Entrepreneurship and small and medium enterprises in the USA and Germany

¶ … entrepreneurs and SMEs in the U.S.A. And Germany

Entrepreneurs and SMEs

Most of the entrepreneurs and the SMEs today are start-ups that have their basis in universities. This has become a popular trend, and it is seen in Europe as well as in the United States. The governments of many areas are now encouraging arrangements between universities and industries because they see service to the industrial world and to society as well as being part of the university mission (Dahlqvist, Davidsson & Wiklund, 2000). This has changed from the traditional opinion that education and research was the only thing that universities should be dealing with (Collinson & Gregson, 2003; William, 1997; Varga, 1999; Swann, 1998; Cooper, 1995; Cooper, 1971).

The United States is not the only country where this is important because laws adapted recently in many countries have included this particular objective and innovation in the mission statements of their universities (Davidsson, 2002). In this way the university plays a much more serious role in the community and a stronger economic role as well. In return for this, industry is helping the universities by funding many of the research programs and contributing to the ideas that have been created there.

Governmental funding is often not enough for many universities to do the types of research that they would like and equipment and other items have become more costly over the years (Davidsson, 2002). Governmental funding is also often not enough for people who are starting up their own entrepreneurial business or SME, but by doing so in conjunction with a university the chances of success are higher and so are the chances of getting enough funding to do everything that a person wants to do to make sure that the business is marketed and set up properly. Just government funding for an SME, though, or just government funding for a university, is generally lacking.

Because of this many industries have begun to look at external means of getting funds and they have found that industries that are interested in the products that they can create with technological know-how are often willing to help fund these projects if they can see how it will pay off for them as well in the long run (Chrisman, Hynes & Fraser, 1995). By combining the knowledge that is found in universities and the financial support that many of these large industries have, new businesses and new innovations have been created as well as wealth and more jobs, and this is true in both Germany and the United States. However, many of these outcomes are obtained only through very hard work and it is often not easy to create a good outcome between university and industry (Dahlqvist & Davidsson, 2000).

There must be a special kind of connection between the university and a particular industry in order for the two entities to have any type of successful cooperation when it comes to working together for a common good, but this is often still sought because of a lack of governmental funding in most countries throughout the world. Looking at the objectives of both and the interests that they have as well as how their strengths and weaknesses can complement each other must be done in order to achieve any type of cooperation that can be considered successful (Clarysse, Degroof & Heirman, 2001). Many industries can benefit very strongly from the services that universities can provide that there are very important characteristics that must be dealt with when looking at the process of innovation in universities.

Recently, higher learning institutions have begun to contribute much more directly to the economy of various regions that surround the university because they are working to transfer technology to industry (Bird Schoonhoven, Eisenhardt & Lyman, 1990). This begins with good interaction between the university and a specific industry. This generally follows a sequence that can be seen as very predictable. Generally, it begins with members of the faculty at a particular university serving as consultants and helping to assist various companies with analysis of data that they have collected (Bird Schoonhoven, Eisenhardt & Lyman, 1990).

When it moves on to the next stage a particular industry may decide to license specific innovations that have been developed strictly by personnel at the university (Bird Schoonhoven, Eisenhardt & Lyman, 1990). Generally, various spinoff companies that are based on these university innovations follow suit. Universities then become much more involved in the transfer of technology and establishing laboratory facilities, workspaces, and a way to help create startup companies that are technology-based is brought before the administrators of the university and the Board of trustees or the Board of Directors to be considered (Bird Schoonhoven, Eisenhardt & Lyman, 1990).

Whether or not a university will establish these types of companies often reflects on what type of commitment the particular university has to the economy of the region in which is located (Bird Schoonhoven, Eisenhardt & Lyman, 1990). The final step in helping to transfer technology between universities and industry is the creation of some type of venture capital fund which is either managed by or attached to the university in some way. This does not mean to imply in any way that the collaboration between a university and industry is something that should be seen as an easy task to undertake (Walstad & Kourilsky, 1999). It presents very strong challenges in that it must work not only with people but also within the discipline of new innovation which is often very strict and difficult.

