Author-professor Tarun Khanna on entrepreneurship in emerging economies
For over two decades, Tarun Khanna—a professor at the Harvard Business School—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 policies for entrepreneurship in India. Tarun is also associated with many for-profit and non-profit organisations and has written several books and essays on entrepreneurship.
In an episode of the Prime Venture Partners podcast, Tarun discussed the various 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 to your generation and mine, that's how we used to think of it. But I think that needs a revision, particularly with the success as big as Aadhaar, UPI, and so on.”
Developed vs. developing countries: The landscape of entrepreneurship
Entrepreneurship is never easy, whether you’re building a company in Boston or Bengaluru. Nonetheless, startup founders in developed countries, like the US, have access to robust ancillary support institutions.
From litigation and arbitration to adjudication — entrepreneurs have access to experts for every ancillary task, allowing them more time to grow their business, develop new products, and reach more customers.
But, the same isn’t true for developing countries like India, which creates an institutional void and leaves it up to entrepreneurs to make conditions to create.
“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 one way to compare the ventures I've done in Bengaluru with the ventures of, let's say, Boston,” remarks Tarun.
The Chinese exception
Although India and China became independent in 1947 and 1949, respectively, the countries’ startup ecosystems are poles apart. China’s rapidly growing entrepreneurial culture can be attributed to the government’s active involvement and investment in scientific R&D.
Tarun believes in China, the R&D to GDP ratio is significantly higher than that in India. The Indian government is yet to realise the impact of scientific research on economic and social development, he says.
“I fear the gap in ambient scientific know-how, which is needed to embrace science in the process of economic development and creating cutting-edge ventures. However, that ambient knowledge is not nurtured in India,” he adds.
Trust issues in entrepreneurship
For entrepreneurs to become successful, they should look to partner with a diverse set of people. But in low-trust societies, founders often end up working with people similar to them.
They look for proximities, be it geographic, religious, or linguistic, before choosing to work with a person, limiting their access to human resources and creating another institutional void.
“All innovation at the end of the day is 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 mixing matching partners,” he says.
Word of Wisdom
When asked if he would like to share any advice for young and aspiring entrepreneurs, Tarun had one thing to say — “Find some setting where there are a bunch of smart people doing interesting work and dive into it and get your hands dirty. And you'll inevitably learn something about human beings, and that's all that's needed.”
You can listen to the full episode here.
01:00: Creating the conditions to create
07:00: State of entrepreneurship: India vs China
15:00: The value of trust in entrepreneurship
27:00: Working with the government on entrepreneurship
34:30: The best way to learn about building a startup
(This story was updated with corrections made to some quotes.)