Hello, ladies and gentlemen
Welcome back today
Today's topic is entrepreneurs
Who are they?
How did they become entrepreneurs?
As I mentioned the last time,
we have tried to understand entrepreneurship and entrepreneurs
from various angles throughout the history
Today, we will take a look at more detail
from the academic and structural framework
Let's begin with institutional and sociological perspective
As a professor, I use the same question every semester in midterm
The question is
about the comparison between Hanyang University and Stanford University
What about it?
Actually, Stanford is very famous for having many entrepreneurs
Around 20% of its students
start their own businesses or work at a startup after graduation
On the other hand,
although Hanyang University in Korea produced
50 to 70 entrepreneurs annually,
it is nowhere near Stanford in comparison
Why does this difference occurs?
Why is Stanford University closer to entrepreneurship than Hanyang University?
This is exactly the exam question I gave students every semester
Very interestingly, every semester,
the student answers are pretty much similar
About 50 to 60% of students respond like this
Stanford has a well-established startup environment,
but Hanyang University does not
Or Stanford provides good access to startup-related information,
but Hanyang University does not
Or Stanford has many practical entrepreneurship courses,
but Hanyang University does not
I categorize these types of answers like an institutional perspective
On the other hand, about 30 to 40% of the students think like this
Stanford has a very strong entrepreneurial network,
but Hanyang University does not
Or Stanford has many mentors, while Hanyang University lacks them
Yes, these types of questions, these types of answers
reflect sociological perspective
Our students were understanding entrepreneurs throughout
both institutional and sociological perspective
Let's now take a closer look at each perspective together
First, the institutional perspective
The institutional perspective suggests that
formal or informal rules shape the entrepreneurship and entrepreneurs
This man is Boehmer, a well-known economist
According to him, people are fundamentally the same
However, whether someone becomes an entrepreneur
depends on the rule of games in the society
Even if someone becomes an entrepreneur,
the society system can determine
whether they become an innovative entrepreneur
or just a rent-seeking person
This man is Douglas North
He studied economic history,
and he is a Nobel winner
He is a very famous man
According to him, institutions in society
can be broadly divided into two types
The first one is formal,
and the second one is informal institution
Formal institution includes things like
regulations and taxes
On the other hand, informal institutions are things like
kind of cultures or social values
For example, there are four university students in Lima, Peru
They wanted to start closing manufacturing businesses
like the picture in this slide
However, to start such businesses,
they need to obtain 11 different government approvals,
which takes almost one year
Such approval processes are typical examples of formal institutions
Here are several countries
You can see that top four countries
have very fast business regulations in time
For example, Estonia
Estonia takes a little less than just two hours
You apply online and get immediate approvals
On the other hand,
the bottom three countries take much longer
For example, in Venezuela, it takes 230 days
If you want to start a business in Venezuela or Laos,
you would need to consider that even the registration takes a long time
This became a barrier to becoming an entrepreneur
This person is Mrs. Moon, founder of The Ventures
Actually, she started a business in 2000, but failed
Then, she moved to Silicon Valley with her husband
In Silicon Valley, she found that
everyone was talking about startups
If she's not interested in startups,
then she felt that she would be left behind
This is the startup fever and the culture present in Silicon Valley
This kind of fever and culture is not formal, isn't it?
But it is a part of the society, informal institution
So, Mrs. Moon began a new business
Up to this point, we will look at the institutional perspective together
However, when we live in the society,
we don't only consider institutional system
What is important is people
Why do we move to the nice neighborhood
or area with good schools?
Because there are good people there, right?
Humans are social animals
The sociological perspective suggests that
relationship or group affiliation influence whether someone
becomes an entrepreneur
Entrepreneurship is a kind of outcome
shaped by social context in which individuals are embedded
I prepared a kind of very interesting quiz for you
Can you match each immigrant with the businesses?
You can see on the left side, we have immigrant groups
On the right side, we have the business sectors
So, can you try to connect each of them?
Okay, let's try it
Korean, Vietnamese, and Indian, Cambodian
And nail salon, donut shop, hotel, the laundry
Okay, let's do this together
Yeah, Korean immigrant
Korean immigrant primarily run the laundry in America
What about Vietnamese?
Vietnamese immigrants often operate the nail salon
What about Indian?
Indians are typically involved in hotel or motel businesses
Cambodians?
Interestingly, Cambodians are known for running a donut shop
Isn't it interesting?
My question is, why is that? Why is that?
When someone immigrates,
without much knowledge of the local environment,
probably they naturally seek guardians from those who came before them
Usually relatives or close friends
So, it is highly likely that
they will learn and follow the same line of work as those former immigrants
For example, Korean immigrants
began working in the laundry businesses starting in 1980s
And those who followed tend to enter the same field
So this same applied to other immigrant groups
So, basically, the former immigrant from the same country influenced the latter
So, in this case, we can see the people really matter on entrepreneurship
Please find out the relationship in the real-world startup case
This is Sun Microsystems
Sun Microsystems right now is a big company
And this company was founded by three entrepreneurs,
Andy Bechtolsheim, Vinod Khosla and Scott McNealy
And then later, what happened?
Sun Microsystems sold for this company
to Oracle in 2009 for $7.4 billion
As you know, Oracle is an enterprise software company
founded in 1977 by also three people
Larry Ellison, Bob Miner and Ed Oates
Later, Larry Ellison became an angel investor in the Salesforce,
a company founded in 1999
Around the same time,
Andy Bechtolsheim invested in Google
Why did such investment happen?
You know, was these companies, such as Salesforce and Google,
are amazing companies?
Yeah, that might be one reason
But there is more than that
Namely, the hidden network of the relationship
What about it?
The answer would be the Jewish network
Look at this red mark
Larry Ellison, Andy Bechtolsheim, Mark Benioff,
Larry Page and Sergery Brin are all Jewish people
This shows that entrepreneurs are often shaped by
social relationships
Look at this research
This research analyzed people in Sweden
and produced a surprising result
Even when better options are available
and the business opportunities were not highly profitable,
people were more likely to become entrepreneurs
if their next-door neighbor was also an entrepreneur
In other words,
where and with whom you live matters greatly
Isn't it interesting?
Look at another study
This study analyzed panel data in America
And this study examined
816 early-stage entrepreneurs and their founding team
And the result showed that
the people tend to form teams with others,
similar to themselves in gender, ethnicity, and occupation
Many teams are composed of
family members, spouses, or their friends
There is an old saying
Do you remember that?
Birds of a feather flock together
And this is precisely the case
We expect that the start-up teams
will be formulated by functional diversity
But from this research,
functional diversity is less common than expected
The more important thing is the people
Let's take another study
This study analyzed the people in Denmark
It examined the wage workers
How many?
Over 270,000 individuals
This research found that
if your co-worker had a prior entrepreneurial experience,
and then the likelihood of an individual
becoming an entrepreneur increased significantly
What do you mean by that?
Yes, your co-workers play a pivotal role
on your entrepreneurship
Isn't it interesting?
So, in short, who you work with also influences
whether or not you become an entrepreneur
So, again, the people matter
Let me summarize
Although entrepreneurship is often defined
by individual attitude and behaviors,
those very attitudes and behaviors are shaped by
broader institutional frameworks
and sociological perspective
This is how we understand entrepreneurs
from institutional and sociological perspective