World turned upside down: Entrepreneurial decline, its reluctant myths and troubling realities

Cooke, Philip Article World turned upside down: Entrepreneurial decline, its reluctant myths and troubling realities Journal of Open Innovation: Technology, Market, and Complexity Provided in Cooperation with: Society of Open Innovation: Technology, Market, and Complexity (SOItmC) Suggested Citation: Cooke, Philip (2019) : World turned upside down: Entrepreneurial decline, its reluctant myths and troubling realities, Journal of Open Innovation: Technology, Market, and Complexity, ISSN 2199-8531, MDPI, Basel, Vol. 5, Iss. 2, pp. 1-16, https://doi.org/10.3390/joitmc5020022 This Version is available at: https://hdl.handle.net/10419/241313 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Journal of Open Innovation: Technology, Market, and Complexity Article World Turned Upside Down: Entrepreneurial Decline, Its Reluctant Myths and Troubling Realities Philip Cooke Mohn Center for Innovation & Regional Development, N-5020 Bergen, Norway; [email protected] Received: 6 March 2019; Accepted: 26 March 2019; Published: 9 April 2019   Abstract: The aim of this paper is to attempt to understand why the popular academic and policy field of promoting, studying and evangelising “entrepreneurship” should have been associated with great success but, in the past twenty years or more in many advanced economies, so much failure. From the US to lesser and developing countries, emerging economies and the European Union, entrepreneurship, especially in regard to start-ups and particularly high-tech start-ups, has been in constant more or less recent decline. This is seldom registered in the mainstream literature where a positive and benign profile is generally presented. The paper examines this phenomenon, ties it partly with the “productivity paradox” and seeks tentative hypotheses in relation to the apparent illusions if not delusions regarding “entrepreneurship”. Keywords: entrepreneurship; start-ups; business dynamics; decline; productivity paradox 1. Introduction In the Michael Moore film Fahrenheit 11/9 the director quotes the Gross’s book [ 1 ]Friendly Fascism (1980) to the effect that “ . . . 21st. century fascism will come with a smiley face and a TV show”. The show is “The Apprentice”, Moore continues: “It was that TV show that made Trump a beloved figure in the United States. People loved watching The Apprentice. People liked the show, it was a popular show”. To say the least it is remarkable and somewhat disconcerting that a reality TV show and its anchor-person could have popularised entrepreneurship in the US and other advanced economies, notably the UK, to the extent it has. While further, it enabled the world’s leading superpower and democracy to have elected the same TV anchor to the position of president of the US as a by-product. This testifies to something eerie, even unreal, about the mood of contemporary “reality” TV audiences which seem to veer towards something scarily totalitarian in their popular preferences. It also acts as something of a comfort to viewers brought up on the mythology of “the American Dream” of untold wealth in exchange for hard work and a bit of luck. For the stubborn reality is, for most, just that, a piece of mythology, which is little compensation for a hard-scrabble existence on less than two or even three living wages per head of household, deindustrialised neighbourhoods and the prospect of opiate-addiction or worse as the only way out. This paper is a critical review of literature that supports the view that entrepreneurship is thriving. The review shows that it is mostly declining. These rather depressing sentiments call to mind certain imaginaries of the science fiction writers, some of whose insights seem more and more prescient as time passes. I have called in the past upon William Gibson, but on this occasion, it is some thoughts of Philip K. Dick that infuse the narrative at occasional points, such as this one (prefiguring recently deceased screenwriter William Goldman: “No-one knows anything”). . . . . . . Can any of us fix anything? No. None of us can do that. We’re specialized. Each one of us has his own line, his own work. I understand my work, you understand yours. The tendency in evolution is toward greater and greater specialization. Man’s society is an J. Open Innov. Technol. Mark. Complex. 2019,5, 22; doi:10.3390/joitmc5020022 www.mdpi.com/journal/joitmc J. Open Innov. Technol. Mark. Complex. 