Archive for the ‘Research’ Category.

Creating the Environment for Entrepreneurial Success: CIPE Special Report

CIPE has released the thought leader report “Creating the Environment for Entrepreneurial Success” to mark Global Entrepreneurship Week 2013.

Entrepreneurship drives economic change and innovation while at the same time it expands opportunity and unleashes the initiative of citizens. Entrepreneurs are crucial to building prosperous societies that deliver opportunity to all. In emerging economies around the world, interest in entrepreneurship is currently higher than ever amid burgeoning youth populations and a desire to move up value chains.

Unfortunately, in many developing economies, obstacles in the business environment close off entrepreneurial opportunities to huge swathes of the population. For example, a rural Kenyan entrepreneur must incur the cost of travel to Nairobi to register a business. In Lebanon, 65 percent of small and medium-sized enterprises must pay a bribe to conduct government procedures. Tunisian street vendors, most of whom cannot attain legal status, “live in constant fear of being evicted or harassed by local officials.” Even bankruptcy can be considered a crime in some places.

These barriers add to the usual challenges that entrepreneurs face with regard to capacity, financing, and market access. To be sure, some entrepreneurs prevail in spite of the obstacles. We should celebrate the successful cases that inspire future entrepreneurs. However, most would-be entrepreneurs face restricted options because they lack the connections, status, and resources enjoyed by established businesses and elite families. Women, youth, and non-elite individuals face higher hurdles to growing a business.

Experts, policymakers, and entrepreneurs have now turned their attention toward building entrepreneurship ecosystems. This attention reflects a recognition of the need for multifaceted support for entrepreneurial activity, as well as interactive effects within communities that accelerate efforts of individual entrepreneurs. As lessons in ecosystem development accumulate, it is becoming clear that initiatives to finance, educate, and connect entrepreneurs are outpacing improvements in the business environment. The majority of entrepreneurship programs struggle to incorporate the business environment pillar into the ecosystem.

This special report, Creating the Environment for Entrepreneurial Success, highlights the crucial environmental dimension of entrepreneurship ecosystems. Improving the conditions for entrepreneurship and leveling the playing field goes beyond the effort to help promising entrepreneurs. It expands the pool of potential entrepreneurs, builds incentives for entrepreneurship, eases the costs of doing business, and generates healthy competition. Policy and regulatory reforms should be integrated with comprehensive services to educate, finance, advise, and encourage entrepreneurs.

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Impact of Business Environment Reforms on New Firm Registration

We know that developing countries need entrepreneurship — especially formal entrepreneurship — in order to drive growth, expand access to opportunity, and address youth unemployment. Yet only 4,000 to 5,000 new firms register each year in places like Belarus, Guatemala, and Tunisia. Can business environment reforms, as prescribed by Hernando de Soto and spotlighted by the World Bank’s Doing Business project, make the difference?

Searching the World Bank’s Entrepreneurship Database for business registry data, Leora Klapper and Douglas Randall analyze what business environment reforms mean in practice. The upshot: big reforms can boost private sector activity but token reforms do not. Their important research is summarized in the “Impact of Business Environment Reforms on New Firm Creation,” the latest release from CIPE’s Economic Reform Feature Service.

This article is excerpted from the forthcoming thought leader report on “Creating the Environment for Entrepreneurial Success.”

Kim Bettcher
CIPE

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Global Entrepreneurship Week Survey Ends Tomorrow!

Global Entrepreneurship Week will be wrapping up their global survey on September 28, 2012.  The survey is part of an effort  to inform policy decisions regarding entrepreneurship and aims to capture young innovator’s perceptions of the entrepreneurial environment in their respective countries.  Through the survey, GEW hopes to get a better handle on which countries and policies inhibit or enable successes in enterprise.

The survey is available in 8 languages and can be completed in about 20 minutes.  Contribute your voices and share it with other entrepreneurs regardless of experience.  Choose your language below to get started!

For a copy of the final report, simply send a messagel to survey@unleashingideas.org with your name, country, and email address.

