Europe in the Global Entrepreneurship Scene - Ignacio De La Vega - GEM and Instituto De Empresa -...

Europe in the GlobalEntrepreneurship Scene

by Professor Ignacio de la Vega

Monday, February 22, 2010European Entrepreneurship & Innovation (ME421)

Entrepreneurship WeekStanford University, School of Engineering

Palo Alto, USA

GEM 1999 Countries

GEM 2000 Countries

GEM 2001 Countries

GEM 2002 Countries

GEM 2003 Countries

GEM 2004 Countries

GEM 2005 Countries

GEM 2006 Countries

GEM 2007 Countries

GEM 2008 Countries

GEM 2009 Countries

54 countries surveyed in 2009: A record!

Factor-Driven EconomiesAlgeria*, Guatemala*, Jamaica*, Lebanon*, Morocco*, Saudi Arabia*, Syria*, Tonga, Uganda, Venezuela*, West Bank & Gaza Strip, Yemen

Efficiency-Driven EconomiesArgentina, Bosnia and Herzegovina, Brazil, Chile*, China, Colombia, Croatia*, Dominican Republic, Ecuador, Hungary*, Iran, Jordan, Latvia*, Malaysia, Panama, Peru, Romania*, Russia*, Serbia, South Africa, Tunisia, Uruguay*

Innovation-Driven EconomiesBelgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Iceland, Israel, Italy, Japan, Republic of Korea, Netherlands, Norway, Slovenia, Spain, Switzerland, United Kingdom, United Arab Emirates, United States

Measuring Entrepreneurial Activity

GEM identifies different phases in the entrepreneurial process

Potential Entrepreneur:Opportunities, Knowledge, and Skills

Nascent Entrepreneur:Involved in Setting Up a Business

Owner-Manager of a New Business (up to 3.5 years old)

Owner-Manager of an Established Business (more than 3.5 years old)

Total Early-Stage Entrepreneurial Activity (TEA)

Conception Firm Birth Persistence

Discontinuation of Business

Total Early-Stage Entrepreneurial Activity in 2009

0 10 20 30 40 50 600

5

10

15

20

25

30

35

GDP Per Capita in Purchasing Power Parities ($), in Thousands

Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

Middle East/North AfricaAsia/PacificCentral/South AmericaEastern EuropeWestern Europe (EU)AfricaUS, Non-EU Europe


0 10 20 30 40 50 600

5

10

15

20

25

30

35


Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

AE

SY

SA

YE

JO

TN

DZ LB

IR

IL

MA



0 10 20 30 40 50 600

5

10

15

20

25

30

35


Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

AE

JP

CN

SY

SA

YE

TG

JO

TN

DZ LB

IR

MY

KR

HK

IL

MA



0 10 20 30 40 50 600

5

10

15

20

25

30

35


Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

AE

VE

JP

BR

CN

SY

ARCL

GT

JM

SA

YE

TG

JO

TN

ECDZ

DO

PECO

LB

IR

PA

MY

UY

KR

HK

MA

IL



0 10 20 30 40 50 600

5

10

15

20

25

30

35


Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

AE

VE

JP

LV

BR

CN

RUBA

SYHU

ROYU

ARCL

GT

JM

SA

YE

TG

JO

TN

ECDZ

DO

PECO

LB

IR

PA

MYHR

UY

KR

SIHK

IL

MA



0 10 20 30 40 50 600

5

10

15

20

25

30

35


Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

AE

VE

NL

BE

UK

JP

LV

ITFR

BR

CN

RUBA

SYHU

ROYU

ARCL

GT

JM

SADE

YE

TG

JO

TN

ECDZ

DO

PECO

LB

IR

PA

MYHR

UY

KR

SIHK

IL

GR

DK

ESFI

MA



0 10 20 30 40 50 600

5

10

15

20

25

30

35


Pe

rce

nta

ge

of

18

-64

Ag

e G

rou

p In

vo

lve

d in

E

arl

y-S

tag

e E

ntr

ep

ren

eu

ria

l Ac

tiv

ity

UG

US

AE

VE

IS

NL

BE

UK

JP

LV

ITFR

BR

CN

RUBA

SYHU

ROYU

ARCL

GT

JM

SADE

YE

TG

JO

TN

ECDZ

DO

PECO

LB

IR

PAZA

MYHR

UY

KR

SIHK

IL

GR NOSW

DK

ESFI

MA

Middle East/North AfricaAsia/PacificCentral/South AmericaEastern EuropeWestern EuropeAfricaUS, Non-EU W. Europe