2019,5, 22 2 of 16 ecology that forces adaptation to it. Continued complexity makes it impossible for us to know anything outside our own personal field—I can’t follow the work of the man sitting at the next desk over from me. Too much knowledge has piled up in each field. And there are too many fields. [2] In this contribution, I will expose the myth of “The Apprentice” as largely fantasy, delusional and properly suited to the sphere of popular entertainment. This is despite the widespread popularity of the idea and perceived practice of “entrepreneurship” in politics, higher education (notably Business Schools, knowledge transfer departments and some engineering schools), and many other institutional spheres where “absence of entrepreneurial spirit” and “entrepreneurial ecosystems” are bemoaned amid calls for more to be done to kindle, stimulate and foster even further the “business dynamics” of the economy where so much economic development faith has been placed. This may all come as a heretical and disagreeable shock to audiences in business management and entrepreneurship, also innovation conferences where these beliefs have long held the platform. But the reality of the literature reviewed here, and which has been growing slowly for a few years is that “business dynamics” are generally not in good condition, small-firm performance has of late been underwhelming, start-up businesses are drying up and entrepreneurship data, in general, have registered substantially declining profiles, not just in relatively recent times, e.g., after the financial crash of 2008, but well before, even back to the 1990s which now seem like a relatively “golden age”. So, the paper begins with an anatomy of entrepreneurial decline in what is conventionally thought to be the home of “rugged entrepreneurship” in the US. This is followed by selected sketches of the same phenomena described for other advanced or developing economies. The second section of this paper then takes a deep dive into the complex explanations that have been advanced for possible hypotheses as to why “business dynamics” entered decline over twenty years ago in—mainly—the US where most analysis has been performed. Then finally, a comparison of selected advanced economy “business dynamics” profiles are performed in an attempt to tease out reasonable contributory factors to the drying up of entrepreneurship. As will be understood, at various points in the narratives of these three sections the implications for the “productivity paradox” are drawn. As a Review Paper, this is non-experimental, so the Research Design involves detailed critical reading of the “Business Dynamics” literature as the main Research Method. The findings of the Review of the literature comprise the content of the contribution. This is followed by a brief concluding section which summarises the main results. 2. World Turned Turtle Again This saying denotes a major set of events has occurred that has overturned major structures, institutions and assumptions that offer a frame or underpinning to the reality most people take for granted. These things change slowly, un-noticed by most people but as more people pay attention change speeds up. The “conventional wisdom” [ 3 ] begins to shrink and uncertainty starts to become prevailing as new certainties to replace the old assumptions are sought, even desperately. Many commentators think that the current era is one of those “transition points” with characteristics of uncertainty, retreat to attitudinal atavism and xenophobia, fears of a “new dark age” and millenarian expectations of “the end times” [ 4 , 5 ]. Relatively few are those persons who keep their antennae attuned to signals of societal change. One small subset of the population which does is the community of science fiction writers, one of whom provides an explanation for our neglect through distraction at the complexity of everyday life, which means we are slow to anticipate change. A representative viewpoint from science fiction literature regarding our “metathesiophobia” (morbid fear of change) is provided by Philip K. Dick: My major preoccupation is the question, ‘What is reality?’ Many of my stories and novels deal with psychotic states . . . by which I can present the concept of a multiverse rather than J. Open Innov. Technol. Mark. Complex. 2019,5, 22 3 of 16 a universe. Music and sociology are themes in my novels, also radical political trends; in particular I’ve written about fascism and my fear of it. [6] Accordingly, most “realities” are rather delayed, sometimes excessively, sometimes marginally. Indeed a workable definition of entrepreneurship could be: “the swift appreciation of changing times . . . and spaces”. Schumpeter [ 7 ] now, sadly, seen more as a harbinger of neoliberalism than social democratic progress, usefully encapsulated the conceptual difference between the “innovator”, the “entrepreneur”, responsible for the initial investment, growth and employment in key markets, and the “imitator”, a different entrepreneur—possibly corporate—responsible for the diffusion and profitable exploitation of the innovation at scale. His later fear [ 8 ] was that the facilitating entrepreneur would be squeezed out of the whole process of corporate “entrepreneurship”. Acceleratingly, if not for the first time, Schumpeter’s wisdom was periodically questioned: first, corporate growth seemed to have extinguished the inventor-innovator-entrepreneur trifecta as spatial divisions of labour evolved with geographical separation of management and innovation (including