Not everyone can get along with everyone else and many of the collaborative work that must be done between various people uses a trial and error issue that has both successes and failures (Venkataraman, 1997). There many advantages to collaborating with other individuals in the same field but there are also many barriers that may arise in time to prevent any type of good cooperation between individuals in universities and industry.

There are basically three types of barriers to this kind of work. These include cultural barriers, operational barriers, and institutional barriers (Wallmark, 1997). Cultural barriers stem from individuals not being able to comprehend what other individuals think or feel about a particular issue because of the cultural differences that they have between them. Operational barriers generally include problems that often come up during creation and implementation of a various project or company because of norms, rules, and other issues that may affect it (Wallmark, 1997). Institutional barriers often deal with the policies of a particular university that may be seen as unclear.

Within modern industry, it appears that those who are serious about the companies that they work with look for information not only from research and development individuals but also from marketing individuals in order to help understand what it is that their customers really need and what types of feelings those customers actually have about various products and services (Timmons, Smollen & Dingee, 1990). Because of this, industry has long been willing to search any sources that they may find of potential new information and to entertain various ideas that have been provided by their suppliers.

Within Western countries, technological spinoff companies that come from academic institutions appear to be growing at a very rapid rate (Stanworth, Blythe, Granger, & Stanworth, 1989). It was not long ago that these things were unheard of and that universities were only for research and learning. Entrepreneurial activities in which a profit was made were virtually unacceptable at almost all universities and therefore the good ideas that these individuals had at various universities often died out (Stanworth, Blythe, Granger, & Stanworth, 1989). If the idea was important enough to any given individual inventor, he or she might leave the University in an attempt to start a company where the product could be marketed (Stanworth, Blythe, Granger, & Stanworth, 1989). There are still some universities that are very much this way and do not agree with any type of entrepreneurial spirit in an institute of higher learning. However, the universities in most Western countries have become much more interested in technological innovation and how helpful the University can be when dealing with this issue (Stanworth, Blythe, Granger, & Stanworth, 1989). Even though this is recent it is still very significant because there is a great deal that can be accomplished when individuals in business and industry work with individuals in universities to ensure that new technological ideas are being evaluated and new products are being brought to market.

Part of the reason that this is so important is that Western countries seem very interested in technology. These countries are usually not the first to create new types of technology but there are some large companies in Western countries that are able to do this. It is likely that these individuals are working with large universities and providing a great deal of industry funded equipment and time so that professors in various universities throughout the Western world can work on new technological advances and ideas which will make their way to commercial success at some point in the future.

Recently, entrepreneurship has been seen to be one of the key driving forces for economic development and growth since it is able to provide literally millions of opportunities for jobs. It also helps to offer a large variety of goods and services to consumers and in general helps to increase the prosperity and competitiveness in a nation (Stanworth, Blythe, Granger, & Stanworth, 1989). However, there is also a lot of debate on the technical knowledge transfer that takes place from universities to industries and on how these universities can continue to support the economic and technological development of countries.

It is very important to look at how significant this spinoff issue actually is to those in the United States and in Europe (Roberts, 1991). This is necessary because spinoffs seem to be growing at a rapid rate and entrepreneurship is getting extremely lucrative in many areas of the country (Roberts, 1991). It is necessary to shed light on the reasons behind this so that it can be more clearly understood. One of the reasons that it appears to be growing so quickly is that both innovation and entrepreneurship are very critical incentives in dealing with the development and growth of the economy and they also help to create various employment opportunities and increased productivity in many countries (Roberts, 1991).

Within the United States there are very strong governmental policies on technology and legal ideas that are very well protected (Seifert & Rubin, 1989). These help foster a much more friendly environment for entrepreneurial expression within academics. When looking at entrepreneurship since 1980, over five million work opportunities have been lost (Seifert & Rubin, 1989). However, some businesses have excelled quite well and created over 34 million new jobs for individuals (Seifert & Rubin, 1989). Other places across the globe are also seeing entrepreneurship as being the key that they need to unlock their economic development (Seifert & Rubin, 1989).