Don’t Judge Entrepreneurship by # of Small Companies

EntrepreneurshipA recent article in The Economist had some interesting information on entrepreneurs based on a paper Small Business Activity Does Not Measure Entreprenurship by Magnus Henrekson and Tino Sanandaji:


  • “… the number of self-made billionaires a country produces provides a much better measure of its entrepreneurial vigour than the number of small businesses.”
  • There’s a negative correlation between the density of billionaires who’ve built innovative business per capita and the rates of small-business owners, self-employment and startups (i.e. measuring a country’s entrepreneurship by the # of small companies is way off)
  • 3/4 of all folks who start companies want to keep them small enough to manage themselves
  • A high tax environment encourages “copycat” entrepreneurs vs. entrepreneurs that truly innovate