R&D) from production engineering and, finally, routine assembly. But then came “lean production” which hollowed-out much of the unaffordable management strata, innovation research, and prototyping, and consigned it to small and medium-sized if not “entrepreneurial” stand-alone firms. So, entrepreneurship revived, especially when science-based start-ups in ICT, biotech and knowledge-intensive services joined them in force while traditional large corporates continued to downsize and/or translocate or both. It took a predictable delay while entrepreneurship scholars imaged up the rugged individualism of the independent entrepreneurs that outfoxed the incumbent corporates (Microsoft cf. IBM; MCI and Verizon cf. AT&T; Apple cf. DEC, Wang, Amdahl and Prime, etc.). But anyway, this rather atomised version of the Neo-Schumpeterian entrepreneur prevailed until quite recently, when, second, Schumpeter Mark 1 had been reincarnated but also shown not to have got the innovation narrative quite correctly. Thus with the discovery of apparently “social democratic” SMEs colluding in “entrepreneurial ecosystems” [ 9 ], Schumpeter Mark 2 corporate “occupational communities” were now to be conceived not as modern innovators but lazy “rent-seekers” [ 10 ]. It was as if Philip K. Dick’s other 1975 prophecy had materialised on the page. “A human being without the proper empathy or feeling is the same as an android built so as to lack it, either by design or mistake. We mean, basically, someone who does not care about the fate which his fellow living creatures fall victim to; he stands detached, a spectator, acting out by his indifference to John Donne’s theorem that “No man is an island”, (sic) but giving that theorem a twist: that which is a mental and a moral island is not a man.” [11] Rational economic “man” was now to be seen as a collaborative, co-operative, subsidised, supported, needy and collectively-minded member of an “ecosystem” rather than a cowboy smoking a Marlboro. Such social phenomena had been researched, studied and written-up since the time of Schumpeter’s schooldays by the likes of Marshall [ 12 ] describing “industrial districts” (IDs) and later by Becattini [ 13 ] in their Italian ID variant before giving rise to the “cluster craze” fomented by regional scientists, planners and Porter [ 14 ]. This, in retrospect, may have been the “canary in the coalmine” where planner foresight detected something amiss with an SME world that was beginning to shed its Marlboro Man image earlier than had been spotted by other interested parties. System entrepreneurship signified that individualistic entrepreneurship may have become harder to perform than textbook accounts had suggested and that entrepreneurship scholars had been examining for several decades. The shock that has yet to be appreciated or, perhaps, rendered subject to metathesiophobia is that belatedly, Schumpeter’s [ 8 ] thesis of the demise of the entrepreneur has begun. Chronologically later than he predicted and accompanied by the demise of the large corporate entity as an innovative actor, which he had not predicted. Both the typical SME of entrepreneurial lore and the corporate giant of earlier days and more recent examples arising from the Information Age technologies of the 1970s and the 1990s are no longer replacing themselves as innovators. In the latter case they are often now written-up as rent-seekers while in the former case they are observable from recent data to be a J. Open Innov. Technol. Mark. Complex. 2019,5, 22 4 of 16 dying breed. This is a worldwide phenomenon and no more evident than in the modern homeland of entrepreneurship, the USA. In what follows, we start a review of comparative SME growth (or decline) performance that covers the financial crash interlude but in many cases takes the timeline from earlier as well as later. Further on, more evidence from a few key economies will be explored more deeply to test this rather startling observation on declining high-tech start-up business dynamics. These will be presented as having declined substantially in the US and various other advanced economies like Canada and the UK since the Great Crash of 2008 and even in some cases before then, dating at least from 2000, some being more affected since 2008 and thereafter up to even the year 2017 in the case of the UK. Many countries had varying fortunes but, in general, business dynamics, notably for high-tech start-ups, declined widely in Canada, Belgium, Brazil, Costa Rica, Japan, New Zealand and Norway joining the UK in an OECD (2017) [ 15 ] study of start-ups growth—meaning fluctuating, i.e., mainly declining high-tech start-up rates. The UK findings in OECD (2017) [ 15 ] “Business Dynamics and Productivity” show that the distinctive feature of the global financial crisis was a collapse in business entries (new start-ups) which negatively affected the stock of continuing firms in the following year, leading to job destruction. The relative absence of startups halted the emergence of continuing