Editor’s note: This post was republished with permission from the Ewing Marion Kauffman Foundation’s Growthology blog.
Despite the reputation of entrepreneurship as a cutthroat and aggressive career choice, some communities have shown that an emphasis on cooperation can help bolster entrepreneurial success.
A recent Washington Post article shared what one couple learned when they left their upper-middle class lifestyle to join an Amish community. While the article covered a variety of topics, the discussion of the Amish entrepreneurial spirit grabbed my attention.
From the article:
“Though the Amish would reject the term “entrepreneurial” as a prideful notion to avoid, the Amish launch many businesses and have a very high start-up survival rate. Sociologist Donald Kraybill, who has studied the Amish extensively, found 95 percent of new Amish businesses were still going after five years — far higher than in general society. But we found that the Amish achieve that remarkable capitalistic success in part by using principles that could be viewed as socialistic.”
A 95 percent success rate after five years is remarkable. Generally, about half of traditional startup businesses survive after the first five years. How do the Amish maintain such a high success rate?
First, the Amish help their competition. For example, a farmer might teach farming techniques to someone who they then compete against in business. In contrast, intellectual property is often seen “as the foundation of innovation in our economy” and entrepreneurs fight to secure intellectual property whether through patents, trademarks, or copyrights.
Second, the Amish are unconventionally flexible in their finances, which could be seen as risky from an outsider. The Washington Post author mentioned that, early into their experience in Amish living, they bought a business from an Amish person whom they did not know. When the seller realized the couple didn’t have enough money to purchase the business, there was no paperwork, but instead the seller said “I will just leave $10,000 in the checking account that you can use and you can pay me back when you are able.” Not only did the seller adjust his asking price to make the sale, but made sure that the couple retained some savings.
This anecdote shows the difference between the Amish community and the traditional entrepreneurial community. Usually when an entrepreneur “exits” their company, either through a merger and acquisition or an initial public offerings (IPOs), money is an important deciding factor. While entrepreneurship is often associated with risk, it is unusual that someone would recommend taking the financial risk of selling their business at a lower value because the buyer doesn’t have the amount of money of the business’s value.
Third, the Amish community supports its local businesses. According to the book, Almost Amish:
“Local economies thrive in Amish communities because the Amish support small, family-owned businesses. Although they are known for their frugality, friendship is valued more than lowest price. Because they do not drive, they depend on a robust local economy. It’s in everyone’s best interest for neighbors to support neighbors.”
While some businesses focus on its local customers and economy, technology has made it increasingly easier to broaden a business’ impact without needing to connect with the local community.
The Amish community is a small one in the United States, and they tend to be geographically and culturally separate from the rest of the country. But their unique business practices and high startup survival rates might help us rethink our common perceptions about what entrepreneurship and entrepreneurial success look like.
Emily Fetsch is a research assistant in Research and Policy for the Ewing Marion Kauffman Foundation, and assists in the processing of new grants including grant research, grant write-ups, setting deadlines, and reviewing financials. She also assists in writing literature reviews and informative briefs, and conducts quantitative and/or qualitative analysis on the economy, policy, and entrepreneurship.