1. Global Entrepreneurship Monitor2010 Global Report EntrepreneurshipPoduzetnistvo OEntreprenrskapEmprendimientoEntrepreneuriat PodjetnistvoOkuyiiyawo Entreprenrskap EmpreendedorismoDonna KelleyNiels Bosma Jos Ernesto Amors

2. Global Entrepreneurship Monitor* 2010 Global ReportDonna J. Kelley, Niels Bosma, Jos Ernesto Amors 3. 2 GEM Global Report 2010GLOBAL ENTREPRENEURSHIP MONITOR 2010 Global ReportDonna J. Kelley, Niels Bosma, Jos Ernesto Amors FOUNDING AND SPONSORING INSTITUTIONS: Babson College, Babson Park, MA, United StatesLead Sponsoring Institution and Founding InstitutionUniversidad del Desarrollo, Santiago, Chile Sponsoring Institution London Business School, London, United Kingdom Founding InstitutionAlthough GEM data were used in the preparation of this report, their interpretation and use are the soleresponsibility of the authors. The authors thank Marcia Cole, Yana Litovsky and Carlos Poblete for their various contributions to thisreport. They also wish to acknowledge the contributions of Michael Hay and Jonathan Levie for their insightfulcomments on this report. The authors would also like to express their gratitude to all participating GEM 2010 national teams.Design and Cover: Trinidad Concha Gell 2011 by Donna J. Kelley, Niels Bosma, Jos Ernesto Amors and Global Entrepreneurship ResearchAssociation (GERA) 4. 3 Table of ContentsExecutive Summary 71. Introduction and Background 121.1 Entrepreneurships Role in the Global Economy121.2 GEM Measures 121.3 Economic Development Level and Entrepreneurship141.4 The GEM Model141.5 Structure of the Report162. A Global Perspective on Entrepreneurship in 2010172.1 Attitudes172.2 Activity 222.3 Aspirations403. Entrepreneurship Framework Conditions an Assessment of Institutional Quality by National Experts 454. Entrepreneurship and the Global Economy in 2010 494.1 The Impact of Recessions on Entrepreneurship: Evidence from GEM Data 504.2 Analysis of GEM Economies: 20022010 524.3 Entrepreneurs Impressions of the Impact of the Recession on Entrepreneurship Activity 555. Conclusions and Implications58Appendix 1: Background on GEM61Appendix 2: Glossary of Main Measures and Terminology63Appendix 3: Characteristics of GEM Surveys 65 5. 4 GEM Global Report 2010 GEM National Teams 2010 67 About the Authors 78 GEM Sponsors79 Contacts80 Notes and References81 List of Figures Figure 1: The Entrepreneurship Process and GEM Operational Definitions13 Figure 2: Characteristics of Economic Groups and Key Development Focus14 Figure 3: The GEM Model 15 Figure 4: Total Early-Stage Entrepreneurial Activity (TEA) for 59 Economies in 2010, by Phase of Economic Development, Showing 95 Percent Confidence Intervals 24 Figure 5: Total Early-Stage Entrepreneurial Activity Rates and Per Capita GDP 201027 Figure 6: Necessity-Based Early-Stage Entrepreneurial Activity and Per Capita GDP 201028 Figure 7: Correlation Between Rule of Law and the Degree of Improvement-Driven Opportunity motivation for Early-Stage Entrepreneurial Activity 30 Figure 8: Sector Distribution of Total Early-Stage Entrepreneurship Activity by Phase of Economic Development31 Figure 9: Sector Distribution of Total Early-Stage Entrepreneurship Activity by Geographic Region 32 Figure 10: Age Distribution of Entrepreneurs by Phase of Economic Development 33 Figure 11: Age Distribution of Entrepreneurs by Geographic Region 34 Figure 12: GEM Economies Ranked by Level of Female Participation in Total Early-Stage Entrepreneurship Activity (TEA) by Economic Group, 2010 35 Figure 13: Established Entrepreneurial Activity for 59 Economies in 2010, by Phase of Economic Development, Showing 95 Percent Confidence Intervals 36 Figure 14: Discontinuations of Entrepreneurial Activity and Per Capita GDP 2010 38 Figure 15: Reasons for Business Discontinuance by Economic Phase, 20082010 39 Figure 16: Job Growth Expectations for Early-Stage Entrepreneurship Activity, 20082010 41 Figure 17: Differences in Job Growth Expectations Between Nascent Entrepreneurs and Owner-Managers in New Firms, by Economic Stage of Development and Country, 2008201041 Figure 18: Innovation for Early-Stage Entrepreneurship Activity, 2008201043 Figure 19: Percentage of Early-Stage Entrepreneurs with International Orientation, 2008201044 Figure 20: The GEM Entrepreneurship Framework Conditions46 Figure 21: Scores on Entrepreneurship Framework Conditions Rated by National Experts, by Stage of Development (Unweighted Country Averages) 47 Figure 22: Entrepreneurial Attitudes in Ireland 20022010 51 Figure 23: Entrepreneurial Activity in Ireland 2002201051 Figure 24: Percentage in the Working Age Population Perceiving Good Opportunities to Start a Business in the Area where they Live, by Country, for 20022004, 20052007 and 20082010, Respectively 53 Figure 25: Owner-Managers of New Firms: Percentage in the Working Age Population, by Country, for 20022004, 20052007 and 20082010. Respectively53 Figure 26: Percentage of Early-Stage Entrepreneurs Indicating that they Are Involved in Entrepreneurship Out of Necessity, by Country, for 20022004, 20052007 and 20082010. Respectively 54 6. Table of Contents 5Figure 27: Growth Expectations: Percentage of Early-Stage Entrepreneurs Expecting toHave at Least 5 Employees Five Years From Now (or After The Start-Up) for 20022004,20052007 and 20082010, Respectively 54Figure 28: Percentages of Total Early-Stage Entrepreneurs Who Find Starting a BusinessNow More Difficult Compared to One Year Ago, 2009 And 201056Figure 29: Percentages of Established Entrepreneurs Whose Expectations for GrowthAre Lower Compared to One Year Ago, 2009 And 2010 56Figure 30: Impact of the Global Economic Slowdown on Entrepreneurs Perception ofOpportunities for Their Businesses, According to the Entrepreneurs (Unweighted Country Averages)57List of TablesTable 1: GEM Countries Classified by Economy and Geography8Table 2: Entreneurial Attitudes and Perceptions in the GEM Countries in 2010 by Phaseof Economic Development 17Table 3: Entrepreneurial Activity in the 59 GEM Countries in 2010, by Phase of EconomicDevelopment 22Table 4: Entrepreneurship Framework Conditions: Three Valued Most Positive (+) andThree Most Negative (-), Per Country48 7. 7Executive SummaryWith this report, the Global Entrepreneurshipwith other key features of their ventures. This effortMonitor (GEM) has completed 12 annual surveys of is accomplished through the collaborative work ofthe entrepreneurial attitudes, activities and aspira-a consortium of national teams consisting of aca-tions of individuals around the world. Starting with demic researchers from across the globe. Each GEMjust 10 developed countries in 1999, GEM has grown national team oversees an annual survey of at leastto include over 80 economies during the course of2,000 adults. In addition, they consult with nationalthese 12 years. In 2010, over 175,000 people wereexperts on factors that can explain the nature andsurveyed in 59 economies. These 59 economies rep-level of entrepreneurship in their economies.resent not only the largest sample yet, but also themost geographically and economically diverse group GEM groups the participating economies intosurveyed. Together, this group covers over 52% of thethree levels: factor-driven, efficiency-driven, and inno-worlds population and 84% of the worlds GDPi.vation-driven. These are based on the World Economic Forums (WEF) Global Competitiveness Report ii, whichThe 2010 survey shows that, in the economies ana-identifies three phases of economic developmentlyzed, some 110 million people between 18 and 64 years based on GDP per capita and the share of exportsold were actively engaged in starting a business. Anoth- comprising primary goods.er 140 million were running new businesses they start-ed less than 3 years earlier. Taken together, some 250According to the WEF classification, the fac-million were involved in what GEM defines as early-tor-driven phase is dominated by subsistence ag-stage entrepreneurial activity. Out of these individuals,riculture and extraction businesses, with a heavyan estimated 63 million people expected to hire at least reliance on labor and natural resources. In thefive employees over the next five years, and 27 millionefficiency-driven phase, further development is ac-of these individuals anticipated hiring twenty or more companied by industrialization and an increasedemployees in five years. This illustrates the contribution reliance on economies of scale, with capital-inten-of entrepreneurship to job growth across the globe.sive large organizations more dominant. As devel- opment advances into the innovation-driven phase,GEM takes a comprehensive snapshot of entre- businesses are more knowledge intensive, and thepreneurs around the world, measuring the attitudes service sector expands.of a population and the activities and characteris-tics of individuals participating in various phases ofGEM additionally considers geographic factors,entrepreneurship. Also revealed are the aspirationsgrouping countries into six geographic regions: Sub-these entrepreneurs hold for their businesses, along Saharan Africa, the Middle East and North Africa 8. 8 GEM Global Report 2010(MENA) / South Asia, Latin America and the Carib-Africa. While some economies have emerged out ofbean, Eastern Europe, Asia/Pacic and the United this crisis, others remain stuck in a morass of highStates and Western Europe. With all groupings, weunemployment, weak consumer spending and out-can compare economies across similar development of-control debt loads.levels and geographic locations. The economic andgeographic groupings are shown in Table 1. For the 41 economies that participated in both the 2009 and 2010 GEM survey, a comparison of This years survey was conducted during June andTotal Early-Stage Activity (TEA) rates from 2009 toJuly of 2010, at a time when the world was still strug-2010 shows a mix of increases and decreases (or nogling to emerge from the 20082009 recession, andchange) across all three economic groups. While thewith the future economic stability of many nations number of positive and negative shifts was roughlystill in question. The recessions prolonged impactequal in the factor-driven and eciency-drivenwas demonstrated most considerably in the contin-economies, the balance tipped slightly toward moreued negative or sluggish GDP growth in the devel-declines in the innovation-driven group. Geographi-oped world, while new growth engines were taking cally, there are both positive and negative changes inroot in developing countries, particularly in Asia and most regions of the world.Table 1: GEM Countries Classied by Economy and GeographyFactor-Driven Efficiency-Driven Innovation-Driven Sub-Saharan Africa Angola*, Ghana, South AfricaUganda, Zambia Middle East/NorthEgypt*, Iran*, Pakistan, TunisiaIsrael Africa (MENA) -Saudi Arabia*, West South Asia Bank and GazaJamaica*, Guatemala*, Argentina, Brazil, Latin America andBolivia Chile*, Colombia, Costa CaribbeanRica, Ecuador, Mexico,Peru, Trinidad andTobago*, Uruguay*Bosnia and Herzegovina, Slovenia Eastern Europe Croatia*, Hungary*,Latvia*, Macedonia,Montenegro, Romania,Russia, TurkeyVanuatu Malaysia, China,Australia, Japan, Re- Asia