firms. For New Zealand, analysis throughout the 2000s shows marked decline in worker flows within the labour market and retention of established small firms but with little clear comparison of job-growth from start-up rate increase. Heterogeneity characterises SME performance in Costa Rica. There, agricultural and manufacturing SMEs are in decline while services firms perform better, especially those in export markets or located in Free Trade Zones. In Canada, as we shall see further below, median firm SME growth stagnated in relation to employment, sales, profits and productivity. Norway suffered declining productivity but growing employment from 2000 onwards because of high entry of start-ups in services which were nevertheless relatively unproductive. Services (wholesale and retail) and, surprisingly ICT, contributed to declining productivity performance while manufacturing lost employment. These job losses were mainly accounted for by large, increasingly productive firms whose declining employment outnumbered employment growth from start-ups. Finally, Japan’s SME employment growth and numbers either stagnated for the last twenty years or did not recover while productivity declined after the crisis but showed signs of upturns afterwards. Crisis impacts occurred universally across sectors due to labour re-allocation across industries. Accordingly, none of the OECD comparators in this study seem to have performed well in terms of business dynamics after the crisis but in many cases they were already slowing down in that respect before 2008. 3. “The American Dream Is Now Only a Myth” The quote for this section heading comes from Stiglitz [ 16 ]. It was suggested earlier that other research literature by the likes of Gordon [ 17 ], Erixon and Weigel [ 18 ], and Lindsey and Teles [ 19 ] points to corporate “rent-seeking” having displaced innovation (Schumpeter 2’s miscalculation). If so, and leading high-tech social media behemoths also “hollow-out” their own as well as their clients’ workforces, past practice has often shown the SME sector taking up the slack regarding job growth. Except that the latest evidence suggests the contrary. In this section of the paper we review the evidence for this—i.e., that high-tech start-ups have declined as sources of US job-growth. One reason for this focus is that there is a deeper, time-series base for the phenomenon in the “business dynamics” literature for the US. In the succeeding (fourth) section of the paper we shall try to review and assess if the process is also pronounced in other economies such as the UK, Canada and selected European and Asian countries. Regarding US evidence, the post-2000 decline in US high-growth young businesses in key innovative sectors like high tech suggests there has been a decline in transformational entrepreneurs in this sector. There are many detailed research studies reported in the following citations, with some guidance in the text on the nuances of each. Why this decline has occurred is an open question [ 20 – 24 ]. In the post-2000 period, high tech includes fewer young firms, and the young firms that are present J. Open Innov. Technol. Mark. Complex. 2019,5, 22 5 of 16 are less likely to have high growth [ 25 – 27 ]. As noted above, this period of decline in high-growth entrepreneurship in high tech coincides with the decline in aggregate productivity growth in the high tech sectors of the economy as documented by Fernald [ 28 ]. Given the important role high-growth young businesses have played historically in the US, especially in sectors like high tech, understanding the causes and consequences of this decline should be a high priority for future research. For some time, the sector has been buoyant in UK and elsewhere in Europe but technological job-decline has been registered in China and elsewhere in Asia. Now recent evidence suggests an entrepreneurship plateau dipped down in 2017 in the UK and declined even earlier in Belgium [29,30]. We start with Hathaway and Litan’s study [ 27 ]. The authors quote copious research by authors like Decker, Haltwanger and others cited above that show that start-up activity declined in the US across every sector of the economy including high tech since 2000. This also applies to every state and metropolitan area where, typically, start-ups used to be responsible for the majority of employment growth. US entrepreneurship has clearly gone into reverse. The assessment that only 20% of the workforce is now employed in firms born after the mid-1990s is surprising given the hype about entrepreneurship and the widespread belief that many household name businesses were created in the last decade alone. But it seems that the few fabled gigafirms in high tech like Facebook, Google and lesser ones like PayPal, Tesla, Netflix and so on, alongside older firms in heralded industries like biotechnology, are either very few but prominent if they reach a large scale or get acquired and absorbed into older high-tech firms, or fade away in some other absorption or