Getting To The Heart Of Entrepreneurship

Like most Western countries in the 1970s, Italy was experiencing its worst economic downturn since the worldwide depression four decades earlier. Double-digit inflation and high unemployment soured la dolce vita.

Maria Minniti, Cox School of Business

“People were concerned about job security,” economist Maria Minniti recalls about her native country. “They worried about being able to afford their rent. Everyone was affected – my family, the parents of my friends. Although I was a child, I could tell there was much distress throughout society.”

Despite its problems, Italy remained a wealthy country, particularly when compared to the misery of the Third World exposed in newscasts in the 1980s. Dismayed by what she saw, Minniti searched for a way she could effect positive change where it was needed most. As the young political science student was researching an honors thesis, the nascent Grameen Bank project in Bangladesh grabbed her attention. The microcredit initiative, which earned the 2006 Nobel Peace Prize for American-trained economist Muhammad Yunus, assisted the rural poor in the famine-ravaged country by making tiny loans, primarily to women, to jumpstart small, self-sustaining businesses. As these female entrepreneurs took baby steps up the economic ladder, they gave their children a boost; consequently, entire families lifted themselves out of grinding poverty.

Minniti’s future snapped into focus as she probed deeper into the complex and multilayered role played by entrepreneurs in the economy. “We all want to make a difference, especially when we’re young, and I believed that, as a social scientist, I could make a difference by understanding the issues that influence economic growth, such as having the right institutions in place to promote entrepreneurship.”

Following a national search, Minniti recently was named the Bobby B. Lyle Chair in Entrepreneurship in the Cox School of Business. “Maria adds depth to the entrepreneurship team at Cox with her res­earch on a global scale,” says Jerry F. White, director of the school’s Caruth Institute for Entrepreneurship.

A native of Rome and a longtime New Yorker, Minniti earned a Ph.D. in economics from New York University. She comes to SMU from Babson College, Boston, where she was a professor of economics and entrepreneurship and served as research director for the Global Entrepreneurship Monitor (GEM) project. Launched in 1999 and coordinated by Babson and the London Business School, GEM is the largest survey-based study of entrepreneurship.

“We assume if there’s more entrepreneurial activity, there will be more economic growth, but we don’t exactly know how the mechanism works,” she says. “We need to better understand which institutional settings are most effective and why. While entrepreneurship is a mechanism for growth, good institutions are a necessary condition for productive entrepreneurship.” The project collects data from more than 60 countries annually to paint a global picture of entrepreneurship and its role in economic development.

“Over the past few decades it has become very apparent that entrepreneurs are the change agents of an economy,” the Caruth Institute’s White says. “If you want to revitalize your country, then encourage entrepreneurship.”

“We assume if there’s more entrepreneurial activity, there will be more economic growth, but we don’t exactly know how the mechanism works. We need to better understand which institutional settings are most effective and why. While entrepreneurship is a mechanism for growth, good institutions are a necessary condition for productive entrepreneurship.”
– Maria Minniti

Broadly defined, “entrepreneurship generates innovation or taps unused resources,” Minniti says. The term “entrepreneurship” is entwined in the vernacular with small businesses, but it can be appropriately applied to ventures of all sizes. She offers Southwest Airlines, Google and 3M as examples of large companies that nurture entrepreneurship within a corporate framework by empowering “individuals to pursue their interests and to research and develop new projects and products.”

In the fall she will teach her first SMU classes – on business decision-making. “We will talk about how individuals make rational decisions, and how they can deviate from the rational by following ‘gut’ feelings, which are influenced by rules of thumb and biases,” she explains. “In the end, we want to be able to make better decisions as both entrepreneurs and consumers. When facing an uncertain choice, the best way to make better decisions is to begin by asking the right questions.”

Until then, she will continue to delve into the characteristics of entrepreneurial behavior and the relationship between entrepreneurship and economic growth. Eager to continue developing her research agenda at SMU, Minniti may not have to venture beyond her own backyard. “Human capital is the main resource of entrepreneurship, and with a fast-growing, ethnically diverse population, Dallas has a lot of that,” she says. “The Dallas area lends itself very well to an exploration of what works and what doesn’t to encourage entrepreneurship.”

A thoughtful and curious observer, Minniti finds that her warm manner and Italian accent are good icebreakers as she explores her new city, drawing her into conversations with everyone from taxi drivers to fellow shoppers. “I’m always asked where I’m from. And when people find out that I have just moved to Texas, they immediately list the many reasons I will love it here,” from reasonable housing prices to the abundance of good restaurants, she says. “It’s a positive sign when so many people can find so many things they like.”

– Patricia Ward