What makes an Entrepreneurial Society?


If there are two countries in this world that have an Entrepreneurial spirit embedded deep within their genes, its USA and Israel. What has caused this? Why have these two countries turned out to be fountainheads of entrepreneurism? What makes these two societies hold their Entrepreneurs in such high esteem? Its not simply a matter of having an economic system favorable to this cause, for there are affluent European countries which have liberal capitalistic economies and yet have shown only feeble signs of Entrepreneurism. Though Americans have descended from the Europeans, why are the former so entrepreneurial and the latter very much less so? One can argue that Europe has a more socialist mindset but then that would be missing the wood for the trees.

Im currently re-reading the book ‘O Jerusalem’, the fascinating account of how the Jewish state of Israel came into being, sixty years ago. That’s when I realised why this Entrepreneurial spirit is found in abundance in Israel and by a similar analogy in America.

The book illustrates the travails of the early Jewish settlers who migrated from Europe into the Holy Land(Palestine) in the early 20th century to build the state of Israel. They came from all parts of the world. They were of all shapes and sizes. All colors and hue. But they all had a single goal: To build a state on their traditional land so that they would never have to face persecution at the hands of non-jews again.(How valid it was to do so in Arab Palestine is a violent debate that has not ended even today.) But all these early settlers had was the land that they had bought. A desert for most part. They had to make the desert bloom if they wanted to establish a suitable home for themselves and the future generations of Jews that would come to inhabit those lands.

These settlers then set to work on building the farms, industries and institutions which would be needed to sustain a modern nation state. They may have had successful professions in their old homes in Europe. But here they were all alike, starting on a blank slate. So, lawyers dug ditches, pianists milked cows, teachers laid bricks etc. Whatever was needed to be done. They did not have the vestiges of past civilizations to fall back on. Everything that was needed  to run a country had to be built ground-up, brick-by-brick. And these settlers rose up to the challenge and how. Everyone took responsibility for building a pillar for Israel. Everyone became an entrepreneur.

Entrepreneur: a person who starts or organizes a business company, especially one involving risk.

What better example of entrepreneurs than these brave Jews who established Israel? What greater risk than doing it in the middle of a desert surrounded by hostile forces? Despite all the political turmoil, Israel remains one of the economic marvels of the world. Having built everything themselves is the reason I suspect that Israeli society holds Entrepreneurship in such high esteem.

A similar analogy can be extended to USA. North America was settled by peoples from Europe. Here too there was no legacy of civilizations ancient. Everything had to be started from scratch and the earliest settlers did just that. As the East coast became populated, the settlers ventured into the unknown lands of the West. The settlers initially struggled to cultivate the lands of the Mid-West due to the thick upper-crust soil. A man called John Deere then invented a steel plough which enabled the settlers to cultivate the land successfully. John Deere is now a massive farming company. The settlers overcame other odds too. Wind-pumps were used to draw up water from deep down, for irrigation and animals. Dry Farming, special ploughing and other methods were used to conserve moisture. Hard winter wheat (e.g. Turkey Red), introduced by Russian immigrants, was found to be suitable for the climate. New machines were invented.

Here too, like in Israel, development came on the back of immigrants and settlers. People who had left behind their pasts and took ownership of their futures. People who did not conform to the standards of comfortable living and constantly pushed boundaries, literally. Its only natural then, that with such a rich history, the societies of USA and Israel have entrepreneurship embedded in their cores.

In Europe and Asia it was different. Ancient civilizations had left behind sound structures and systems that did not have the need to be replaced. Occupational patterns set in the days of yore continued unquestioned. There was never a need to build anything from scratch. A well established order then, held back these societies from toying around with ideas of self-ownership to the extent done in America and Israel.

I guess entrepreneurial societies are a function of their historical legacies.

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34 responses to “What makes an Entrepreneurial Society?

  1. I knew that I could expect something good from you, but didn’t expect a touchdown at the very start “fountainheads of entrepreneurism?” .

    I think all this happens in cycles. would be interesting to see how things develop in countries like India.

