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Is Entrepreneurship Declining?


Scott Shane says yes.

Steve King says no.

I’d like to see a closer analysis of the trends in the past 10 years. There’s been a fundamental shift in how people start businesses and the types of ventures they start in the last decade. Technology has lowered barriers to entry in many industries, and the Internet has opened up new markets. Scott writes about the Wal-Mart effect:

Large, efficient companies are able to out-compete small start-ups, replacing the independent businesses in many markets. Multiply across the entire economy the effect of a Wal-Mart replacing the independent restaurant, grocery store, clothing store, florist, etc., in a town, and you can see how we end up with a downward trend in entrepreneurship over time.

But there’s a separate trend we could point to: The emergence of niche markets where many small players compete, without the dominance of a Wal-Mart-like giant, or even mass markets where niche players are gaining a foothold. For example, big brewers still control most of the U.S. beer market, but microbrews are growing faster: “In 1978 there were a total of 42 breweries in the U.S., including industrial breweries. Today there are 1,390 craft breweries, microbreweries, and brew pubs.”

I can’t argue with the entrepreneurship numbers. But as one of Scott’s commenters points out, you get different trend lines depending on where you start counting. I think there could be an inflection point around the beginning of this decade that reflects growth of new types of ventures. Curious to hear more thoughts on this in comments or on Twitter.


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