Below is an article featured in the Harvard Business Review. Two of the authors are Professors of Entrepreneurship at Aalto University in Finland, the host country of our 2019 ICSB World Conference.
Starting a Business Can Increase Older Workers’ Quality of Life (Even When It Doesn’t Pay Well)
by Maria Minniti, Teemu Kautonen, and Ewald Kibler
As a result of declining birth rates and increasing life expectancy, the average age of the global population is increasing. This demographic trend has important implications for the labor market. Aging individuals are not always able to find satisfactory outlets for their abilities. Moreover, finding sufficient funds to maintain the current level of pension and health-care benefits is a major concern for many countries.
To investigate these issues, we looked at a group of late-career workers who chose to work for themselves or start small companies instead of retiring or remaining in their current jobs. We found that, despite making less money on average, becoming entrepreneurs triggered a significant increase in their quality of life. Entrepreneurship is not always about the money, and late-career individuals who voluntarily transition to it are generally better off.
To better understand the outcomes achieved by these workers, we compared individuals who switched to entrepreneurship with those who remained in their original employment, as well as with those who switched to another job as paid employees. This allowed us to examine how the individual’s levels of income and quality of life changed in response to a career transition.
Our data came from five biennial surveys conducted between 2002 and 2011 for the English Longitudinal Study of Aging funded by the UK government. The purpose of these surveys was to generate data useful for analyzing the dynamics of aging and the relationships between economic circumstances, physical and mental health, and social and psychological issues. We limited our sample to 2851 individuals aged 50–67 years who were resident in England and employed full time at the beginning of each survey. Among them, 115 switched to entrepreneurship, 464 switched to another job, and 2272 remained in the same job.
To analyze the data, we used a technique known as propensity score matching. This technique matches each member of the group being studied (late-career workers who switch from employment to entrepreneurship or a new job) with a virtually identical member of a control group (late-career workers who did not switch), and let us compare the changes in quality of life and income resulting from the switch. To ensure the closeness of the match, we considered, in addition to quality of life and income before the career switch, each person’s gender, age, physical and mental health, close social network, and overall financial wealth. Importantly, to measure quality of life accurately we computed a detailed index based on multiple indicators of autonomy, self-realization, control, and pleasure developed and thoroughly tested by gerontology scholars.
We found that switching to a new job increases the quality of life index compared with staying in the same job. However, the increase experienced by late-career workers switching to entrepreneurship is significantly larger, on average, than those experienced by all others. That is, transitioning to entrepreneurship increases quality of life significantly more compared with staying in the same job or switching to another paid job. Yet switching to entrepreneurship meant, on average, a significant reduction in income not observed in the other groups.
Previous research has focused exclusively on income considerations, which suggested that older workers may be less likely to engage in entrepreneurship than their younger counterparts. The financial benefits from starting a business tend to be risky and realized over time, often with significant delays. Older workers are therefore less likely to get a long-run financial gain from entrepreneurship. Our study points to a different story: When non-financial motives are added to the picture, entrepreneurship allows late-career workers to achieve a higher quality of life even if it comes at a significant cost in income.
Our analyses yielded some further results. 44% of people who switched to entrepreneurship worked as many or even more hours per week as they did before switching. Although based on a small number of cases, this result points to the possibility that late-career entrepreneurship is not always about making a phased withdrawal from the workforce. Rather, it may often be a way to benefit from increased opportunities for self-realization.
Our research suggests that governments should consider ways to help older workers move into entrepreneurship as a viable option, rather than retirement or staying in a work experience that is no longer satisfying. Late-career entrepreneurship can be socially sustainable because older workers undertaking such transitions are, on average, better off. While we do not know to what extent our results apply to other countries, a similar pattern is likely to emerge at least in other developed economies. Thus, late-career entrepreneurship can allow societies to move from supporting aging models that emphasize economic inactivity and dependence, toward active aging models that are better suited to address the personal needs of aging individuals.
Active aging models should encourage older workers to feel that entrepreneurship is an acceptable career move despite their age. Institutions have an important role in enabling this social change. Pension and tax systems should not penalize entrepreneurs, and lenders should not penalize older workers. Among other things, entrepreneurs tend to have longer working careers than employees and contribute significantly to the transferring of knowledge across age cohorts. All generations benefit from their continued presence in the work force.
On October 26th and 27th, The George Washington University School of Business will host the 8th Annual GW October Entrepreneurship Research and Policy Conference. The conference theme will be New Frontiers in Entrepreneurship and the Definition of Work. The conference will bring together practitioners, educators, policy makers and industry CEOs and leaders to explore the concept of the new entrepreneurial frontiers like automation and universal basic income – identifying key stakeholders and how they can collaborate for success. We will discuss specific examples where pioneering growth in these new entrepreneurial frontiers are taking place. Please read below to view the various plenary sessions featured at the conference. A major new session is added titled: The End of The World as We Know It: The Idea Time Capsule.