    • Yeah its true that a cycle of entrepreneurship will catch up in India too, but the i feel that India will never be the kind of Entrepreneurial society like the US and Israel, because, for reasons iv listed in the article, it is something that comes natural to them and society has that sense ingrained in them. Even kids are encouraged to do some small business and make money in their summer vacations and stuff. In India’s middle class, parents consider it an insult if their kids work for money before they’re 22. But I have another post coming up on that. 😉

  2. So true. Having been there in US I have seen it in live. Also Indians who go there for studying develop the entrepreneurial spirit. Most of the companies in silicon valley was started by such Indians. Things are changing slowly in India as well. The same middle class parents that you pointed out have no issues with their kids working part time now. The new India wants kids to be all rounders unlike our generation where we were happy with our parents money. But its mainly got to do with the cultural background as you have rightly pointed it out. There kids are thrown out of the home after 18. Having pointed this there are parents who look after their kids education even after 18 years just like in India the difference being the kids stay on their own.

    • Yeah i think a cultural environment is very important to kindle an entrepreneurial spirit in youngsters in India. Parents also need to push for that. Even if India churns out ten times more entrepreneurs in 2020 it’ll be because of India trying to recreate the success of the silicon valley etc. We are trying to import that system; while in US and Israel it came naturally to them. Still, something is better than nothing.

  3. Nice article. Speaking as an American I think you are right about the entrepreneurial spirit/culture. It is also one thing that many Europeans I have talked to mentioned as something they envied about American culture.

    That being said, the article I linked to in my weekly economics headlines:
    http://floodingupeconomics.wordpress.com/2010/12/28/economics-headlines-for-the-week-1272010/

    stated that innovation has been dropping since the 1990s in the U.S., and I think rightly sights some structural constraints in the U.S. economy that will be an issue when we try to tackle the future’s long term problems.

    • You are right. It does look like that over the course of the next 20 years China and India will catch up with the US when it comes to innovations and R&D. One of the reasons for this is the increased importance placed on higher education in Science and Maths in these two countries.

  4. I liked this post, and the history of countries that have “recently” been settled definitely shows up in the business culture.
    A couple of thoughts to consider.
    One brought up by Malcom Gladwell in Outliers is that in many European countries Jews were excluded from owning land, and so they were forced to become merchants.
    The other one being that China and India boosting Science and Match education is also a big gain for the US since many of those people will look for higher wages in the US than their home countries could offer.
    http://seeingredinchina.wordpress.com/

    • I disagree with the point of higher wages in the US. That will hold true only for another 5 years. After that we will see that more Indians will return home because of the flood of opportunities this emerging economy will provide. Given a choice between working in the US and using their expertise to set up their own ventures in India where the market would be relatively untapped and costs much lower, we will see Indians come back to India to start their own firms or join other global firms at higher positions. This process has already started. It remains a trickle only because the infrastructure is bad in India. Once that shapes up or becomes better we will see more people return mainly for the huge opportunities present here. Another point to remember is that one can have a very good standard of living in India with even half the wages hes paid in the US. Once again, its infrastructure which is the main stumbling block. That will get in place over the next 5 to 7 years.

  5. I would like to add to the point which ulag has made here. The wages are surely high now but so is the Insurance which reaches new peaks every year almost nullifying the yearly hikes that one receives. My point is the starting salaries might not be comparable with US but as you progress the hikes and the perks involved are surely better here. Also after the recession the taxes for foreign workers has increased which adds to the woes of immigrants. Seeing all these I decided to head back to India. One other disadvantage of US is the weather, Its Atrocious!!!!Compare it with India although the population is high the medical system is better than that of US and also the weather doesn’t fluctuate as bad as in US.

  6. Excellent analysis ulag. I will quibble only on one aspect of your analysis. If entrepreneurship is based on a genetic structure, in a global capitalist economy genes are sans borders and therefore can be transmitted to the peoples of other nations that have adopted the principles of a free market.

    • Thanks!!

      Yes it is based on the society and culture of the place which in turn is influenced by the region’s history. And true, this culture will permeate to others too. For eg. Indians working in the US will draw in that culture into themselves. They will then be encouraged to be more entrepreneurial than they would have been if they were in India. And if they were to return to India, they would bring back that spirit with them and in this way globalization will help spread this entrepreneurship culture. This is slowly beginning to happen. What is required to hasten this process is that the “receiving” nation modify its policies to help this process. But again, as iv said before, even though other countries like India and China might see a rapid rise in the number of entrepreneurs, Entrepreneurship will not get embedded into their cultures in the way it is embedded in US and Israeli cultures.

  7. Entrepreneurial Society?
    True entrepreneurs have a totally different mind set than most other people within a society. Entrepreneurs don’t simply tweak, and look for ways to produce more of the same old products at a cheaper cost to the benefit of ‘someone’ else’s business.

