Gem UK 2014 launch presentation. March 3rd 2015

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How Entrepreneurial is the UK? GEM UK 2014 Results Mark Hart, Jonathan Levie, Karen Bonner and Cord Christian-Drews GEM UK 2014 Launch Event BIS Research Conference London, 3 rd March 2015

Transcript of Gem UK 2014 launch presentation. March 3rd 2015

Page 1: Gem UK 2014 launch presentation. March 3rd 2015

How Entrepreneurial is the UK?

GEM UK 2014 Results

Mark Hart, Jonathan Levie, Karen Bonner and Cord Christian-Drews

GEM UK 2014 Launch Event BIS Research Conference London, 3rd March 2015

Page 2: Gem UK 2014 launch presentation. March 3rd 2015

Presentation Structure

• What is GEM? • GEM Global Messages 2014 • GEM UK Headline Results – 2003-2014

– International comparisons – Opportunity Vs Necessity – Gender and Age – Sub-national geographies

• Entrepreneurial Aspiration

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GEM is an international project aimed at understanding the relationship between entrepreneurship, environment and economic development

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GEM’s Primary Focus

• To measure differences in entrepreneurial attitudes, activity and aspiration between countries

• To uncover factors which underpin these differences • To identify policies that may enhance entrepreneurial

activity.

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Role and Contribution of GEM

• In 2014, the GEM research consortium measured entrepreneurial activity of working age adults (~200,000 individuals) in 73 countries, collectively representing all global regions of the world and a broad range of economic development levels.

• The samples represent an estimated 72% of the world’s

population and 90% of the world’s total GDP. • GEM Global considered as the world’s most authoritative

comparative study of entrepreneurial activity in the general adult population.

• The Global GEM Executive 2014 Report was published in February 2015 and can be found at www.gemconsortium.org

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Key theoretical assertion in the GEM Model

• relationship between national-level new business activity and

the institutional environment (Entrepreneurial Framework Conditions - EFC) – i.e., national levels of entrepreneurial opportunity and entrepreneurial capacity

• In GEM we measure these two dimensions with the following two questions from the individual respondents:

• ‘there are good opportunities where I live in the next 6 months’ (opportunity perception) and,

• ‘I have the skills, knowledge and experience to start a business’

(start-up skills perception) in the adult population.

• Focus on structural conditions that regulate the allocation of effort to entrepreneurial activity in the population as a whole

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Social, Cultural, Political Context

Basic requirements

- Institutions - Infrastructure - Macroeconomic stability - Health and primary

education

New branches, firm growth

Established Firms (Primary Economy)

National Economic Growth

(Jobs and Technical Innovation)

Efficiency enhancers

- Higher education & training

- Goods market efficiency - Labour market efficiency - Financial market

sophistication - Technological readiness - Market size

Innovation and entrepreneurship

- Entrepreneurial finance - Gov. entrepreneurship

programs - Entrepreneurship

education - R&D transfer - Commercial, legal

infrastructure for entrepreneurship

- Entry regulation

Attitudes: Perceived opportunities Perceived capacity

Aspirations: Growth Innovation Social value creation

Activity: Early-stage Persistence Exits

Entrepreneurship

GEM Conceptual Model

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GEM Entrepreneurial Pipeline

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Key Messages from GEM Global 2014

• African economies showed the highest ability to perceive and pursue entrepreneurial opportunities with little fear of failure.

• In contrast, European Union nations are less optimistic, see fewer opportunities and are more uncertain about their skills in acting entrepreneurially.

• Total early-stage Entrepreneurial Activity (TEA) is highest among factor-driven economies and declines in economies with higher Gross Domestic Product per capita (GDP pc).

• The lowest TEA rates overall are in European economies (7.8% in EU

economies and 6.0% in non-EU economies).

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GEM UK 2014

• In 2014, 10,750 adults aged 16-80 were sampled for GEM UK (just over 200,000 worldwide).

• Supported by BIS, Welsh Government, Hunter Centre for Entrepreneurship, Invest NI and PRIME.

• UK pooled dataset (2003-14) for ~300,000 adults (16-80yr

olds).

