Year of publication: 2015
Category: Special Topic Reports
Upload date: 2015-05-15
You can download the report as PDF at the bottom of the page.
Many advanced economies are missing out on the full benefits of entrepreneurship owing to insufficient ambition, innovation, or number of entrepreneurs, according to a report launched today by the World Economic Forum and the Global Entrepreneurship Monitor. Chile and Colombia score best. The Leveraging Entrepreneurial Ambition and Innovation report provides analysis and recommendations for policy-makers to maximize the impact of entrepreneurs in their economies, comparing countries on key variables of entrepreneurship. For the first time, Leveraging Entrepreneurial Ambition and Innovation combines two unique data sets: the World Economic Forum Global Competitiveness data is the largest and most comprehensive assessment of the business environment of 144 economies globally; the Global Entrepreneurship Monitor’s Adult Population Survey is the largest and most comprehensive assessment of entrepreneurial activity across 70 economies globally. The insights from the analysis of 44 of those economies in this report offer a new perspective on the relationship between entrepreneurial activity and entrepreneurship. Endeavor provided the interviews for the report.
Here are some highlights from the GEM 2015 Leveraging Entrepreneurial Ambition and Innovation – A Global Perspective on Entrepreneurship, Competitiveness and Development report:
- Competitiveness matters for entrepreneurship, but not in any simple or straightforward way. The most competitive economies are not the ones with the most new business creators, yet on a per-entrepreneur basis, their economies tend to derive greater benefit from their smaller concentration of entrepreneurs than do less competitive economies.
- Only a few countries’ economies in this sample have high rates of early-stage entrepreneurial activity, and none of them are highly competitive, according to the GCI definition. Approximately two thirds of the countries in the sample have early-stage entrepreneurship rates under 10%.
- High early-stage entrepreneurial activity is exclusive to economies with low competitiveness. As economies move up the competitiveness spectrum, they converge around a narrow band of early-stage entrepreneurial activity of between approximately 4% and 11% of their working-age population.
- When each of the three competitiveness bands are looked at as wholes, this general pattern about early-stage entrepreneurial activity is clearly revealed, with highly competitive countries as a group seeing 7% of their working-age population engaged in early-stage entrepreneurial activity compared to 12% for moderately competitive and 16% for low competitive economies.
- The study suggests that despite lower rates of early-stage entrepreneurial activity in highly competitive countries, entrepreneurial drive is not low in these more competitive economies, but, rather becomes more formalized, with higher rates of “entrepreneurial employee activity”.
- Generally, the more competitive an economy, the greater the share of ambitious early-stage entrepreneurs among all early-stage entrepreneurs.
- In short, unlike early-stage entrepreneurial activity in general, higher proportions of ambitious early-stage entrepreneurs are found in highly competitive economies.
- Two economies that perform highly on the proportion of innovative entrepreneurs, Chile and Colombia may therefore do so for different reasons: a highly competitive economy with a high proportion of innovative entrepreneurs is more likely to have “vertical innovation” than a less competitive one, in which innovative entrepreneurs are more likely to innovate “horizontally”.
- The relationship between innovative early-stage entrepreneurs
and competitiveness is weak across our sample. This reflects the nature of the definition of innovation in this report: while Colombia, Israel and the United States have approximately the same proportions of innovative early-stage
entrepreneurs those economies have very different levels of competitiveness.
- Countries, such as Colombia and Latvia, with high levels of ambitious entrepreneurial activity, also have high rates of innovative activity, while Chile and
Denmark perform well on at least one metric and above average on the other. Germany is an example of a highly competitive country that is middling on both metrics, whereas Brazil supports the correlation by performing poorly on both.
- Across the entire 44-country sample, growth-oriented early-stage entrepreneurs are, on average, 50% more likely than non-ambitious entrepreneurs to state that they have innovative products or services.
Summary: the study’s analysis of early-stage entrepreneurial activity across countries and regions revealed high levels of earlystage activity, ambition and innovation, but rarely all three metrics in a single country. Less competitive economies with high levels of early-stage entrepreneurial activity, such as Uganda, tend not to provide the environment necessary for ambitious and innovative entrepreneurs to develop and thrive. But, then competitive economies with low levels of early-stage entrepreneurial activity, such as
Denmark, have twice as much EEA as early-stage entrepreneurs, and high rates of ambitious and innovative entrepreneurship as a proportion of their low early-stage entrepreneurial activity. In Section 3, the study attempts to make sense of the various permutations in which the three early-stage entrepreneurial metrics are combined, by employing cluster analysis that, along with taking EEA into account, provides greater value for understanding the link between entrepreneurship and competitiveness.