    The most successful entrepreneurs dream up, new,never before seen products and with a bit of genious, promote that produce as a must have to the consuming public. Microsoft windows operating system is a good example. By scraping the tried and true DOS operating system, MS in time came to dominate the computer operating system market.

    Many countries do great things in tweaking existing products. Japan, China and most Europe countries are good examples of this methodology.

    However you seldom see really new technology being developed. I think you may have hit the nail on the head in saying, socialized government thinking is a deterrent to entrepreneurial thinking.

    • By Entrepreneurial society, I mean a society which cherishes and nourishes its Entrepreneurs. That means a society that not only lauds the 1% successful entrepreneurs among them but also the 99% who have tried and failed. Because, unless the society appreciates the efforts of the other 99%, the successful 1% will not emerge. The US and Israel are such societies, because they value the efforts of all their entrepreneurs and not just the successful ones among them. Entrepreneurs are given immense respect. In many societies the consequences of failure in entrepreneurship are high. This is a mitigating factor against having an Entrepreneurship culture.

  8. Entrepreneurs are mostly born but can be trained provided their mindsets are right.

    • Even if we agree to this theory that Entrepreneurs are born, we can assume that its not necessary that all of them go on to become Entrepreneurs. This is where the role of an Entrepreneurship culture in the respective society comes to play.

  9. I think, there is one fundamental difference between US and Israel! US is a diverse and continuously evolving society (Look at the waves of migrations throughout the history of US), and that ‘s why entrepreneurial attitude will always thrive in US! Other societies in Europe were not so diverse, and hence entrepreneurialism is not so prevalent in Europe now! Ofcourse, they thrived on trading and imperialism outside their own countries (Rememebr Marco Polo, Columbus, Vasco-de-Gama, East India Trading Co! Spain, Portugal, France, UK and Germany all had developed their entreprenurial energies in that direction)!
    I think US will continously thrive with entreprenurial attitudes because of the diversity of it’s the culture, but I am not sure Israel will, unless it encourages non-monolithic culture in that holy land! Just another perspective!

    • A good point. However, recent moves in the US to curb the entry of skilled immigrants by raising the cap on H1B visas etc will prove counter-productive to the point you are making. Domestic compulsions are forcing the US to be more protectionist and there is a wave of anti-immigration from the right. Immigrants are the new “settlers”. People who have to start from scratch. The same people who will be more receptive to their children going forth on their own ventures. In Europe, while there was robust trade and exploration in the early 18th century, over 300 years, rigid systems and structures came into place for a society that decided to rest on its laurels and hence died that spirit of adventurism.

      Israel can make many more strides if the political scenario was one of peace. It would encourage more young jews to migrate to the holy land from other parts of the world and this would help its cause. Right now, a fragile peace and compulsory service in the Army prevent it from happening.

  10. excellent post. out of curiosity, do you believe any other countries share this type of culture/history with the U.S. and Israel? Or was this post meant to say that the U.S. and Israel are completely unique in their entrepreneurial inclinations?

    http://thrillvilletimes.wordpress.com/

    • I think US and Israel do lead the pack when it comes to Entrepreneurial societies, but by no means are they unique in their Entrepreneurial inclinations. Other societies do have these traits but to far lesser degrees. However, US and Israel are unique in the fact that both have been settled recently: Israel from 1948 and US from the 18th century till today by the flow of immigrants – the modern “settlers”.

  11. Strange, that I was talking to my housemate and we had a long discussion about the internet ad business, entrepreneurship and things like that. It was a great talk, and you can see the difference in attitude, the mindset. We had a lot in common and it was amazing to speak for a couple of hours, one of the main things is a new breed of entrepreneurs who are trying to make an impact. I want to be one of them, and am keeping my options open, be it in any field, media, online ads, the app business, manufacturing consulting, its all about the mindset, the confidence and breaking the usual stereotypes which is extremely important, right now, in India.

    I think, its important to cut a lot of negativity in each, and say to oneself, “Don’t tell me what I can’t do, tell me what I can do”, it should really drive entrepreneurial attitude.

    I have some plans when I come back, basically it is because of the people I am surrounded with, the last thing I want to hear is “You are too young to this”, “you don’t have enough experience”. I don’t care, I might fail, but I have no issues getting back up and moving ahead. And according to me, that is what we need.

  12. Ulag,

    Really nice post. Appreciate how you compared Asia and Europe differences to the similarities to Israel and the US. It could be argued that the US and Israel or also most targeted for terrorist attacks and/or hate– while there are lots of reasons for this ranging from historical conflicts, politics, military actions etc., how do you think the entrepreneurial nature of these countries contributes to its target level?