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GEM UK Datasets – underpins a range of unique analyses

• International benchmarks and comparative analysis – tracking entrepreneurial attitudes, aspiration and activity over time of the adult population

• Only source of data on key groups of individuals - e.g.,

women, young people and ethnic minority groups • Sub-national analysis with the pooled dataset – Home

Nations, city-regions/LEPs – multi-level analytical techniques • Input into wider conceptual frameworks – GEDI • Opportunities for longitudinal analysis - PSED

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Participation in Entrepreneurship

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Early-Stage Entrepreneurial Activity (TEA)

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Early-Stage Entrepreneurial Activity – UK Home Nations

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Opportunity and Necessity Entrepreneurship

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Rising Nascent Opportunity in 2014

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Digging Deeper

• A deeper understanding of entrepreneurial motivation – beyond simplistic opportunity and necessity motives – is important

• ……….especially when it comes to predicting

entrepreneurs’ expectations about growing their business and hiring employees

• Which were one key link to subsequent business

performance (in terms of job growth, innovation and exporting)

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“Entrepreneurial Journey” of Necessity-motivated Entrepreneurs

Active (53%)

Sold (2%)

Closed (15%)

Dormant (8%)

Nascent (23%)

Growth (19%)

No change (78%)

Decline (3%)

Performance: Job Growth (N= 125 active businesses)

>25% of customers outside UK (11%)

1-25% of customers outside UK (21%)

No exports (68%)

Performance: Exports (N= 125 active businesses)

High (6%)

Some (42%)

None (52%)

Performance: Innovation (N= 124 active businesses)

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Female Early-Stage Entrepreneurial Activity 2003-14

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Senior Entrepreneurship (50-64 years old)

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UK Entrepreneurial Attitudes

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Measures of Entrepreneurial Aspiration – 2014

(% of TEA or

EBO

entrepreneurs)

High Job

Expectation:

More than ten

jobs and

growth more

than 50%

New Product-

Market

High or

Medium tech

sectors

Exporting:

More than

25% of

customers

outside the

country TEA EBO TEA EBO TEA EBO TEA EBO

UK 17.6 3.6 24.7 13.8 8.4 9.4 15.9 9.9

France 16.9 1.6 40.1 10.6 11.3 0 21.7 12.3

Germany 14.1 3.5 24.0 14.3 6.8 10.4 21.1 11.8

US 27.3 4.2 36.7 18.4 9.4 6.5 14.5 7.5

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High Job Expectation

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Headline Findings from 2014 • The TEA rate in 2014 of 8.6% further confirms the higher long-

term trend in early-stage entrepreneurial activity in the UK.

• UK has pulled ahead of France and Germany in the entrepreneurship stakes - for the last four years it has significantly outperformed both of these countries in the number of early-stage entrepreneurs

• In 2014 one in five working age individuals in the UK intended

to start a business within the next three years, were actively trying to start a business, or were running their own business.

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• Growth in early-stage entrepreneurial activity in the UK is mainly because more men, especially those aged between 50 and 64 years old, are taking the first steps to running their own business.

• While this means that the “gender gap” in early-

stage entrepreneurship has risen this year, a longer term view reveals that the TEA rate of 5.7 per cent for women in 2014 has almost doubled in ten years.

Headline Findings from 2014 (2)

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Headline Findings from 2014 (3)

• Entrepreneurial attitudes: the percentage of non-entrepreneurs of working-age in the UK who agreed there were good opportunities for starting a business in their local area in the next six months has now risen to 37 per cent in 2014.

• This marks a return to pre-recession levels of 2007 and suggests a growing sense of optimism among the wider population for business start-up.

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Deepening Analysis and New Directions

• Work has commenced in 2013 & 2014 to develop a pilot ‘Panel Study of Entrepreneurial Dynamics’ (PSED) in the UK – led by Professor Paul Reynolds (Marie Curie Research Fellow at Aston))

• GEM UK core dataset will feed into the work of the Enterprise

Research Centre (ERC) on ‘High Aspiration Entrepreneurs’; ‘Diversity and Small Firm Growth’; ‘Understanding Motivations for Entrepreneurship’; ‘Sociology of Enterprise’; ‘Evaluation of SULCo’ for the BBB. (www.enterpriseresearch.ac.uk)

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Contact us:

If you would like any more information about the GEM UK and Global projects and any of its activities please contact Professor Mark Hart

([email protected]); Professor Jonathan Levie ([email protected]) or Karen Bonner ([email protected])

More details about the activities of GEM can be found at:

www.gemconsortium.org