Two-Thirds Of Adults Worldwide Think Entrepreneurship Is A Good Career Choice

WELLESLEY, Mass., Feb. 5, 2016 /PRNewswire-USNewswire/ -- Sixty-six percent of adults see entrepreneurship as a good career choice, and more than half of the working-age population feel they have the ability to start a business – this according to the Global Entrepreneurship Monitor (GEM) 2015 Global Report (pdf) released with sponsors Babson College, Universidad Del Desarrollo, Universiti Tun Abdul Razak, and Tecnológico de Monterrey.

In its 17^th consecutive year, the report continues to serve as the largest single study of its kind.

According to the Global Entrepreneurship Monitor (GEM) 2015 Global Report:

The majority of entrepreneurs worldwide are fueled by opportunity rather than necessity. They make up 78 percent of those in innovation-driven economies, and 69 percent in factor and efficiency-driven economies.

"It is often a misperception that most entrepreneurs in less-developed economies are necessity-motivated," said Babson College Professor and report lead author Donna Kelley. "The reality is that entrepreneurial opportunities of all types exist in every part of the world, and there are ambitious entrepreneurs everywhere with the aspirations to pursue them."

Seventy percent of adults hold entrepreneurs to a 'high status' in their respective societies. Twenty-one percent of adults across 60 economies intend to start a business in the next three years.

The proportion of entrepreneurs with medium to high job creation expectations are similar across all development levels, with about one in five entrepreneurs stating that they will employ six or more people. Entrepreneurs in the United States show higher levels on this measure, with 32 percent projecting this employment potential.

Across all economies, the highest entrepreneurship participation rates are found among 25-35 and 35-44 year-olds – people in their early and mid-careers.

Nearly half or more of the entrepreneurs in the factor and efficiency-driven economies operate wholesale or retail businesses, while nearly half of the entrepreneurs in the innovation-driven group started businesses in information and communications, and financial, professional, health, education, and other services industries.

"Understanding what inhibits and what enhances entrepreneurship has never been more important, as many economies are struggling - especially those in developing countries, and unemployment is increasing," said GEM Executive Director and report author Mike Herrington. "The Global Entrepreneurship Monitor allows us to gain additional perspective on entrepreneurial activity, and to look at best practices that are helping to promote small and medium enterprise development."

Factor-driven economies show the highest rate of average female total early-stage entrepreneurial activity (TEA) at 20 percent. These economies also demonstrate the highest rate relative to men, which translates to just about nine women entrepreneurs for every 10 men entrepreneurs.

"The entrepreneurial capacity of an economy depends on the co-existence of different types of entrepreneurial behavior, which helps provide a transition from unemployed to self-employed, and then from self-employed, to striving to create jobs, innovate, and operate globally," said J.J. Strossmayer University of Osijek Professor and report author Slavica Singer. "With the Global Entrepreneurship Monitor, we seek to spread this awareness to the entrepreneurial policy makers and regulators who can contribute to the design of more supportive entrepreneurship ecosystems worldwide."

About the Report

The 2015 Global Entrepreneurship Monitor (GEM) Global Report, unveiled today at the GEM Annual Meeting in Boston, Massachusetts, USA, represents the 17^th year GEM has tracked rates of entrepreneurship worldwide. The report surveyed entrepreneurs across multiple phases, and assessed their characteristics, motivations, and ambitions, as well as the attitudes societies have toward such activity. It covers results based on 60 economies that completed the Adult Population Survey (APS), and 62 economies that completed the National Expert Survey (NES). The aim of this report is to inform academics, educators, policy-makers, and practitioners about the multi-dimensional nature of entrepreneurship around the world, advancing knowledge and guiding decisions that can lead to the conditions that allow entrepreneurship to thrive.

The 2015 GEM Global Report is authored by Babson College Professor and Frederic C. Hamilton Chair of Free Enterprise, Donna Kelley; J.J. Strossmayer University of Osijek Professor and UNESCO Chair in Entrepreneurship, Slavica Singer; and University of Cape Town Professor and Global Entrepreneurship Monitor Executive Director, Mike Herrington.

