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Entrepreneurs Among the Happiest People in the World

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SOURCE Babson College

Global Entrepreneurship Monitor report finds entrepreneurship a satisfying career choice worldwide - especially for women within innovation-driven economies

SANTIAGO, Chile, Jan. 21, 2014 /PRNewswire-USNewswire/ -- Entrepreneurs are among the happiest individuals across the globe when it comes to individual well-being and satisfaction with their work conditions according to the Global Entrepreneurship Monitor 2013 Global Report. 

The GEM report's special topic, Entrepreneurship and Well-Being, also found that women entrepreneurs from innovation-driven economies showed, on average, higher degrees of personal well-being than their male counterparts.

Entrepreneurs worldwide – at both the established and early-stage phases – exhibited higher ratings on subjective well-being compared to populations not involved in entrepreneurship activities, suggesting that entrepreneurship could be a good career choice for most.

"Our idea", said José Ernesto Amorós, report co-author, "is to contribute to a better understanding about what influences a population's perceptions about well-being and how that consequently shapes entrepreneurship indicators. One interesting finding is that in all regions, entrepreneurs exhibit relatively higher rates of subjective well-being in comparison to individuals who are not involved in the process of starting a business or owning-managing a business. Another relevant result is that female entrepreneurs in innovation-driven economies exhibit on average a higher degree of subjective well-being than males. This initial assessment opens up possibilities for exploring the role of women and men entrepreneurs beyond the traditional notion of development generally associated with economic indicators," Amorós said.

About The Report

The report, unveiled at the GEM Annual Meeting in Santiago, Chile, is the 15th annual survey of entrepreneurship worldwide and is the largest single study of its kind. It is coauthored by José Ernesto Amorós, Universidad del Desarrollo in Chile and Global Entrepreneurship Research Association (GERA); and Niels Bosma, Utrecht University in the Netherlands. 

In 2013, more than 197,000 individuals were surveyed and approximately 3,800 national experts on entrepreneurship participated in the GEM study across 70 economies, collectively representing all global regions of the world and a broad range of economic development levels (GEM groups the economies into three development levels based primarily on GDP/capita: factor-driven, efficiency-driven, and innovation-driven).  The samples in the GEM 2013 Global report represent an estimated 75 percent of the world's population and 90 percent of the world's total GDP.  In addition to its annual measures of entrepreneurship dynamics, GEM analyzed well-being as a special topic in 2013.

GEM Global Sponsors include: Babson College, United States, Lead Sponsoring Institution and Founding Institution; Universidad del Desarrollo, Chile, Sponsoring Institution; and Universiti Tun Abdul Razak, Malaysia, Sponsoring Institution.

The full report can be accessed here:

http://www.gemconsortium.org/docs/3106/gem-2013-global-report

Key Findings

Entrepreneurial Activity

PHASES OF ENTREPRENEURIAL ACTIVITY IN THE GEM ECONOMIES IN 2013, BY GEOGRAPHIC REGION


Early-stage entrepreneurial activity (TEA)

Established business ownership rate

Discontinuation of businesses

Necessity-driven (% of TEA)

Latin America & Caribbean

Argentina

16

10

6

30

Brazil

17

15

5

29

Chile

24

9

8

20

Colombia

24

6

5

18

Ecuador

36

18

8

34

Guatemala

12

5

3

31

Jamaica

14

6

7

41

Mexico

15

4

7

7

Panama

21

4

3

19

Peru

23

5

4

23

Suriname

5

2

1

18

Trinidad & Tobago

20

11

4

11

Uruguay

14

5

3

12

Average (unweighted)

19

8

5

22

Middle East & North Africa

Algeria

5

5

3

21

Iran

12

11

6

38

Israel

10

6

5

17

Libya

11

3

8

8

Average (unweighted)

10

6

6

21

Sub-Saharan Africa

Angola

22

9

24

26

Botswana

21

3

18

26

Ghana

26

26

8

33

Malawi

28

12

30

44

Nigeria

40

18

8

25

South Africa

11

3

5

30

Uganda

25

36

20

25

Zambia

40

17

20

39

Average (unweighted)

27

15

17

31

Asia Pacific & South Asia

China

14

11

3

34

India

10

11

2

39

Indonesia

26

21

2

25

Japan

4

6

2

25

Korea

7

9

3

37

Malaysia

7

6

2

18

Philippines

19

7

12

44

Singapore

11

4

3

8

Taiwan

8

8

5

29

Thailand

18

28

4

19

Vietnam

15

16

4

25

Average (unweighted)

