CUHK Study Finds Hong Kong Government Policies Help Stimulate
Using a combination of survey data from a half a million interviews worldwide and in-depth interviews with 16 Hong Kong policy makers and implementers, the Hong Kong study finds that while Hong Kong has a low rate of startups (3% as compared with 8% worldwide), the rate of startups expected to achieve high growth is 0.7%, which is approximately equal to the world average which is 0.8%. The rate of high growth expectation measures the percentage of the population starting firms that anticipate hiring over 20 persons within five years. High growth expectation entrepreneurship, in Hong Kong and throughout the world, is dominated by wealthy, young males worldwide. But the research shows that, unlike the case in the rest of the world (including Shenzhen), in Hong Kong high growth expectations startups entrepreneurs are no better educated than low growth expectations entrepreneurs. The research team believes this suggests that our education system does not train our youth to spot and take advantage of entrepreneurial opportunities. The study sees that the long standing examination-oriented education system stultifies cultivating creativity, curiosity and independent thinking and applauds recent education reforms to address these problems.
Even though high growth expectations startups are not equivalent to high tech startups ¡V in particular high growth expectations startups in Hong Kong focus on consumer services ¡V the study reviews the strong economic theoretical reasons for government subsidies to R&D intensive startup activity. The study recommends that the government should improve its capacity for effective intervention in formulating technology policies. Hong Kong¡¦s lack of engineers and scientists, a result of insufficient opportunities in the past, today hinders innovation and commercialization of new technologies. The government should develop more proactive and strategic ways to attract R&D talents from overseas and Mainland and instead of passively waiting for the inflow.
Since the early years of the Tung administration, the government has moved from a linear view of stimulating innovation and technology to support a policy of promotion of clusters in targeted industries. It has entered and then exited direct financing of venture capital. It has encouraged and now is reassessing the Growth Enterprise Market board. The study seeks to bring open debate of these substantial changes of Hong Kong policy.
Professor Autio maintains that, in structuring policies to encourage startups, policy makers should focus on quality not quantity: Hong Kong should adopt policies which address the needs of the high-growth firms in order to nurture them. Sophisticated support for private-sector angel investors and venture capitalists can boost high-growth entrepreneurship. It is crucial to identify the right talents to start new firms by setting up policies to address entrepreneurial career trade-offs and facilitate mobility so as to foster an entrepreneurial mind-set and opportunity pursuit and recognition. It is also necessary to create social norms that reduce the stigma of failure in the society so that entrepreneurs are encouraged to take risks. Only if future employment opportunities are not adversely affected by failure will highly educated youth take the risks of starting up high-growth ventures. Finally, policies aimed at supporting high-growth entrepreneurial activity should be closely coordinated with innovation policy.
The collaborating organization for the study is the Division of Social Science of HKUST with Professor Erik Baark¡¦s contribution. The study is supported by CUHK¡¦s Asia-Pacific Institute of Business. Findings of the research were released at a Forum titled ¡§Innovation Policy and High Growth Startups¡¨ at JW Marriott Hotel Hong Kong today, and the complete study is available on the website of the CUHK Center for Entrepreneurship (http://www.cuhk.edu.hk/centre/entrepreneurship).