The Brain Drain of Entrepreneurial Talent Mary Boardman Fiona Sussan Louis Daily University of...
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Transcript of The Brain Drain of Entrepreneurial Talent Mary Boardman Fiona Sussan Louis Daily University of...
The Brain Drain of Entrepreneurial Talent
Mary BoardmanFiona SussanLouis Daily
University of PhoenixCenter for Global Business Research
Introduction-Allocation of Entrepreneurial Talent
• Entrepreneurs have profit motives, means to the end are less important
• Literature primarily comes from Baumol (1990), Murphy, et al. (1991), Sobel (2008), Desai (2008)
• Incentives matter within a society:• Entrepreuneurship can be productive,
unproductive, or destructive• Entrepreneurially talented individuals can
choose to engage (or not engage) in entrepreneurship
• What about migration of talent?
Migration of Entrepreneurial Talent
• Allocation of Talent literature assumes entrepreneurial talent is constant within each country
• Talent clusters in the industries and activities where payoffs are highest
• We challenge the assumption of constant levels of entrepreneurial talent within country
• Do the entrepreneurially talented migrate, clustering geographically where payoffs are highest?
Hypotheses
• Talent migrates away from:• Communist
regime• Political instability• Conflict
• Talent migrates toward:• Larger markets• Higher growth• Richer countries• More favorable
institutions
Data Sources
• Forbes Billionaires list 2008• Approximately 1200 total, from
that:• Wealth must be self-made• Must have made a decision to move
internationally• Must have conducted entrepreneurial
activities in new country
Data Sources
• Other Sources:• CIA World Factbook
• Used to assess conflict, political instability, and/or communism
• UN Development Data• Used to assess growth and GDPPC
• Supplemental Sources• Used to complement Forbes bio
data
Analysis
• Data too limited for rigorous econometric testing• Insignificant regression results
• Identified countries with brain gain, drain and circulation
• Net gain and/or loss of at least 6 future billionaire entrepreneurs
Major Talent Gainers/Losers
• U.S.: +21 (Gained 32, Lost 11)• U.K.: +4 (Gained 9, Lost 5)• Russia: +4 (Gained 7, Lost 3)• China: +4 (Gained 8, Lost 4)• Hong Kong: 0 (Gained 7, Lost 7)• Canada: -1 (Gained 5, Lost 6)• India: -4 (Gained 2, Lost 6)• Israel: -7 (Gained 0, Lost 7)
US Gains• Countries: Argentina, Canada (5), China, France,
Germany (2), Hong Kong (2), Hungary, India (5), Iran (2), Ireland, Israel (2), South Africa, Taiwan (3), UK (3), USSR, and Venezuela
• Biotech/Pharmaceuticals (2), Commodities/Resources (1), Communications, Financial Services/Investments (4), IT (10), Manufacturing (2), Media/Entertainment (3), Real Estate (6), Retail, Venture Capital (2), and Other
• Sixteen entrepreneurs obtained higher education in the US and stayed
• No conflict or political instability
US Losses
• Countries: Canada (3), China (2), Hong Kong (2), India, Russia, Switzerland (2). Except for Switzerland, the movers were either returning to their home country or had ethnic ties to the move.
• Industries: : Biotech/Pharm, Commodities/Resources (4), Communications, Financial Services/Investments (2), IT, Logistics (2), and Retail
• No entrepreneurs left and obtained education elsewhere
• No conflict or political instability
UK Gains• Countries: Australia, Egypt, Hungary,
Iraq, Russia, Singapore, South Africa (2), and Switzerland
• Industries: Communications (2), Commodities/Resources (2), Financial Services/Investments (4), Media/Entertainment (2), Real Estate/Construction, and Other
• Two entrepreneurs received higher education in the UK and stayed
• No conflict or political instability
UK Losses
• Countries: Bahrain, Hong Kong, and US (3)
• Industries: Commodities/Resources, Financial Services/Investments, Media/Entertainment, Retail, Venture Capital
• One person received a degree abroad
• No conflict or political instability
Russia Gains• Countries: Germany, Iceland, Israel,
Kazakhstan, New Zealand, Turkey, and US• Industries: Commodities/Resources (4),
Financial Services/Investments (3), Real Estate/Construction (3), Communications, and a Brewery
• No additional education attained• No moves into conflict/political instability,
but 2/7 moves were in the aftermath of the USSR collapse.