12

12

4

28

European Union

Belgium

5

6

2

29

Croatia

8

3

5

37

Czech Republic

7

5

3

23

Estonia

13

5

2

15

Finland

5

7

2

18

France

5

4

2

16

Germany

5

5

2

19

Greece

6

13

5

24

Hungary

10

7

3

28

Ireland

9

8

3

18

Italy

3

4

2

19

Latvia

13

9

4

21

Lithuania

12

8

4

23

Luxembourg

9

2

3

6

Netherlands

9

9

2

8

Poland

9

7

4

47

Portugal

8

8

3

21

Romania

10

5

4

32

Slovakia

10

5

6

40

Slovenia

7

6

3

24

Spain

5

8

2

29

Sweden

8

6

2

10

United Kingdom

7

7

2

16

Average (unweighted)

8

6

3

23

Non-European Union

Bosnia and Herzegovina

10

5

6

59

Macedonia

7

7

3

61

Norway

6

6

2

4

Russia

6

3

2

35

Switzerland

8

10

2

8

Average (unweighted)

7

6

3

33

North America

Canada

12

8

4

15

Puerto Rico

8

2

2

22

USA

13

8

4

21

Average (unweighted)

11

6

3

19

  • In general, less developed regions of the world exhibit higher levels of entrepreneurship activity. TEA rates (Total Early-stage Entrepreneurial Activity) are typically highest for factor-driven economies and decline with increasing levels of GDP (Gross Domestic Product). This is mainly because higher levels of GDP yield more and better job opportunities.
  • Early-stage entrepreneurs in factor-driven economies have the highest proportion of necessity-driven motives (no other options for work) while innovation-driven economies with the lowest TEA rates have highest proportion of opportunity-driven motives.
  • Some of the opportunity-driven entrepreneurs recognize and pursue opportunities that will improve their incomes as well as their degree of independence. In Canada, Finland, the Netherlands, Singapore and Switzerland, roughly two out of three early-stage entrepreneurs showed the highest proportion of improvement-driven opportunity motives.
  • Among factor-driven economies, Sub-Saharan African economies have the highest TEA rates especially Zambia and Nigeria with 39 percent among 18-64 year olds. Efficiency-driven Latin American and Caribbean economies scored highest while MENA and EU economies reported lower TEA levels. Trinidad, Tobago and the United States showed the highest TEA rates among innovation economies.  In 2013, Italy and Japan reported the lowest TEA rates at 3.4 percent and 3.7 percent respectively.
  • The rate of established business ownership (owner-managers in businesses that exist 3 and ½ years or more) varies greatly across economies. GEM found that in many factor and efficiency-driven economies, the limited sustainability of many start-up attempts is a serious concern.
  • The rate of business discontinuance is highest in factor-driven economies - mainly Sub-Saharan African economies - where unprofitability, financing difficulties, and personal reasons were the most common reasons for discontinuance. Among all economies, financial issues were the number one reported reason for business discontinuation.  Some innovation economies reported 'positive' reasons for discontinuation such as being able to sell the business, find a better job, or improve their personal situation.
  • Looking at demographics within every phase of economic development, GEM found more early-stage entrepreneurs in the 25-34 age group than any other age range.
  • Gender parity also varies markedly.  In MENA economies, more than two-thirds of early-stage entrepreneurs are men, while in sub-Saharan African economies, there are nearly the same number of men and women starting and owning-managing new businesses.

"The 2013 results reveal that the U.S. has maintained a high rate of entrepreneurship for three years running, after substantial declines in this activity in the aftermath of the recession," said Babson College Entrepreneurship Professor Donna Kelley.  "We are also seeing positive signs in the environment for entrepreneurship. More people (47 percent) perceive good opportunities for starting businesses in the United States (up from 43 percent in 2012). This is, by far, the highest we've seen on this measure in the 15 years we've conducted the GEM survey in the U.S. In addition, fewer people who have recently discontinued businesses are reporting a lack of finance as the reason for their exit: 8 percent in 2013 vs. 18 percent in 2012. In all, entrepreneurship activity is stable and popular in the United States with favorable conditions in the environment for this activity."

