Total Early-stage Entrepreneurial Activity Research Articles

How to analyse determinants of entrepreneurship and self-employment at the country level? A methodological contribution

Abstract The aim of the article was to empirically support a hypothesis, that no matter what measure of entrepreneurship or self-employment we choose at the country level, the determinants indicate the same direction of impact. Methodologically, four measures of entrepreneurial and self-employment activity were utilized as dependent variables in regression models. Entrepreneurial activity in the article was operationalized by Eurostat and OECD self-employment rates, and by Global Entrepreneurship Monitor rates of established business ownership rate and total early-stage entrepreneurial activity (TEA). Based on the obtained results, the determinants of entrepreneurship and self-employment influence all four presented measures in the same direction.

What Skills Do Nascent Entrepreneurs Need? The Evidence from Thailand

Introduction and Rational of Study Entrepreneurial society plays an important role for countries' economic development. Small and Medium Enterprises (SMEs) sector is considered as the vital mechanism for sustainable economic and social development for Thailand. According to the SMEs White Paper Report of Office of Small and Medium Enterprises Promotion (OSMEP) in 2015, the number of SMEs in 2015 is 2,736,744 enterprises counting for 99.73% of total business enterprises in Thailand. Additionally, Small enterprises (SE) count for 99.26% of total enterprises. In term of the contribution to Thai GDP, SMEs contribute 5,212,004 Million Baht counting for 39.6% of Total GDP and SMEs employ 10,501,166 people counting for 80.30% of Total employment in Thailand. Furthermore, 26.25% of Thai export value came from SMEs counting for 1,917,817.12 Million Baht. At present, Thai government emphasizes on new entrepreneur promotion and also focus on develop and support high potential entrepreneurs to start up their business by using technology and innovation as the mechanism. The Plan Government development (2016-2019) (Electronic Government Agency, 2016) intends to radically change to the era of digital Digital which means Thai entrepreneurs can exploit from technology and digital knowledge in order to develop innovate and enhance Thailand sustainable competitive advantage. The plan also intends to crate digital entrepreneurs and expend markets by using technology an information system According to the Global Entrepreneurship Monitor (GEM) report (2016), the Total Early-stage Entrepreneurial Activity (TEA) rate of Thailand is 13.7% ranked of 20th from 60 countries GEM member around the world. As the importance of Thai entrepreneurs supporting and promotion mentioned, the study of entrepreneur skills of nascent entrepreneurs since nascent stage is the most critical stage to decide the survival of the business. The objectives of this study are (1) the investigate the level of entrepreneur skills of nascent entrepreneurs in Thailand and (2) the study the influence of entrepreneur skills toward business growth expectation of Thai nascent entrepreneurs so as to more comprehensively understand the nascent entrepreneurs' situation and develop more effective policies to enhance them. Literature Review Entrepreneurial skills and Business Growth Orientation An entrepreneurial skill research is one of most interesting research area in entrepreneurship field (Hayton, 2015). Previous researches tried to study the set of necessary skills needed for new entrepreneurs to establish new businesses in nascent stage and also the set of skills for enhancing small business to larger scale of business. According to Hayton (2015) defined entrepreneurial skill as customer needs, technical or market opportunities, and pursuing opportunities. Chell (2013) states that skills consist of multidimensional constructs which are the cognitive, the affective, and the behavior. the cognitive refers to knowledge and what is learnt whereas the affective refers to emotional expression and what is experienced, and the behavior refers to action at strategic, tactical and personal levels; and the context sectoral, occupational, job and task levels. Entrepreneurial skills can also refer to the entrepreneurial competency which is one of the constructs to explain entrepreneurial intention (Shane and Venkataraman, 2000). The relationship between entrepreneurial skills and firm performance is confirmed by previous studies (Chell, 2013; Hayton, 2015; Arslan-Ayaydin et al., 2014; Mihola et al., 2016; Theriou and Aggelidis, 2014; Theriou et al., 2014). Previous studies emphasized on finding out the necessary entrepreneurial skills for successful entrepreneurs. There are many skills mentioned such as identifying customer needs, technical opportunities and market opportunities (Hayton, 2015), creation of new opportunities (Alvarez and Barney, 2007), recognizing social/market needs (Hunter, 2012). …

