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Hello, ladies and gentlemen

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Welcome back today

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Today's topic is entrepreneurs

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Who are they?

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How did they become entrepreneurs?

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As I mentioned the last time,

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we have tried to understand
entrepreneurship and entrepreneurs

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from various angles throughout the history

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Today, we will take a look at more detail

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from the academic and structural framework

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Let's begin with 
institutional and sociological perspective

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As a professor, I use the same question
every semester in midterm

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The question is

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about the comparison between 
Hanyang University and Stanford University

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What about it?

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Actually, Stanford is very famous
for having many entrepreneurs

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Around 20% of its students

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start their own businesses or work
at a startup after graduation

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On the other hand,

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although Hanyang University in Korea produced

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50 to 70 entrepreneurs annually,

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it is nowhere near Stanford in comparison

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Why does this difference occurs?

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Why is Stanford University closer to entrepreneurship
than Hanyang University?

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This is exactly the exam question
I gave students every semester

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Very interestingly, every semester,

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the student answers are pretty much similar

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About 50 to 60% of students respond like this

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Stanford has a well-established startup environment,

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but Hanyang University does not

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Or Stanford provides good access to
startup-related information,

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but Hanyang University does not

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Or Stanford has many practical entrepreneurship courses,

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but Hanyang University does not

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I categorize these types of answers
like an institutional perspective

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On the other hand, about 30 to 40%
of the students think like this

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Stanford has a very strong entrepreneurial network,

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but Hanyang University does not

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Or Stanford has many mentors,
while Hanyang University lacks them

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Yes, these types of questions,
these types of answers

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reflect sociological perspective

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Our students were understanding
entrepreneurs throughout

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both institutional and sociological perspective

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Let's now take a closer look
at each perspective together

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First, the institutional perspective

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The institutional perspective suggests that

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formal or informal rules shape
the entrepreneurship and entrepreneurs

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This man is Boehmer, a well-known economist

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According to him, people are fundamentally the same

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However, whether someone becomes an entrepreneur

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depends on the rule of games in the society

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Even if someone becomes an entrepreneur,

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the society system can determine

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whether they become an innovative entrepreneur

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or just a rent-seeking person

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This man is Douglas North

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He studied economic history,

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and he is a Nobel winner

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He is a very famous man

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According to him, institutions in society

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can be broadly divided into two types

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The first one is formal,

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and the second one is informal institution

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Formal institution includes things like

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regulations and taxes

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On the other hand, informal institutions are things like

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kind of cultures or social values

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For example, there are four 
university students in Lima, Peru

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They wanted to start closing manufacturing businesses

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like the picture in this slide

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However, to start such businesses,

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they need to obtain 11 different government approvals,

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which takes almost one year

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Such approval processes are
typical examples of formal institutions

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Here are several countries

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You can see that top four countries

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have very fast business regulations in time

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For example, Estonia

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Estonia takes a little less than just two hours

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You apply online and get immediate approvals

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On the other hand,

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the bottom three countries take much longer

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For example, in Venezuela, it takes 230 days

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If you want to start a business in Venezuela or Laos,

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you would need to consider that
even the registration takes a long time

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This became a barrier to becoming an entrepreneur

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This person is Mrs. Moon, founder of The Ventures

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Actually, she started a business in 2000, but failed

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Then, she moved to Silicon Valley with her husband

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In Silicon Valley, she found that

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everyone was talking about startups

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If she's not interested in startups,

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then she felt that she would be left behind

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This is the startup fever and the culture
present in Silicon Valley

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This kind of fever and culture is not formal, isn't it?

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But it is a part of the society, informal institution

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So, Mrs. Moon began a new business

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Up to this point, we will look at 
the institutional perspective together

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However, when we live in the society,

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we don't only consider institutional system

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What is important is people

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Why do we move to the nice neighborhood

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or area with good schools?

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Because there are good people there, right?

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Humans are social animals

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The sociological perspective suggests that

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relationship or group affiliation influence whether someone

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becomes an entrepreneur

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Entrepreneurship is a kind of outcome

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shaped by social context
in which individuals are embedded

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I prepared a kind of very interesting quiz for you

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Can you match each immigrant with the businesses?