death spiral manner. In passing, it is instructive that investment in healthcare acquisitions by FAGAMi (Facebook, Apple, Google, Amazon & Microsoft) alone rose from $270 million to $2.7 billion in the eleven months to November 2017. Apple (Figure 1) has added substantially to its one hundred-strong list of start-up acquisitions in varieties of ICT and nowadays, artificial intelligence (AI) by adding half a dozen healthcare start-ups to its recent acquisitions portfolio. This is emulated by Google, IBM and FB who are all engaged in “cognitive computing” (IBM) or varieties of machine learning (FB) or deep learning (Google acquisition of DeepMind) for application in the new field of AI healthcare. The graphic of Apple’s “healthcare plan” is meant simply as downloadable illustrative material, which readers can replicate for other Big Tech companies listed in the previous sentence. The point is that one explanation for decline in entrepreneurship is that founders are “selling-out” to Big Tech, thus denuding the start-up “gene pool”. J. Open Innov. Technol. Mark. Complex. 2019, 5, x FOR PEER REVIEW 5 of 16 young firms that are present are less likely to have high growth [25–27]. As noted above, this period of decline in high-growth entrepreneurship in high tech coincides with the decline in aggregate productivity growth in the high tech sectors of the economy as documented by Fernald [28]. Given the important role high-growth young businesses have played historically in the US, especially in sectors like high tech, understanding the causes and consequences of this decline should be a high priority for future research. For some time, the sector has been buoyant in UK and elsewhere in Europe but technological job-decline has been registered in China and elsewhere in Asia. Now recent evidence suggests an entrepreneurship plateau dipped down in 2017 in the UK and declined even earlier in Belgium [29,30]. We start with Hathaway and Litan’s study [27]. The authors quote copious research by authors like Decker, Haltwanger and others cited above that show that start-up activity declined in the US across every sector of the economy including high tech since 2000. This also applies to every state and metropolitan area where, typically, start-ups used to be responsible for the majority of employment growth. US entrepreneurship has clearly gone into reverse. The assessment that only 20% of the workforce is now employed in firms born after the mid-1990s is surprising given the hype about entrepreneurship and the widespread belief that many household name businesses were created in the last decade alone. But it seems that the few fabled gigafirms in high tech like Facebook, Google and lesser ones like PayPal, Tesla, Netflix and so on, alongside older firms in heralded industries like biotechnology, are either very few but prominent if they reach a large scale or get acquired and absorbed into older high-tech firms, or fade away in some other absorption or death spiral manner. In passing, it is instructive that investment in healthcare acquisitions by FAGAMi (Facebook, Apple, Google, Amazon & Microsoft) alone rose from $270 million to $2.7 billion in the eleven months to November 2017. Apple (Figure 1) has added substantially to its one hundred-strong list of start-up acquisitions in varieties of ICT and nowadays, artificial intelligence (AI) by adding half a dozen healthcare start-ups to its recent acquisitions portfolio. This is emulated by Google, IBM and FB who are all engaged in “cognitive computing” (IBM) or varieties of machine learning (FB) or deep learning (Google acquisition of DeepMind) for application in the new field of AI healthcare. The graphic of Apple’s “healthcare plan” is meant simply as downloadable illustrative material, which readers can replicate for other Big Tech companies listed in the previous sentence. The point is that one explanation for decline in entrepreneurship is that founders are “selling-out” to Big Tech, thus denuding the start-up “gene pool”. How Apple is piecing together its secret healthcare plan 2014 – HealthKit; Gorilla healthcare (AI) 2017 – Gliimpse (acq. AI engine) 2015 – ResearchKit (AI CRO) 2017 – Beddit (acq. Sleep tracking) 2016 - CareKit (App Algo) 2017 – ClickWell Care (hires CEO Desai) 2018 – SMI (eye-tracking) Figure 1. How Apple is piecing together its secret healthcare plan. The earlier point about only 20% of employment being accounted for by start-ups dating from after the mid-1990s is underlined by the observation of Aldrick [31,32]) that even since the 1980s the Figure 1. How Apple is piecing together its secret healthcare plan. J. Open Innov. Technol. Mark. Complex. 