PacicTaiwan* public of KoreaBelgium, Denmark, United States andFinland, France, Western Europe Germany, Greece,Iceland, Ireland, Italy,Netherlands, Norway,Portugal, Spain,Sweden, Switzerland,United Kingdom,United States * In transition to next stage 9. Executive Summary 9 Key Overall Findingsels. In the efficiency-driven group, the highest TEA rates were found in the Latin American and Carib- bean economies, while lower levels were reported in Attitudes Eastern Europe. Iceland, Australia and the United States showed the highest TEA rates among the in- Individuals in factor-driven economies tended tonovation economies.generally rate more positively on the attitude mea-sures, with declining patterns exhibited with high-While the factor-driven economies have the high-er development levels. Some of the measures also est TEA rates, they also have the highest proportionshowed geographic patterns within the three eco- of necessity-driven motives, where entrepreneurs arenomic groupings. pushed into entrepreneurship because they need a source of income. The innovation-driven group hadIn the factor-driven group, individuals in the the lowest necessity rate, but the highest proportionSub-Saharan African countries exhibited high per-of opportunity-driven motives, where entrepreneursceptions about the presence of opportunities in theirare pulled into entrepreneurship because they rec-area, their capabilities for entrepreneurship and theirognize an opportunity that can improve or maintainintent to start businesses. In contrast, the MENA/ their incomes or increase their independence.South Asian countries had mostly lower perceptionson these measures. A similar geographic distinction Nordic countries (Netherlands, Sweden, Den-was illustrated in the efficiency-driven group: Latinmark and Iceland) showed especially high pro-America reported high perceptions about opportu- portions of opportunity motives. A plot of im-nities and capabilities, while Eastern Europe was lowprovement-driven opportunity (desire to improveon these measures. In the innovation group, thereincomes or increase independence) against rule ofwas a distinction between high opportunity and ca- law (extent people have confidence in, and abidepability perception in the Nordic regions and lowerby the rules of society) shows that this motive in-perceptions in southern Europe.creases with greater rule of law. Fear of failure showed less distinction among de- An examination of the proportion of entrepre-velopment levels and geographic location. Perceptionsneurial activity in the four main industry sectorsabout the status and media attention of entrepreneurs, shows that extraction businesses (farming, forestry,and the attractiveness of this type of career choice fishing and mining) are more dominant in factor-showed a mix on these three measures. For example, driven economies. Business services are more com-people in some economies generally believed entre- mon in the innovation-driven economies. This ispreneurs had high status; nonetheless they had littleconsistent with the description of developmentdesire to pursue this career. Other economies saw en-phases. Transforming businesses (manufacturingtrepreneurship as an attractive career option, despite and construction), however, are equally prevalentlittle status or attention associated with this pursuit. across all three economic levels, rather than domi- nant in the efficiency group. Participation in the Activityconsumer-oriented sector generally decreases with higher development levels.Total Early-Stage Entrepreneurial Activity (TEA)includes individuals in the process of starting a busi-In each economic group, there are more entre-ness and those running new businesses less than 3 preneurs in the 2534 age group than any other ageyears old. These rates are highest for the factor-driv-range. Womens participation in entrepreneurshipen economies, and decline with greater development relative to men ranges markedly: In the Republic oflevels. At the very highest GDP levels, however, weKorea there are five times more men than womennotice a slight upward trend in TEA levels.entrepreneurs, while in Ghana there are fewer men than women starting businesses. In the factor-driven economies, the Sub-SaharanAfrican countries have among the highest TEA rates, The rate of established business ownership (thosewith the MENA group exhibiting relatively lower lev- running businesses more than 3 years old) de- 10. 10 GEM Global Report 2010 clines with greater economic wealth. In comparison, and growing firms were among the most negatively TEA levels are higher than established business rates evaluated factors. in the factor-driven group, but decline more steeply with greater development levels. As such, TEA levelsThe final section of the report examines the drop below the level of established businesses for most impact of the most recent recession on entrepre- economies in the innovation-driven phase. Stated dif- neurship. Perceptions improved in more developed ferently, there are more nascent and new businesses economies in 2010, where the recession took root than established businesses in less-developed regions,starting around 2008. Fewer entrepreneurs in many but this shifts in the advanced economies, with estab-of the innovation-driven economies thought it was lished firms tending to outpace nascent and new ones. more difficult to start a business compared to a year ago, although there were still some pessimists in the The rate of business discontinuance is highest in mix. In addition, fewer of these entrepreneurs felt the factor-driven countries, with personal reasonsnegative effects from the global slowdown this year, indicated more often as a reason for discontinuingand as many as one-quarter saw more opportunities relative to the other economies. Across all the econo-compared to a year earlier. mies, however, financial issues (unprofitable busi- nesses or problems obtaining financing) weigh most Implications heavily in business exits. At a time when governments are faced with theAspirationschallenges of reviving their economies, they can look toward entrepreneurship as a major stimulus of new The efficiency and innovation economies haveemployment. With GEM as a guide, they can make similar proportions of entrepreneurs with high- comparisons across countries on a variety of aspects growth aspirations. These levels are higher than in around entrepreneurship, deriving insights about the the factor-driven economies. Notably, the MENA andattractiveness of their environments for entrepre- Eastern European economies, although exhibiting low neurship. Others, like educators, can build greater TEA rates, show relatively high-growth expectations.awareness of entrepreneurship around the world, just as business increasingly requires cross-global un-The innovation measures show especially high derstanding. This report is intended to inform such variation among the efficiency-driven economies,stakeholders in promoting entrepreneurship and, as ranging from lower levels in Brazil and Trinidad/ such, improving employment growth and economic Tobago to high levels in Peru and Chile. Among thedevelopment worldwide. innovation-driven economies, there was relatively little variation on this measure. With 59 countries participating in this years sur- vey, we have more economies with which to make The factor-driven economies revealed the low- comparisons across the three development groups, est level of international customers on average. Theas well as enough geographic coverage to identify Eastern European region generally showed a high insights about regions. Following are some implica- level of internationalization. On the other hand, tions of the report. economies with big territories (for example: Iran, Brazil, China and Argentina) exhibited lower inter- Entrepreneurship does not impact an economy national orientation. simply through higher numbers of entrepreneurs. It is important to consider quality measures, likeInterviews with national experts revealed insights growth, innovation and internationalization. on factors impacting the environment for entrepre- neurship in the economies. Physical infrastructure Economies need to enable people to start busi- and the commercial and legal infrastructure receivednesses when it is necessary, but they also need to among the most positive evaluations across theencourage those attracted by opportunity to venture economies. Education and training in primary andinto entrepreneurship, even when they have other secondary school and regulations impacting newwork options. 11. Executive Summary 11 Entrepreneurship needs both dynamism and Initiatives aimed toward improving entrepre-stability. Dynamism occurs through the creation of neurship should consider the development level ofnew businesses and the exit of non-viable ones. Sta- the economy. With a strong set of basic requirementsbility comes from providing new businesses with thein place, efforts can turn toward reinforcing efficien-best chance to test and reach their potential. cy enhancers, and then building entrepreneurship framework conditions. Comparisons across both development-leveland geographic groups may enhance understanding An entrepreneurial mindset is not just forabout entrepreneurship and the conditions that im- entrepreneurs. It must include a variety of stake-pact it, both within and across economies. holders that are willing to support and cooperate with these dynamic efforts. In addition, non-en- Entrepreneurship in a society should contain a trepreneurs with entrepreneurial mindsets mayvariety of business phases and types, led by different indirectly stimulate others to start businesses. Thistypes of entrepreneurs, including women and under- indicates the value of broader societal acceptancerepresented age groups.of entrepreneurship. 12. 