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The Myth of the American Entrepreneurial Culture

Kauffman Research & Policy Director Yas Motoyama examines whether the United States is unique in its supportive entrepreneurship culture.

When interacting with entrepreneurs and entrepreneurship supporters from around the globe, I often hear that they do not think the culture of their country is accepting of entrepreneurship, and it’s hard to change.

I understand the background behind that type of statement very well. I come from Japan, and people often aspire to work in big companies, like Toyota, Honda, Toshiba, and Canon, rather than become entrepreneurs.

Last summer, I had an opportunity to speak at an event in Frankfurt, Germany, and I heard the same: Germany’s support of entrepreneurship is not like in the US. Germans do not buy products from startups. Banks and other financial institutions do not lend them money. The talent goes to big companies or government.

I’m not an anthropologist or culture expert, but I want to engage in this conversation in this post.

While there are clear cultural differences across countries on how they perceive and support entrepreneurship, I think the general perception of a great, supportive, American entrepreneurial culture is somewhat misguided. There are two factors that help explain this misconception, which can lead to further implications.

First, it does not look like that the American entrepreneurial culture is ubiquitous even within the country. Business schools still exist to train managers for Fortune 500 companies, and Goldman Sachs or McKinsey are some of the most popular job destinations. This bent towards training employees is evident on how schools are evaluated. According to the popular ranking of US News and World Report, the most weighted ranking criteria is the placement rate – how many graduates are employed after graduation, and how much those graduates get paid. Thus, the ranking seems to be stacked up against business school career offices advising to start a new business.

Second, it is not true that the United States has always enjoyed the culture of entrepreneurship.  It is common to hear about legendary billionaire entrepreneurs like Bill Gates, Steve Jobs, and Warren Buffett, as well as the century-old roots in the American frontier spirit. However, I have interviewed senior generations, and they all suggested a different story. In the Postwar era, people generally considered it prestigious to work at companies like GE, GM, or IBM. Those companies provided life-time employment and perceivably treated their employees like families. However, the persistent recessions during the 1970s and 1980s drastically changed the idealized picture. Tens of thousands of people were laid off, even by these prestigious companies, and starting your own company became a path to sustaining your food and shelter.

Having a bunch of necessity entrepreneurs per se is not sufficient to promote the entrepreneurial culture yet. The series of bad events continued with side effects. Among many laid-off entrepreneurs, a small number of them became successful and became millionaires (not too many billionaires in that era yet). This created a funny psychological change to the mainstream employees. Those who successfully survived waves of laid-offs potentially thought: “What? I am the better one, and that’s why I could stay with the company. But, he became a millionaire? If he could do it, I can do it, too!”

This shift of culture could happen within a region, too. Steven Klepper’s detailed historical analysis revealed that, before Detroit became a corporate town of the Big Three, it was the mecca of startups and spin-offs of automobile firms in the first two decades of 20th century, more dynamics than the semiconductor industry in Silicon Valley in later years.

While these are brief and skewed stories, I would like to present four propositions regarding cultural change.

First, culture changes. It does not change overnight or even in a few years, but it’s not permanent, either. We do not know how long it takes, but I want to point out that the vibrant startup and spinoff period in Detroit somewhat coincides with the length of commitment and change proposed by Brad Feld’s Startup Communities (20 years), and the period that Indians and Chinese immigrants started to penetrate the mainstream entrepreneurship in Silicon Valley observed by Saxenian (15-20 years).

Second, the culture changes nationally, but also regionally. You do not need to wait until the whole nation of Confucius or conservative Christian culture changes. A crisis is sometimes the best opportunity. I have seen only anecdotal evidence so far, but Detroit is producing a number of startups now after the collapse of its automobile industry.

Third, the culture changes not only by admiring the above-the-cloud icon, but also by facing the successes of people next to you or in your town. It’s not exactly brainwashing by Entrepreneur Magazine or social media, but personal observation that speaks most to yourself. This underscores the importance of identifying and celebrating successful local entrepreneurs. In my past projects, my colleagues and I interviewed dozens of successful Inc. entrepreneurs in Kansas City, Indianapolis, and St. Louis. Those successful entrepreneurs exist in virtually every city, but are not often known.

Fourth, you need to believe that the culture will change. Let’s not use culture as an excuse, but work to change assumptions. I know successful entrepreneurs, and they are working hard to ensure greater success. Let’s join them to change the culture of your place.


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