2019,5, 22 6 of 16 The earlier point about only 20% of employment being accounted for by start-ups dating from after the mid-1990s is underlined by the observation of Aldrick [ 31 , 32 ]) that even since the 1980s the US rate of new company formation fell by 40%. Further, a sector that employed 20% of the workforce in 1988 and which also accounted for 70% of gross job creation between 1992 and 2011, by 2018 only accounted for 10%. Commentators from former Federal Reserve Chairwoman Janet Yellen that “ . . . the dynamism of the US economy has diminished” to Nobel Laureate and former World Bank chief economist Joseph Stiglitz’s view that “The American Dream is really a myth. We like to think of our economy as being dynamic, new people creating new firms. The data say we are becoming less dynamic” testify to the new US reality on entrepreneurship. The implication that large firms are “taking up the slack” warrants further exploration in this piece. Thus record low unemployment, hovering below 4% since April 2018 seems to support Aldrick’s contention. However, a major reason why not is that the workforce in general has also been in decline. Accordingly, the US workforce was falling by some 235,000 per month in 2018. Labour force participation fell to stagnating at around 63% since 2015 (Figure 2). To underline and repeat the point of Figure 2, it shows the workforce employed or seeking work in the US to be in decline, meaning another force diminishing the population among which it can be hypothesised many routine or even highly-skilled entrepreneurs may have been lost. As clarified at the end of this paragraph, as well as being victims of “discouraged worker syndrome” among the higher-skilled population of the unregistered unemployed (perhaps due to automation of work) the loss of potential entrepreneurs among the lower-skilled used to be a significant source of start-up business activity. They may also have become “technologically unemployed by automation of work” in some accounts of the decline in “business dynamics”. Both are now part of the more general entrepreneurial decline. This includes a substantial “discouraged worker” element in the US population, leaving an historically low recent labour market participation rate, which was once picked up by start-ups, but no longer. So, to conclude this momentary diversion into the “double-whammy” experienced by the US economy of large-firm job loss and a precipitate decline in start-ups in recent years, what are the causes? Business economists seem to be guided more by ideology than research evidence, choosing the only indicators that match their political preferences. Right-wingers blame over-regulation and education policy while left-wingers blame corporate tax-cuts and “financialisation” which favours mergers, rent-seeking and structured finance rather than financing enterprise. Wherever the answer lies, the large firm–small firm contraction shows up in low productivity performance. Hitherto, productivity increases were assumed to be the product of start-ups and entrepreneurship because large firms had become, at best, imitators of SME innovations rather than innovators in their own right—see, again, Erixon and Weigel [ 18 ]; Lindsey and Teles [ 19 ]. But now, with the start-up data showing declining “business dynamism” it is likely that a major part of the “productivity paradox” is explained by the absence of innovators in recent times. A further, related contributory factor is that the innovation frontier is now even more highly skill and competence demanding for new graduates. This, too, gathers testimony from the close-to halving in the percentage of graduates who were entrepreneurs from 4.0% in 1992 compared to 2.2% in 2017. Coincidentally and not conforming to the received image, Brookings’ [ 33 ] research shows that many self-employed individuals have relatively low education levels and opt into entrepreneurship as a default rather than choosing it. Accordingly, the self-employed have lower life satisfaction than their wage-earning peers. This contrasts with many prior studies that document a positive relationship between entrepreneurship and life satisfaction. J. Open Innov. Technol. Mark. Complex. 2019,5, 22 7 of 16 J. Open Innov. Technol. Mark. Complex. 2019, 5, x FOR PEER REVIEW 7 of 16 Figure 2. Percent of working-age Americans employed or looking for work. Source: BLS. Exploring more deeply into the historical record, Hathaway and Litan [27] began with demographics and found that there were close correlations between population change and startup activity both for the 1980s (before which there was no modern start-up data) and the contemporary period. In simple terms, both periods showed strong demographic effects but also less obvious ones. The analysis was done with regions as the basis for comparison and firms as their unit (not establishments, existing ones being responsible for spawning up to 40% of new businesses). Predictably the “Sunbelt” regions in the south west and Florida out-performed the north east “Rustbelt” regions. Data for metropolitan city-regions revealed a more intense correlation. This is consistent with two contrasting hypotheses; one is that firm formation rises with the supply of population; the other is that it rises with demand from a rising population. Either way the correlation holds but so, possibly unexpectedly, does the one that