12 GEM Global Report 2010 Captulo 1 Introduccin 1Introduction and Background 1.1 Entrepreneurships Role in thecan leverage their wealth and innovation capacity, yet they also offer more employment options to at-Global Economy tract those that might otherwise become entrepre- neurs. In order to maintain their entrepreneurialMost policymakers and academics agree that dynamism, they need to instill more opportunity- entrepreneurship is critical to the development based motives. and well-being of society. Entrepreneurs create jobs. They drive and shape innovation, speeding Second, an economys entrepreneurial capacity up structural changes in the economy. By introduc-requires individuals with the ability and motivation ing new competition, they contribute indirectly toto start businesses, and requires positive societal productivity. Entrepreneurship is thus a catalyst for perceptions about entrepreneurship. Entrepreneur- economic growth and national competitiveness. ship should include participation from all groups in society, including women, a range of age groups GEM focuses on three main objectives: and education levels and disadvantaged popula- To measure differences in entrepreneurial at- tions. Finally, high-growth entrepreneurship is a titudes, activity and aspirations among economies.key contributor to new employment in an economy, To uncover factors determining the nature and and national competitiveness depends on innova- level of national entrepreneurial activity. tive and cross-border entrepreneurial ventures. To identify policy implications for enhancing entrepreneurship in an economy. GEM is based on the following premises. First, an economys prosperity is highly dependent on 1.2 GEM Measures a dynamic entrepreneurship sector. This is true At the time of GEMs founding, traditional across all stages of development. Yet the nature of analyses of economic growth and competitiveness this activity can vary in character and impact. Ne- had, for the most part, neglected the role played by cessity-driven entrepreneurship, particularly in less new and small firms in national economies, due, developed regions or those experiencing job losses, in some measure, to the lack of good data on this can help an economy benefit from self-employmentsector. This information, when available, tended to initiatives when there are fewer work options avail-be present in only those countries at the most ad- able. More developed economies, on the other hand,vanced stages of economic development. Existing 13. Chapter 1 Introduction and Background13measures, such as self-employment rates, did not GEMs research is to promote entrepreneurshipreflect the dynamic scope of entrepreneurship. And as a process comprising different phases, from in-while most governments have long maintained re-tending to start, to just starting, to running newcords of formal business registrations, it wasnt un-or established enterprises and even discontinu-til GEM emerged that an accurate picture could being these. Figure 1 summarizes the entrepreneur-drawn of the people, and how many of them startedship process and GEMs operational definitions.businesses in different corners of the world.For more information on the history of GEM, see Background on GEM in Appendix 1. For more The main guiding purpose of GEM is to mea-information on the GEM methodology, visit thesure individual involvement in venture creation. website at www.gemconsortium.org. The mostThis differentiates GEM from other data sets, most common operational variables and their defini-of which record firm-level data. A second aim of tions are outlined in Appendix 2.Figure 1: The Entrepreneurship Process and GEM Operational DefinitionsDiscontinuation ofBusiness Total Early-Stage Entrepreneurial Activity (TEA) Potential Entrepreneur:Nascent Entrepreneur: Owner-Manager Owner-Manager of an Opportunities, Involved in Setting Up of a New BusinessEstablished BusinessKnowledge and Skillsa Business(up to 3.5 years old)(more than 3.5 years old) CONCEPTIONFIRM BIRTH PERSISTENCE Through the wealth of measures GEM tracks, we services or the pursuit of customers beyond nationalcan understand which types of people are (and areborders. They may also include high-growth ambi-not) participating in entrepreneurship. We capture tions, thereby contributing more markedly to newboth those formally registering their businesses and employment in their economies.those running informal ones. These unregisteredbusinesses, in fact, can compose as much as 80% ofRecognizing that entrepreneurs are driven not onlyeconomic activity in developing countriesiii.by their own perceptions about starting a business, but the attitudes of those around them, GEM considers thePeople launch businesses for a variety of reasons. attitudes representing the climate for entrepreneurshipThey may be led into entrepreneurship out of neces-in a society. Entrepreneurs need to be willing to takesity: the pursuit of self-employment when there are no risks and have positive beliefs about the availability ofbetter options for work. In contrast, their efforts mayopportunities around them, their ability to start busi-be powered by the desire to maintain or improve theirnesses and the value of doing so. At the same time, theyincome, or to increase their independence. GEM there-need customers who are willing to buy from them,fore assesses the motives of entrepreneurs vendors willing to supply them and families and inves- tors ready to support their efforts. Even positive soci- GEM additionally measures aspirations. Theseetal perceptions about entrepreneurship may indirectlyaspirations may be evident in innovative products or stimulate this activity. 14. 14 GEM Global Report 2010 1.3 Economic Development Level their early stages of development, economies typi-cally have a higher proportion of necessity-driven and Entrepreneurship activities. Here, the demand for jobs in high-pro-ductivity sectors outpaces supply. As a result, manypeople must create their own source of income. GEMs harmonized dataset enables comparisons of entrepreneurship activity around the globe, and With further development comes the growth of within and across geographic regions. This report ad-productive sectors. This increases employment ca- ditionally examines groups of economies at similar pacity but leads to gradual declines in the level of development levels. Following a typology used by the necessity-driven entrepreneurship. At the same time, World Economic Forum, GEM classifies the 59 GEMimprovements in wealth and infrastructure stimu- participants as factor-driven, efficiency-driven orlate opportunity-based businesses, shifting the na- innovation-driven economiesiv. Figure 2 illustratesture of entrepreneurship activity. These ventures are the characteristics of these economic groups and the more likely associated with greater aspirations for key development focus at each level. growth, innovation and internationalization. Theyrely, however, on the economic and financial institu- As an economy develops, productivity increases tions created during the developing phases. To the and, consequently, so does per capita income. This isextent these institutions are able to accommodate often accompanied by the migration of labor across and support opportunity-seeking entrepreneur- different economic sectors. For example, labor may ship activity, innovative entrepreneurial firms may move from agricultural and extractive sectors to emerge as significant drivers of economic growth manufacturing, and then eventually to servicesv. Inand wealth creationvi. Figure 2: Characteristics of Economic Groups and Key Development Focus Factor-Driven Efficiency-Driven Innovation-Driven From subsistence agriculture toIncreased industrializationR&D, knowledge intensity,extraction of natural resources,and economies of scale. Large and expanding service sector. creating regional scale-intensivefirms dominate, but supply Greater potential for innovativeagglomerations. chain niches open up for smallentrepreneurial activity. and medium enterprises.Basic RequirementsEfficiency Enhancers Entrepreneurship Conditions 1.4 The GEM ModelAs Figure 3 shows, the key imperative in factor-driven economies lies in building basic requirementssuch as primary education, healthcare, infrastruc-ture and so forth. Later-stage factors like entrepre-Figure 3 illustrates the GEM model, which shows,neurial finance and government entrepreneurship first, the relationship between the social, cultural and programs are unlikely to have substantial impact if, political context and three sets of framework condi- for instance, entrepreneurs dont have good roads tions. These framework conditions are modeled as to transport goods or a sufficiently educated labor impacting the attitudes of a population toward en- force from which they can recruit employees. In trepreneurship, and the activity and aspirations ofother words, investments in entrepreneurship-spe- entrepreneurs. In turn, entrepreneurship activity, ascific framework conditions may be less effective in well as the growth of established firms in the primary enabling business creation if they are made at the economy, influence economic growth.expense of basic requirements. 15. Chapter 1 Introduction and Background 15 Entrepreneurs with high aspirations fare better in function properly. The nurturing of economies ofcountries with a stable economic and political climatescale can, in fact, be complemented by the emergenceand well-developed institutions. This, in fact, may ac- of growth- and technology-oriented entrepreneurs,count for the activities of certain groups of immigrantsexpanding the scope of employment in a society.into wealthier economies. At the same time, economicprogress begets scale economies. Large firms are more Advanced economies have a relatively sophis-efficient from a national perspective and, for many in- ticated foundation of basic requirements and effi-dividuals, a more attractive employment alternative tociency enhancers. While these factors are essentialnecessity-based entrepreneurship. in sustaining necessity-based entrepreneurship, theymay be insufficient drivers of opportunity-basedTo replace the migration of necessity entre-behavior. Here, knowledge is prevalent but labor ispreneurs toward employment in large companies,expensive. Entrepreneurship-specific frameworkefficiency-driven economies must attract more op- conditions become the levers that drive dynamic, in-portunity-based entrepreneurship. The second set of novation-oriented behavior, while the foundation offramework conditions represents efficiency enhanc-basic requirements and efficiency enhancers needsers. These are directed toward ensuring that marketsto be maintained.Figure 3: The GEM Model Basic requirements - Institutions - Infrastructure - Macroeconomic stability - Health and primary education Established firmsFrom other(Primary economy) available sources Efficiency enhancers - Higher education & training New plants, firm growth - Goods market efficiencyNational - Labor market efficiencyEconomic - Financial market sophisticationGrowth Social, ENTREPRENEURSHIP - Technological readiness(Jobs andCultural,Attitudes: - Market sizeTechnicalPolitical- Perceived opportunitiesContext- Perceived capacity Innovation) Innovation and entrepreneurship - Entrepreneurial finance Activity: - Government policy - Early-stage - Government entrepreneurship - Persistence programs- Exits - Entrepreneurship educationAspirations: - R&D transfer- GrowthFrom GEM Adult Population - Internal market openness- InnovationSurveys (APS) - Physical infrastructure for entre-- Social value creation preneurship - Commercial, legal infrastructure From GEM for entrepreneurship National Expert - Cultural and social normsSurveys (NES) 16. 