Entrepreneurship: An international phenomena Dr. Alan Carsrud Executive Director & Professor Global Entrepreneurship Center FLORIDA INTERNATIONAL UNIVERSITY Based on the research of Professors Carsrud, Mason, Harrison, Reynolds, Birch, Bygrave. Hay, Brown, Florio, and others Entrepreneurship: What is It? Who or what is entrepreneurial? People? Businesses? Industries? Entire societies? What makes it entrepreneurial? Special traits? New/innovative ideas, products, & services? High growth activities? Exploitation of opportunity and/or people? Creation of new markets, new economic sectors? 1
What is Entrepreneurship? Not Just Small Companies Not Just Start -Ups Not the Unscrupulous Promoters Not Just For-Profit Firms Not Just Non-Government Certainly not many dot.com s What is it to you as a student? If Entrepreneurship is the Answer, Then what are other questions? What it isn t? Why is it important? What role does it play in society? What is its role internationally? How is being an entrepreneur different from being a manager? Entrepreneurship: Traditional Definitions Risk Taker Founder Innovator Capitalist Scoundrel Born not Learned 2
Views of Entrepreneurship Francis A. Walker (1876)...the new captains of industry as the principals agents of production and industrial process. Joseph Schumpter (1934)...the entrepreneur is the man who gets new things done. Or a modified David Birch model Cockroaches Mice Giselles Elephants Another View Peter F. Drucker (1964)... maximization of opportunities is a meaningful, indeed a precise, definition of the entrepreneurial job. It implies that effectiveness rather than efficiency is essential in business. The pertinent question is not how to do things right but how to find the right things to do, and to concentrate resources and efforts on them. 3
More Views of Entrepreneurship William Baumol (1968) He is the individual who exercises what in the business literature is called leadership Albert Shapero (1975)...a kind of behavior that includes: 1) initiative taking, 2) the organizing or reorganizing of social / economic mechanisms to turn resources and situations to practical account, 3) the acceptance of risk of failure. A major resource utilized by the entrepreneur is himself. Perhaps the Best Working Definition The pursuit of opportunity beyond the resources you currently control Professor Howard Stevenson Harvard Business School About Entrepreneurs Innovative Creative Excellence Egos 4
The entrepreneur s personality: Cooperative, a team player; Strong desire to work hard; High in desire to learn new & different things; Able to listen to others; Not competitive; Not any more risk prone than other professionals. Factors in entrepreneurial success: Achievement Oriented Personality Entrepreneurial Attitudes Belief in Self and Ability Social Context Precipitation Event Intention to Start a Venture Opportunity Recognition Controlling Resources Timing Why Entrepreneurship Now? Technological Change Economic Change Social Change Psychological Change 5
The Present Explosion Response to Ambiguity Need for Flexibility Creating Economic Value Key to Economic Development Matches Risks and Rewards Creation of Wealth Creation of Jobs A final set of questions: Are there national differences in entrepreneurial activity? Is entrepreneurial activity related to national economic growth? Why are some countries more entrepreneurial than others? What can be done to enhance entrepreneurial activity? The Global Entrepreneurship Monitoring (GEM) Project Based on the research of Professor Paul Reynolds and the National GEM Teams 6
Social, Cultural, Political Context General National Framework Conditions Openness (External Trade) Government (Extent,Role) Financial Markets (Efficiency) Technology, R&D (Level, Intensity) Infrastructure (Physical) Management (Skills) Labor Markets (Flexible) Institutions (Unbiased, Rule of Law) Entrepreneurial Framework Conditions Financial Government Policies Government Programs Education & Training R&D Transfer Commercial, Legal Infrastructure Internal Market Openness Access to Physical Infrastructure Cultural, Social Norms Major Established Firms (Primary Economy ) Micro, Small, and Medium Firms (Secondary Economy ) GEM CONCEPTUAL MODEL Entrepreneurial Opportunities Entrepreneurial Capacity - Skills - Motivation National Economic Growth (GDP,Jobs) Business Churning Two Types of Entrepreneurs Necessity Opportunistic Necessity Entrepreneurship as % of Total : GEM 2002 60.0% 50.0% 40.0% % Necessity 30.0% 20.0% 10.0% 0.0% FRANCE NORWAY DENMARK FINLAND ICELAND ITALY BELGIUM NETHERL US SWITZER CANADA UK SINGAPO IRELAND N ZEALA C TAIPE SWEDEN AUSTRAL THAILAN ISRAEL MEXICO SPAIN GERMANY RUSSIA CROATIA INDIA KOREA JAPAN POLAND SLOVENI HUNGARY H KONG S AFRIC CHILE ARGENTI BRAZIL CHINA 7
