A short note highlighting how the economic incentives buried within culture leads to a different brand of entrepreneurship, using the difference between the USA and Japan as an example.

Chana R. Schoenberger in Forbes Asia Magazine, In Tokyo, a Rare Incubator for Startups:

Venture capitalists in the U.S. spend $30 billion annually, on average, funding startups, while Japanese funders kick in just one-tenth that amount. Midcareer managers and engineers don’t want to quit and forfeit their pensions to start companies. Risk-averse Japanese students, who rarely get M.B.A.s, prefer jobs at large, long-stable companies to starting their own firms. If they have the itch to launch a business, they aim for big trading companies, like Sumitomo or Itochu, which use on-staff “intrapreneurs” for new units. There’s also a social stigma about failing in business–an embarrassing loss of face. Successful company founders in the U.S. often have a string of crash-and-burn startups.

Not a surprise to anyone that understands the vast difference between American and Japanese culture. But it doesn’t mean that entrepreneurship is dead:

Into this lonesome entrepreneurial existence has stepped the mighty Mitsubishi Estate, Tokyo’s second-biggest business landlord. It started an entrepreneurs’ group, the Tokyo 21c Club, in 2000, trading rent and logistical support for stock options in the nascent companies. Snagging office space in the incubator requires a screening process that can take six months, but once entrepreneurs get in, they can rub shoulders with the 650 club members–venture capitalists, lawyers, accountants, other company founders–who stop by for coffee or to attend an evening business seminar. In addition to small, boxy offices for new companies, the club also offers workroom passes for $160 a month, as well as a mail drop that gets entrepreneurs a coveted Shin-Marunouchi building address.

Perhaps this isn’t “Entrepreneurship” in the sense that Silicon Valley promotes and rewards, but it’s “Entrepreneurship” in Japan, and understanding how to succeed in the local culture is a key for any new company.

Taking it a step further: what about the differences between (and within) Europe, Asia, Africa, South America, Australia? Companies thrive in each region by playing the game according to the rules they face, yet we often highlight and glamorize one single type of entrepreneurship. Entrepreneurs exist throughout the world, and to neglect their lessons and insights is a failure of all of us, myself included.

Of course, to truly understand the lessons from entrepreneurs throughout the world we need to understand the cultures they operate within. Copying tactics without creating strategies is a route to failure, yet it’s often as deep as we get when analyzing lessons from abroad. Tactics translate easier than strategies, but the value is often lost in translation.

The economic incentives buried within culture plays a huge role in shaping the decisions of entrepreneurs and investors. In a more holistic sense of capitalism, it’s pretty easy to imagine how a different accounting of risk and reward would influence the decisions we make.

How? Start with the role of humanity in economics; but as always, I’m open to ideas.