16 GEM Global Report 2010 1.5 Structure of the ReportWith regard to entrepreneurship activity, we analyze Total Early-Stage Entrepreneurship Activ- ity (TEA), which combines nascent and new business measures. TEA is then discussed in terms of its rela- This report reveals results of the measures oftionship to development level, expressed as GDP per entrepreneurial attitudes, activity and aspirations capita, adjusted for purchasing power parity (PPP). We from the GEM 2010 Adult Population Survey (APS).then describe the necessity and opportunity-driven These results include comparisons of economies in components of TEA. Additional characteristics include the three development phases, and also comparisonsthe proportion of entrepreneurs operating in various of different geographic regions within each develop-business sectors, as well as age and gender factors. ment phase. We highlight particular economies in some cases to illustrate unique findings. The discussion then turns to established busi- ness and business discontinuance. Finally, we de- This report proceeds as follows. We first exam- scribe the aspirations of entrepreneurs: growth ine entrepreneurial attitudes, activities and aspira- projections for their businesses, the level of inno- tions in the 59 participating economies. entrepre-vativeness from a product, market, and competitive neurial attitudes encompass several dimensions: standpoint and the extent their customers come views about the presence of good entrepreneurialfrom outside their economy. opportunities in ones area, beliefs about ones ca- pabilities for starting a business, fear of failure,The final sections include an overview of results perceptions about the status of entrepreneurs and from the National Expert Survey (NES) and an analy- their media image, the attractiveness of entrepre-sis of entrepreneurship and the global economy in neurship as a career choice and finally, intent to2010. We close with a summary of key conclusions start a business. and implications. 17. 172 A Global Perspective onEntrepreneurship in 20102.1 Attitudes GEM measures several indicators of attitudes:the extent to which people think there are good op-portunities for starting a business and their capa-Entrepreneurial attitudes convey the generalbilities for doing so. Also measured is fear of failurefeelings of a population toward entrepreneurs and or its inverse: the level of risk individuals mightentrepreneurship. A society can benefit from people be willing to assume to start a business. Percep-who are able to recognize valuable business opportu-tions about entrepreneurship are reflected in ques-nities, and who perceive they have the required skillstions about the status of entrepreneurs, their mediato exploit them. Moreover, if the economy in generalimage and whether it makes an attractive careerhas positive attitudes toward entrepreneurship, thischoice. Finally, GEM assesses intent to start a busi-will generate cultural support, financial resources,ness in the individuals it surveys. The results arenetworking benefits and various other forms of as-shown in Table 2.sistance to current and potential entrepreneurs.Table 2: Entrepreneurial Attitudes and Perceptions in the GEM Countries in 2010 byPhase of Economic DevelopmentPerceived PerceivedFear ofEntrepreneur- High StatusMedia Atten- Entrepre-Opportunities Capabilities Failure* ship as a Good to Successful tion for Entre- neurialCareer Choice Entrepreneurs preneurshipIntentions **Factor-Driven Economies Angola67.3 73.132.270.183.374.754.5 Bolivia 53.2 75.828.462.966.651.149.3 Egypt 38.8 63.425.377.789.570.524.3 Ghana 75.7 74.610.491.190.778.668.8 Guatemala 62.9 71.023.273.859.744.130.7 Iran41.6 65.730.163.684.662.331.4 Jamaica 56.1 80.233.085.184.877.438.1 Pakistan51.9 56.234.376.380.761.032.4 Saudi Arabia75.8 69.339.086.892.378.0 1.0 Uganda80.5 86.720.781.187.381.977.1 Vanuatu 73.6 79.646.955.677.634.350.5 West Bank and Gaza Strip44.0 57.040.085.383.562.528.2 Zambia81.4 77.512.869.971.872.567.1 Average (unweighted)61.8 71.528.975.380.965.342.6Continued 18. 18 GEM Global Report 2010 Perceived PerceivedFear ofEntrepreneur- High StatusMedia Atten- Entrepre- Opportunities Capabilities Failure* ship as a Good to Successful tion for Entre- neurial Career Choice Entrepreneurs preneurshipIntentions ** Efficiency-Driven EconomiesArgentina 50.3 63.521.374.367.161.721.0Bosnia and Herzegovina38.3 62.527.476.063.047.616.8Brazil48.1 57.933.278.079.081.126.5Chile 65.0 65.622.187.471.245.738.3China 36.2 42.332.070.076.977.026.9Colombia68.2 65.127.788.675.966.741.3Costa Rica46.4 68.836.064.363.460.813.2Croatia 23.3 53.231.267.149.941.8 7.4Ecuador 50.3 76.631.283.174.062.646.3Hungary 33.3 43.442.455.073.747.413.8Latvia29.1 50.739.958.864.857.221.4Macedonia 34.3 59.730.971.366.256.026.7Malaysia40.1 24.345.355.768.688.0 5.1Mexico55.6 64.633.469.462.854.022.3Montenegro36.1 70.930.481.068.469.531.9Peru71.4 76.534.082.076.881.239.6Romania 17.5 38.241.166.565.546.9 8.6Russia21.7 22.741.765.463.746.6 2.6South Africa40.9 44.329.077.577.678.616.7Taiwan29.6 26.443.868.457.578.225.1Trinidad and Tobago 69.1 82.811.683.277.667.230.4Tunisia 37.6 53.123.289.192.778.424.1Turkey36.1 54.225.071.276.461.719.4Uruguay 52.1 73.327.764.861.843.331.8Average (unweighted)42.9 55.931.772.869.862.523.2 Innovation-Driven EconomiesAustralia45.753.235.857.068.470.5 8.7Belgium39.644.935.160.051.245.7 8.2Denmark46.440.731.5 *** *** *** 5.9Finland51.139.528.646.186.571.4 5.9France 33.937.340.565.267.944.714.2Germany28.541.633.753.177.149.0 6.4Greece 15.952.250.965.670.234.512.8Iceland48.749.033.751.260.966.615.7Ireland22.549.233.451.881.561.1 6.1Israel 35.241.646.061.373.056.314.1Italy24.742.436.869.169.337.7 4.0Japan 5.913.732.628.452.058.5 2.9Republic of Korea13.029.032.567.671.361.410.1Netherlands44.845.523.885.468.660.9 5.5Norway 49.840.426.657.870.767.2 7.6Portugal 20.352.129.767.570.552.6 8.8Slovenia 26.856.327.553.273.756.2 8.7Spain18.850.236.465.462.540.7 5.8Sweden 66.142.428.956.971.660.8 8.5Switzerland33.343.927.064.976.450.6 6.7United Kingdom 29.251.830.351.076.752.2 5.1United States34.859.526.765.475.967.8 7.7Average (unweighted) 33.444.433.159.270.355.5 8.2 * Denominator: 1864 age group perceiving good opportunities to start a business. ** Denominator: 1864 age group that is not involved in entrepreneurship activity. *** Data is not available Source: GEM Adult Population Survey (APS) The definition of entrepreneurship tends to be a moving target - even the teaching of entrepreneurship causes confusion in the definition. To start a business does not necessarily make you an entrepreneur. Entrepreneurs create needs; business people satisfy needs. Tony Falkenstein, New Zealand 19. Chapter 2 A Global Perspective on Entrepreneurship in 2010 19 Perceived Opportunities and having high levels of innovativeness or growth ex- pectations. In contrast, Israel (an innovation-driven Capabilitiescountry), had a higher proportion of opportunity- driven motives and a large percentage of individu-People may decide to start businesses when and als with high levels of innovativeness and growthbecause they recognizeperhaps unexpectedly expectations. We could surmise that there are differ-specific entrepreneurial opportunities. The thoughtent perceptions about what an opportunity encom-of becoming an entrepreneur may not have evenpasses, and what capabilities are required, for entre-occurred to them before this idea came into view.preneurship in Uganda versus Israel.Others may decide to start ventures and undergo asearch for ideas. Entrepreneurs may recognize op-While economic development level may explainportunities well in advance, or just before they set some differences in beliefs about opportunities andup their businesses. Consequently, the perception of capabilities, there are also some interesting geographicopportunities relative to new business starts can take patterns. In the factor-driven group, individuals in themany different paths.sub-Saharan African countries had the highest-level perception that there were good opportunities for en-An economys entrepreneurial energy derives, trepreneurship in their area. These countries also hadat least in part, from individuals who perceive op-above average capability perceptions, with nearly 87%portunities for launching a business in the area inof the individuals surveyed in Uganda stating thatwhich they live. These people are further encouraged they had the capabilities to start a business.by their beliefs in their capabilities for starting thetypes of ventures they may envisage. The quantityThe MENA/South Asian countries in the factor-and quality of the opportunities they perceive, anddriven group had the lowest perceptions, except fortheir beliefs about their capabilities, may be affectedSaudi Arabia, where over 75% of individuals per-by various conditions in their environment: for ex-ceived there were good opportunities. Perceptionsample, economic growth, culture and education. Dif-about capabilities for starting a business were belowferent demographic groups may make distinct judg-average among the factor-driven MENA economies,ments about opportunities and capabilities; thesealthough much higher than the overall average ofmay be embedded in historical, socio-economic or the other two wealthier economic groups.cultural factors. Notably, Latin American countries occupied allAt the same time, policy makers may seek tothe highest levels of opportunity perception in thestimulate these attitudes. Policy programs may ex- efficiency-driven group; they were the only econo-plicitly target groups exhibiting low perceived or mies in this group with above average ratings onactual capabilities. Thus, particular sets of national this attitude measure. They also had above averageconditions may affect perceived capabilities, both di- perception of capabilities.rectly and indirectly.In contrast, the Eastern European countries hadOn average, individuals in factor-driven econo-lower than average opportunity perception in themies have higher perceptions that there are good op- efficiency-driven group. Capabilities perception wasportunities for entrepreneurship, and that they have also below average, with the exception of Macedonia,the capabilities to start businesses. These attitude Bosnia/Herzegovina and Montenegro. The same canmeasures tend to decline with greater developmentbe said for the three Asian countries in the efficien-levels. This may seem counter-intuitive until we con-cy-driven group, as well as Japan and the Republic ofsider, for example, that individuals in different stages Korea in the innovation-driven groupboth oppor-of economic development may have different kinds tunity and capability perceptions were below average.of businesses in mind. While all of the Western European countries fallFor instance, as the activity section shows, half of into the innovation-driven group, a distinction be-the entrepreneurs in Uganda (a factor-driven econ- tween some northern and southern regions can beomy) started businesses out of necessity, with few observed. Nordic countries (Sweden, Finland, Ice- 20. 