Personal Responses and Entrepreneurial Acdtivity: 30 GEM 2002 Countries TEA_Opportunity TEA_Necessity TEA_Other 25.00 20.00 #/100 Persons 18-64 Yrs Old 15.00 10.00 5.00 0.00 Know Entre: Yes Know Entre: No See Opportunity: Yes See Opportunity: No Have SU Skill: Yes Have SU Skill: No Fear Failure: Yes Fear Failure: No Market Replication vs. Market Expansion Market Replication Customers know product or service well Lots of competition Using established technology or procedures Market Expansion, Creation Customers unfamiliar with product or service No competition New technology or procedures TEA Entities - Replication versus Market Expansion by Global Type 16 Asian Advanced Former Centralized EU Europe + 4 Former British Latin American Asian Developing 14 12 #/100 Adults 18-64 Years Old 10 8 6 4 2 0 Market Replication Some market Expansion 8
Developed Asian [Chinese Taipei, Hong Kong, Japan, Singapore] Opportunity Entrepreneurship low Necessity entrepreneurship very Low Market expansion entrepreneurship low Women low in entrepreneurship relative to men Small percent adults Know an entrepreneur Think they know how to start a business Low income disparity Eastern European [Croatia, Hungary, Poland, Russia, Slovenia] Opportunity entrepreneurship low Necessity entrepreneurship very low Market Expansion entrepreneurship very low Women low entrepreneurship rates relative to men Small percent adults Think they know how to start a business Some know an entrepreneur Substantial farm sector Moderate income disparity Low VC, informal financing European Union + 4 [Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK] Opportunity entrepreneurship moderate Necessity entrepreneurship very low Market expansion entrepreneurship moderate Women low in entrepreneurship relative to men Many adults Think they have start-up skill Know an entrepreneur Have high fear of failure Low income disparity High social security costs Moderate VC, informal financing 9
Former British Empire (Anglo) [Australia, Canada, New Zealand, South Africa, United States] Opportunity entrepreneurship high Necessity entrepreneurship low Market Expansion entrepreneurship high Women low in entrepreneurship relative to men Many adults Think they have start-up skill Know an entrepreneur Have low fear of failure Moderate income disparity Moderate VC, informal financing Latin America [Argentina, Brazil, Chile, Mexico] Opportunity entrepreneurship high Necessity entrepreneurship high Market Expansion entrepreneurship high Women approach men in entrepreneurship rates Many adults Think they have start-up skill Know an entrepreneur Substantial farm sector High % unemployed < 25 yrs old Highest income disparity Highest firm registration barriers Moderate VC, informal financing Developing Asian [China, India, Korea (South), Thailand] Opportunity entrepreneurship high Necessity entrepreneurship high Market Expansion entrepreneurship high Women approach equality in entrepreneurship rates Many adults Think they have start-up skill Know an entrepreneur Substantial farm sector High % unemployed < 25 yrs old High income disparity Political System High levels of corruption Weak property rights protection Highest firm registration barriers Moderate VC, informal financing 10
How Many People Are Involved? 37 GEM 2002 countries 3,882 million people 2,374 million in labor force age range (18-64 years old) 62% of world population 92% of world GDP Estimate 286 million active in start-ups 205 million in India and China 18 million in the US 11.6 million EU + 4 4.0 million Eastern European 5 140 million business entities (2 per start-up) Estimate 460 million active in the world Compare to 132 million new human births each year More that population of North America (415 million) So Hopefully I have Anwered Who or what is entrepreneurial? People Businesses Industries Entire societies What makes it entrepreneurial? Special traits New/innovative ideas, products, & services High growth activities Exploitation of opportunity and/or people Creation of new markets, new economic sectors QUESTIONS? 11