Determination and classification of entrepreneurial efficiency of countries: Data envelopment analysis and hierarchical clustering analysis

Abstract

Entrepreneurship initiatives have undeniable effects on national economies. States and governments produce various strategies and policies to increase the contribution of entrepreneurship to the country's economy. Entrepreneurship levels of countries are determined by various organizations. Country entrepreneurship scores and rankings are regularly published by the “Global entrepreneurship monitor (GEM)”. Countries, on the other hand, understand their current level of entrepreneurship according to these reports. In this research, it is aimed to determine the entrepreneurial activity efficiency levels (EAE) of the countries with the data obtained from the GEM 2021 reports and to cluster them according to their activity levels. In this context, forty-two country data of five indicators presented in the 2021 GEM report were used. The research was carried out in two stages. In the first stage, four output-oriented data envelopment (DEA) models were created and the EAE were determined. In the second stage, the clustering of countries according to their EAEs was carried out by hierarchical clustering analysis. According to the research findings, 21 countries were at full efficiency in the DEA-1 model, 22 countries were at full efficiency in the DEA-2 model, and 18 countries were at full efficiency in the DEA-3 and DEA-4 models. In the hierarchical clustering analysis, the countries are clustered in three groups. Twenty-two countries were included in Cluster-1, seven countries in Cluster-2, and thirteen countries in Cluster-3. Cluster-1, Cluster-2 and Cluster-3 were characterized as high, middle, and low efficiency levels, respectively. As a result of the research, suggestions were made to countries to improve their entrepreneurial activities.