shows that high start-up regions decline in firm-formation capacity after about thirty years. So given thirty years of relative start-up quiescence in the Rustbelt, it was joined thirty years after population grew significantly in the Sunbelt, which together accounts for an overall regression to the mean. Further analysis suggests such regression is influenced by “business consolidation” or the aging of regional firms and the erection of evolving barriers to entry by established firms [34]. In combination these correlated modestly but the strongest magnitudes underlying change were the initial start-up rate, subsequent population decline and greatest declines in personal income growth. A local “boomfollowed-by-bust” profile predominated in regional start-up declines. This may be what the US firm formation rate is displaying, namely a seemingly immutable secular decline in firm-formation, or if it is preferred, “entrepreneurship”. We now briefly return to the research pointing consistently to the decline in US entrepreneurship in recent years to establish what, if any, plausible hypotheses or putative explanations are offered before, in the final main section of this paper we review the status of entrepreneurship in selected countries and regions. First, let us pay attention to a summary article by the group of researchers into this issue led by Decker et al. [23] starting with their cited paper entitled “The decline of high growth entrepreneurship”. They point at the outset to a significant change in high growth entrepreneurship since the 1980s to 1990s when decline was dominated by a dearth of start-ups in the retail trade. By the 2000s though, this profile was replaced by a different segment of the start-up product market with a sharp decline in high-growth young businesses in key innovative sectors like high tech. Clearly there was a marked decline in transformational Percentage of working-age US employed or looking for work Figure 2. Percent of working-age Americans employed or looking for work. Source: BLS. Exploring more deeply into the historical record, Hathaway and Litan [ 27 ] began with demographics and found that there were close correlations between population change and start-up activity both for the 1980s (before which there was no modern start-up data) and the contemporary period. In simple terms, both periods showed strong demographic effects but also less obvious ones. The analysis was done with regions as the basis for comparison and firms as their unit (not establishments, existing ones being responsible for spawning up to 40% of new businesses). Predictably the “Sunbelt” regions in the south west and Florida out-performed the north east “Rustbelt” regions. Data for metropolitan city-regions revealed a more intense correlation. This is consistent with two contrasting hypotheses; one is that firm formation rises with the supply of population; the other is that it rises with demand from a rising population. Either way the correlation holds but so, possibly unexpectedly, does the one that shows that high start-up regions decline in firm-formation capacity after about thirty years. So given thirty years of relative start-up quiescence in the Rustbelt, it was joined thirty years after population grew significantly in the Sunbelt, which together accounts for an overall regression to the mean. Further analysis suggests such regression is influenced by “business consolidation” or the aging of regional firms and the erection of evolving barriers to entry by established firms [ 34 ]. In combination these correlated modestly but the strongest magnitudes underlying change were the initial start-up rate, subsequent population decline and greatest declines in personal income growth. A local “boom-followed-by-bust” profile predominated in regional start-up declines. This may be what the US firm formation rate is displaying, namely a seemingly immutable secular decline in firm-formation, or if it is preferred, “entrepreneurship”. We now briefly return to the research pointing consistently to the decline in US entrepreneurship in recent years to establish what, if any, plausible hypotheses or putative explanations are offered before, in the final main section of this paper we review the status of entrepreneurship in selected countries and regions. First, let us pay attention to a summary article by the group of researchers into this issue led by Decker et al. [ 23 ] starting with their cited paper entitled “The decline of high growth entrepreneurship”. They point at the outset to a significant change in high growth entrepreneurship since the 1980s to 1990s when decline was dominated by a dearth of start-ups in the retail trade. By the 2000s though, this profile was replaced by a different segment of the start-up product market with a sharp decline in high-growth young businesses in key innovative sectors like high tech. Clearly there was a marked decline in transformational entrepreneurs in this sector. Their contribution aims to tease out key factors that hypothetically may be considered responsible for this change. J. Open Innov. Technol. Mark. Complex. 