Discussion 2: Myths about entrepreneurs Q: Three (3) most intriguing myths about entrepreneurship, what academic literature says about those myths and what your experience has taught you. (1) The Blockbuster Myth According to the blockbuster myth, it is to be expected that new ventures will later evolve into huge enterprises similar to Google, and in the course of this development also transforms the way we live. In actuality, seldom do ventures graduate into businesses whose products and services are so revolutionary that they redefine out lifestyle. Occasionally, a Google or two may take place, but these are rare. Many ventures are unknown companies that serve a small segment of the market and provide highly specialized goods and services, on the one hand. On the other hand, many new ventures provide generic services such as restaurants, barber shops or beauty salons, car repair shops, and similar common (versus radical) products. The fact that ventures tend to fail more than succeed is evident in the tendency of venture capitalists to be more confident in predicting the failure rather than success of proposed ventures (Landstrom, 2007). (2) The Inspiration Myth This myth states that most successful enterprises are serendipitously born from some revelation of a revolutionary new product or technology. Far from the truth, because all enterprises set out with much risk and doubt, and the business owners would have endured several setbacks and would have changed their plans multiple instances before they would have achieved success in their business. In fact, corporate ventures (set up by large incumbent firms) are more successful at pursuing radical innovations than are small entrepreneurial ventures, because of the more advanced technical support and steadier financial assurance from the large corporation (Czarnitzki, Dick amp. Hussinger, 2010).(3) Incentive myth It is necessary to keep tax rates low so entrepreneurs could reap rewards that would keep them motivated in their enterprises. Actually, this is true to some extent because entrepreneurial profits are lower in states with higher marginal tax rates (Ortmans, 2011). What is not true, however, is that high tax rates are the only disincentives to entrepreneurs. There are many other factors that tend to discourage entrepreneurs or cause enterprises to fail. One of these is complex accounting methods and reporting requirement. Another is the bureaucratic bias against enterprises that compel the firm to hire specialists and professionals to duly advise them. But probably the most important disincentive is the thousands of regulations, such as employment and health-care regulations by federal and state agencies, which erode the scarce capital and investment resources of the small business.These and a host of other myths appear to have sprung up around enterprises and about entrepreneurs because of the interest and, to some degree, fascination that ordinary people have about setting up their own businesses. It is probably the dream of a great many employees to work for oneself and be one’s own boss, in order to be free of reliance on an employer for one’s subsistence. There is also a romantic notion that all that one needs is to muster the confidence to strike out on one’s own in order to succeed as a new venture and escalate into big business. However, being a successful entrepreneur is more than that, and entails not only hard work and persistence but also a wise approach to managing risk (Kuratko amp. Hodgetts, 2008). Sometimes, these myths are also spawned by those who would have wanted to set up business, but lacked the confidence to make the leap to self-employment. The myths serve as excuses for not taking the business risk of entrepreneurship, and the would-have-been entrepreneur takes some comfort in that. After all, not everybody is meant to be in business. References:Czarnitzki, D. Dick, J M H. amp. Hussinger, K 2010 ‘The Contribution of Corporate Ventures to Radical Innovation.’ Katholieke Universiteit Leuven, Department of Managerial Economics, BelgiumKuratko, D F amp. Hodgetts, R M (2008) Entrepreneurship: Theory, Process, Practice, 8th edition. Mason, OH: South-Western Cengage Learning.Landstrom, H (2007) Handbook of Research on Venture Capital. Cheltenham, Glos: Edward Elgar PublishingOrtmans, J (2011) ‘About Taxes and Entrepreneurship.’ The Policy Dialogue on Entrepreneurship. Retrieved 20 January 2013 from http://www.entrepreneurship.org/en/Blogs/Policy-Forum-Blog/2011/May/About-Taxes-and-Entrepreneurship.aspxSamuelson, R J (2010) ‘The Real Jobs Machine.’ Newsweek, 10 Nov. 2010, vol. 156, issue 15.
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