“CURRENT GLOBAL SUPPORTING ECONOMIES FOR ENTREPRENEURS”
WRITTEN BY MARCO A SORIANO,
To develop a deeper understanding of how entrepreneurship, ambition and innovation interact and are in turn related to competitiveness, this study includes a cluster analysis to assign the countries’ economies in our sample into five groups of similar economies.
- All-rounder Economies exhibit high rates of entrepreneurial activity, high rates of entrepreneurs that are ambitious and high rates of entrepreneurs that are innovative.
- High-Activity Economies exhibit high rates of early-stage entrepreneurial activity, but low rates of ambitious and innovative entrepreneurial activity.
- High-Ambition Economies exhibit low rates of entrepreneurial activity, but a high proportion of entrepreneurs that are ambitious, yet not innovative.
- High-Innovation Economies exhibit low rates of entrepreneurial activity, with low proportions of ambitious entrepreneurs, but high proportions of entrepreneurs that are innovative.
- Neutral Economies exhibit low rates on all three early-stage entrepreneurial activity metrics.
All-rounder economies in the sample are especially distinct from the other clusters. They exhibit high rates on all three metrics of entrepreneurship. On average, 15.1% of entrepreneurs in this cluster are ambitious and 46.4% of entrepreneurs introduce new products or services into their market. All-rounders leverage the most benefits from early-stage entrepreneurial activity for their economies, including job creation and new products and services.
High-Activity economies are distinct from the other clusters in having high rates of early-stage entrepreneurial activity, but aver- age or low rates of ambition and innovation among early-stage entrepreneurs. There are 11 countries in this cluster: Argentina, Brazil, Ecuador, Guatemala, Jamaica, Mexico, Panama, Peru, Trinidad and Tobago, Uganda and Uruguay. Geographically, this cluster is over-represented by Latin American and Caribbean countries. With regard to development level, there is one factor- driven economy (Uganda) and one innovation-driven economy (Trinidad and Tobago); the remaining seven are middle-stage, efficiency-driven economies. Only 3% of entrepreneurs in this cluster are ambitious, which is one-third the rate of the overall sample, and 19% introduced new products or services into their market, which is approximately three-quarters the rate of the overall sample average. Interestingly, all these countries have low rates of entrepreneurial employee activity (EEA estimates are not available for Guatemala and Uganda).
High-Activity economies include many entrepreneurs who have started, or are in the process of starting, businesses. However, these economies are not able to leverage the full spectrum of positive impacts from their entrepreneurs. Entrepreneurial activity that is neither ambitious nor innovative will not deliver high levels of job creation or economic advancement that result from new products and services. Instead, entrepreneurial activity of this form resembles a form of regular employment (and for many entrepreneurs might well be a necessary replacement for it).
High-Ambition economies represent the most diverse country profile mixes. There are 11 countries in this cluster: China, Croatia, Hungary, Ireland, Israel, Japan, Korea, Latvia, Romania, Taiwan and the United States. They represent diversity with respect to their stages of economic development and geography, with about half being innovation-driven and the remainder efficiency-driven, represented in five regions: North America, South America, Europe, the Middle East and Asia. They also vary from low to medium in levels of entrepreneurial employee activity. Taiwan is the core representative of this cluster, with over one-quarter of its entrepreneurs being ambitious, but only 8% of its working-age population engaged in early-stage entrepreneurial activity and 22% in innovative activity, both slightly below the average of the overall 44-country sample. The United States, Israel, Ireland and Latvia as a group stand out with above average proportions of innovative entrepreneurs, at, or above, 30%. The group made up of Romania, Hungary, Croatia, Japan and Korea exhibits slightly below overall sample average rates of early stage entrepreneurial activity, alongside slightly below proportions of innovative entrepreneurs. China stands alone in a sub-cluster group with high early-stage entrepreneurial activity, above-average ambitious activity and slightly below- average innovative activity.
Economies in this cluster benefit from their entrepreneurs having higher than average ambition to grow their businesses quickly and create jobs. But lacking innovative entrepreneurs reduces the potential impact that these entrepreneurs have on social value and unique economic activity.
High-Innovation economies have low to average rates of early- stage entrepreneurial activity, low proportions of early-stage entrepreneurs who are ambitious, and high proportions of early-stage entrepreneurs who are innovative. There are four countries in this cluster: Denmark, France, Slovenia and South Africa, with a low diversity of three European countries and one African country. Denmark has the highest rate of innovation, with 46.3% of entrepreneurs introducing new products or services into the market. Denmark also has a very high rate of entrepreneurial employee activity, setting it apart from the other members of this group.
Lastly, The Neutral economies have below average rates on all three metrics. There are 16 countries in this cluster: Algeria, Belgium, Bosnia and Herzegovina, Finland, Germany, Greece, Italy, Malaysia, Netherlands, Norway, Portugal, Russian Federation, Spain, Sweden, Switzerland and the United Kingdom. The majority of these economies are in Europe, and in the innovation- driven stage of development. The Netherlands is among the core representatives of this cluster, and similar in its profile to many of its European neighbors.
The non-European countries in the cluster show generally lower proportions of innovative entrepreneurs, with comparative high proportions of ambitious entrepreneurs in Russia and Algeria, and overall activity at the higher end of the scale in Algeria and Bosnia and Herzegovina. Malaysia’s scores are comparatively low across the spectrum.
In this cluster, some countries are mobilizing alternative modes of innovative and ambitious entrepreneurship.
Entrepreneurial activity depends on individuals who perceive business opportunities and who have the capability and willingness to pursue them. For their businesses to function, these individuals, in turn, rely on a variety of stakeholders around them that encourage entrepreneurship, including investors, consumers, suppliers, employees, advisors, and even supportive families and friends. The term “preconditions” in this report encapsulates the general conditions in an economic, social, and political environment that generate and support entrepreneurs. The relationship between these preconditions and entrepreneurship is not one-way; entrepreneurial activity can also influence how society, economies, and political systems operate. Below is a short list of preconditions that differ across the five clusters:
- Connections with entrepreneurs,
- Awareness of opportunities,
- Entrepreneurial skills, and
- Willingness to take risks
Should you have any questions, please write to:
Marco A SORIANO, Managing Partner at