The accelerating impact of entrepreneurship on our society is increasingly evident. It is also sweeping in scope, making itself felt across a broad spectrum that includes everything from innovative products and services, given birth by small ventures, to the recognition and creative pursuit of opportunities within both for-profit and not-for-profit organizations. Who will be the entrepreneurs and entrepreneurial thinkers of tomorrow, carrying forward this important trend? Our youths, one could argue, are ultimately the answer to this key question. From both an economic and a social perspective, then, youths' attitudes, knowledge, and skills with respect to the entrepreneurial process are all of great strategic significance. Additionally, these same attributes are increasingly associated with equity and access issues concerning youths' capacity to participate successfully in the economy and to contribute to the general welfare of their communities.
In this article we report the major findings of our recent research on entrepreneurship and youths. The detailed results from our studies can be found in the recently published book, Seeds of Success.1
Overview
Previous studies have investigated factors that affect entrepreneurship based on interviews with entrepreneurs, or they have studied those individuals in their prime years for entrepreneurship, from about age 24 to 40. Our work explores the "entrepreneurial spark" in our nation's youths, ages 14 to 19.
The research is based on a series of four major national Gallup surveys commissioned by the Kauffman Center for Entrepreneurial Leadership at the Ewing Marion Kauffman Foundation from 1994 to 1997. In our studies we sought insights on youths' thinking about six major topics. The first was whether youths were interested in starting a business, and the reasons why and why not. Because initiating small business ventures is a core ingredient of entrepreneurship, the second topic focused on what youths thought about small business compared to large corporations. As a third issue, we sought data on youths' knowledge about basic concepts in the area of entrepreneurship and about related understandings in economics. Our fourth target area was how youths' opinions about competitive markets and the government's appropriate role may influence the general climate for entrepreneurship and youths' capacity for success. The fifth topic turned to youths' perspectives on philanthropy and entrepreneurship, their views on entrepreneurs' contributions to the community and the connection between those contributions and the success of the entrepreneurs' businesses. The sixth and final issue was devoted to what youths thought about their education in entrepreneurship.
We also surveyed three adult groups using essentially the same survey instrument. The responses from these groups provide a basis for comparison with the youths' responses and aid in the interpretation of the data. The three groups included national random samples of the general public, teachers (K-12), and small business owners.
All work on selecting national samples, interviewing respondents, and tabulating survey data was handled by The Gallup Organization, Inc. The item content that formed the basis for the field survey instruments was developed by a partnership between the Kauffman Center and the University of Nebraska. With this background and overview, we can now turn to the major findings.
Starting a Business
The degree of youths' interest in entrepreneurship is surprising. About two-thirds of those surveyed said they wanted to start a business of their own. This finding is highly significant and suggests an untapped reservoir with the potential to affect directly our country's standard of living and its economy. Youths' interest was stronger than that found for the general public or teachers. Fifty percent of the general public and 54 percent of teachers were interested in starting a business.
Although the reasons youths gave for wanting to start a business covered a wide range, most appeared to reflect a strong desire for independence and control. Being your own boss and being able to control your life were cited by 41 percent of youths. These reasons were also the top choices among the general public (51 percent) and teachers (43 percent). In apparent contradiction to media stereotypes of the greedy business owner, the desire for a lot of money was considered to be a minor motivating factor for starting a business among all three groups (21 percent for youths; 14 percent for the general public; and 18 percent for teachers).
A subsample of youths who were not interested in starting a business felt they lacked something necessary to become entrepreneurs. About four in ten cited a lack of energy, ideas, education, confidence, or money. Another two in ten were satisfied with their current work or educational situation and were not interested in changing it. The remaining four in ten gave reasons related to the difficulty of running a business, such as managing people, handling government regulation, or dealing with the stress. Similar reasons were also given by the general public and teachers, although the general public was more likely (37 percent) to cite age as a major reason — perhaps because many of them were nearing retirement age or had retired.
The reasons given by youths suggest that many of them could benefit significantly from increased and more effective entrepreneurship education. Such education has the potential for helping them overcome perceived barriers to entrepreneurship, including the lack of something needed to begin or the problems that come with running a business.
