For more than two decades, Harvard Business School professor Tarun Khanna has closely studied entrepreneurship as a means of social and economic development in emerging markets.
Between 2015 and 2019, he worked closely with the Indian government on various national commissions to frame entrepreneurship policies in India. Tarun is also associated with many profit and non-profit organizations and has written several books and essays on entrepreneurship.
In an episode of the Prime Venture Partners podcast, Tarun discussed the different facets of entrepreneurship and its evolution in India. He says,
“And we have this image in India of the state being somehow antithetical to private enterprise. At least for your generation and mine, that’s how we used to think of it. But I think that this needs an overhaul, especially with such big hits as Aadhaar, UPI, etc.
Developed and developing countries: the landscape of entrepreneurship
Entrepreneurship is never easy whether you are building a business in Boston or Bengaluru. Nevertheless, founders of startups in developed countries, such as the United States, have access to strong ancillary support institutions.
From litigation and arbitration to arbitration, entrepreneurs have access to experts for every ancillary task, giving them more time to grow their business, develop new products, and reach more customers.
But the same is not true for developing countries like India, which creates an institutional vacuum and leaves it up to entrepreneurs to create the conditions.
“That’s why I say it’s harder, more rewarding and more exhilarating. I think ‘the highs are higher and the lows are lower’ is a way of comparing the businesses I’ve done in Bengaluru with those in, say, Boston,” Tarun remarks.
The Chinese exception
Although India and China became independent in 1947 and 1949, respectively, the countries’ startup ecosystems are poles apart. The rapid growth of China’s entrepreneurial culture can be attributed to the government’s active participation and investment in scientific R&D.
Tarun estimates that in China, the R&D/GDP ratio is significantly higher than that of India. The Indian government has yet to realize the impact of scientific research on economic and social development, he says.
“I fear the lack of ambient scientific know-how, necessary to integrate science into the process of economic development and create cutting-edge companies. However, this ambient knowledge is not cultivated in India,” he adds.
Trust issues in entrepreneurship
To be successful, entrepreneurs must seek to partner with a diverse set of people. But in low-trust companies, founders often end up working with people who look like them.
They seek proximities, whether geographical, religious or linguistic, before choosing to work with a person, limiting their access to human resources and creating a new institutional vacuum.
“At the end of the day, all innovation is about mixing and matching. That’s all. So if you can mix and match with people everywhere, you’re much better off than if you’re limited to a few matching partners,” he says.
word of wisdom
When asked if he would like to share any advice with young entrepreneurs and aspiring entrepreneurs, Tarun had one thing to say: “Find a place where there are a bunch of smart people doing interesting work and dive in there and get your hands dirty. And you will inevitably learn something about human beings, and that’s all it takes.
You can listen to the full episode here.
01:00: Create the conditions to create
07:00: State of Entrepreneurship: India vs. China
3:00 p.m.: The value of trust in entrepreneurship
27:00: Work with government on entrepreneurship
34:30: The best way to learn how to create a startup
(This story has been updated with corrections to some quotes.)