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Resource Center > Article
Why America Needs Small Business Entrepreneurs and the Policies to Support Them
1 Sep 11 Posted by: Kathleen C Lanza
in Start-Up
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Entrepreneurship in America is a vital source of employment, economic growth and innovation.  In fact, it’s one of the few things that continues to make our nation great and that will ensure we remain globally competitive for the foreseeable future.  Policymakers and pundits alike would agree that encouraging entrepreneurship of any kind, including home-based and other small businesses and franchises in particular, will need to be a critical component of our country’s economic recovery.

This viewpoint is wholly supported by a recent Kauffman Foundation study entitled “Frontier Economics: Why Entrepreneurial Capitalism Is Needed Now More Than Ever.”  It concluded that America’s long-term economic wellbeing will largely depend upon its ability to encourage entrepreneurial start-ups.  Furthermore, the report emphasizes steps that can and must be taken to increase free-market competition, starting with reduced government intervention.

The study’s author and Kauffman Foundation senior scholar in research and policy, Brink Lindsey, says that “innovative growth,” which results from the generation of new ideas, becomes far more important as countries grow richer.  He terms this relatively new economic paradigm “frontier economics,” and explains how it is largely dependent upon technological development and advancement.  In this new economic reality, according to a statement about the report’s findings, “the ceaseless trial-and-error experimentation of competitive markets becomes indispensable.”

It goes on to explain that as technological advancements continue to be made, mass production and distribution creates mass affluence, which in turn creates an increased need for “wide-open competition among countless rival new ideas.”  It is only by fostering this new level of competition that the “puzzle of increasing consumer welfare” can be solved.

Wealthier nations must “rely on innovation to keep growth going and, therefore, the more we need free-market policies that foster the creation of new businesses and the implementation of new ideas,” Lindsey says.  “If we are to rise out of the current slump and launch a new, 21st century boom, it is in the direction of freer, more competitive markets that our policies must turn.”

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