20 GEM Global Report 2010 land and Denmark) have the highest opportunity per-the Asian economies, Taiwan and Malaysia have the ception, while economies in Southern Europe (Greece, highest fear of failure in the efficiency-driven group, Spain, Portugal and Italy) tend toward the low end. Butwhile the Republic of Korea and Japan show a below the reverse is generally true for capabilities. The Nor- average rate in the innovation-driven group. dic countries, with the exception of Iceland, had below average belief about capabilities, while the SouthernInterestingly, fear of failure among all economies European countries, with the exception of Italy, werewas highest in Greece. This continues an ongoing above average on this attitude measure.pattern over the past seven years and reflects a strongaversion to risk, which is confirmed by the relatively The United States reports the highest level of per-high employment protection ratevii. Employment ceived capabilities among the innovation-driven coun-protection refers to the number of procedures and tries, even though opportunity perception was only justcosts required by law to hire or dismiss workers. above average. These mismatches between opportuni- ty and capability perceptions in the innovation-driven The Netherlands had the lowest fear of failure economies could indicate a need to address conditionsamong the innovation-driven economies. However, in the environment that can bring into balance thisthere is a much smaller gap between this country and alertness to opportunities with the beliefs, or perhapsothers in the innovation-driven group (such as the confidence, in ones entrepreneurial abilities.U.S., Slovenia and Switzerland, which also have lowfear of failure). More noticeable differences can beFear of Failure seen in the remarkably low fear of failure reported inGhana and Zambia, compared to others in the factor- Sometimes, the downside risk of failure outweighsdriven group, and between Trinidad and Tobago and even the most promising gains imagined in the eventthe other members of the efficiency-driven group. of success. In other words, even if the expected re- turns from entrepreneurship are considerably higherThe GEM Global 2009 Executive Report showed than the next best alternative, the perceived risks of that, in factor-driven and efficiency-driven coun- starting a business may nonetheless deter some in- tries, those with the highest fear of failure rates have dividuals. Risk-taking propensity can therefore play the lowest intentions to start businesses. In addition, a significant role in the transition from potential (oracross the sample, fear of failure was lower among latent) entrepreneurship to actual business starts. We those who saw good opportunities to start a business could also assume that entrepreneurship is affectedcompared with the population in general. This sug- by the wider populations view on risk, since entre- gests that it could be possible to improve perceptions preneurs rely on the participation of stakeholders about opportunities and increase intentions to start like employees, investors, suppliers and others. businesses by reducing fear of failure. Policy changesmay have a positive influence on risk propensity: Characteristics such as age, gender or ethnicity can for example, removing the large firm employment influence fear of failure. Young people may not have advantage with respect to health care and pension families and mortgages to supportin a sense havingbenefits, improving the skills of creditors and inves- less to lose. Immigrants may be shut out of more stabletors in assessing higher risk ventures and reducing or lucrative jobs and therefore have fewer options for negative consequences associated with employment generating income. The institutional environment can protection or bankruptcy laws. also impact this; for instance, bankruptcy legislation may deter would-be entrepreneurs. Perceptions about EntrepreneurshipWhile perceptions about opportunities and capa- Over time, societies and organizations develop bilities show significant differences among the eco- particular cultural and social expectations, reflecting nomic groupings, fear of failure shows less distinctiontheir members values, norms, and a shared under- among these groups, just slightly rising with economic standing about how things are done. These can serve development levels. Geographically, there are few clearas informal governance mechanisms, guiding activi- patterns, with economies from each region fallingties alongside, or in place of, more formal administra- both above and below average. For example, among tive methods. Conformity and social sanctions may 21. Chapter 2 A Global Perspective on Entrepreneurship in 2010 21function to maintain a particular equilibrium, some-higher perception about the status of entrepreneurstimes preserving special interests or creating resistance than they are to perceive entrepreneurship as a goodto change. Consequently, cultural and social elements career choice. The innovation-driven group also hasare often lasting or slowly evolving qualities. a higher perception about entrepreneurs status com-pared to their perceptions about entrepreneurship asAn entrepreneurial culture may be reinforced by a career. This is understandable, given how entrepre-perceptions like the amount of status society confers neurs like Sir Richard Branson in the United King-on entrepreneurs and the extent people think being an dom, and Bill Gates, Steve Jobs and recently Markentrepreneur is an attractive pursuit. Media can also Zuckerberg of Facebook in the United States havereinforce notions about entrepreneurs: for example, gained prominence, not only in their home coun-magazines or television shows can highlight entre-tries, but worldwide.preneurs, or newspaper stories can feature about theachievements of such individuals. Entrepreneurs asIn wealthier economies, with relatively good in-heroes (or otherwise), and their stories of success (or frastructure, education and other basic and efficiencyfailure), can shape a societys impressions markedly. factors, shaping attitudes may be more critical becausePolicy makers may even take specific actions to high- entrepreneurs are more likely to enter this role becauselight entrepreneurs and shape cultural perceptions. of choice. At the same time, with status rated higherthan perceptions about entrepreneurship as a career,The 2010 survey shows that perceptions aboutit appears that people in these economies may admirethe attractiveness of entrepreneurship as a career, entrepreneurs more than they want to become one.the status of entrepreneurs and media attention to-ward entrepreneurship were all, on average, highest Entrepreneurs with recognition and status canin the factor-driven countries. These indicators then serve as role models, in a sense communicating thatdeclined generally from factor-driven to efficiency,entrepreneurship is possible and desirable. Yet, entre-and then from efficiency to innovation-driven preneurs such as Bill Gates and Richard Branson mayeconomies. However, in both the efficiency-driven cause some to see such achievements as rare or un-and innovation-driven groups, perceptions about realistic, or simply a path they do not, or cannot, seethe status of entrepreneurs were similar, on average. themselves taking.One explanation for this phenomenon is that thegeneral population in factor-driven economies per-In the efficiency-driven group, on the other hand,ceives entrepreneurship as an escape from a formalthe reverse is true. Individuals believe entrepreneur-job, even though some of these activities could beship is a good career choice despite less perceiveddriven by necessity.status. Entrepreneurship may take less of a glamorousimage in these regions, which could, in like manner,Ghana and Saudi Arabia has among the highestreduce its attractiveness.levels of status, career and media perceptions in thefactor-driven group. In the efficiency-driven econo- Entrepreneurial Intentionsmies, Malaysia shows the highest level of media atten-tion around entrepreneurship, yet one of the lowestEven when individuals have favorable perceptionslevels of perception about entrepreneurship as a career.of entrepreneurship, they may nonetheless have fewIn the innovation-driven group, over 85% of peopleintentions to start businesses. This is the case for manyin the Netherlands have a positive perception about European countries. Although attitudes and percep-entrepreneurship as a career, far above the rest of the tions about entrepreneurship are fairly high, this is notgroup. At the same time, media attention is just abovematched by high intentions for starting businesses. Aaverage and status perceptions are lower than average.variety of national characteristics could be underlyingThis is similar to Chile, and may serve as an example this phenomenon. For example, red tape could pres-of the prospects for stimulating the publics attention ent unfavorable administrative burdens or high costsabout entrepreneurship. to those thinking about starting a business. Addition-ally, governments characterized as welfare statesIt is notable that most economies in the factor-although meaning to protect citizensmay reducedriven group are more likely to have the same orincentives for entrepreneurship. 22. 22 GEM Global Report 2010 Far more individuals in factor-driven economies (almost 43% on average) intend to start businesses over2.2 Activity the next three years compared to the other economies.Across the sample of 59 economies, we estimate An average of just 23% of people in efficiency-driventhat some 110 million people between 1864 years economies expressed this intent, while even fewerold were actively engaged in starting a business. An- (8%) of those in innovation-driven economies did.other 140 million were running new businesses theystarted less than 3 years earlier. Taken together, In the factor-driven group, the Sub-Saharan Af-some 250 million were involved in early-stage entre- rican countries had the highest intent, consistent preneurial activity. with their positive perceptions about opportunities and their belief in their capabilities. Similarly, lowAs Figure 1 shows, GEM measures the partici- intentions in the MENA countries are consistentpation of individuals in entrepreneurship activity, with their views on opportunities and capabilities.presenting this as a continuous process that in-cludes nascent entrepreneurs involved in setting Among the efficiency-driven group, Eastern Euro- up businesses, entrepreneurs owning and manag- pean economies had lower than average intent, with the ing new businesses 3 years old or less and en- exception of Macedonia and Montenegro. Latin Amer- trepreneurs owning and managing businesses es- ican countries had higher than average intent, with thetablished more than 3 years agoviii. In addition, exception of Costa Rica, Argentina and Mexico. GEM assesses the rate and nature of business dis-continuance. This section reviews these phases, In the innovation-driven economies, Icelandas well as necessity versus opportunity motives. showed high intent. While both the Republic of Korea Table 3 shows these activity results. In addition, and Japan had low perceptions about opportunities andthese sections provide additional insights on the capabilities, this was matched with low intent only in industry sector of the businesses, and age and Japan. The Republic of Korea was well above averagegender demographics of the entrepreneurs. on this measure. Table 3: Entrepreneurial Activity in the 59 GEM Countries in 2010, by Phase of Economic Development Nascent New Business Total EstablishedDiscontinuation Necessity- Improvement- Entrepreneur- OwnershipEarly-Stage Business of Businesses Driven (% of Driven ship Rate Rate Entrepreneur- Ownership Rate TEA) Opportunityship Activity (% of TEA)(TEA) Factor-Driven EconomiesAngola13.619.1 32.4 8.6 19.9 3630Bolivia 28.814.0 38.618.29.0 1757Egypt2.1 4.97.0 4.53.8 5325Ghana 10.724.6 