Why people discontinue businesses

Factor-Driven Economies

Efficiency-Driven

Economies

Innovation-Driven

Economies

0%10%20%30%40%50%60%70%80%90%

100%Incident

Personal Reasons

Retirement

Exit Planned in Advance

Other Job or Business Opportunity

Opportunity to Sell

Problems Getting Finance

Business Not Profitable

High Expectation Entrepreneurship and Employment Protection Regulations

0 0.5 1 1.5 2 2.5 3 3.5

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Strictness of Employment Protection

Inv

olv

ed

in

Hig

h-E

xp

ec

tati

on

En-

tre

pre

ne

urs

hip

(H

EA

) P

erc

en

tag

e o

f A

du

lt P

op

ula

tio

n i

n

18

-64

Ag

e G

rou

p

US

CA

UK

IE

JP

AU

SW DK

FI

NL

IT

SE

DE

BE

SI

NO

GRFR

ES

R2=0.57

Comparing 2006-2007 with 2008-2009:

Entrepreneurship and the 2008-2009 recession

• Opportunity perception fell in half of all countries• Decrease in opportunity perception in 50% of innovation-

driven countries, increase in none of them• Decrease in opportunity perception in 56% of other

countries, increase in 13% of them

• Fear of failure rose in almost 40% of countries:• Increase in fear of failure in 33% of innovation-driven

countries, decrease in none• Decrease in fear of failure in 44% of other countries,

increase in one (6%)

Comparing 2006-2007 with 2008-2009:


• Necessity entrepreneurship increased as % of TEA in many innovation-driven countries:

• Increase in necessity entrepreneurship as % of TEA in 39% of innovation-driven countries, decrease in 11%

• Decrease in necessity entrepreneurship as % of TEA in 31% of other countries, increase in 25%


Comparing 2006-2007 with 2008-2009:• Business start-up attempts in large innovation-

driven economies most affected• New business activity held up well• Reduction in business start-up attempts in 50% of innovation-

driven countries, increase in 25%• Reduction in business start-up attempts in 31% of other

countries, increase in 25%• Reduction in new business activity in 11% of innovation-driven

countries, increase in 39%• Reduction in new business activity in 31% of other countries,

increase in 38%

Comparing 2008 with 2009, more than half of entrepreneurs found that starting a business was more difficult, but around 20% found that it was less difficult.

Entrepreneurs were evenly divided on the effect on their prospects for growth.

Young, well-educated entrepreneurs who expected to create relatively high numbers of jobs were more likely to see more opportunities for their business as a result of the global slowdown.

The more established the entrepreneur, the more pessimistic they were likely to be

What the Entrepreneurs think

Informal Investment (with thanks to Bill Bygrave)

• Investment by individuals in other peoples’ businesses declined in most G7 economies between 2008 and 2009

• Elsewhere, the pattern is mixed: lower in 19 countries and higher in 16 countries

• Great variation in informal investment:• Investment at least once in the past 3 years:

1 in 5 Ugandans, 1 in 10 Chileans,1 in 100 British, 1 in 200 Brazilians!

Special Topic: Social Entrepreneurial Activity (with thanks to Rachida Justo, Jan Lepoutre and Siri Terjesen)

Factor-Driven Economies

Efficiency-Driven Economies

Innovation-Driven Economies

0%

5%

10%

15%

20%

25%

Strictly SEA

TEA - SEA Overlap

Strictly TEA

Pe

rce

nta

ge

of

Ad

ult

Po

pu

lati

on

B

etw

ee

n 1

8-6

4 Y

ea

rs

Who Becomes a Social Entrepreneur?

age18-34 age 35-64 age 18-34 age 35-64lower education (up to

secondary)higher education (post secondary and higher)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%factor-driven efficiency-driven innovation-driven

Pe

rce

nta

ge

of

Ad

ult

Po

pu

latio

n

Be

twe

en

18

-64

Ye

ars

Our Thanks to...

