Entrepreneurial Activity Becoming More Global
Entrepreneurial activity is becoming more global, as more early stage entrepreneurs than ever before expect at least a quarter of their future customers to be from different countries. That’s one of the conclusions of a newly released report from the Global Entrepeneurship Monitor (GEM), a research group run by Babson College and the London Business School.
The report looked at early-stage entrepreneurial activity in 46 countries. “Early-stage” was defined as a business under 3.5 years old. It found a “U-shaped relationship” between a country’s mean income and levels of entrepreneurial activity.
This relationship, according to the authors, was the result of entrepreneurial activity being opportunity-based in wealthier countries and necessity-driven in poorer countries. As income levels grow in poorer nations, better job prospects lead more people away from entrepreneurial activity into the regular job market.
Other key findings of the report:
- Countries in Eastern Europe and Central Asia traditionally have relatively low rates of early-stage entrepreneurial activity but the evidence for Croatia points at an increasing rate over the period 2002-2007. Instead, most Latin American countries tend to show a drop in early stageentrepreneurial activity, which may be natural progression toward higher per capita income.
- As per-capita incomes rises in high-income countries, so does the rate of early-stage entrepreneurship. However, cultural demographic and institutional factors are also at play.
Many EU countries consistently have relatively low rates of early-stage entrepreneurship. Iceland(12.5%), Hong Kong (10.0%) and the United States (9.6%) show the highest levels. Lowest rates
were found in Austria (2.4%), Puerto Rico (3.1%), and Belgium (3.2%). - Among high-income countries, the USA, Israel, Iceland, and Canada show the highest rates of high-growth expectation entrepreneurship (expecting to employ at least 20 employees five
years from now). Among middle and low-income countries, China has the highest rate followed by Argentina. - Early-stagers are young (25-34). Men are more likely to start a business than women. This gender gap is present among all age groups, but is relatively small for countries in Latin America and the Caribbean.
- Entrepreneurship is going global—in some GEM countries, 40% of early-stage entrepreneurs expected 24% or more of their customers to come from outside the country.
- There is a strong correlation between the rate of early-stage entrepreneurial activity and the general population’s positive perceptions of their entrepreneurial skills and opportunities for starting a business. Other factors associated with early-stage entrepreneurial activity are whether entrepreneurship is widely believed to be a good career choice, and the degree to which it is reported in the media.
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