The Analysis of Nascent Entrepreneurs’ Happiness Level in Indonesia

This study tried to analyze the factors that influence the happiness level of entrepreneurs in Indonesia especially the nascent entrepreneurs. The level of entrepreneurs’ happiness has a positive effect on the sustainability of their business. The research data are secondary data from 1,148 respondents who are included in the category of Total Early-stage Entrepreneurial Activity (TEA) at Global Entrepreneurship Monitor (GEM) in 2013. The variables employed are motivation, perception and innovation and demographic variables (gender, education and income). Analyzer used is multiple linear regressions with dummy variable. From the result, it is found that only the motivation, education level and level of income that significantly influence the level of happiness. The nascent entrepreneurs, who have motivation to start a business because of opportunity, have a higher level of happiness than necessity motivation due to necessity. The level of education and income are also proportional to the level of happiness, but the level of education gives greater influence to the level of happiness of nascent entrepreneurs in Indonesia.

Large firm dominance on country\u2019s entrepreneurship potentials

This paper aims to determine whether countries where large firms are very dominant have less entrepreneurial activities. There is anecdotal evidence that the continued decline in the business dynamism or the number of start-ups in the United States is said to be partly attributed to large firms. One key explanation is that the regulatory environment tends to favor existing large firms – an environment that allows near monopolies and a protection of tiny entrepreneurial elite. Using the Global Entrepreneurship Monitor (GEM) data together with the World Bank – International Finance Corporation’s MSME country indicators, I empirically test whether large firm dominance influences entrepreneurial activities as well as intentions. Using fixed effects regression analysis on unbalanced panel of 40 countries over the period 2002–2007, I found that the entrepreneurship potential of a country is potentially at risk if the growth of large firms’ stake in the economy is left unchallenged. In particular, a one percentage point increase in the share of large firms to total employment is associated with 0.35 percentage point lower total early-stage entrepreneurial activity rate, holding other factors constant. Also, worth noting is the sensitivity of entrepreneurial intentions to large firm dominance. A one percentage point increase in the share of large firms to total employment dampens (i.e., by 0.56 percentage point) intentions of latent entrepreneurs to start a business within the next 3 years, other factors remaining constant. This second-order effect of large firm dominance depends heavily on the country’s institutions. Thus, it is critical for governments to foster a dynamic system that guarantees free competition and rewards creativity. Likewise, it is necessary to review and amend policies that seem to favor large firms that compromise the establishment as well as growth of smaller enterprises.

Effects of Schumpeterian and Kirznerian entrepreneurship on economic growth: panel data evidence

The relevant literature recognises Schumpeterian and Kirznerian entrepreneurship as mechanisms that can impact economic growth. This article seeks to explore the effects of these two types of entrepreneurship on economic growth across the three GEM (Global Entrepreneurship Monitor) economic ecosystems (factor-driven economy, efficiency-driven economy, innovation-driven economy). Using different databases, we applied unbalanced panel data for 43 countries (2009–2013). By estimating the econometric models, we were able to calculate the effects of these two types of entrepreneurship on economic growth in the three different types of economy. In terms of the overall model for GEM economies, neither Schumpeterian nor Kirznerian entrepreneurship return any statistically significant effects on the Global Competitiveness Index or on GDP growth. However, the Total Early-Stage Entrepreneurial Activity variable generates a positive effect on the Global Competitiveness Index. The results presented in this paper provide insights into entrepreneurship and the GEM entrepreneurial economic ecosystems.

Entrepreneur: do social capital and culture matter?

This paper analyzes the effect of the individual perceptions of social capital and culture in entrepreneurial aspirations before and after the economic crisis in Western Europe. Following the approach of the Theory of Planned Behavior (Ajzen in Organizational Behavior and Human Decision Processes, 50, 179–211, 1991), we advance the analysis of the effect of the perception of subjective norms in the entrepreneurial intentions. We studied the Total Early-Stage Entrepreneurial Activity (TEA) of twelve countries in 2006 and 2010. The results reveal that the perception of having social networks is significant for the TEA, and it increases after the economic crisis. However, the cultural factors do not have a significant impact, except the one related with the perception of social equality. The results obtained through the double perspective of this analysis (individual’s social capital vs cultural factor of individualistic perspective) offers a certain dilemma when we try to understand the entrepreneurial intntion through the individual’s perception of subjective norms, following the Ajzen’s model. The more individualist is a person, the lower the weight of its social capital. However, the more a person has access to social networks, the greater his entrepreneurial intention will be. This result opens future lines of research focused on understanding the value of the individual’s social capital for different countries and groups of entrepreneurs.

