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

Scott A. Shane (Author)

Book Description

Publication Date: January 28, 2008

There are far more entrepreneurs than most people realize. But the failure rate of new businesses is disappointingly high, and the economic impact of most of them disappointingly low, suggesting that enthusiastic would-be entrepreneurs and their investors all too often operate under a false set of assumptions.

 

This book shows that the reality of entrepreneurship is decidedly different from the myths that have come to surround it. Scott Shane, a leading expert in entrepreneurial activity in the United States and other countries, draws on the data from extensive research to provide accurate, useful information about who becomes an entrepreneur and why, how businesses are started, which factors lead to success, and which predict a likely failure.

 

The Illusions of Entrepreneurship is an essential resource for everyone who has dreamed of starting a new business, for investors in start-ups, for policy makers attempting to facilitate the formation and survival of new businesses, and for researchers interested in the economic impact of entrepreneurial activity. Scott Shane offers research-based answers to these questions and many others:

·        Why do people start businesses?

·        What industries are popular for start-ups?

·        How many jobs do new businesses create?

·        How do entrepreneurs finance their start-ups?

·        What makes some locations and some countries more entrepreneurial than others?

·        What are the characteristics of the typical entrepreneur?

·        How well does the typical start-up perform?

·        What strategies contribute to the survival and profitability of new businesses over time?

 

Editorial Reviews

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 )

"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 )

“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 (Nick Schulz Wall Street Journal 20080130)

"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 20080208)

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

(Publishers Weekly 20080303)

"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 )

About the Author

Scott A. Shane is A. Malachi Mixon III Professor of Entrepreneurial Studies, Weatherhead School of Management, Case Western Reserve University. He is the author or editor of eleven books and more than sixty scholarly articles on entrepreneurship and innovation management. He lives in Shaker Heights, OH.

Product Details

• Hardcover: 224 pages
• Publisher: Yale University Press (January 28, 2008)
• Language: English
• ISBN-10: 0300113315
• ISBN-13: 978-0300113310
• Product Dimensions: 6.1 x 0.9 x 9.2 inches
• Shipping Weight: 10.4 ounces
• Average Customer Review: 4.0 out of 5 stars  See all reviews (61 customer reviews)
• Amazon Best Sellers Rank: #91,820 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

36 of 39 people found the following review helpful

2.0 out of 5 stars So Repetitive September 3, 2008

By Citidweller

Format:Hardcover

This book is the perfect example of the folks whose communication style goes like this: they tell you what they are going to tell you, they tell you, and then they tell you what they told you! And just for good measure (or to fill up more pages) this guy adds a numerical list of what he told you! Since the hardcover version I have runs just 165 pages before endnotes, you have to wonder if this is really a business magazine article, stretched waaaayyyyy out.

From reading business and economic development literature, I have often seen a distinction made between lifestyle entrepreneurs and other entrepreneurs. Shane makes no such distinction and I think the statistics he uses to bust myths are highly questionable. Do we really think policy-making in this important area should conflate every attorney who hangs a shingle to do real estate closings or draft wills, with businesses that aspire to develop new products, technologies?

On the other hand, if you are reading this because you want to leave your law firm and open a solo practice, or sell baked goods prepared in your home (lifestyle entrepreneurs) this book could be quite useful.

24 of 27 people found the following review helpful

1.0 out of 5 stars Not about "entrepreneurs" as the term is generally understood December 8, 2009

By lector avidus

Format:Hardcover

What disappointed me about this book is that it is not really about "entrepreneurs" as I and many other people understand the term, that of people who create businesses that are generally meant to employ others, but rather about the self-employed. Many of the self-employed, such as freelance writers, podiatrists, those working as consultants for tax-reasons, are not entrepreneurs in the same sense as Bill Gates, Michael Dell, or the founder of a restaurant near your home are. To my mind it's a bit of apples and oranges to lump these two widely disparate groups together, and then draw conclusions about them, and even worse, to push for policies that do not differentiate between these two groups.

Using this definition, which includes many people not working full-time, and many who cannot find full-time jobs, Shane arrives at conclusions such as that entrepreneurs earn less than than the industry average, that striving to work as an entrepreneur is generally unwise, and more. In my opinion Shane's conclusions do not "shatter myths," but merely reiterate what has long been known, thereby confusing his readers.

A more accurate, and less myth-making, title for this book would have been "Aggregate Data about the Self-Employed." Somewhat worryingly, this book lists "East Germany" as a "country" existing in 1999! Might there be other crass inaccuracies in it? I cannot recommend this book.

22 of 27 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

Format:Hardcover|Amazon Verified Purchase

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.