Views of Small Business
Youths had a more positive view of small businesses than of large corporations. With a pattern of response consistent with their interest in starting a business, 56 percent said they would rather be the owner of a small business than the manager of a large corporation. On this issue, the adult groups showed a similar preference, but the sentiment was stronger. About three-fourths of the general public and teachers thought they would rather be small business owners than managers in large corporations. Eighty-nine percent of small business owners liked the career choice they had made.
Despite their positive opinions about small businesses, many youths (43 percent) did not know a person who ran one. The percentages are even greater among Black and Hispanic youths. The response to this question is troubling. Past research has shown that personal connection is important because role models have a critical influence on entrepreneurial aspirations and achievement. On this issue, more education could also help fill the gap for those youths without access to a personal role model for entrepreneurship.
What youths and adults especially liked about small business was the service it provided to customers. Fifty-four percent of youths and 66 percent of teachers and the general public thought small businesses were better than large corporations at providing services that meet customers' needs. As might be expected, 86 percent of small business owners thought small businesses were better on this point.
The most unfavorable perspectives on small business exhibited by youths, the general public, and teachers related to job creation. Forty percent of youths, 32 percent of the general public, and 49 percent of teachers thought small businesses were worse than large corporations at providing jobs. These results indicate that many people misunderstand the important contribution small businesses make to job creation in the United States. Small businesses account for over half the jobs in the economy. They are also responsible for creating most of the net new jobs (jobs added minus jobs lost). In addition, getting a job at a small business is often the first entry point for youths or younger adults when they enter the work force.
Entrepreneurship Knowledge
Youths lacked understanding of many major concepts related to entrepreneurship. The mean score for youths was 42 percent correct for the eight knowledge questions on the survey. The percent correct was higher among the adult groups as might be expected given their older age, greater work experience, and additional education. The general public had a mean score of 50 percent correct. Teachers scored significantly better with 62 percent correct. The best score, however, was found among small business owners. They scored 74 percent correct.2
Youths' self-assessment scores, however, indicated they were well aware of their problems with entrepreneurial knowledge. Forty-four percent rated their knowledge and understanding of starting and managing a business as very poor or poor. Another 38 percent rated their knowledge as only fair. Fewer than 18 percent gave themselves a good or excellent rating. Although youths lack knowledge of many basic concepts related to entrepreneurship, they do recognize they need more entrepreneurship education. The general public and teachers also recognize they need more knowledge and understanding of starting and managing a business. Correcting this perceived deficiency among teachers is likely to be an important consideration when exploring how best to improve the entrepreneurship knowledge and understanding of our youths.
Competitive Markets and Government
Although government has an important and legitimate role to play in our market economy, many of its actions can either encourage or discourage entrepreneurship. For example, government may impede entrepreneurship when it intervenes in markets to establish prices, imposes onerous regulations on business, or increases business taxes. Although such actions can always be debated on their overall merits, they are definitely not conducive to entrepreneurship. Consequently, we asked youths a set of questions designed to gauge the extent of their support or non-support for an entrepreneurial environment in terms of prices, regulation, and taxation.
Fifty-one percent thought businesses were overtaxed rather than undertaxed (9 percent) or taxed the right amount (37 percent). Many youths also thought there was too much government regulation of business (35 percent) rather than too little (18 percent), although almost half (45 percent) thought there was about the right amount of regulation.
This apparent support for less government intervention in some aspects of business, however, reversed itself when the issues at hand appeared to have a more directly adverse effect on youths' roles as consumers. In particular, 55-67 percent of youths wanted the government to intervene in particular markets to prevent consumers from having to pay the higher prices that would normally result, in a competitive market, from an increase in business costs or in consumer demand. Although history contains many examples of the unintended consequences of price controls, it is doubtful these youths were aware of the potential negative ramifications for entrepreneurship from such interventions. Such lack of awareness would also be consistent with results for the entrepreneurship knowledge questions. Those findings show that approximately half of the surveyed youths were unaware of the interactions between supply, demand, and the prices of most products in a competitive market.
The general public held views similar to youths on the taxation issue but were more likely to think that there was too much government regulation of business (60 percent). By contrast, they were generally supportive of government intervention into the market to inhibit price increases.
