship.
• Reduce the corporate tax burden via targeted tax credits
• R&D tax credit
• A simple marginal rate reduction largely leads to stock buybacks
(Curtis and Decker, 2018; Fazio, Guzman, and Stern, 2019)

23.

Regulations
Business Formation within 4
Quarters by State-Per 1,000
People
4
13
+
Number of resolutions from
the Federal Government
removing regulations
37

24.

Anti-trust enforcement

25.

Policy rooted in Neoliberalism
“The irony is that the policy agenda adopted in the name of
entrepreneurs- including lower taxes, lower social
spending, less regulation, financial liberalization, and
weaker antitrust enforcement- hurt entrepreneurs more
than it helped them.”
(Vogel, 2020; See also Coles, 2020; Shambaugh et al. 2018;Philippon, 2019)

26.

Social Foundations of
Entrepreneurship

27.

Lower Risk: Ease of Failure
• Lowering barriers to failure encourages:
– More entrepreneurship
– More capable (high end of human capital spectrum) individuals
to be entrepreneurs
– Leading to higher growth among new ventures.
• Lower barriers to entry only encourages more
entrepreneurship.
(Eberhart, Eesley and Eisenhardt. 2017)

28.

Lower Risk: Debt
High student loan debt
hinders entrepreneurship
and entrepreneurial success.
(Krishnan and Wang, 2019)

29.

Lower Risk: Healthcare
Research suggests that tying
health insurance to employment
reduces entrepreneurial activity.
Universal coverage could
increase entrepreneurial activity in
the workforce by 2% to 3.5%.
(Fairlie et al., 2011; Wellington, 2001)

30.

Housing Policies
A 100+ year history of housing policies creating racial disparities of
homeownership in the U.S.
– U.S. Supreme Court: Euclid v. Ambler Realty (1926)
– FHA policies on insuring mortgages leads to standardization of redlining
in the Real Estate Industry (1934)
– Subprime Mortgage Crisis (2007)
2019: The median black family owns just two percent of the wealth of the
median white family ($3,600 vs. $180,000). U.S. rental housing is the least
affordable of 12 advanced countries.

31.

Housing Policies
Differences in average levels of home equity account for approximately
13% of the black-white gap in entrepreneurship.
“An increase in home equity is positively related to the probability of starting a
business for whites, but not for blacks. Thus, while deficits in home assets
contribute to black-white gaps in entrepreneurship, blacks who do own home
assets are less able to access the housing collateral channel than whites with
similar levels of home assets”
(Atkins, 2020)

32.

Systemic Racism and Innovation
450
400
350
300
250
200
150
100
50
0
1860s
1890s
1900-1940
Patents per 1 million people
(Cook, 2014; Fechner and Shapanka, 2018)
2006

33.

Economic Impact of Systemic Racism
If Black entrepreneurs were given fair and equal access to credit, the U.S.
economy would have generated an additional 6.1 million jobs a year from
2000 to 2020, and an additional $13 trillion in economic output.
(Peterson, 2020)

34.

Political Stability
• A 3.5% increase in violence (killings
and kidnappings) was associated with
a 1% increase in new venture failure
rates in Colombia.
• Rates of new business foundings
dropped 13% in Mexican communities
that saw a 1% rise in homicides per
capita.
(Coles and Hiatt, In Development; Hiatt and Sine, 2014)

35.

Social Capital
What is Social Capital?!

36.

Social Capital
• Financial Capital
– Money and credit used to produce goods/services.
• Human Capital
– A person’s knowledge and abilities, which they use to produce
goods/services.
• Social Capital
– Resources and information embedded in a person/community’s
social network which can be mobilized to produce
goods/services.

37.

Social Capital

38.

Social Capital
(Kwon et al. 2010)
“If entrepreneurs must devote
more time to monitoring
possible malfeasance by
partners, employees, and
suppliers, they have less time to
devote to innovation in new
products or processes.”
(Knack and Keefer 1997: 1252-53)
60
16
14
50
12
40
10
30
8
6
20
4
10
2
0
0
4 5 6
7 8 9 10 11 12
Social
Trust
Firm Entry Rate (US)
Sources: General Social Survey, 1972-2012; Federal Reserve
1
2
3
Bank of St. Louis
Note: Correlation is 0.85

39.

Social Capital & Income Distribution
Rothstein and Uslaner (2005:45)
undertook extensive statistical
testing, and found “no direct effect
of trust on inequality; rather,
the…direction starts with
inequality.”
60
42
50
40
40
38
30
36
20
34
10
32
0
30
1
2
3
4
5
Social Trust
6
7
8
9
10
11
12
US Gini-Coefficient
Sources: General Social Survey, 1972-2012; Federal Reserve Bank of
St. Louis
Note: Correlation is -0.84

40.

Social Capital & Income Distribution
Social Capital
(Coles et al., 2020)

41.

Education
• Supply and demand side benefits
– Increased quality of nascent
entrepreneurs
– Increased consumer spending +
preference for novelty
• 1% increase in community members
with a college education is associated
with 7 additional new business the
following year
(Coles, Sine, and Hiatt, In Development)

42.

Basic Research and Innovation
Who is responsible for the technological
innovations in a smartphone?

43.

Basic Research & Innovation

44.

Basic Research & Innovation
"Where were you guys in the '50's and '60's when all
the funding had to be done in the basic science? Most
of the discoveries that have fueled [the industry] were
created back then"
(Henderson and Schrage in the Washington Post, 1984)