The role of entrepreneurship in explaining the real Gross Domestic Product per capita: Regression model selection

AbstractIn this research, the impact of total early-stage entrepreneurial activity and competitiveness of the economy on the real gross domestic product (GDP) per capita is analyzed in a cross-section of world economies using the methods of correlation and multiple regression analysis. In the attempt to select between the linear and the double-logarithmic model, the regression diagnostics and quality of the relationship between the dependent and the independent variables were analyzed. The functional form of the model was tested by the MacKinnon, White and Davidson test. Model selection methods regarding the comparison of coefficients of determination and the Akaike information criterion were used. The results of the analysis show that independent variables have a statistically significant impact on the real GDP per capita, and that the real GDP per capita is elastic to the changes of competitiveness but inelastic to the changes of total early-stage entrepreneurial activity.

Correlates of Entrepreneurship in Pakistan: The Regional Dimension

This study analyzes entrepreneurial ability in Pakistan through a cross-sectional comparison of provinces and districts based on data from the Global Entrepreneurship Monitor for 2010–12. The aim is twofold: to (i) identify individual and country-level factors that affect nascent and potential entrepreneurs and (ii) see how regional income levels and the degree of development affect entrepreneurship (of both the opportunity and necessity varieties), eventually contributing to innovation and economic growth. We investigate the effect of total early-stage entrepreneurial activity on entrepreneurial framework conditions at the regional level and then evaluate the impact of education, age, gender and entrepreneurial ability on potential entrepreneurs, nascent entrepreneurs and baby business owners to examine the entrepreneurial startup process.

Entrepreneurial Education in a Tertiary Context: A Perspective of the University of South Africa

<p class="2">South Africa is characterised by high unemployment levels, a low Total Early Stage Entrepreneurial Activity rate, and a high small business failure rate. Entrepreneurship and small business development is seen as a solution to end unemployment in South Africa. A study to understand how to improve small business support was conducted at the University of South Africa and has shown that alumni are unable to apply theoretical knowledge acquired from their studies. The purpose of this article is to explore the potential of the University of South Africa in becoming more entrepreneurial to address the aforementioned challenges. A desk study that reviewed literature was conducted to identify different constructs associated with an entrepreneurial university, namely entrepreneurial education, research and development, innovation, commercialisation and incubation, and stakeholders. In addition to traditional teaching methods, various alternative approaches can be used to stimulate entrepreneurial education to develop the skills of learners/students. To address these challenges a closer relationship between academia, government, and industry is paramount. It is recommended that universities incorporate entrepreneurial education in all their qualifications, expose students to on-the-job training, assist with the incubation of business ideas that students have, and provide a platform for cross-pollination of knowledge between industry, academia, and government.</p>

An Investigation of Determinants Global Entrepreneurship: Multi-Country Panel Studies

<p>This study examines the validity of governmental supports and policies; and financing for entrepreneurs in the context of global entrepreneurial activities. Our studies are based on the rich datasets of the Global Entrepreneurship Monitor (GEM) database covering 108 countries from 2001 to 2014. In this study, we examine whether countries with more favorable policies and supports towards entrepreneurship and availability of financing for entrepreneurs would result in the higher country’s entrepreneurial activities.</p><p>We use total early-stage entrepreneurial activity (TEA), a percentage of 18 - 64 year old population who are either a nascent entrepreneur or an owner manager of a new business, as our dependent variable to represent country’s entrepreneurial activities. There are two main explanatory variables used in the study: governmental supports and financing for entrepreneurs. The governmental supports represents the extent to which public policies support entrepreneurship as a relevant economic issue, while financing for entrepreneurs indicates the availability of financial resources for small and medium enterprises (SMEs) including grants and subsidies. We also include three control variables of basic school entrepreneurial education and training; physical and services infrastructure; and cultural and social norms to test the significance of these factors to the country’s entrepreneurial activities.</p><p>This study adopts panel regression model augmented with control variables. We favor Random Effect model as opposed to Fixed Effect or Pooled OLS model as Hausman and Breusch–Pagan test suggest. Our results suggest that there is no evident that government supports have significant contribution to country’s entrepreneurial activities. In other words, entrepreneurial activities are more flourished in a country that has not set entrepreneurship as relevant economic issues as it might be the case for many emerging countries. The availability of formal financial resources is significant to the country’s entrepreneurships, but with a negative sign. It could be interpreted that in some countries many new start-ups and entrepreneurs seem to have a greater reliance to informal financing of 4Fs (Founders, Family, Friends and Foolhardy investors) instead of formal channels i.e. government grant and subsidies, venture capital or strategic partners. A country with cultural and social norms that encourage citizens to new business activities also has greater number of entrepreneurships. However, we found no evident that entrepreneurial education and training at basic school; and ease access to infrastructure are significantly affecting entrepreneurial activities in a country.</p>

