Canada's ability to develop and sell innovative products and technologies will determine its ability for long-term growth.
Supporting entrepreneurs and boosting innovation must be a priority for Canada's recovery from COVID-19.
Dr. Barak Aharonson developed a taste for entrepreneurship early in his career. After graduating from Tel Aviv University with a degree in accounting and economics, he worked as a consultant and adviser for a series of tech startups. Over time, he observed a curious phenomenon. “I was constantly watching small businesses fail, which surprised me because they’re such an important part of a service-based economy,” he recalls. “The question of why some businesses succeed and others fail inspired years of future research in the entrepreneurship and innovation space.”
Aharonson notes that service-based economies like Canada outsource most of their manufacturing needs. This outsourcing creates a circular economy, where all monies exchanged stay in the system and there’s little potential for growth. Aharonson sees the ability to develop and sell innovative products and technologies as the key to breaking the cycle. Once innovation gains traction in Canada, cash flow from outside parties will increase and allow for tax cuts, creating a more business-friendly environment.
Aharonson acknowledges that change doesn’t happen overnight. Compared to Israeli or U.S. business culture, Canadian culture has a well-earned reputation for being more conservative when it comes to taking risks. As a group, Canadian investors are typically more hesitant to take a chance on early-stage startups. The ongoing global trade wars only heighten their sense of caution.
“We need to shift how we interact with entrepreneurs and set up incentives for innovation so that Canadians feel confident about starting and investing in new business ventures,” he says. “When we neglect to welcome trial and error, many young entrepreneurs are reluctant to take that first step toward innovation.”
Aharonson was encouraged to see so many entrepreneurs pivot to supporting social needs at the local, national, and global level at the beginning of the pandemic. At the same time, he noticed how the lockdowns hit small businesses the hardest, partially in the absence of a robust safety net for entrepreneurs.
From ensuring that entrepreneurs enjoy a full range of unemployment benefits to increasing funding for university-based programs and incubators that nurture and encourage entrepreneurial ventures, the government has an opportunity to make immediate investments in Canadian entrepreneurs. “Time and again, we see how long-term benefits of these investments far exceed short-term costs,” he says.
Despite the challenges of emerging from the pandemic on solid economic footing, Aharonson maintains an optimistic outlook for entrepreneurship in Canada. As he begins a new role as Wood Chair in Innovation at the Gordon S. Lang School of Business and Economics, he recognizes that academic and research powerhouses like Guelph have a crucial role to play in motivating change.
“Universities are the greenhouses of entrepreneurs,” he says. “We have the unique responsibility to motivate new generations of entrepreneurs to invest their talent and time in carving innovative inroads for Canada and, by extension, the world.”
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