Observing the "Israel Effect"

Inspired by a recent trip to Israel, in which he was part of a delegation of U.S. business professors who sampled the country's booming innovation scene, Clinical Assistant Professor of Business Administration Paul T. Harper is eager to explore the connections between Israel's start-up culture and the entrepreneurial mindset.

"I feel like in some ways I saw the future," Harper says. "Tel Aviv was such a young place. Everybody's conversation was start-up. The goal for university students is to own their own tech-oriented company, not to work in a corporate bureaucracy."

In global business discussions, so much attention goes to emerging economies and the rise of the BRICS nations of Brazil, Russia, India, China, and South Africa. Israel, however, is a study in opposites. The Middle Eastern country, roughly the size and shape of New Jersey, has a population of about 8 million people, yet produces the world's highest concentration of startups per capita and the world's third-most companies listed on the New York Stock Exchange, behind only the United States and China. Often times backed by financial support from the Israeli government to build in Israel, multinationals with a significant presence in Israel include IBM, Intel, Google, Hewlett-Packard, Microsoft, Siemens, General Electric, Johnson & Johnson, and Motorola.

Harper will teach two MBA courses in the spring that incorporate the study of Israeli businesses in the context of entrepreneurship—the Organizational Leadership Project Course (BOAH 2552) and Social Entrepreneurship Workshop. The book Start-up Nation: The Story of Israel's Economic Miracle will be required reading for both courses. Students will be challenged to find natural synergies between Israel and the University of Pittsburgh and City of Pittsburgh, with the ultimate goal of establishing a basis for a Pittsburgh/Tel Aviv axis. In the future, Harper plans to organize MBA project courses that culminate with students traveling to Israel to complete their work for a client company.

"Entrepreneurship isn't meaningful unless it's technological and global—and Israel is leading in both," Harper says. "Israel as a country is a start-up. It's in the unique situation of being walled in. It lacks natural resources because of its geography. And due to geo-political strife, investment in the defense industry creates opportunity in the commercial sphere."

Harper's one-week November 2012 trip, called the Israel Familiarity Trip, was fully funded by Israel & Co., a nonprofit formed in 2011 to promote Israel's business contributions. Mainly splitting his time between Tel Aviv and Jerusalem, Harper joined delegates from 17 universities including Columbia University, Dartmouth College, University of North Carolina, George Washington, University of Pennsylvania, Penn State University, Rutgers University, and Vanderbilt University. The week featured face time with executives from Israel's leading venture capital firms, which play a critical role in supporting the nation's robust technology scene by infusing much needed capital to the projects.

"Israelis have a technical literacy that their social and political structure demands of its citizens, which is then nurtured on the entrepreneurial side," Harper says.

On their first day of activities, delegates got down to business, visiting Intel's Fab 28 chip processing plant in Kiryat Gat. There they met with Maxine Fassberg, Intel's vice president of technology and manufacturing group. Later delegates toured the facilities of Better Place, which develops and sells battery-charging and battery-switching services for electric vehicles, and met with the company's head of oil independence policies. Later delegates toured Jerusalem Venture Partners Media Lab, which focuses on the conversion of gathering new media data and building security systems.

In addition to the business excursions, Harper had an opportunity to experience the weightlessness of floating in the Dead Sea and to be moved by the solemnity of the Western Wall, commonly known as the Wailing Wall, and Yad Vashem, which is the Jewish people's living memorial to the Holocaust. He also visited Ramat David Air Force base, the ancient stone-walled fortress of Masada, the Old City of Jerusalem, and the ruins of Caesarea on the Mediterranean.

As a result of the trip, Harper made an academic connection with Aharon Schwartz, chairman of the board of the Yissum Technology Transfer, the commercialization arm of Hebrew University of Jerusalem. He anticipates developing a case study with Schwartz on the topic of organizational innovation within the context of the pharmaceutical industry.

Additionally, Harper got the idea for a new research project in the area of entrepreneurial cognition. He would conduct a comparative study of a Jewish community performing venture capitalism here versus a Jewish community in Israel.

"Is the Israeli mindset different? A lot argue that it is, but it hasn't been tested. Their educational context is more STEM oriented. Israel produces more engineers per capita than any country. There is also mandatory military service," Harper says.

The tail end of Harper's trip coincided with a skirmish between Israel and Hamas, during which Israel deployed its missile defense system to shoot down rocket attacks. "I never felt threatened," Harper says. "I heard sirens at one point. Part of it was that nobody freaks out when it happens. What you got was reassurance."