Teachers were more likely to support government actions related to regulation and taxation and less likely to be supportive of price intervention. On the issue of government regulation, they were just as likely to think there was about the right amount (43 percent) as to think there was too much (44 percent). On the issue of taxation, they were more likely to think businesses were taxed the right amount (35 percent) or undertaxed (29 percent). However, significantly fewer teachers than youths or the general public thought government should intervene to control prices.
Small business owners were the most opposed of all groups to government intervention in the economy. Seventy-five percent thought there was too much government regulation, and 69 percent thought businesses were overtaxed. Most also thought government should not intervene to control price increases of particular products.
Philanthropy
Most youths do not understand the important linkages between entrepreneurship and community philanthropy. Only 38 percent could identify an economic or philanthropic contribution that entrepreneurs make to the community. Adults were much more likely (66 percent) to cite such a contribution. Nevertheless, most youths (65 percent) and adults (61 percent) were not aware that most major charitable foundations were started by large contributions from successful business owners or entrepreneurs.
Although many youths may not see the important connection between entrepreneurship and philanthropy, the vast majority (96 percent) thought that successful business owners and entrepreneurs had a responsibility to give back to their communities. Most adults (87 percent) held a similar opinion.
Education
Because our research results suggest that most youths do not have access to entrepreneurship and economic education from informal sources or role models, formal education can be seen as a critical ingredient for the development of basic knowledge and understanding in these areas. Unfortunately, our research results also reveal that only 27 percent of youths took courses in entrepreneurship or business, and only 35 percent took an economics course in high school. Additionally, 85 percent said they were taught little or nothing about how business works, and 76 percent reported being taught little or nothing about how the economy works. One can only wonder what expanded opportunities the future might have held for these youths and the nation had their education been more complete.
Youths, however, did have a strong recommendation for correcting this situation. Seventy-seven percent thought it was very important or important for the nation's schools to teach more about entrepreneurship and starting a business. This opinion was held even more strongly by the general public (82 percent), and teachers and small business owners (81 percent).
Implications
The entrepreneurial mind of youths in the United States is complex. It is a mind full of dreams — optimistic about the prospects of starting a business and taking control of one's own destiny. It is also a mind with misperceptions — lacking in understanding of business, the economy, and the barriers to entrepreneurship — yet desirous to learn more. These contrasts mean that many youths who want to become entrepreneurs may never achieve their goals. They do not have the skills or knowledge to act on their dreams. They lack the connection to role models or the personal support for undertaking entrepreneurial ventures. For many, or all, of these key reasons, the entrepreneurial interest expressed by youth may never get translated either into the creation of new businesses or into innovative entrepreneurial thinking within an existing venture.
This is not to say that all, or even most, youths should become entrepreneurs. Our findings suggest, however, that there is greater interest in and potential for entrepreneurship and entrepreneurial thinking among youths in the United States than has been realized to date. If more youths received the education and support needed to have the option of becoming successful entrepreneurs at some point in their lives, the entrepreneurial human capital of our country would increase significantly. Such an increase in turn could help the nation by stimulating economic growth, benefiting consumers, enriching local communities, and enhancing individual self-fulfillment. Benefits from exposure to entrepreneurship accrue also to those youths who do not become entrepreneurs, because the knowledge, skills, and attitudes of entrepreneurship are readily applicable to many situations and opportunities at work and home. Finally, the diversity of America's entrepreneurs could be significantly improved through entrepreneurship education.
The entrepreneurial spark is clearly present among our youth. We must ensure educational conditions are right for that spark to light fires, enabling our youths to pursue opportunities in all sectors — private, not-for-profit, and public — opportunities they might have otherwise overlooked or hesitated to engage.
1 Walstad, W., and Kourilsky, M., Seeds of Success: Entrepreneurship and Youth, Kendall/Hunt Publisher, 1999. For information on ordering a copy, contact the Kauffman Center for Entrepreneurial Leadership at 4801 Rockhill Road, Kansas City, MO 64110-2046.
2 Even small business owners were not expected to get all items right because they were tested "cold" and were given no preparation. These owners also vary in background and education. Given the test conditions and groups, an average score of 70 percent correct probably indicates a relatively high degree of mastery of the material — a score that the small business owners exceeded.