33.935.5 25.7 3735Guatemala8.3 8.4 16.3 6.63.9 1528Iran 4.8 7.8 12.412.27.3 3839Jamaica5.5 5.1 10.5 6.98.1 4239Pakistan 6.6 2.79.1 4.72.6 4139Saudi Arabia 5.9 3.59.4 3.93.8 1075Uganda10.622.0 31.327.7 27.4 5034Vanuatu 31.228.2 52.223.2 22.0 3824West Bank and Gaza Strip 7.9 2.6 10.4 2.05.7 3233Zambia17.317.1 32.6 9.6 23.5 3241Average (unweighted)11.812.3 22.812.6 12.5 3438 Continued 23. Chapter 2 A Global Perspective on Entrepreneurship in 2010 23 Nascent New Business Total EstablishedDiscontinuation Necessity- Improvement- Entrepreneur- OwnershipEarly-Stage Business of Businesses Driven (% of Driven ship Rate Rate Entrepreneur- Ownership Rate TEA) Opportunityship Activity (% of TEA)(TEA)Factor-Driven EconomiesEfficiency-Driven Economies Argentina 7.0 7.4 14.212.4 3.8 36 43 Bosnia and Herzegovina4.1 4.17.7 6.6 4.7 47 30 Brazil5.811.8 17.515.3 5.3 31 46 Chile11.1 6.1 16.8 6.0 5.6 29 53 China 4.610.0 14.413.8 5.6 42 34 Colombia8.612.7 20.612.2 5.1 40 41 Costa Rica 10.4 3.6 13.5 4.8 2.0 32 38 Croatia 3.8 1.95.5 2.9 4.5 32 49 Ecuador10.411.5 21.314.7 7.2 28 45 Hungary 4.6 2.67.1 5.4 2.9 20 43 Latvia5.6 4.29.7 7.6 4.2 27 51 Macedonia 4.4 3.68.0 7.6 3.7 59 23 Malaysia1.4 3.65.0 7.9 1.9 12 41 Mexico*82*1**5.9 1* 4* Montenegro 12.0 3.1 14.9 7.8 7.3 37 38 Peru 22.1 6.0 27.2 7.2 9.2 21 47 Romania 3.3 1.14.3 2.1 2.6 31 47 Russia2.1 1.93.9 2.8 0.8 32 30 South Africa5.1 3.98.9 2.1 4.8 36 31 Taiwan4.7 3.88.4 7.2 3.7 30 48 Trinidad and Tobago 8.9 6.4 15.1 8.5 2.9 14 47 Tunisia 1.7 4.46.1 9.0 4.1 24 48 Turkey3.7 5.18.610.7 4.6 37 47 Uruguay 7.8 4.1 11.7 7.2 3.5 26 54 Average (unweighted)6.7 5.2 11.7 7.6 4.4 31 42Innovation-Driven Economies Australia 3.9 4.07.8 8.5 2.7 19 59 Belgium 2.3 1.43.7 2.7 2.0 10 54 Denmark 1.8 2.23.8 5.6 1.78 54 Finland 2.4 3.45.7 9.4 1.8 18 54 France3.7 2.35.8 2.4 2.5 25 56 Germany 2.5 1.84.2 5.7 1.5 26 48 Greece2.0 3.55.514.8 3.4 28 39 Iceland 7.4 3.3 10.6 7.4 3.47 68 Ireland 4.4 2.66.8 8.6 2.3 31 33 Israel3.2 2.65.7 3.1 3.8 29 54 Italy 1.3 1.02.3 3.7 1.6 13 55 Japan 1.5 1.83.3 7.4 1.5 36 47 Republic of Korea 1.8 4.86.611.2 1.6 39 49 Netherlands 4.0 3.47.2 9.0 1.48 64 Norway4.4 3.47.7 6.7 2.6 15 74 Portugal1.8 2.84.5 5.4 2.6 22 52 Slovenia2.2 2.44.7 4.9 1.6 16 54 Spain 2.2 2.14.3 7.7 1.9 25 42 Sweden2.3 2.64.9 6.4 2.9 13 72 Switzerland 2.0 3.15.0 8.7 2.4 14 60 United Kingdom3.2 3.36.4 6.4 1.8 11 43 United States 4.8 2.87.6 7.7 3.8 28 51 Average (unweighted)3.0 2.85.6 7.0 2.3 20 54* Data is not availableSource: GEM Adult Population Survey (APS)My decision to start a boutique ad agency, Pepper, came from my incapacityto tow the line and follow corporate instructions that did not sit well withmy value system, my training and experience. So I could either find anothercompany to work with or start my own. I chose to start my own and now inour sixth year, it looks like we might survive.Dennis Ramdeen, Founder of Pepper Advertising and Experiential Marketing,Trinidad and Tobago 24. 24 GEM Global Report 2010Total Early-Stage Entrepreneurship indicator of TEA in a country. It represents dynamic new rm activitythe extent new businesses are in-Activity (TEA) troduced into a national population. GEM denes Total Early-Stage Entrepreneurship Figure 4 shows TEA rates across the sample of 59 Activity (TEA) as the prevalence rate of individuals in economies, organized into the three economic lev- the working-age population who are actively involvedels and exhibited within each from lowest to highest in business start-ups, either in the phase preceding theTEA rate. This gure facilitates benchmarking among birth of the rm (nascent entrepreneurs), or the phaseeconomies in similar phases of development. Vertical spanning 3 years after the birth of the rm (owner-bars on either side of the point estimates represent de- managers of new rms). The cut-o point of 3 years grees of freedom. In comparing any two economies, if has been made on a combination of theoretical and the bars do not overlap, this means they have statisti- operational groundsix.cally dierent TEA ratesx. For the purpose of international comparisons, For the 41 economies that also participated in GEM takes the payment of any wages for more thanthe GEM 2009 survey, a comparison of TEA rates three months to anybody (including the founders) as from 2009 to 2010 shows a mix of increases and the birth event. Individuals who are actively commit- decreases (or no change) across all three economic ting resources to start a business that they expect togroups. While the number of positive and negative own themselves, but who have not reached this birth shifts was roughly equal in the factor-driven and event are labeled nascent entrepreneurs. The preva- eciency-driven economies, the balance tipped lence rate of nascent entrepreneurs and new businesstoward slightly more declines in the innovation- owner-managers, taken together, may be viewed as an driven group. Figure 4: Total Early-Stage Entrepreneurial Activity (TEA) for 59 Economies in 2010, by Phase of Economic Development, Showing 95 Percent Condence Intervals Percentage of Adult Population Between 1864 Years 60% 50% 40% 30% 20% 10% 0%EgyptPakistanBoliviaSaudi Arabia West Bank and Gaza StripJamaica IranGuatemala UgandaAngola ZambiaGhana Vanuatu RussiaRomaniaMalaysia CroatiaTunisiaHungary Bosnia and HerzegovinaMacedoniaTaiwanTurkey South Africa Latvia Argentina MontenegroUruguayCosta Rica China Trinidad and Tobago ChileBrazil ColombiaEcuador PeruItalyJapan BelgiumDenmarkGermanySpainPortugalSlovenia Sweden SwitzerlandGreeceIsrael FinlandFrance United Kingdom KoreaIreland NetherlandsUnited States NorwayAustraliaIcelandFactor-Driven Economies Efciency-Driven EconomiesInnovation-Driven Economies Source: GEM Adult Population Survey (APS) 25. Chapter 2 A Global Perspective on Entrepreneurship in 2010 25 Factor-Driven Economies having lower than average TEA rates for efficien- cy-driven countries, both experienced increasesThe factor-driven economies show the highest over last year.TEA rates on average, followed by the efficiency-driven economies. The lowest average rates are Asian economies in this group reveal a rangefound in the innovation-driven group. The nature of entrepreneurship levels. While Malaysias TEAof these differences will be explained more fully in rate is relatively lower, it has increased from lastsubsequent sections regarding development levels year. China, on the other hand, has a high rate ofand necessity versus opportunity motives.entrepreneurship (14.4%), yet experienced a mod- erate decline from 2009. China was able to main-Within the factor-driven group, the MENA/tain its targeted high GDP growth rate amid theSouth Asia region tends to show lower relative global downturn in 2009 with a 4 trillion Yuanrates of entrepreneurship. Shifts in activity were economic stimulus. This was mostly distributedobserved in Saudi Arabia, which increased itsto state-owned enterprises for large projects inentrepreneurship rate from last year, and Egypt, real estate and heavy industries (like constructionwhich exhibited a decline. and infrastructure). The entrepreneurship sector could be seen as indirectly benefitting, however,Sub-Saharan African countries tended towardto the extent these firms can become supply-chainthe top of the factor-driven economies on entrepre-players or service providers for the large firms, asneurship rates. In fact, none of the countries in this well as businesses selling to those receiving wagesgeographic region revealed a decline in rates over from the projects.the previous year, and Angola showed an increase.Interestingly, another country in this region, SouthInnovation-Driven EconomiesAfrica, part of the efficiency-driven group, also ex-hibited an increase in TEA from 2009.The innovation-driven economies contain the United States and three economies from theVanuatu, a small island of two hundred thou- Asia-Pacific region, but are mostly populated bysand people in the South Pacific, showed the high- Western European economies. This latter region,est rate of entrepreneurship in this group, with as a whole, experienced mostly little or nega-over half its people engaged in starting or alreadytive changes in TEA from 2009. Greece showed arunning new businesses.substantial decrease in TEA, amid the debt crisis that permeated the country in the spring of 2010. Efficiency-Driven Economies A positive change was seen in France, however, which experienced a jump in entrepreneurshipLatin American/Caribbean economies tend to participation after many years of exhibiting loweroccupy the highest positions in terms of entrepre- relative TEA rates.neurship rates in the efficiency-driven group. Allthe efficiency-driven Latin American countries ex- Iceland, Australia and the United Stateshibit 10% or higher rates and none show declines showed the highest TEA rates in the innovation-from last year. Peru (27.2%) and Ecuador (21.3%) driven category. For Iceland, this comes even afternot only showed the highest rates of entrepreneur- experiencing a decline from last year. The Unitedship among all countries in this category, but alsoStates declined slightly in 2010, following a moreexhibited increases in TEA from 2009.marked drop in 2009.Eastern European countries tend toward rela- In Asia, Japan maintained its entrepreneur-tively low entrepreneurship rates, with the excep- ship rate, while the Republic of Korea faced ation of Montenegro, which has nearly 15% of itsslight decline, although still maintaining a rela-population engaged in early-stage entrepreneur-tively high level of entrepreneurship among itsship. Bosnia/Herzegovina and Turkey, althougheconomic peers. 26. 