Key Findings

Societal Values about Entrepreneurship

• In factor and efficiency-driven economies, two-thirds of adults, on average, think entrepreneurship is a good career choice.
  • In innovation-driven economies, 53 percent have this same belief.
• Across 60 economies, 68 percent of working-age adults, on average, perceive high status for entrepreneurs in their societies.
• Three countries from the Asian economies (Kazakhstan, Philippines, and Indonesia) exhibit the highest levels on all three indicators.

Self-Perceptions about Entrepreneurship

• 42 percent of working-age adults see good opportunities around them for starting a business.
  • Only one-third of those who see opportunities feel constrained due to fear of failure.
• More than half of the working-age population, on average, feel they have the ability to start a business.
• High levels on these indicators can be seen in Africa (Senegal, Burkina, Faso, and Botswana) and Barbados, where over half of the adults in these countries see opportunities.
  • Less than one-fifth of those seeing opportunities in these countries feel constrained by fear of failure, and
  • Close to three-fourths or more believe they have the capabilities to start.
• 21 percent of people across 60 economies, on average, intend to start a business in the next three years.

Phases and Types of Entrepreneurial Activity

• Average TEA rates tend to be highest in the factor-driven economies, decreasing with higher levels of economic development (21 percent in factor-driven, 15 percent in efficiency-driven, and 8 percent in innovation-driven).
• Established business ownership is also highest in the factor-driven group (13 percent for factor-driven, 8 percent for efficiency-driven, and 7 percent for innovation-driven).
  • The proportion of established business owners relative to TEA in factor-driven economies is smaller than in the innovation-driven.
• High rates of both TEA and established business ownership are exhibited in Senegal and Ecuador, where more than one-third of the population is starting or running a new business, and over one-sixth is running a mature one.
• Entrepreneurial Employee Activity (EEA) is highest in the innovation-driven economies (1 percent for factor-driven, 2 percent for efficiency-driven, and 5 percent for innovation-driven).
  • Norway and Australia report the highest EEA rates, at 8 percent or more of their adult populations.
• Discontinuance is highest in factor-driven economies (8 percent for factor-driven, 5 percent for efficiency-driven, and 3 percent for innovation-driven).
  • A lack of profits or finance explain half or more of the exits in factor and efficiency-driven economies.
  • The innovation-driven group shows equal proportions of exits due to unprofitability compared to the other two development stages, but these economies are less than half as likely to name finance problems as a reason for business exits.
  • Both the efficiency-driven and innovation-driven economies show four times the proportion of exits due to bureaucracy compared to the factor-driven group.

Motivation for Early-Stage Entrepreneurial Activity

• Most entrepreneurs worldwide are motivated by opportunity, rather than necessity.
  • The innovation-driven economies show the highest proportion of opportunity-motivated entrepreneurs, at 78 percent.
  • In the factor and efficiency-driven economies, 69 percent stated they chose to pursue an opportunity as a basis for their entrepreneurial motivations.
• Among entrepreneurs with opportunity-driven motives, a portion seek to improve their situation, either through increased independence or income (versus maintaining income). GEM refers to these as improvement-driven opportunity (IDO) entrepreneurs.
  • GEM's Motivational Index reveals that there are one and a half times as many IDO entrepreneurs as necessity-driven ones, on average, in factor-driven economies, and twice as many in efficiency-driven economies.
  • In innovation-driven economies, there are three and a half times as many IDO entrepreneurs as necessity-motivated ones.

Gender and Age Distribution of Early-Stage Entrepreneurial Activity

• Among development levels, the factor-driven economies have the highest average female TEA rates at 20 percent, and the highest rate relative to men.
  • Among those entrepreneurs, however, women are nearly one-third more likely to start a business out of necessity than men.
• In six economies, women show equal or higher entrepreneurship rates than men (Vietnam, Philippines, Thailand, Malaysia, Peru, and Indonesia).
• Among the 45 participating economies from 2013-2015, several showed year-over-year increases in ratios of both female to male entrepreneurship rates, and female to male opportunity motives, bringing these economies closer to gender parity in either or both measures.
  • Among these are two European countries (Luxembourg and Greece), and three from Latin America and the Caribbean (Ecuador, Colombia, and Panama).
• The overall age pattern for entrepreneurship shows the highest participation rates among the 25-35 and 35-44 year-olds – people in their early and mid-careers.

