The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By (Hardcover)

by Scott A. Shane (Author)
Key Phrases: new employer firms, typical new business, lesser human capital, United States, Land of Entrepreneurship, Panel Study of Entrepreneurial Dynamics (more...)

Editorial Reviews

Review
"Business scholar Scott Shane debunks popular theories with research-based answers to questions such as why people start businesses, which industries are most popular for startups and what are the most common characteristics of the typical entrepreneur." -- Mark Henricks "Entrepreneur Magazine" --This text refers to the Paperback edition.

Review
"This fascinating book, by one of the most competent investigators of the subject, tells us how much we think we know about entrepreneurship that is just not true. It has already led me to change several of my lectures (with thanks to the author). This book is a must read for anyone who takes a serious interest in the subject of entrepreneurship."-William J. Baumol, Academic Director, Center for Entrepreneurial Studies, Stern School of Business, New York University (William J. Baumol 20080208)

"Scott has clearly and entertainingly shown why policy makers, entrepreneurs and investors should focus more attention on high growth, high potential start-ups and less on the ''me-too'' new companies than is currently the case."-David T. Morgenthaler, founder, Morgenthaler Ventures (David T. Morgenthaler 20080303)

"In this fact-filled, but fun-to-read book, Scott Shane demolishes many myths about entrepreneurship and in the process provides much-needed guidance to entrepreneurs, investors, and policymakers."-Steve Crawford, Director, Social, Economic, and Workforce Programs Division, National Governor's Association (Steve Crawford )

"For its myth-busting findings and analytical rigor, Mr. Shane''s book is a welcome addition to the literature on a crucial part of any modern economy."-Nick Schulz, Wall Street Journal (Nick Schulz Wall Street Journal )

"The belief that the U.S. is a relative haven for small businesses is one of the many bubbles burst by Scott Shane. . . . While he''s busting myths, Shane also unveils weaknesses in common entrepreneur practices."-Mark Henricks, The Industry Standard (Mark Henricks The Industry Standard )

"This makes an excellent reality-check for anyone considering beginning their own business."-Publishers Weekly (Publishers Weekly )

"Business scholar Scott Shane debunks popular theories with research-based answers to questions such as why people start businesses, which industries are most popular for startups and what are the most common characteristics of the typical entrepreneur."-Mark Henricks, Entrepreneur Magazine (Mark Henricks Entrepreneur Magazine )

"The lessons in this book will perhaps save its readers a bundle of money that would otherwise be wasted on an ill-conceived business idea."-Morgan Lewis Jr., Inside Business (Morgan Lewis Jr., Inside Business )

"[This] book is important not just for clearing our minds of what''s erroneous but for reconsidering our public policy, which is based on the widespread feeling that startups are a magic bullet that will create a lot of jobs and generate innovation."-Harvey Schachter, Toronto Globe and Mail (Harvey Schachter Toronto Globe and Mail )

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Product Details

• Hardcover: 224 pages
• Publisher: Yale University Press (January 28, 2008)
• Language: English
• ISBN-10: 0300113315
• ISBN-13: 978-0300113310
• Product Dimensions: 9.3 x 6 x 0.9 inches
• Shipping Weight: 10.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars See all reviews (45 customer reviews)
• Amazon.com Sales Rank: #39,501 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

9 of 10 people found the following review helpful:

5.0 out of 5 stars From an angel investor and practitioner, March 25, 2008

By	Frederick A. Lins "life long learner" (Honolulu) - See all my reviews (REAL NAME)

Basic Argument: The public, investors, and policy makers mistakenly believe a number of myths about the value of entrepreneurship for the society. Research disproves many of these myths but nevertheless shows an underlying dynamic that can improve the selection of entrepreneurial ventures that will create value for the society.

Shane identifies and discusses 67 myths and key realities (truths) grounded in fully cited research. He addresses the topic from the perspective of industries, entrepreneurial traits, startup models, financing, entrepreneurial tasks, entrepreneurial success, women as entrepreneurs, black entrepreneurs, and the value of the average startup. His definition of entrepreneur includes self-employed as well as employers who startup any type of business, thus not limiting the population to those starting firms to create new products or use new methods by Schumpeter's definition. Shane's concluding chapter provides his insight into how to select valuable entrepreneurial ventures.

Strengths: The grounding of his arguments in identifying myths and drawing conclusions as to truths is well done. He even tackled the sensitive areas of black and women entrepreneurs without inappropriate political correctness. His conclusions validate the activities of business schools, angel investors, and venture capitalists.