26 GEM Global Report 2010Entrepreneurship Relative to comes replaced by transparent and respected legal and regulatory systems.Development LevelsIndustrialization and economies of scale favor As Figure 4 shows, average TEA rates are highestlarger and more established firms that are able to in the factor-driven economies. Figure 5 plots thesesatisfy the appetites of growing markets, thereby in- rates against GDP per capita, adjusted for purchas- creasing their role in the economy. Accompanying all ing power parity. As this figure shows, TEA rates are this is an expansion of employment capacity, allow- highest for the poorest countries, declining rapidlying more people to find stable jobs in large industrial and then leveling out in the efficiency stage, with low plants. The proportion of necessity-driven entrepre- levels continuing into the innovation stage until theyneurship declines as a result. At the same time, im- turn upward at increasing levels of wealth. provements in wealth and the development of basic requirements (infrastructure, economic stability, One key reason for this trend can be found in education) enable opportunity-based businesses to differences between the level of necessity and op-thrive, shifting the nature of entrepreneurship activ- portunity-based entrepreneurship at particular GDPity. But the dominance of large firms also leads to an levels. The section that follows provides a more in-overall reduction in the number of new businesses. depth examination of this phenomenon. We provide a brief description here, however, in order to includeAt the wealthiest societal levels, individuals live this in the discussion of the relationship betweenwith sophisticated basic requirements and efficiency TEA and development levels. enhancers. More importantly, they have access to entrepreneurial finance, open markets, R&D knowl- Necessity entrepreneurs are those who have en-edge and other entrepreneurship-specific framework tered self-employment because they have no better conditions. Toward the right-hand side of the figure, options for work; in other words, they start business-the role played by the entrepreneurship sector may es to generate income for themselves and their fami-increase because more individuals can access the lies. Opportunity entrepreneurs, on the other hand, resources necessary to start their own business in have chosen to start businesses out of opportunity, knowledge-intensive environments with abundant even when they have other employment possibili- opportunities. This tends to create an upward trend ties. GEM further queries these individuals on theiras GDP rises to its highest levels, thus completing the motives: whether they seek to maintain or increaseU-shape curve. their income, or whether they desire independence in their work.In countries with low levels of per capita income, a decrease in the prevalence of early-stage entrepre- Necessity-driven (mainly self-employment) neurship may be a positive one. It could signal great- activity tends to be higher as a proportion of TEAer sustainability, especially if this is accompanied by in less developed economies. Agricultural and ex- economic growth and political stability. As such, it tractive sectors, as well as consumer-based local represents a natural evolution in development, as an businesses, dominate these regions. There is more economy relies increasingly on established organiza- demand for jobs here than employers can provide.tions with scale. Consequently, many people must create their own jobs to generate income. Small businesses, and lots ofTherefore, while low TEA rates, or drops in rates, them, are prevalent at this development level.may be a cause for concern in some economies, it could instead mean that the general economic climateWith further development comes macroeco- has improved and that job opportunities are increas- nomic and political stability and the growth of ing. Additionally, it may be accompanied by a shift productive sectors. Accompanying this is thetoward more promising aspirations for growth, inno- emergence of strong institutions that organize andvation and international trade, even while the number govern the functions of society and its economy.of entrepreneurs declines. In this respect, each of these A shift begins to occurs, where a previous reliance entrepreneurs contributes more markedly to employ- on commonly accepted norms of behavior be-ment growth and national comparative advantage. 27. Chapter 2 A Global Perspective on Entrepreneurship in 2010 27Further inspection reveals that the dispersion of stock of business owners, tend to appear above theTEA estimates around the line of best t in Figure 5trend line.is not just a function of dierences in economic de-velopment (or welfare) but also other factors. ForWhile development tends to be associated withexample, Eastern European countries have been a particular level of sophistication and attention toexperiencing falling populations and a low stock of various framework conditions, economies also havebusiness owner-managers as a legacy of commu- their own cultures and policies, among other sourcesnism. Their TEA point estimates are clustered below of uniqueness. These elements might be worth con-the trend line. In contrast, Latin American countries,sidering when counterintuitive or contrasting resultswith healthy population growth rates and a larger are revealed.Figure 5 : Total Early-Stage Entrepreneurial Activity Rates and Per Capita GDP 2010135GHAOAngola ES Spain JP JapanSA Saudi ArabiaPercentage of 1864 Population Involved in Early-Stage Entrepreneurial ActivityZMARArgentinaFI Finland KR KoreaSE SwedenAOAUAustraliaFR FranceLV Latvia SI SloveniaUGBABosnia and Herzegovina GH Ghana ME Montenegro SW Switzerland30BEBelgiumGR GreeceMK MacedoniaTN TunisiaBRBrazil GT Guatemala MX Mexico TR Turkey PE CLChileHR Croatia MY Malaysia TT Trinidad and TobagoCNChinaHU Hungary NL NetherlandsTW Taiwan25COColombia IE Ireland NO Norway UG UgandaCRCosta Rica IL IsraelPE Peru UK United KingdomDEGermanyIR IranPK Pakistan US United States EC DKDenmarkIS Iceland PT Portugal UY UruguayCOECEcuadorIT Italy RO RomaniaZA South Africa20EGEgyptJM Jamaica RU Russia ZM Zambia BR CL2 GT R = 0.5115ME TTCNAR CRIRIS JMUY10 MXZA LV PKSA TW AU NLTR BA MKHUKRUKIE US NOEG IL GR FR FI5 TNMYHR SE ES DE SWRORU PTSI JP BE DK IT0 0 1020 30 405060GDP Per Capita in Purchasing Power Parities ($), in ThousandsGDP per1Bolivia and Vanuatu a not showed in this gure, because their TEA rates are outsidersSource: GEM Adult Population Survey (APS) and IMF World Economic Outlook Database 28. 28 GEM Global Report 2010 Figure 6: Necessity-Based Early-Stage Entrepreneurial Activity and Per Capita GDP 201020VUAO Angola ESSpain KR Korea SI SloveniaAR ArgentinaFIFinland LV LatviaSW SwitzerlandAU AustraliaFRFranceME MontenegroTN Tunisia Percentage of 1864 Population Involved in Early-Stage Entrepreneurial Activity by Necessity18BA Bosnia and Herzegovina GHGhana MK Macedonia TR TurkeyBE BelgiumGRGreeceMX MexicoTT Trinidad and TobagoBO BoliviaGTGuatemala MY MalaysiaTW TaiwanBR Brazil HRCroatia NL Netherlands UG Uganda16CL ChileHUHungary NO NorwayUK United KingdomUGCN ChinaIEIreland PE PeruUS United StatesCO Colombia ILIsraelPK PakistanUY UruguayCR Costa Rica IRIranPT PortugalVU VanuatuDE GermanyISIceland RO Romania ZA South Africa14DK DenmarkITItaly RU RussiaZM ZambiaEC EcuadorJMJamaica SA Saudi ArabiaGHEG EgyptJPJapan SE Sweden12 AO ZM10CO8BOCN BC6PE BRMEARIRJMMK CL4CRBA PKEGZA TR UY2 LV KR TW R = 0.62GT US MXHR TT IE2IL GR FRTN JP RO RUFI DEAU HU ISNO MY ESSA PT SIUKSENL IT BEDKSW0 010 203040 5060GDP Per Capita in Purchasing Power Parities ($), in Thousands Source: GEM Adult Population Survey (APS) and IMF World Economic Outlook Database Figure 6 shows a plot based on necessity-motivat- an increase in GDP, and then gradually continue ed entrepreneurship. This plot reveals that the steep-on a more moderate decline. When compared with ness of the left-hand side of the curve in Figure 5 isFigure 6, it is apparent that both the more gradual due to very high levels of necessity-based entrepre-slope on the left and the uptick on the right are cre- neurship at the lowest GDP per capita levels. Along ated by the increase in opportunity-based entrepre- the horizontal axis, the levels drop very rapidly withneurship as GDP rises. 29. Chapter 2 A Global Perspective on Entrepreneurship in 2010 29 Necessity Versus Opportunity styles, while many people in Iceland wish to im-prove their lifestyles and see entrepreneurship as aThis section examines the proportion of entrepre- means to do this.neurs in an economy that have identified their mo-tives as either based on necessity or improvement-Also notable in the innovation-driven group aredriven opportunity. Improvement-driven opportunitythe high levels of improvement-driven motivationrefers to those entering entrepreneurship because theyin the Netherlands, Sweden, Denmark and Iceland.seek independence or to improve (not just maintain) This indicates a feature that may be common to thetheir income. In other words, it excludes maintaining Nordic region of Europeentrepreneurs motivatedincome from opportunity motivation. to increase their incomes or independence. This phe-nomenon could be linked to the degree of generalSaudi Arabia, despite low TEA levels, shows a wealth (paired with relatively low income inequali-pattern similar to Bolivia, with nearly three-fourths ties) and social security in Nordic countries. Addi-of its activity as improvement-driven opportu-tionally, these four countries score high on the Easenity, and the lowest amount of necessity motiva-of Doing Business Reportxi, all falling within the toptions in this group. On the other hand, Egypt, with 15 countries out of 183. Ireland, on the other hand,the lowest TEA rate in the group, has the highest had almost equal proportions of necessity and op-proportion of necessity-driven entrepreneurship,portunity motives.and among the lowest proportion of improve-ment-driven opportunity. This indicates there are An analysis of framework conditions can helprelatively few entrepreneurs in both countries, yet explain the higher level of opportunity-based en-Saudi Arabian entrepreneurs choose to enter en- trepreneurship in the innovation-based economies.trepreneurship to improve their lives with more in- Referring back to Figure 3, consider the entrepre-come or independence, while Egyptians entrepre- neurship framework condition relating to commer-neurs need to start businesses in order to supportcial and legal infrastructure. Figure 7 shows a plot ofthemselves financially. Rule of Law against the proportion of entrepreneurswith improvement-driven opportunity motives.The highest proportion of necessity-based en-trepreneurship in the efficiency-driven group can The Rule of Law index, published by the Worldbe found in Macedonia, which also has the lowestBankxii, includes several indicators that measureimprovement-driven opportunity ratio. This coun-the extent to which people have confidence in andtry saw a significant decrease in entrepreneurshipabide by the rules of society. These include percep-activity from last year. Both Malaysia and Peru showtions of the incidence of crime, the effectiveness andrelatively low proportions of necessity-based activity, predictability of the judiciary and the enforceabilityyet they exhibit contrasting TEA levels, with Malay-of contracts. Together, these indicators measure thesia on the low side and Peru with the highest TEA success of a society in developing an environment inin this group. This illustrates simply a lack of need-which fair and predictable rules form the basis forbased entrepreneurship in both countries. In Peru,economic and social interactions and the extent tothe high level of entrepreneurship is associated with which property rights are protected.choice regarding lifestyle improvement.The positive slope reinforces the idea that en- In the innovation-driven group, several econo- trepreneurship can be encouraged by ensuringmies show a very large proportion of improvement- individuals feel secure that, among other things,driven opportunity relative to necessity entrepre-their contracts can be enforced and their intellec-neurship. Interestingly, both the highest (Iceland) tual property can be protected. With fewer indi-and lowest (Italy) TEA countries in this group ex-viduals being forced into entrepreneurship out ofhibited some of the largest spreads between these necessity, these economies need to promote a posi-two motivation factors. It could be said that few tive environment that encourages people to startpeople in Italy choose to become entrepreneursbusinesses when they otherwise have a choice ofand only because they want to improve their life- options for employment. 