Russia Losses• Countries: Hungary, Iceland, and the
UK• Industries: Communications,
Commodities/Resources (2), Financial Services/Investments (2), similar to the industries in which they gained.
• No additional education attained• No moves from conflict or in the
aftermath of the USSR collapse
China Gains• Countries: Australia, Hong Kong (4),
Singapore, and US (2), all are ethnic Chinese.
• Industries: IT, Manufacturing, Real Estate/Construction (2), Retail, and Solar Power.
• No additional education attained• No moves into conflict/political
instability.
China Losses• Countries: Hong Kong (2),
Singapore, and US• Industries: IT, Manufacturing,
Media/Entertainment, Real Estate, similar to the industries in which they gained
• One person received a degree abroad (BA/BS-MA)
• One out of four moves from a conflict/political instability situation
Hong Kong Gains• Countries: Brazil, China (2),
Malaysia, UK, and US (2), all are ethnic Chinese.
• Industries: Commodities/Resources (3), Logistics (2) Manufacturing (2), Media/Entertainment, and Real Estate/Construction
• No additional education attained• No moves into conflict/political
instability
Hong Kong Losses• Countries: China (4), Taiwan, and US
(2), all ethnic Chinese• Industries: IT, Manufacturing (5),
Real Estate/Construction• No additional education attained• No moves into conflict/political
instability
Canada Gains• Countries: Israel, Jamaica, and US
(3)• Industries: Biotech/Pharmaceuticals,
Commodities/Resources, Financial Services/Investments (2), and Real Estate/Construction
• Two entrepreneurs received education in Canada and stayed
• No moves into conflict/political instability
Canada Losses• Countries: Singapore and US (5)• Industries: Biotech/Pharmaceuticals,
Commodities/Resources, Financial Services/Investments, IT (2) Media/Entertainment, and Real Estate/Construction
• Two entrepreneurs received education outside of Canada (the US) and stayed
• No moves into conflict/political instability
India Gains• Countries: Oman and US • Industries: Commodities/Resources
and Real Estate/Construction• No additional education attained• No moves into conflict/political
instability.
India Losses• Countries: Oman and US (5). • Industries: Commodities/Resources
Communications, IT (3), Real Estate/Construction, and Venture Capital
• Four entrepreneurs obtained education in the US and stayed
• Three entrepreneurs moved from a conflict/political instability situation
Israel Gains• Countries: None• Industries: None• No additional education attained• No moves into conflict/political
instability• However, several people migrated
to Israel, THEN migrated elsewhere and became entrepreneurs
Israel Losses• Countries: to Australia (2), Canada,
France, Russia, and US (2)• Industries: Commodities/Resources,
Financial Services/Investments, Media/Entertainment, and Real Estate/Construction (5)
• One person received a degree abroad
• Three out of seven moves were from a conflict/political instability situation
Next Steps
• Gather additional years of data• Gather data on millionaires• Assess countries that excel in
keeping talent (study people who do not migrate)
• Incorporate variables from GEM data
• Also account for other factors, such as preferential treatment (Russia)
References• Acemoglu, D. (1995). ‘Reward Structures and the Allocation of Talent,’ European
Economic Review. 39, 17-33• Acemoglu, D., and T. Verdier (1998). ‘Property Rights, Corruption, and the
Allocation of Talent: A General Equilibrium Approach.’ The Economics Journal.’ 108, 1381-403.
• Baumol, W. (1990). ‘Entrepreneurship: Productive, Unproductive, and Destructive.’ The Journal of Political Economy. 98 (5), 893-921.
• Coyne, C., and P. Leeson (2004). ‘The Plight of Underdeveloped Countries.’ Cato Journal. 24 (3), 235-49.
• Desai S. (2008). ‘A Theory of Destructive Entrepreneurship.’ Essays on Entrepreneurship and Postconflict Reconstruction. Fairfax, VA: George Mason University. 15-42.
• Forbes. The World's Billionaires. (2008) Available on 4-1-2015 from: “http://www.forbes.com/2008/03/05/richest-people-billionaires-billionaires08-cx_lk_0305billie_land.html.”
• Murphy, K., A. Shleifer, and R. Vishny (1991). ‘The Allocation of Talent: Implications for Growth.’ The Quarterly Journal of Economics. 106 (2), 503-30.
• Sobel, R. (2008). ‘Testing Baumol: Institutional Quality and the Productivity of Entrepreneurship.’ Journal of Business Venturing. 23 (6), 641-55.
Hypothesis Testing
Hypothesis Testing
Hypothesis Testing