Weaknesses: One has to `slog' through the long discussion of myths without knowing that there is `light at the end of the tunnel' in the conclusions. He understated the distinction between entrepreneurship by necessity and by opportunity as brought out by the GEM report. (Acs 2004) This confuses the myth/truth aspect of much of his discussion.

Applicability: The conclusions validate a new direction for academic research and the appendix of cited research when keyed to the 67 myths/truths would provide valuable reference data for future work.

Useful learning: The broad definition of entrepreneur in use by the public, politicians, and occasionally academics greatly reduces the value of any popular discussion of its merits or consequences.

5 of 5 people found the following review helpful:

5.0 out of 5 stars Facts on the American entrepreneur and entrepreneurial activity, February 13, 2008

By	Toke Reichstein (Copenhagen) - See all my reviews (REAL NAME)

With several books and countless academic articles in major journals, Professor Scott Shane is an internationally recognized scholar in entrepreneurship. Among many other entrepreneurship subjects, Scott Shane has studied the academic entrepreneur, opportunity recognition, the entrepreneur and innovation, franchising, and genetic predisposition to self-employment. Over the years, he has built up an extraordinary portfolio of work addressing the very core questions of entrepreneurship. Drawing from this work, his new book, "The Illusions of Entrepreneurship - The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By", rightly argues there is a general misperception about entrepreneurs and entrepreneurial activity. Professor Shane shows that entrepreneurship in fact is a very common activity, typically carried out by a middle-aged white guy whose primary goal is to earn a living working for no one else. The book argues that "entrepreneurship" unfortunately has become an overly used buzzword creating illusions of the entrepreneur being the successful businessman with psychological powers allowing him to create a multimillion-dollar company living out the American dream.

Drawing on extensive empirical data and data sources, the book discusses the true nature of the American entrepreneur. Starting from the general misguided attitude towards entrepreneurship, Professor Shane manages to give a fairly accurate description of the average entrepreneur, hence bringing the illusions to an end. Asking very simple questions like: "Do we live in an entrepreneurial era?" "Why do people start businesses?" "How well do the typical start-up perform?" "To what extend do start-ups create jobs?" and "What does the typical entrepreneur look like?" enables Professor Shane to draw far-reaching conclusions and policy recommendations that for most will be considered surprising and considerably daring. The substantial backing of the regularities and conclusions through solid empirical research, nevertheless leaves the reader comfortable and at ease with the books' final concluding remarks and policy perspectives.

The book can be studied as a popular read, but has merits as an input to the development of an entrepreneurship course at a higher academic level as well. The easily followed and highly entertaining text accompanied by an extended notes section renders the book interesting both as a relaxing read and as an input to the more academic audience. I believe we will find this book on various bookshelves across several demographic groups who only share the interest of understanding the entrepreneurial spirit and entrepreneurial activity.

4 of 4 people found the following review helpful:

5.0 out of 5 stars Essential reading for anyone interested in practicing, promoting, or studying entrepreneurship, January 15, 2008

By	Brian McCann - See all my reviews (REAL NAME)

The Illusions of Entrepreneurship is a very readable but remarkably comprehensive review of the realities of entrepreneurial activity. Scott Shane, one of the top scholars in the field of entrepreneurship, explains what we really know about the who, what, where, how, why, etc. of new business creation.

Whether you like this book or not will largely depend on whether you prefer to form your beliefs based on intuition and anecdotes or cold, hard facts. The book examines some of the most common myths surrounding entrepreneurship and shows that the reality is often quite a bit different from what you (and many others) think. Even though I have both studied entrepreneurship and participated in the start-up process myself, I still learned quite a bit from this book.

In simple, straightforward language, Shane shatters one common entrepreneurial myth after another using the best evidence we have available regarding those who engage in the process of starting new businesses. So much of what we hear about entrepreneurship is based on extrapolating trends from a limited number of high-profile cases. As Shane observes, "while the stories of these companies are no doubt true, so are stories of people who get struck by lightning in their back yards." The main point is that comprehensive, representative samples paint a very different picture of the new venture creation process than these isolated stories do.

The book is not only valuable to those who want to understand better the real facts of entrepreneurship but also for those who want to become entrepreneurs themselves. Shane reviews the evidence on what factors are associated with the success of new businesses and provides clear, useful advice for anyone considering or already involved in the start-up process.

This book is an excellent investment for anyone interested in practicing, promoting, or studying entrepreneurship.