Entrepreneurial Attitudes

ENTREPRENEURIAL ATTITUDES AND PERCEPTIONS IN THE GEM ECONOMIES IN 2013 BY GEOGRAPHIC REGION (% OF POPULATION AGED 18-64)


Perceived opportunities

Perceived capabilities

Fear of failure*

Latin America & Caribbean

Argentina

41

62

25

Brazil

51

53

39

Chile

68

60

28

Colombia

68

58

32

Ecuador

57

74

35

Guatemala

59

66

33

Jamaica

51

79

27

Mexico

54

59

32

Panama

59

66

29

Peru

61

62

26

Suriname

53

54

24

Trinidad & Tobago

58

75

20

Uruguay

48

61

27

Average (unweighted)

56

64

29

Middle East & North Africa

Algeria

62

56

33

Iran

37

57

36

Israel

47

36

52

Libya

52

59

33

Average (unweighted)

49

52

39

Sub-Saharan Africa

Angola

57

56

64

Botswana

66

67

19

Ghana

69

86

25

Malawi

79

89

15

Nigeria

85

87

16

South Africa

38

43

27

Uganda

81

84

15

Zambia

77

80

15

Average (unweighted)

69

74

25

Asia Pacific & South Asia

China

33

36

34

India

41

56

39

Indonesia

47

62

35

Japan

8

13

49

Korea

13

28

42

Malaysia

41

28

33

Philippines

48

68

36

Singapore

22

25

40

Taiwan

42

27

41

Thailand

45

44

49

Vietnam

37

49

57

Average (unweighted)

34

40

41

Europe – EU 28

Belgium

32

34

47

Croatia

18

47

35

Czech Republic

23

43

36

Estonia

46

40

39

Finland

44

33

37

France

23

33

41

Germany

31

38

39

Greece

14

46

49

Hungary

19

38

45

Ireland

28

43

40

Italy

17

29

49

Latvia

35

48

42

Lithuania

29

35

42

Luxembourg

46

43

43

Netherlands

33

42

37

Poland

26

52

47

Portugal

20

49

40

Romania

29

46

37

Slovakia

16

51

33

Slovenia

16

51

30

Spain

16

48

36

Sweden

64

39

37

United Kingdom

36

44

36

Average (unweighted)

29

42

40

Europe – Non-EU

Bosnia

23

51

26

Macedonia

37

50

36

Norway

64

34

35

Russia

18

28

29

Switzerland

42

45

28

Average (unweighted)

37

41

31

North America

Canada

57

48

35

Puerto Rico

28

53

25

USA

47

56

31

Average (unweighted)

44

52

30

* Denominator: 18-64 age group perceiving good opportunities to start a business.

** Respondent expects to start a business within three years. Denominator: 18-64 age group that is currently not involved in entrepreneurial activity (including involvement in early-stage and established entrepreneurship).

*** This is an optional item in the GEM 2013 Adult Population Survey.

  • Entrepreneurs in factor-driven economies (dominated by subsistence agriculture and extraction businesses, unskilled labor and natural resources) are more positive in their attitudes about perceived opportunities to start businesses than those in efficiency-driven (countries producing more advanced products and services) and innovation-driven economies (knowledge-intensive businesses with expanded service-sectors).
  • Sub-Saharan African economies are highly optimistic with 69 percent of respondents seeing good opportunities to start a business.  Respondents (74 percent) also believe they have the skills and knowledge to carry it out. Only 24 percent experience any fear of failure.
  • European Union economies show lower perceptions on all of these measures. The EU hosts primarily innovation-driven businesses and GEM speculates that attitudes about starting new businesses tend to decline within nations as economic development levels rise.
  • Still, differences in the prevalence and nature of entrepreneurship vary among similar levels of economic development.  Latin American and Caribbean efficiency-driven economies report high rates of perceived opportunities and capabilities while economies in Eastern Europe and Asia Pacific (also efficiency-driven) scored lower on these measures.
  • Among the innovation-driven economies of Finland, and in southern Europe's Spain and Greece, levels of capability perception are low even when opportunity outlook is consistently high.
  • Attitudes about being an entrepreneur vary depending on two key factors - whether society places a high status on being an entrepreneur, and how often and to what degree the media cover successful entrepreneurs. Entrepreneurial attractiveness is high in the Sub-Saharan, Latin American and Caribbean, and MENA economies (Middle East and North Africa) but much lower percentages are found in EU economies, particularly when it comes to media attention.