2019,5, 22 8 of 16 One question concerns the distinction between “transformational” and “lifestyle” entrepreneurs, the latter conceived as the less “embedded” of the two. Their evidence shows that, while retail predominated in the earlier period, equivalent declines occurred later in the “information” sector of the start-up economy. The authors define high tech as firms with highest concentration of science, technology, engineering and mathematics (STEM) workers to which are added appropriate STEM sub-sectors from ICT manufacturing and scientific services. The data reveal that while sectoral entrepreneurship decline occurred throughout the 1978–2011 period, information start-ups grew most in the period leading up to 2000 but declined at exactly the same rate as retail after the “dot.com” slump thereafter—specifically booming and slumping 1997–2005. High tech thus displays more “skewness” than retail because it had a predominance of young start-up entrepreneurs, many of whose firms disappeared in the slump while retail firm start-ups were not characterised by such a youthful cohort of start-up entrepreneurs but ended up with a similar downward trajectory nevertheless. A key question, apart from the obvious “shakeout” effects of the dot.com slump is why did both these demographically and skills-profile sectors reach the same downward destination? The evidence mainly points to fewer young high-growth start-ups in retail than in ICT. The authors also determine that the post-2000 period shows a decline in transformational entrepreneurship, at least as measured by employment growth. There was also a common rate of decline in business dynamism in all sectors. This points to a decline in high-growth young firm activity although it is unclear if causality is more singular than multiple, with sector-specific implications. For example, research shows that retail trade entrepreneurship decline is largely an effect of displacement of SMEs by large national chains that were more competitive through enhanced productivity. In passing, they in turn are outcompeted in 2018-onwards by online retail as practised with devastating effect on the likes of Sears (also mall chains like Abercrombie & Fitch, American Apparel, Best Buy, Gap, J. Crew, Kenneth Cole, Macy’s, Radio Shack, Rockport, Toys ‘R’ Us, The Limited, and Urban Outfitters) by competition from Amazon. A further feature of the convergence of decline in business dynamics between retail and high tech is that in the post-2000 period while high tech includes fewer young firms, it is also the case they are less likely to have high growth. This period of decline in high-growth entrepreneurship in high tech coincides with the decline in aggregate productivity growth in the high-tech sector more generally as documented by Fernald [28]. The evidence here for IT productivity is that it declined before the Great Crash or Recession of 2008. This in turn was caused by the slowdown both in industries producing and using IT intensively. While capital deepening, labour quality and total factor productivity grew at rates unforeseen since the 1945–1973 era, the dot.com boom was shortlived and pervasive as IT took on the character of a general purpose technology (GPT) after Helpman [ 35 ] it took a Solow residual (or paradox) interlude for it to be absorbed fully into the IT productivity statistics as indicated in a belated, marked increase in labour quality around 2007–2013. The low-hanging IT fruit had been plucked by 2005 but could not be digested much until nearly a decade later. The slowdown heralded a lower GDP growth rate and associated lower gross investment rates leading to lower utilisation and associated innovation demand that might otherwise have stimulated entrepreneurship, pari passu. This is evidently well-identifiable in the contribution to IT entrepreneurship from its adoption and eventual utilisation in the retail trade. Even though it is argued by many, including Fernald [ 28 ] that entrepreneurship started to decline early in the twenty-first century, Fort et al. [ 36 ] also show that young and small firms, already particularly sensitive to fluctuations in housing prices through a range of credit channels, meant that start-ups were hit hard during and since the Great Recession. So there is now evidence that high-tech entrepreneurship was already in decline before but then exacerbated even more by the global financial crisis of 2008 and afterwards. So there is broad agreement on the underlying narrative of the story that turned the assumptions of those who see an entrepreneurial growth profile in the current and foreseeable economic era in the USA. It is roughly as follows. To the contrary, observable rates of start-up activity, new firm entry and job creation have trended steadily down over the past 1984–2014 period with notable further declines since the Great Recession. 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