Stronger national development requires the fostering of entrepreneurs and the matching of their talent to venture capitalism and financial resources. Without the creation of pathways and support many of these small businesses will not grow to a level that furthers economic development in a substantial way. According to a paper by Carl Schramm (2004) the business environment should foster the development of consistent small business growth and not focus only on mature firms; both develop together.
Bias was built into the system when discussing macroeconomic systems and this has impacted how Americans view small business. When WWII was coming to a close much of the U.S. was already developed. Large businesses were the focus of both micro and macroeconomics. The needs of smaller businesses and their contributions have generally been ignored as an economic engine.
The entrepreneurial system within the U.S. is based on high-impact entrepreneurs, mature firms, governments, and universities. Mature firms provide money and training grounds, entrepreneurs capitalize on new ideas, the government focuses development, and universities create technology and human capital. Without an environment where entrepreneurial activity, financing of mature firms, proper government and education enhancements work together growth will be lower.
Government: The lowering of regulatory tape for starting businesses, investing infrastructure such as the Internet, encouraging shared R&D projects, and creating a legal framework that helps businesses succeed. The environment should be conducive to business start-ups.
Education: Education provides a highly skilled population that can effectively compete on the market. Universities help in transferring and generating information. Even though education is not a criterion for business development it is a factor that helps foster business development.
Entrepreneurs: Entrepreneurs usually invest their own money and after about three years, when they have developed a proper model and are ready to break out, investors offer financing. Investors seek to ensure that the business will have a reasonable risks and opportunities for success. Before this state is realized it is up to the owner to make the financial decisions.
Mature Business: Larger businesses adapt new technologies and have the strength to market these products. Their financial well-being can encourage the development of other businesses around them. They may engage in acquisitions, investment, purchase innovation and the transfer of skilled abilities.
Schramm, C. (2004). Building entrepreneurial economies. Foreign Affairs, 83 (4).