If I live outside the United States, do Rich-versus-King tradeoffs apply to founders in my country?
In recent months, one question I have gotten on a regular basis is whether Rich-versus-King tradeoffs are specific to founders from the United States or are more universal. (See here for a blog-post about the core concept, here for a fuller article in Harvard Business Review.) The data with which I have analyzed the tradeoffs are almost exclusively from the U.S., so it’s a very valid question.
In recent months, I have had several in-depth discussions with entrepreneurs from other parts of the world (multiple visitors from India, some during a trip to China in December, and others during my March visiting-scholar time in Israel). That anecdotal evidence has led me to two tentative conclusions: (1.) the tradeoffs are pretty universal, but (2.) compared to the U.S., some cultures have a little more of an emphasis on Rich motivations while others have more of an emphasis on King ones.
Soon after those discussions, I was reading a recent publication from the Global Entrepreneurship Monitor, an international academic research consortium. Their 2007 Global Report contained a 42-country survey of entrepreneurship, and in it, I found one chart (Figure 8 in the Report) particularly interesting.
One of the GEM analyses focuses on “opportunity-driven entrepreneurs,” and separates into two categories their motivations for starting their ventures:
- “Increase income”
- “Independence”
From the brief description in the GEM report, these motivations seem to map directly to “Rich” and “King” motivations, respectively. Thus, the GEM analyses could shed light on our question about Rich-versus-King motivations around the world.
The chart in the report (below, I have split the chart into two halves, for legibility) groups the countries into (1.) High-Income Countries and (2.) Middle- and Low-Income Countries.
Four things struck me in these charts:
- Of the 23 High-Income Countries, the United States is right in the middle (with 11 countries below it, 11 above it).
- In the Middle- and Low-Income Countries, nearly all of the countries fall between 30% and 60% King motivations (i.e., 40-70% Rich motivations) – in other words, a pretty even mix of the two motivations.
- In the High-Income Countries, except for Switzerland and France, nearly all countries have 35%-70% King motivations (i.e., 30%-65% Rich) – again, a pretty even mix of motivations.
- The High-Income Countries seem to be a little more King driven than are the Middle- and Low-Income Countries. (It would be great to have the underlying data to test if those are statistically-significant differences between High and Middle/Low countries.)
Questions:
- Big-picture question: Is it better for a country to have founders who are relatively evenly balanced between Rich and King motivations, or to be more heavily one or the other?
- For the individual countries with which you are familiar (or in which you live or work), do you agree with the GEM data? Why or why not?
- Across countries, do you see any other patterns in the charts?
- Do you agree or disagree with the four observations above?
This is very interesting. I’m a founder of a software company in the UK, and definitely in the King rather than Rich mode. It seems to me that I’m comfortable in the UK society where this is the majority - pushing 70% on your chart. So whether its good for the country I don’t know, but I think it suits me.I have links to New Zealand, which unfortunately is not on your chart. My guess is that the Rich mindset there is in the ascendant; I should probably stick with it as a holiday destination rather than a place of business.As to other patterns in the chart, I wonder why Belgium and the Netherlands are so different.
I found your comments on the right time to start a business very interesting indeed. I went into business in South Africa in 2001 after spending perhaps my most energetic years in the corporate world. I had always wanted to go the entrepreneurial route but suffered from exactly the same predicament you indicated. I had a growing family to fend for, a bond to service and hire purchase agreements for mine and my wife’s cars. I knew at that time that there was a risk of failure and that if indeed I failed, I would literally be down in the gutters.While attending a business management course at the local university, I met up with two guys who were feeling exactly like me about business. By the time we finished the course, we had already registered our company which has been our source of livelihood for the past 8 years now and employs 23 engineers and technicians.As we grow up, we generally are advised not to burn our bridges. Hence in South Africa, it is not uncommon to find a corporate executive holding a full-time job while running a ‘small enteprise” on the side. The fear of failure is susch that they cannot or dare not take the plunge, leave their comfortable jobs and venture into the risky world of business. They would thus like to keep the bridge intact, just in case the venture fails, then they would still have their day time jobs to fall back on. What i have since learnt is that burning the bridge is actually essential to the success of the venture. With your back against the wall, failure is no longer an option and you would do whatever is required to ensure success. With the bridge in place, at the earliest sign of turbulence across the river, the temptation is run back across to the safety of one’s job. So when we started our company, all 3 of us basically quit our jobs to focus on the venture, thus burning our bridges. There was thus no job to turn to in case of failure.Perhaps you may want test this hypothesis with your students but I firmly believe burning the bridges is a prerequisite to success for the venture. i would very much want to hear what yours and other people’s views are on this matter. My email address is [email protected]
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Alan
http://holidaydestinationinindia.blogspot.com
Great post! Your research work is a real quality.
Great post, I can tell you are passionate about your writing.
These are some amazing tools. I think the people will be really grateful for the information that you have shared here on your site.
I am always looking for new cases and new examples of founders who were able to achieve both, but this is also a good definition.
It’s really great post..I have read a number of posts of yours, but this is the one that I like the most. So expecting some more ideas from your side.I would like to appreciate your work and would like to tell to my friends.Thanks for sharing;
I think a trade-off, then, involves a sacrifice that must be made to obtain a certain product, rather than other products that can be made using the same required resources.