Does the quality of public policies and institutions matter for entrepreneurial activity? Evidences from the European Union’s member states

By using data related to the 15 European Union ?old? and ?new? Member States, for a time span between 2001 and 2014, the present paper supports the thesis of a positive and significant correlation between the quality of governance and entrepreneurial activity. In order to test such correlation, the elements of Governance Quality reported by the World Bank?s Worldwide Governance Indicators (WGI) project were considered. Some key aspects of entrepreneurial activity reflected by Total Early-Stage Entrepreneurial Activity, Perceived Opportunities and Perceived Capabilities were taken into account based on The Global Entrepreneurship Monitor (GEM) database. In addition, in order to reflect the structural rigidities and tensions from the labour market, the unemployment rate provided by the World Bank?s World Development Indicators database was considered as a control variable. The effect of the inclusion of a country in a certain development group, according to the most recent World Bank classification (?low-income economies? to ?high-income economies?), was also considered in a multi-level analytical framework with a two-level model. The results of this study clearly indicate that higher levels of public policies and institutions? credibility/effectiveness produce a positive and robust impact on entrepreneurial climate.

Country-based comparison analysis using fsQCA investigating entrepreneurial attitudes and activity

This study undertakes a cross-country comparison of the relationship between entrepreneurship attitudes and high and low entrepreneurial activity. The analysis employs fuzzy-set Qualitative Comparative Analysis. The data set comes from the Global Entrepreneurship Monitor 2011 survey, four country-level entrepreneurial attitudes and perceptions variables considered against Total Early-Stage Entrepreneurial Activity from a sample of 54 countries. This study provides comprehensive understanding of variations between individual countries at different levels of economic development and groups of countries in their level of opportunity and necessity-related entrepreneurial activity.

The Characteristics and Determinants of Entrepreneurship in Ethiopia

Using Global Entrepreneurship Monitor (GEM) approach, the study analyzes the characteristics and determinants of entrepreneurship in Ethiopia. Primary data are collected through the Adult Population Survey (APS) and analyzed using Probit model. To overcome the hetroscedasticity problem, which is prevalent in cross section studies, robust standard errors were employed. The findings of the study reveal that about 53% of the adults in Ethiopia are potential entrepreneurs. The perceived opportunity rate in Ethiopia (65%) is above the average for factor-driven economies (63%); while the perceived capabilities rate (69%) is below the average for factor-driven economies (71%). Ethiopia’s rate of entrepreneurial intention (22%), early-stage entrepreneurial activity rate (12.2%), and established business activity rate (8.3%) are below the average for both factor-driven economies and Sub-Saharan African countries. The econometric analysis indicates that demographic variables such as age, level of education, societal attitude towards entrepreneurship, and social networks (knowing someone in business) are significant in influencing potential entrepreneurship and entrepreneurial intensions in Ethiopia. In early-stage entrepreneurial activity (TEA),"Fear of failure" is found to have a negative and statistically significant effect. On the other hand, the probability of engaging in TEA significantly differs between those living in urban and rural areas. Furthermore, the results provide basic data to develop national entrepreneurship strategy, consistent with the MSE development strategy and other macro and sectoral level strategies. Thus, the low rate of TEA and established business in Ethiopia can be improved by expanding the quantity and quality of support services. Moreover, there is also a need to develop region-specific entrepreneurial development plan to reduce region to region or urban-rural differences. Keywords: Global Entrepreneurship Monitor (GEM), Perceived Opportunities and Capabilities, Total Early-Stage Entrepreneurial Activity (TEA)