Industry Sector Participation

• Nearly half or more of the entrepreneurs in the factor and efficiency-driven groups operate wholesale or retail businesses.
• Nearly half of the entrepreneurs in the innovation-driven economies started businesses in information and communications, as well as financial, professional, health, education, and other services industries.
  • An emphasis in particular sectors can be seen in several economies, including agriculture in India, mining in Tunisia, manufacturing in Egypt, wholesale/retail in the Philippines, information and communications technology in Sweden and Belgium, finance in Slovakia, and professional services in Norway.

Job Creation Projections

• The average frequency of medium-to-high growth oriented entrepreneurs (expecting to employ six or more) is similar across all economic development levels (18 percent for factor driven, 21 percent for efficiency-driven, and 20 percent for innovation-driven).
  • At 32 percent, entrepreneurs in the United States have high job creation ambitions compared to the 20 percent average in innovation-driven economies.
  • The highest rates of medium-to-high growth entrepreneurs can be found in efficiency-driven economies in Latin America and the Caribbean (Colombia and Chile), Asia and Oceania (Taiwan, China, and Kazakhstan), Africa (Tunisia), and Europe (Romania and Ireland).
• The innovation-driven economies have, on average, the highest proportion of prospective non-employer entrepreneurs (40 percent for factor-driven, 39 percent for efficiency-driven, and 45 percent for innovation-driven).

Innovation

• Average innovation levels increase with development level (21 percent for factor-driven, 24 percent for efficiency-driven, and 31 percent for innovation-driven).
  • From a regional perspective, innovation levels are highest in North America.
  • Within individual economies, the highest levels can be seen in Chile and India, where over half of the entrepreneurs state they have innovative products or services.

Internationalization

• The innovation-driven phase of development reveals the highest average level of internationalization (6 percent for factor-driven, 13 percent for efficiency-driven, and 20 percent for innovation-driven).
  • Panama and four European economies (Luxembourg, Switzerland, Croatia, and Slovenia) each contain over one-third of entrepreneurs with substantial international sales.
  • Canada also shows a high rate of internationalization, boosting North America's average.

Download the report (pdf) »

About the Global Entrepreneurship Monitor (GEM)
The Global Entrepreneurship Monitor (GEM) was initiated in 1999 as a joint venture of Babson College and the London Business School. Starting with 10 participating economies, the project expanded to include 73 economies in its 2014 survey. The latest survey spans 62 economies. GEM is the largest and most developed research program on entrepreneurship in the world. GEM is unique because, unlike most entrepreneurship data sets that measure newer and smaller firms, GEM studies the behavior of individuals with respect to starting and managing businesses. GEM academic teams in each participating economy are members of an exclusive research project that provides access to the collective knowledge of some of the world's most renowned researchers and institutions involved in entrepreneurship research. At a time in history when individual entrepreneurial activity may hold the key to transforming the global economy and discouraging ingrained economic disparity in countries with minimal economic opportunity, GEM data has influenced national economic policies and continues to expand its collaborative role. Global sponsors of the research include Babson College (lead sponsor) in the United States, Universidad Del Desarrollo in Chile, Universiti Tun Abdul Razak in Malaysia, and Tecnológico de Monterrey in Mexico. For more information, follow GEM on Twitter.    

About Babson College
Babson College is the educator, convener, and thought leader for Entrepreneurship of All Kinds^®. The top-ranked college for entrepreneurship education, Babson is a dynamic living and learning laboratory where students, faculty, and staff work together to address the real-world problems of business and society. We prepare the entrepreneurial 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 make a difference in the world, and have an impact on organizations of all sizes and types. 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.

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