Entrepreneurial Aspirations

  • Growth expectations and aspirations of early-stage entrepreneurs are key in determining entrepreneurial impact and policy objectives that will help create more jobs. GEM found that a simple count of start-ups does not necessarily equal high economic performance.  In economies with high TEA rates, the number of early-stage entrepreneurs indicating they expect to employ five employees within the next five years is rather low. Yet, MENA and EU economies pair low TEA rates with relatively higher percentages of early-stage entrepreneurs with high-growth expectations.
  • Innovative orientation varies among regions and increases with the level of economic development.  Japan, Korea, and China have high degrees of innovative products and services closely followed by entrepreneurs in North America and the EU.  Sub-Saharan economies, European economies outside the EU report lower proportions.  In emerging nations, Colombia, Chile, Taiwan and South Africa offer products or services that are new to their customers and see few local competitors.
  • Factor-driven economies revealed the lowest level of international customers, on average. EU economies generally showed a high level while economies with big territories and big internal markets - Brazil, Russia, China, India - continue to exhibit lower international orientation. Innovation-driven countries such as Singapore, Luxembourg and Israel with relatively small local markets have a high international orientation. 

Special Topic – Entrepreneurship and Well-Being

The GEM 2013 Global Report includes a special topic that explores and measures a level of individual well-being (happiness or satisfaction) among entrepreneurial economies in order to develop better policies of support in the future. The report also researched self-assessments of work conditions and work-life balance, and how an economy's entrepreneurship framework contributes to the work-life balance of entrepreneurs.

  • Subjective well-being indicators vary widely across world regions.  Sub-Saharan African economies exhibit the lowest rates, while Latin and North Americans have the highest rates.
  • "Traditional" welfare states like Nordic economies and well-developed economies like the Netherlands, Switzerland and Singapore also showed high rates of subjective well-being.
  • In all regions, the average of both TEA and established entrepreneurs find relatively higher rates of subjective well-being contrasted with all populations and individuals not involved in entrepreneurship activities.
  • The report found that women entrepreneurs from innovation-driven economies exhibit on average a higher degree of subjective well-being than their male counterparts in the early-stages.

Entrepreneurship Frameworks

GEM interviewed country experts about the kinds of Entrepreneurship Framework Conditions (EFCs) including financial and government support, specific regulations, market openness, R&D transfer, entrepreneurship education and cultural norms and values related to entrepreneurship. 

  • Overall, experts in innovation-driven economies (EU and North America) gave higher rating to EFCs.  In contrast, ratings were lower in Sub-Saharan African economies particularly related to R&D transfer.
  • Emerging economies like Argentina and Brazil in Latin America, Malawi and Uganda in Africa, Indonesia and Philippines in Asia Pacific and Bosnia, Herzegovina and Romania in Europe have little support from government. Experts in Italy, Croatia and Lithuania were critical of government regulations there.  Overall, Education and training in primary and secondary schools and regulations impacting new and growing firms were among the most negatively evaluated factors.

Policy Implications

GEM researchers offer several guidelines for policy makers, entrepreneurs, and academics to help them build entrepreneurial eco-systems that enable entrepreneurship to flourish in every world economy.

  • Focus entrepreneurial education and training on the needs of early-stage entrepreneurs with work-life balance issues.
  • Develop policies to promote societal attitude changes about women; and that train, support and encourage women entrepreneurs.
  • Identify the various types and phases of entrepreneurship in order to fully compare the entrepreneurial landscapes among economies all over the world.
  • Create ways to stimulate entrepreneurship from a behavioral approach with the understanding that entrepreneurship manifests itself differently within particular economies, and is about cultivating entrepreneurial thinking in addition to increasing the number of start-ups or self-employment

Download full report here:  http://www.gemconsortium.org/docs/3106/gem-2013-global-report

About GEM

The Global Entrepreneurship Monitor (GEM) is a not-for-profit academic research consortium that has as its goal making high-quality information on global entrepreneurship activity readily available to as wide an audience as possible.  GEM is the largest single study of entrepreneurial activity in the world.  Initiated in 1997 by researchers at the London Business School, UK and Babson College, USA, GEM has now conducted research in over 80 economies all over the world.  Learn more about GEM>>

About Babson College

Babson College is the educator, convener, and thought leader for Entrepreneurship of All Kinds™ . The College is a dynamic living and learning laboratory, where students, faculty, and staff work together to address the real-world problems of business and society -- while at the same time evolving our methods and advancing our programs. We shape the leaders our world needs most: those with strong functional knowledge and the skills and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in a common purpose to create economic and social value. As we have for nearly a half-century, Babson continues to advance Entrepreneurial Thought and Action® as the most positive force on the planet for generating sustainable economic and social value. Visit www.babson.edu

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