30. 30 GEM Global Report 2010 Figure 7: Correlation Between Rule of Law and the Degree of Improvement-Driven Opportunity motivation for Early-Stage Entrepreneurial Activity 80Improvement-Driven Opportunity Entrepreneuship, % of TEA 70 60 50 40 R2= 0.39 30 20 -2 -1,5 -1 -0,500,511,5 22,5Rule of Law Indicator Source: Global Entrepreneurship Monitor 2010 and World Bank Governance Indicators 20022006Sectornature. They can play a key role in entrepreneurshipactivity where poorly developed transportation and Figure 8 and Figure 9 show the distribution of commercial infrastructure exists. early-stage entrepreneurship activity in four main in- dustry sectors, with regard to both economic develop-The MENA/South Asian and Sub-Saharan African ment phase and geographic region. Figure 8 confirmscountries in the sample are primarily in the factor- that extraction businesses (farming, forestry, fishing driven stage of development. So it is no surprise that and mining) are more dominant in factor-driven these economies both have high levels of early-stage economies. Business services are more common inentrepreneurs in extractive businesses, as Figure 9 il- the innovation-driven economies. On the other hand,lustrates. These geographic regions have high levels no group dominates the transforming business sec-of natural resources, which enable the extracting tor (manufacturing and construction), which exhibits sector to thrive. The two differ, however, in that the equal prevalence across all three economic levels. MENA group dominates the transforming sector,while Sub-Saharan Africa is the most prevalent geo- Both factor-driven and efficiency-driven econo-graphic region in the consumer-oriented sector. mies are strongly weighted toward the consum- er-oriented sector. These businesses tend to have The Eastern European, Latin American and Asian relatively low resource needs and are often local in economies span two or three economic groups. Look- 31. Chapter 2 A Global Perspective on Entrepreneurship in 2010 31ing across the sectors, none of these global regions has a The United States and Western Europe, all inno-majority presence in any one category. Looking withinvation-driven economies, not surprisingly dominatesectors, both Latin America and Asia Pacific have most the business services sector. This sector tends to relyof their entrepreneurs in the consumer-oriented sector.on highly educated human capital, which is moreBut while many Eastern European entrepreneurs oper-widely available in these regions, and supplied by aate in consumer-oriented businesses, there is a compar-well-established higher education system.atively even distribution among the other sectors.Figure 8: Sector Distribution of Total Early-Stage Entrepreneurship Activity by Phaseof Economic DevelopmentExtractive Transforming Business Services Consumer-Oriented Factor-Driven EconomiesEfficiency-Driven Economies Innovation-Driven Economies 0%20%Source: GEM Adult Population Survey (APS) 32. 32 GEM Global Report 2010 Figure 9: Sector Distribution of Total Early-Stage Entrepreneurship Activity by Geographic RegionExtractive TransformingBusiness ServicesConsumer-OrientedLatin America and CarribeanMiddle East and North Africa/South Asia Sub-Saharan AfricaAsia Pacific Eastern EuropeU.S.A. and Western Europe 0%20% Source: GEM Adult Population Survey (APS) Age Distribution Figure 10 and Figure 11 show the distribution of early-stage entrepreneurs by age for the three economicA society can benefit from entrepreneurs of allgroups and the six geographic regions. Figure 10 illus- ages. At one extreme, young people have fresh ideas,trates that in each of the three economies, the 2534 are born-digitals with perhaps a different outlookage group contains a higher percentage of early-stage and more education than their parents. They are lessentrepreneurs than the others, followed by the 3544 likely to have responsibilities like mortgages and fami-age group, and then the 4554 age group. Less preva- lies, which can otherwise make them more cautious. At lent is the youngest (1824) age group and, even less the other end, older people have experience, contacts so, the oldest age group (5564). and capital built over long careers. Moreover, the 50+ age group in many economies is now familiar with in-All three of the economic groups thus show bell- formation and communication technologies, makingshaped distributions that are steeper on the left. Yet home-based start-ups an interesting option for this there are some unique patterns. Innovation-driven group. While entrepreneurship is often more preva-economies have greater concentrations of entrepre- lent in the age groups in between, policy makers mightneurs in the middle age groups, 25 through 54 years look to harness the entrepreneurial potential on either old, showing a steeper trail off on both sides. This is side of these seemingly more likely prospects.likely due to a higher proportion of people in tertiary The development of our country depends on the achievements of young entrepreneurs. We should encourage our young people to choose entrepreneurship as a career path. Therefore, we need to create awareness about entrepreneurship and increase the number of role models in Turkey. Ali Sabanci, Chairman, TOBB Young Entrepreneurs Board, Turkey 33. Chapter 2 A Global Perspective on Entrepreneurship in 2010 33education in younger age groups and better retirement The Asia Pacific region and the United States/provisions for older people. The factor-driven econo- Western Europe had the highest percentages of themies have more entrepreneurs in the younger (1824) second most popular age group (3544 year olds)and older (5564) extremes compared to the othercompared to the others. In these regions, individualseconomies, thereby exhibiting a flatter bell shape. tend to spend a longer time period receiving theireducations. In addition, with their high levels of edu-Looking at Figure 11, the geographic regions re-cation, they are more likely to work for establishedveal similar patterns of relative prevalence across the companies or in government jobs before becomingage categories. This suggests that the age distribution entrepreneurs. The United States/Western Europeanof an economy is an important determinant of early- region also had the highest percentage of the secondstage entrepreneurship activity across age groups.oldest group (4554 year olds), again demonstratingSeveral of the geographic regions reveal some uniquethe popularity of entrepreneurship among a middle-characteristics, however. age population.In the Asia Pacific region, the prevalence rate of theEastern Europe showed a unique pattern in itsoldest group is nearly identical to the youngest group, emphasis on an overall greater proportion of youngin contrast to the other regions, which show a higher entrepreneurs than the other geographic areas. Thislevel of younger than older entrepreneurs. Some Asian region had the highest relative percentages of theeconomies are experiencing a decline in their youth two youngest age groups and the lowest proportiondemographic. In Japan, for example, the middle ageof the two oldest groups. Perhaps the entrepreneur-group (3544 years old) is the most prevalent one,ial activities of the youngest generations in thesewhile there are slightly more entrepreneurs in the old- countries can be explained by the different socio-est age group compared to the youngest one. economic system in which they have been raised.Figure 10: Age Distribution of Entrepreneurs by Phase of Economic Development1824 Years2534 Years3544 Years4554 Years 5564 Years 30%Percentage of Adult Population Between 1864 Years 25% 20% 15% 10% 5% 0% Factor-Driven Economies Efficiency-Driven EconomiesInnovation-Driven EconomiesSource: GEM Adult Population Survey (APS) 34. 34 GEM Global Report 2010 Figure 11: Age Distribution of Entrepreneurs by Geographic Region1824 Years2534 Years 3544 Years 4554 Years5564 Years35% Percentage of Adult Population Between 1864 Years30%25%20%15%10%5%0%Latin AmericaMiddle East andSubSaharan Asia Pacific Eastern EuropeU.S.A. andand Carribean North Africa / AfricaWestern Europe South Asia Source: GEM Adult Population Survey (APS) Gender Differences eration and willingness of stakeholders like investorsand creditors, employees, suppliers and customers. Women can enter entrepreneurship for many of When these factors act as impediments, society miss- the same reasons as men: to support themselves and es an opportunity to gain from the entrepreneurial their families, to enrich their lives with careers and energy of half its population. financial independence and so on. Yet there may be special considerations for female involvement in start-Figure 12 shows the level of female and male par- ing businesses. This is important to examine in light of ticipation in early-stage entrepreneurship, ranked by the fact that womens participation in entrepreneur- the percentage of women involved in TEA within the ship varies significantly across economies, but is near- three economic groups. The level of women partici- ly always less than that of men. pation is somewhat similar to TEA levelsthat is, ifTEA is very low in an economy, there are also fewer Societies differ in their perceptions and customswomen entrepreneurs in an absolute sense. But some about women working, and working in business.economies show relatively higher or lower percentages Overall levels of education and development can in-of women entrepreneurs relative to men. For these lat- fluence societal beliefs, with a higher degree of either ter economies, entrepreneurship activity could be en- generally associated with greater acceptance about hanced overall by stimulating women to become more womens careers. In some cases, however, women en- active in entrepreneurship. ter entrepreneurship, regardless of perceptions, simply because their families need their incomes. Womens participation in entrepreneurship relativeto men ranges from a ratio of 20:100 in the Republic of In addition, social acceptance around placing chil-Korea to 120:100 in Ghana.Across the three development dren in the care of others while pursuing a career, andlevels, the factor-driven and efficiency-driven groups are the cost and availability of childcare can weigh heavily.similar on average, but the innovation-driven group has Women entrepreneurs also need to rely on the coop- a lower average proportion of women entrepreneurs. 35. Chapter 2 A Global Perspective on Entrepreneurship in 2010 35In the factor-driven economies, the lowest levels with lower than average female participation with aand ratios of women participation can be found in the 60 to 100 ratio.MENA countries, where for every woman entrepre-neur, there are about two to four men. The highest ra-Looking at the Asia Pacific region, Australia showstio can be seen in the Sub-Saharan African countries, the greatest number of women entrepreneurs amongwhere there is more or less equal participation, with the innovation-driven economies, with men and wom-Zambia having slightly fewer women and Ghana hav- en participating equally in this activity. Malaysia has aing