• The contributors to the GEM 2009 Global Report- William D. Bygrave, Rachida Justo, Jan

Lepoutre and Siri Terjesen • The GEM coordination team

- Alicia Coduras, Marcia Cole, Mick Hancock, Yana Litovsky and Jeff Seaman

• The GEM 2009 national teams• Babson College, Universidad del Desarrollo,

Reykjavik University

Europe’s Position in a Global Perspective (I)Early-stage Entrepreneurial activity (TEA) and GDP per Capita

Source: GEM 2009 Global report

Europe’s Position in a Global Perspective (II)High Expectation Entrepreneurship and Employment Protection Regulations

0 0.5 1 1.5 2 2.5 3 3.5

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Strictness of Employment Protection

Inv

olv

ed

in

Hig

h-E

xp

ec

tati

on

En-

tre

pre

ne

urs

hip

(H

EA

) P

erc

en

tag

e o

f A

du

lt P

op

ula

tio

n i

n

18

-64

Ag

e G

rou

p

US

CA

UK

IE

JP

AU

SW DK

FI

NL

IT

SE

DE

BE

SI

NO

GRFR

ES

R2=0.57

Source: GEM 2009 Global report

Entrepreneurship in Europe (I)• Differences between countries

– North / South divide– West /East divide

• North-West Europe: low-medium participation in early-stage entrepreneurship, many other alternatives for income (and employees more protected, see previous slide). Results in 2009 quite stable compared to previous years

• Southern Europe: higher participation in entrepreneurship, but less ambitious. Increase in necessity entrepreneurship in Greece. Decrease in early-stage entrepreneurial activity in Spain.

• Eastern Europe: less stable due to big changes in past decades. Increase in necessity entrepreneurship following the economic crisis, especially in Latvia and Hungary

Entrepreneurship in Europe (II)• Next slides map entrepreneurship across European

regions using 2001-2006 data (based on over 140,000 data points)

• Differences at national and regional levels 1. Differences in balance between perceptions and

activity

2. Differences in growth ambitions

• Low rates of early-stage entrepreneurial activity not necessarily ‘a bad thing’ if accompanied with good (employment) alternatives, for instance through intrapreneurship (see Global Report, page 31).

Perceived opportunities to start a business (2001-2006)

TEA: Early-stage entrepreneurial activity (2001-2006)

Source: Bosma (2009), The Geography of Entrepreneurial Activity and Regional Economic Development. Multilevel analyses for Dutch and European Regions. Ph.D. Dissertation Utrecht University, Utrecht, The Netherlands

Early-stage Entrepreneurial Activity: Low growth oriented (2001-2006)

Early-stage Entrepreneurial Activity: High growth oriented (2001-2006)

Source: Bosma (2009), The Geography of Entrepreneurial Activity and Regional Economic Development. Multilevel analyses for Dutch and European Regions. Ph.D. Dissertation Utrecht University, Utrecht, The Netherlands

Entrepreneurship in Spain• Spain, from the “European Economic Miracle” to a

member of the PIGS (FT dixit…..c´..on)• Tough times ahead, 20% unemployment, growing

deficit, more necessity entrepreneurship coming?• Spanish TEA dropped 8% in 2008 and 27,1 % in

2009.• Crisis hitting Death Rate: increases a huge 53%

percent over previous year. 25 % of that is not a closure but a sale.

• Women participation also hit by crisis.

Entrepreneurship in Spain• Necessity Entrepreneurship grows a 6,7%.• Services, Industrial and Technology start ups grow.

Decrease in real state and construction related ventures.

• Smaller start-ups, larger “growth stage” ventures. Dimension as a protection against markets.

• More “high growth-high potential industries” profiles.

• Surprising growth of informal investment, more money into the system, cheaper valuations.

Entrepreneurship in Spain• Less immigrants starting up.• Experts identify more opps that in 2008.• More money than deals into market, huge available

funding from VC´s and B.angels in 2009-2010.• Government interest and investment into training

and financing for innovative start-up. “Sustainable Economy” Government Plan.

Entrepreneurship in Spain• Growth of necessity entrepreneurship forecasted in

Spain and some European nations for the coming years:

"So, what made you decide to go into business for yourself?" "It was something my last boss said."

"Really, what was that?"

"You're fired."

Europe in the Global Entrepreneurship Scene - Ignacio De La Vega - GEM and Instituto De Empresa -...

Technology

Transcript of Europe in the Global Entrepreneurship Scene - Ignacio De La Vega - GEM and Instituto De Empresa -...