New Frontiers in Entrepreneurship and the Definition of Work
Industrial automation and artificial intelligence (AI) are bringing rapid changes to the workplace. This is particularly true in fields such as defense, healthcare, education and in the service sector. In 2014, Forrester research estimated that U.S. business to business (B2B) online sales revenues were $1 trillion. This staggering statistic help illustrate how quickly B2B, or wholesale ecommerce, made inroads in the marketplace. In 2017, the quickening of technology in business interactions has not only increased to all business sectors but is impacting day-to-day transactions globally. Leading academic researchers, development experts, and policymakers from across the globe will share examples of new and innovative SME policy programs dealing with radical and dynamic markets; examine insights from policy design research; discuss the role of high-growth firms; and promote the importance of entrepreneurship as a key driver of innovation and sustainable development.
SME Policies, Support Programs and the Unintended Consequences
As key drivers of job creation, SMEs play a key role in the economic development strategies of many countries around the world. Many countries are moving forward to implement policies and support programs to foster the growth of MSMEs, youth and women entrepreneurs, and those in the informal economy. This panel will address the trade-offs and benefits of policies intended to improve the entrepreneurial and small business environment.
New Frontiers of Entrepreneurship Education
New frontiers in entrepreneurship and the definition of work are interlinked with the future of learning. It is obvious that the knowledge and skills necessary for the next generation might be different from those needed today. Higher Education can help bridge the gap between what is needed today versus tomorrow. Yet, universities and educators keep developing the same content packaged in different modes (on-campus, hybrid, and on-campus). This session will discuss what revolution is needed in higher education to prepare these new students to succeed within Industry 4.0.
The End of the World as We Know It; Creating the Time Capsule
600 millions jobs will be needed in the next 15 years to just stay current with the current work-force. If we create an Idea Time Capsule to be opened after 15 years, what trends, challenges, opportunities will evolve in the next 15 years. This innovative collaborative conference-wide discussion will occur as the last session of the day.
Ideas will be transcribed and put forth in an ICSB working online e-book to be used by ICSB members worldwide.
SUBMIT YOUR ABSTRACT HERE
Greetings from the ICSB Immediate Past President, Dr. Luca Iandoli,
One of my roles as the Immediate Past-President is the chairing of the Nominating Committee for the next slate of officers. We have made the nominating process as transparent as possible and below you will find an online form to submit your nomination.
The current ICSB Board of Directors are:
*President – Robert Lai (ROC-Taiwan)
*President-Elect – Geralyn Franklin (USA)
*Immediate Past-President – Luca Iandoli (Italy)
*Senior Vice-President, Finance & Control – Ahmed Osman (Egypt-MCSBE)
*Senior Vice-President, Development – Winslow Sargeant (USA)
Affiliate Representative – Heidi Neck (USASBE)
Affiliate Representative – Lu Feicheng (ICSB China-Mainland)
Affiliate Representative – Eileen M Figueroa Rivera (ICSB Puerto Rico-Representative Americas)
Affiliate Representative – Robert Blackburn (ECSB-Representative Europe)
Affiliate Representative – Hermawan Kartajaya (ACSB/ICSB Indonesia)
Wilford White Fellows and Past-President Representative – Brian Gibson (Australia)
*Indicates an elected position.
Vice-President (VP), Historian – J. Hanns Pichler (Europe)
Vice President (VP), Mohammad M. Al-Zuhair (Kuwait)
Vice President (VP), Jeffrey Alves (USA)
Vice President (VP), Elissa Grossman (USA)
Vice President (VP), Anthony Mendes (USA)
Vice President (VP), Alex DeNoble (USA)
Vice President (VP), Olli Vuola (Europe)
Vice President (VP), Michael Battaglia (USA)
Vice President (VP), Katia Passerini (Italy)
Vice President (VP), Milla Wu (ROC Taiwan)
Vice President (VP), Ruben Ascua (Argentina)
Vice President (VP), Ki-Chan Kim (Korea)
Vice President (VP), Steven Hsu (ROC Taiwan)
Vice President (VP), Ahmed Shalaby (Egypt)
Vice President (VP), Rita Grant (USA)
Vice President (VP), Amr Abouelazm (Egypt)
In this year’s election, nominations will be accepted for the position of President-Elect, Senior Vice President for Finance and Control (2 year term), and Senior Vice President for Development (2 year term).
The position of President-Elect is a one (1) year term, followed by subsequent one (1) year terms as President and then Immediate Past-President. The positions of SVP for Finance and Control and SVP for Development carry two (2) year terms.
Please remember that all nominations will be vetted by the ICSB Nominating Committee before appearing on the ballot, so it’s very important for all candidates to submit the (1) current bio and (2) statement of purpose to complete their nomination package.
We welcome all nominees who will be fully committed to the work involved in being a Board Member and will contribute positively towards achieving the goals of the organization.
The deadline to submit a nomination is November 13, 2017.