    • That is an interesting parallel you draw between their entrepreneurial nature and their being prime targets of terrorism.

      However, i do not believe that their entrepreneurial nature enhances the danger from terrorism/hate. The US has been a target for terrorism for only about 10 years now, while India has been a target for over 30 years. I think the danger from terrorism etc rises from the government policies of a country rather than the structure/nature of its society. Israel is a target of terrorism because of the highly charged socio-cultural-political scenario in which it exists. This happened as a direct result of its birth, bang in the middle of the Arabian Kingdoms sixty years ago.

  13. Hmmm, quite different perspective than the piece on PG.
    What do you think about the entrepreneurial ventures that are not much in tech.? When I hear about entrepreneurship, it has become a fashion for my generation to talk about ventures which are more into virtual world, the net. or mainly in service sector. What about dreams like producing organic food, natural farming? What about our pathetic supply chain systems where except for the middle men, both the consumer and producer has been suffering all along. Is it really the time only for Knowledge economy? What about our primary sector?

    • U r right. Most of the people talk about Entrepreneurship related to IT. Maybe this is because this has the least starting cost or least capital intensive among others. Also the entry barriers are lesser. For eg a student of electrical or even electronics can jump into it cos he just needs to learn coding which is easier than if he has to open something related to organic farming and stuff. Also the turn-around time to start generating revenues is lesser. Infrastructure involved is lesser as one can do this from the leisure of their homes. These are some of the reasons sarting tech firms are easier and since most of us are surrounded by Engg graduates we tend to hear more of such things. But for every Narayan Murthy and Subroto Bagchi there’s also a Kishore Biyani and Capt Gopinath. Its all about expanding the horizons of thought. Most of us being engineers, we dont think beyond tech. But its wrong to think nothing is happening in the primary sector. There are many Entrepreneurial ventures happening in rural areas where entrepreneurs are trying to solve the rural problems. We just dont get to hear enough of such stories as there’s no glamour involved in it and hence the mainstream media ignores it.

  14. first of all a pat-on-the-back for this very nice article. would really like tell you that its only yesterday that i resigned from the company where i was working as a relationship officer. and now i am all set to start my trading business of sanitary wares in northern india by the end of next month. coming from a lower middle class family the decision was never easy as the opportunity cost in terms of ‘monthly salary’ seems too high. but finally the raging passion had its way. long live this spirit!!!!!!!!!

  15. I am totally impresses by this article & the comments which follow subseuently.I think the need of the hour is to be aware & to create awareness,think beyond what others think,try to be creative in every small thing we do & appreciate othres success & learn from them.Hope we all will create a better nation & a better society to ive in.best of luck to all in your respective ventutes

  16. i somewhat disagree with ulag bcz as u said that entrepreneurship comes with d genes but in case of these jews, they had no option but to build everythng fr their survival and that is totaly diffrnt frm wat we encountered in last 50 yrs in israel or u.s.a or in any other country bcz everybdy has other options too. and in the case of european or asian countries, there would b the first generations who started it all from zero to the top, so by this logic these countries should have that enterp. gene in them….

    • When i said genes, I meant the genetic structure of a society. i.e It is an intrinsic part of the society and culture. And if the society and culture has been shaped by the settlers in the way it has been in the US and Israel, then these societies will have an entrepreneurship culture in them. By this I mean societies which encourage the notion of building things from scratch and which gives enough cushion against failure in trying something on your own. I am talking about societies as opposed to individuals.

      Regarding the European and Asian countries, they too had their first “settler” generations no doubt. But those were more than 2000 years ago. After that what they had were systems which held people in place. Now and then there have been opportunities where there have been entrepreneurship cultures in these societies, for example the industrial revolution in Europe which led to a lot of innovation, but then again it stagnated along the way. Israel has been settled more recently and it still hold dear the values that built the country. USA though settled close to 300 years back, it still has a huge flow of immigrants who represent the modern day settlers who go and start a new life from scratch.

  17. but i agree wid d point that the zest or passion to achieve something different or big in life combined wid an brilliant idea is wat makes sumone an entrepreneur.
    PLEASE correct me if i am wrong as i am only a starter/newbie :-))

    • Again I am not discussing what makes an entrepreneur. Im talking about what kind of societies Entrepreneurs thrive in today and why this is so.

  18. hmmm nw i can relate 2 ur article as d explainatn u gave in the para of history of asian n euro countries of about 2000 yrs … thanks for d insight…

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