Global Entrepreneurship Monitor Report 2007

The ninth annual Global Entrepreneurship Monitor (GEM) 2007 Global Report, directed by London Business School and Babson College, was released last week.

• In general, the 2007 data continue to show that early-stage entrepreneurial activity tends to be high in countries with lower per-capita GDP, but declines in middle-income countries, and then rises again in higher income countries. The country-by-country profile of TEA against per-capita income thus shows a U-shaped relationship.

• 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%).

• Early-stage entrepreneurs from high-income countries are more likely to be opportunity driven (as opposed to necessity-driven and finding no other option for work). Wider job opportunities and social security offer more alternatives to entrepreneurship. In Norway and Sweden, most early-stage entrepreneurial activity is part-time.

• 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.

• 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-stage entrepreneurs are more likely than established business owners to claim they offer innovative products and face less competition in the marketplace. They also claim to use technologies that were not available to them a year earlier. GEM also found that populations that embrace innovation will have higher levels of early-stage activity.

• 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.

• In an increasingly globalized economy, international economic institutions– such as the World Bank and the World Trade Organization–exert a growing influence on entrepreneurs and their opportunities. They do so directly through international trade agreements and indirectly by cultivating an economic flexibility and adjustment—building local market institutions, infrastructure, and financing– in an open world economy. GEM strongly recommends that entrepreneurs organize to achieve political influence to liberalize trade and investment policies.

• GEM found that the more burdensome a country’s new business regulations (according to national experts in the field), the lower the ambition for growth among a country’s entrepreneurs.

• 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.

More

GEM Global Report 2007 (PDF)

GEM Consortium

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