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You can see on the left side,
we have immigrant groups

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On the right side,
we have the business sectors

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So, can you try to connect each of them?

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Okay, let's try it

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Korean, Vietnamese, and Indian, Cambodian

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And nail salon, donut shop, hotel, the laundry

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Okay, let's do this together

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Yeah, Korean immigrant

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Korean immigrant primarily 
run the laundry in America

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What about Vietnamese?

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Vietnamese immigrants often
operate the nail salon

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What about Indian?

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Indians are typically involved
in hotel or motel businesses

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Cambodians?

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Interestingly, Cambodians are
known for running a donut shop

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Isn't it interesting?

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My question is, why is that?
Why is that?

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When someone immigrates,

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without much knowledge of the local environment,

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probably they naturally seek guardians
from those who came before them

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Usually relatives or close friends

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So, it is highly likely that

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they will learn and follow the same line of work
as those former immigrants

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For example, Korean immigrants

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began working in the laundry businesses
starting in 1980s

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And those who followed
tend to enter the same field

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So this same applied to other immigrant groups

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So, basically, the former immigrant
from the same country influenced the latter

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So, in this case, we can see 
the people really matter on entrepreneurship

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Please find out the relationship
in the real-world startup case

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This is Sun Microsystems

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Sun Microsystems right now is a big company

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And this company was 
founded by three entrepreneurs,

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Andy Bechtolsheim, Vinod Khosla
and Scott McNealy

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And then later, what happened?

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Sun Microsystems sold for this company

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to Oracle in 2009 for $7.4 billion

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As you know, Oracle is an enterprise software company

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founded in 1977 by also three people

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Larry Ellison, Bob Miner and Ed Oates

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Later, Larry Ellison became 
an angel investor in the Salesforce,

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a company founded in 1999

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Around the same time,

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Andy Bechtolsheim invested in Google

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Why did such investment happen?

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You know, was these companies,
such as Salesforce and Google,

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are amazing companies?

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Yeah, that might be one reason

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But there is more than that

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Namely, the hidden network of the relationship

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What about it?

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The answer would be the Jewish network

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Look at this red mark

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Larry Ellison, Andy Bechtolsheim, Mark Benioff,

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Larry Page and Sergery Brin
are all Jewish people

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This shows that entrepreneurs are often shaped by

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social relationships

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Look at this research

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This research analyzed people in Sweden

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and produced a surprising result

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Even when better options are available

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and the business opportunities
were not highly profitable,

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people were more likely
to become entrepreneurs

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if their next-door neighbor
was also an entrepreneur

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In other words,

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where and with whom you live matters greatly

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Isn't it interesting?

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Look at another study

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This study analyzed panel data in America

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And this study examined

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816 early-stage entrepreneurs
and their founding team

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And the result showed that

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the people tend to form teams with others,

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similar to themselves in
gender, ethnicity, and occupation

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Many teams are composed of

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family members, spouses, or their friends

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There is an old saying

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Do you remember that?

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Birds of a feather flock together

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And this is precisely the case

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We expect that the start-up teams

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will be formulated by functional diversity

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But from this research,

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functional diversity is
less common than expected

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The more important thing is the people

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Let's take another study

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This study analyzed the people in Denmark

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It examined the wage workers

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How many?

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Over 270,000 individuals

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This research found that

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if your co-worker had
a prior entrepreneurial experience,

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and then the likelihood of an individual

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becoming an entrepreneur
increased significantly

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What do you mean by that?

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Yes, your co-workers play a pivotal role

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on your entrepreneurship

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Isn't it interesting?

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So, in short, who you work with also influences

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whether or not you become an entrepreneur

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So, again, the people matter

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Let me summarize

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Although entrepreneurship is often defined

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by individual attitude and behaviors,

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those very attitudes and behaviors
are shaped by

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broader institutional frameworks

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and sociological perspective

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This is how we understand entrepreneurs

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from institutional and sociological perspective