Ireland, or at least the government, is in the grip of a frenzy around entrepreneurship. From local government, through the higher education system, to the highest in the land, hardly a day goes by without some new band jumping on the wagon. We are being flogged with the mantra that we must start up, become entrepreneurs, be self-employed, yadda yadda yadda. It’s a diversion of resources, built around a self-perpetuating meme. The SME sector is really important, in Ireland and in Europe. In Europe, as of 2012, SMEs accounted for over 99% of all companies, employing just under 90m people. They account for 66% of total employment and for about 58% of total output. However, when we think of SME’s in Ireland we think of small and medium-sized companies. The SME definition is companies with less than 250 employees, €50m in total turnover. This is by Irish standards a fairly substantial enterprise. In Ireland, SME account for 68% of total employment. Thus, it makes sense, to some extent, to ensure that SMEs as a sector are in rude health. What it may not make sense to do is to pour more and more scarce resources into creating startups and micro enterprises, in pursuit of a problem that doesn’t exist.
The issue however is not so much SME’s as a group but as the makeup of them. And here we are not badly off. To hear ministers and educationalists we might think Ireland to be a SME desert, when nothing is further from the truth.
First, in Ireland, we have fewer large employers than in the EU as a whole. We therefore should put resources into ensuring that companies can transit from S to M to L(arge). As things stand this is evidentially not happening. Lets have less focus on S and more on M and L.
Second, we are fairly well represented in the startup sectors that matter. Micro companies are defined as those with less than 10 employees. The proportion of all companies which are micro and in the services sector, at about 7% of all (non holding) companies, are relatively large in Ireland. The EU average is about 5%. Curiously, despite the notion that we are overrun with construction subbies, these micro construction companies only account for about 1% of all (non holding) companies in Ireland, less than half the European average. We have a larger percentage of all companies in the micro industrial sector than in the EU as a whole.
Third, we are not short of startups. The EU business demographics database suggests that while we are not prolific in new companies, with about 6% of the existing company stock being added to each year, nor were we that horrific in company deaths, with even in 2011 only a number equivalent to 5% of the stock closing. So we are adding about 1% of companies per annum, as of 2011. From the Global Entrepreneurship Monitor, an international annual survey of same, we see similar news. Although I have concerns about the percentage of Irish start-ups which seem to be driven by the TINAE’s, those for whom There Is No Alternative but Entrepreneurs, the fact remains that we have a healthy startup culture. Compared to the OECD average in Ireland we are more likely to believe we have the skills needed to be entrepreneurs, have a greater likelihood to be owner-managers, have more graduates as percentage of entrepreneurs (but less school leavers), have older and therefore more experienced owner-managers, are more likely to have immigrants as entrepreneurs, are more likely to be in the high-tech or consumer services sectors at startup (but much less so in business services), are more likely to be offering unique products and services, and to be export orientated.
Given all this, one wonders why the frantic push? In particular, given the cuts in state support for higher education over the last half decade, why are the higher education institutions rushing to reconfigure themselves as innovation campuses, entrepreneurial universities, etc etc? Instead of universities we are creating innoversities. Why? The role of the higher education system is to provide skills, general and specific, to people as part of their education. Good practice is, when faced with fiscal constraints, to focus resources on the core business in order to survive. The core business of our universities and even our Institutes of Technology, is not to be part of the state supra and infra structure driving forward that which does not need to be driven but which needs to be consolidated. And yet “innovation is the third core of UCD” ; TCD is “forging an entrepreneurial campus” ; NUIM sees its mission as “central to innovation, economic growth”… one could go on. A read of the “about us “ pages of the Irish universities shows a major part of the education sector is now in whole or in large part captured by the meme that it’s about Entrepreneurial and innovation activities. That entrepreneurship maybe cannot be taught should make us stop and think; how have the universities gotten sucked into this? For every euro spent on setting up innovation bootcamps, incubators, start-up academies, the shebang whole parallel to the existing state system, monies are not spent on the core mission. Libraries are cut, academic and support staff not replaced, conference and fieldwork travel curtailed, student fees increased and so forth. Universities are happy to spend almost anything it seems on things and persons related to innovation and entrepreneurship; but try getting someone replaced in the Library. Irish universities spend 1.8b per annum, a large part of it from the state (but not as much as people think). They are chasing the dragon of entrepreneurship for no good reason. Whether it is because it is more fun for the university managers to hang out with cool startups and government ministers than with fusty academics, a cynical ‘go with the flow’ on the government obsession with entrepreneurship in the hope of some institutional sweeties, or god forbid a wholesale buy into the evidentially false idea that there is a problem, time and money is being diverted from the creation of a well-educated graduate cohort.
We need to stop and think again. We are never going to have ‘Stanford by the Liffey”; for one we don’t have the weather. For another, we don’t have a massive, decades in the making, world-class innovation/entrepreneur ecosystem. For a third, the 40:60 undergraduate /postgraduate or 5:1 faculty student ratio which Stanford enjoys is never going to come to the Irish higher education system. For a fourth, the Stanford spend is approx 50% the TOTAL spend on all Irish universities, and it has an endowment of €18b. Aping Stanford is as useful as SFI funding an investigation of phlogiston. Lets have the university sector deliver quality teaching and learning experiences to its target population ; lets empower and somehow fund it to include critical thinking, qualitative and quantitative skills , critical reading and hermeneutics, logic, presentation and communication skills as part of the core embedded experience of all students. Lets make it that every student takes a combination of arts, humanities, science, rather than diving into a silo or worse yet forcing them into the business school to get learned up on how to become an entrepreneur. Lets reward formally students who engage in debates, form clubs, do charity drives. Lets allow students to determine a large part of how they learn. That, combined with the natural curiosity of the young and hopefully in combination with some specific skills garnered will, I suspect, be both more socially and economically beneficial. But it wont be as much fun for the managers.
This is a version of my column in the Irish Examiner of 12 July 2014
This is a version of my column for the Irish Examiner 5 July 2014.