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The new worker’s revolution

Professor Lloyd Shefsky’s Asian book tour reveals that entrepreneurship is thriving in China

By Matt Golosinski

4/12/2007 - In the United States, entrepreneurs may earn some respect for being the economy’s real engine, but in China they are hailed as rock stars.

The fact is perhaps not altogether surprising.

China is a culture that has embraced entrepreneurship throughout its history, despite the 20th century Communist “interruption” that radically altered its political landscape, says Lloyd Shefsky. The Kellogg School clinical professor of managerial economics can attest that entrepreneurship is once more ascendant inside the Asian powerhouse.

During recent visits to China to promote a new translation of his 1996 book, Entrepreneurs are Made, Not Born, Shefsky was regaled as a conquering hero. A lecture last September at Beijing’s Tsinghua University, which published the updated text, resulted in 3,000 people clamoring to see the Kellogg entrepreneurship and family business expert. Unfortunately only 1,000 seats were available, so the school beamed the broadcast to remote campus locations to accommodate demand. Shefsky says an estimated 30,000 people ended up seeing the broadcast.

But that number pales with the millions of Chinese viewers who watched the Kellogg professor join budding Sino capitalists on television during a subsequent appearance as part of a show whose popularity Shefsky compares to such U.S. fare as “The Apprentice” and “American Idol” — if they were rolled into one package.

“There were 6,000 people at the rehearsal taping,” he says of the event held outdoors and lasting well past midnight. “The numbers just get bizarre.”

Shefsky, co-director of the Kellogg Center for Family Enterprises, was among the V.I.P. entrepreneurs overseeing the proceedings as contestants pitched their business ventures and (incongruously) performed a song or dance. From an initial 120,000 contestants, the field had narrowed to 20 finalists.

“Since I can’t speak Chinese, they had me do a long interview beforehand and dubbed it,” Shefsky says. His recorded video appears several times during the show.

For all the acclaim entrepreneurs garner in China today, the country’s political and economic situation still seems muddled. A new government-sanctioned textbook only mentions Mao once but Microsoft Founder Bill Gates three times, yet Shefsky’s passing reference to “God” during an interview still provoked the censors.

“If somebody told me I was going to be bleeped in my life, that wouldn’t have been the word I imagined would do it,” says Shefsky, who conducted numerous high-profile interviews for print, radio and television during the September visit and an encore in January.

He says China is a fascinating study in entrepreneurship, in part because of the sheer number of enterprises, most of which he describes as mom-and-pop shops. “When you see a new KFC or McDonald’s, they are huge,” Shefsky says. “But for every one of those, there are a thousand tiny kiosks that somebody starts. It’s interesting to watch because it has an influence on the next generation.”

In fact, entrepreneurship and family business are closely linked there, says Shefsky, because many of these small ventures were launched about 15 years ago, as the government relaxed certain restrictions (initial beneficiaries often were government bureaucrats). Now those aging founders need successors and are turning to their children, since Communist rule discouraged trust of anyone outside the family. Often, there’s only a single potential heir, increasing the need for the hand-off to go smoothly. Such pressure makes for a rapt audience.

Shefsky’s core message? Entrepreneurship is not merely an “American” trait; it’s largely universal, despite cultural variants. In fact, everyone is born with what it takes to become an entrepreneur, he says. The problem is children soon lose this ability.

“For perhaps good reasons we drive it out of them,” says Shefsky. “We teach kids to fear failure. We teach kids to not take risks. We teach them to be wary of the unknown.

If you don’t have a lack of fear, if you don’t have tolerance for ambiguity, you can’t become an entrepreneur. We’re born with the quality, but it’s driven out and you have to get it back.”

That’s a tough job, he says, especially in business schools where students typically are mastering the tools to help them avoid risk. Shefsky isn’t about to upset that apple cart. Instead, he tries to adapt the MBA toolkit for use in entrepreneurship.

“When I ask questions like, ‘How would you create a marketing plan for the following product?’ usually I get an answer that would cost $10 million and take a year and a half,” he says. “Then I explain how an entrepreneur starting a business without those resources might have done it differently."