The Characteristics and Determinants of Entrepreneurship in Ethiopia

Using Global Entrepreneurship Monitor (GEM) approach, the study analyzes the characteristics and determinants of entrepreneurship in Ethiopia. Primary data are collected through the Adult Population Survey (APS) and analyzed using Probit model. To overcome the hetroscedasticity problem, which is prevalent in cross section studies, robust standard errors were employed. The findings of the study reveal that about 53% of the adults in Ethiopia are potential entrepreneurs. The perceived opportunity rate in Ethiopia (65%) is above the average for factor-driven economies (63%); while the perceived capabilities rate (69%) is below the average for factor-driven economies (71%). Ethiopia’s rate of entrepreneurial intention (22%), early-stage entrepreneurial activity rate (12.2%), and established business activity rate (8.3%) are below the average for both factor-driven economies and Sub-Saharan African countries. The econometric analysis indicates that demographic variables such as age, level of education, societal attitude towards entrepreneurship, and social networks (knowing someone in business) are significant in influencing potential entrepreneurship and entrepreneurial intensions in Ethiopia. In early-stage entrepreneurial activity (TEA),Fear of failure is found to have a negative and statistically significant effect. On the other hand, the probability of engaging in TEA significantly differs between those living in urban and rural areas. Furthermore, the results provide basic data to develop national entrepreneurship strategy, consistent with the MSE development strategy and other macro and sectoral level strategies. Thus, the low rate of TEA and established business in Ethiopia can be improved by expanding the quantity and quality of support services. Moreover, there is also a need to develop region-specific entrepreneurial development plan to reduce region to region or urban-rural differences. Keywords: Global Entrepreneurship Monitor (GEM), Perceived Opportunities and Capabilities, Total Early-Stage Entrepreneurial Activity (TEA)

Micro Enterprises’ Start-Up Constraints in South Africa

The creation of micro enterprises is important to the reduction of high levels of poverty, income inequality and unemployment in South Africa. The objective of the study is to investigate the constraints faced by the owners of micro enterprises during the start-up stage. Understanding these factors can help to improve the low total early stage entrepreneurial activity rate of South Africa. The study used the qualitative research technique. In-depth interview method was used for primary data collection from twenty two owners of micro enterprises. The results indicate that inadequate owners’ capital, difficulty in raising external finance and lack of physical resources such as equipment are some of the major constraints to new business creation. Other important barriers are lack of experience and start-up skills, high level of competition and difficulty in getting a proper location. Recommendations to reduce the constraints faced by the owners of new micro enterprises during the start-up phase are suggested. DOI: 10.5901/mjss.2014.v5n23p30

High Income Inequality as a Structural Factor in Entrepreneurial Activity

Statistical tests on a panel of data from 54 countries over the 2004–2009 period support the proposition that high income inequality and entrepreneurial activity share a positive linear relationship. In a novel approach, the dependent variable is defined from two independent and uncorrelated perspectives: (1) the World Bank Group Entrepreneurship Snapshot, which measures new business entry density based on secondary official sources; and (2) the Total Early Stage Entrepreneurial Activity of the Global Entrepreneurship Monitor project, which is a survey-based measure of formal and informal entrepreneurial participation rates. The empirical strategy is based on the logic that economies with increasing concentrations of wealth tend to encourage entrepreneurial activity because entrepreneurs accumulate more income than workers. Following the disequalizing model, once this inequality appears, it is reinforced in successive generations. The intuition behind this outcome is that a certain level of initial capital is required to establish a new enterprise, which implies that the probability of becoming an entrepreneur increases if an individual has inherited wealth.

An Exploratory Study on Effects an Aging Population can have on Entrepreneurship

This research aims to explore the effects that an ageing population can have on total early-stage entrepreneurial activity in three developing countries currently within an efficiency-driven stage of economic development including: Brazil, China, and South Africa. This relationship was explored using a longitudinal database of developing countries that have participated in the Global Entrepreneurship Monitor in 2002 and 2009. This study explored the notion that the age distribution of a country affects the total early-stage entrepreneurial activity. This research aimed to gain an understanding into the demographic changes of developing countries – if their populations were indeed experiencing an ageing phenomenon and if age is a factor in determining the level of entrepreneurial activity. The results showed that China is experiencing an ageing population but the total early-stage entrepreneurial activity was not affected by this demographic shift. The data analysis for Brazil and South Africa provided mixed results.

GEM New Zealand's different approach

At 13.9% of the adult population, New Zealand's Total Early-Stage Entrepreneurial Activity is highest amongst developed countries. This benchmark uses the Global Entrepreneurship Monitor (GEM) methodology. New Zealand has a high level of opportunity entrepreneurship and a moderate level of necessity entrepreneurship. New Zealand's entrepreneurial firms contribute about half of all new jobs created annually. Informal investment is a more important source of financing to entrepreneurs than venture capital. The proportion of female entrepreneurs has slipped over the past three years. Maori are more entrepreneurial than the rest of population. The study argues that New Zealand has an excellent innovation policy but no entrepreneurship policy.