Teaching About Entrepreneurship

[Editor’s note: In her previous post, Temnick talked about how she teaches her students about human capital.]

Economics teachers never fail to miss introducing their students to the Factors of Production. Land, labor, and capital all have their day. But too often, one of the most critical factors is left out- entrepreneurship. How do I teach it?

I begin by asking for volunteers to attempt to spell out-loud, without looking at a reference, the word, entrepreneurship. I sound a buzzer at a first mistake and move on to the next student, and the next. It usually takes three student attempts before it is spelled correctly. This may be the reason that some textbooks substitute the term enterprise for this factor of production. I prefer the former term. (I have a relentless aim to emphasize spelling and geography lessons as opportunities arise in the high school classroom. I rotate seating in my classroom so that students sitting under the world map are responsible for pointing out the locations of countries that come up in various lessons.)

After the lesson on Human Capital, I ask students how this factor of production differs from Entrepreneurship, as well as for examples. Inevitably, names of individual entrepreneurs come up, Steve Jobs, Bill Gates, Elon Musk… mostly male and tech related. Why not Taylor Swift? Or Oprah Winfrey? After acknowledging that these are indeed individual entrepreneurs, we discuss the definition of entrepreneurship: the risk-taking, innovation, and organization of resources for production. It is a process of discovery, most often a collaboration by many individuals over time that leads to small and sometimes large changes in goods, services and processes.

In the tens of thousands of Research and Development Departments in U.S. institutions, patents are awarded for new inventions or changes made to existing products. This intellectual property award protects the owner for a limited time from others copying, using or selling the invention. Roughly 90% of all patents are awarded to firms (corporations, universities, and other organizations), while the remainder go to individual inventors. Entrepreneurs can be awarded either patents or copyrights depending on the type of intellectual property they create. Patents are awarded for useful new items, copyrights generally protect authorship (of books, software, music, etc.). The distribution of copyrights between firms and individuals varies with the type of creative work.

I then ask. what are recent examples of inventions of brand new products? What are examples of tweaks or changes to existing products? 

The Covid-19 vaccine, AI-powered health devices like Apple watches and Fitbits, plant-based meat alternatives, TikTok, craft breweries, eco-friendly cosmetic packaging… I encourage the list to be continued while I type them into a smart board projected document. 

Then I ask what countries of the world file the most patents? Which countries earn the most copyrights?

Here I remind myself of the great responsibility I have to connect the institutions of free market societies to the incentives that influence flourishing entrepreneurship. Demographic differences or feverish patriotism are not the drivers.

Entrepreneurship prospers where contracts are upheld by courts of law, where private property is protected and can be used for collateral, where profits can be earned and retained by the firm or individual risking their time and capital to innovate. These are only some of the features of an enterprising society. Others include an educational system that promotes the exploration of creative endeavors, access to global markets, and cultural and community support for business ventures that encourage individuals to devote time, effort and finances to produce their products and ideas. A free market economy, as examined in Adam Smith’s  Wealth of Nations, illuminates how resources – those factors of production- are best allocated to produce the goods and services desired by society. 

I assure students that we will revisit the multiple topics brought up in that description, but it is never too early to reinforce the market connection. Back to the question, ‘who leads the world in patents and copyrights, these symbols of a prosperous entrepreneurial society’? The right answer is usually guessed, but that guess is hopefully more informed. 

The U.S. consistently ranks at the top for patent filings, particularly driven by its strong technology, pharmaceutical, and automotive sectors. Major corporations like Apple, IBM, and Microsoft contribute significantly to the country’s patent filings.

The United States is the undisputed leader in global startup businesses.  From Silicon Valley, the epicenter of tech innovation, to New York City, to newer hubs like Austin Texas, talented workers are attracted to startups across various industries.  

The U.S. leads the world in copyrights, particularly in entertainment, software, and literature. The dominance of Hollywood, Silicon Valley, and the robust publishing industry makes the U.S. a global leader in copyrights.

Additionally worth a mention is how easily the spirit of existing and potential entrepreneurs can be crushed by an authoritarian regime disrupting existing institutions. This can also generate conversation about countries with limited f entrepreneurship.

As an advocate of proper technology use in the classroom, I now have students work in teams to conduct their own research on global patents and copyrights, or business start-ups, research and development funding or any related topic. Teams then share with the class an interesting finding or observation from a country other than the United States. (The students seated under the map will point out each location as students name their country and their unique findings).  

The class closing is an opportunity for a student volunteer to differentiate human capital as the physical and intellectual work of the laborer with the entrepreneur’s risk-taking, innovative actions. This might generate interest in future work for a firm that is part of the entrepreneurial activity in a growing economy. 

Two factors of production down, and now land and capital need an introduction. Coming Soon!