GEW Conducting Policy Survey

In an effort to help inform policy decisions regarding entrepreneurship, Global Entrepreneurship Week has recently announced The Global Entrepreneurship Week Policy Survey.  Through this project, the Monitor Group and the Ewing Marion Kauffman Foundation have teamed up to capture the perceptions of entrepreneurs on their country’s entrepreneurial environment.  From gathering responses to the survey, GEW hopes to get a better handle on which countries and policies inhibit or enable successes in enterprise.  The results will be distilled and inform a polished report on entrepreneurial ecosystems

The survey is offered 8 languages and should take no more than 20 minutes to complete.  GEW has asked that participants help identify other entrepreneurs in their respective countries and pass along the survey.  Click one of the links below to access the survey:

If you would like a copy of the final report when it is published, simply send a request to survey@unleashingideas.org with your name, country and email address included.

Inside the Minds of Nigeria’s Entrepreneurs

Nigeria’s entrepreneurs are expressing a good deal of optimism, according to a recent survey by the Legatum Institute. Indeed, 82 percent of entrepreneurs believe Nigerian society has become more welcoming of entrepreneurship in the past 10 years. Download the Nigeria 2011 survey of entrepreneurs.

Some interesting facts from the survey:

  • Nigerian entrepreneurs are largely motivated by a desire to be independent (32 percent) or to make a difference (28 percent).
  • Contacts with other entrepreneurs form the single greatest source of individual desire to become an entrepreneur (30 percent).
  • In the survey, 74 percent of respondents became entrepreneurs out of choice, 23 percent out of necessity, and 3 percent are following family tradition.
  • Views of state governments’ performance are higher than views of national government performance. 73 percent reported that state government is doing a good job versus 63 percent reporting that national government is doing a good job.
  • Nationally, the most cited factor needed to achieve future growth is to clean up corruption (45 percent).

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Growth Strategies of Young Companies

Entrepreneurial firms pursuing growth have numerous strategies available to them. This should come as no surprise, given that the role of entrepreneurship is to capitalize on unmet opportunities wherever they may arise. A 2011 World Economic Forum study attempts to make sense of these strategies: “Global Entrepreneurship and the Successful Growth Strategies of Early-Stage Companies

A highlight of the World Economic Forum study is its categorization of eight possible strategies. For instance, a company can create, build, or ride a wave of economic transformation–and first movers do not necessarily come out on top. Facebook, as one example, did not create social networking but rather helped build this wave. The choice is complicated by uncertainty over the timing and development of the wave.

Strategies also diverge depending on whether a company offers an entirely new category of product or else a new product within an existing category. Continue reading ‘Growth Strategies of Young Companies’ »

Competition for Research on Entrepreneurship and SMEs

Deadline: August 22, 2011.

Innovations for Poverty Action has a competition open for grants to “build a systemic body of evidence on the contribution of SMEs and entrepreneurship to poverty alleviation and economic development.” The Competition on Entrepreneurship and SME Growth for Young Scholars aims to stimulate research on access to finance and human capital.

Application details and the request for proposal are available here.

The Young Upstarts Report: Youth Perceptions in South Africa

The Branson Centre of Entrepreneurship released its first Young Upstarts Report on youth attitudes toward entrepreneurship, showing a high level of interest in starting a business combined with insights on the challenges facing entrepreneurs.

As far as attitudes go, the culture of creativity is widespread among South African youth. For many, creativity fuels their entrepreneurial dreams. Understanding and experience, however, are more limited. Most do not realize that entrepreneurship requires hard work and more than a good idea. Many would select the food and beverage sector for a new business–a highly competitive sector–presumably because it is familiar to them.

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Social Networks and Business Activity: Emerging vs. Developed Economies

Everyone knows that entrepreneurs like to network, but where do social networks foster greater levels of entrepreneurship? A study in the latest issue of the International Business Review compares the relationship of social networks to levels of entrepreneurial activity in both developed and emerging economies. The authors–Wade M. Danis, Dirk De Clercq, and Olga Petricevic—try to get at the question of whether “informal networking behavior may compensate for weak institutions.”

Using participation in voluntary associations as a proxy for networking behavior, and testing data from the World Values Survey and Global Entrepreneurship Monitor, the study finds that “associational activity is more strongly related to new business activity in emerging than developed economies.” The implication is that while networking has value everywhere, it is more important where institutions are weak. As Douglass C. North has noted, institutional development is essentially a matter of moving from personal exchange to impersonal exchange.

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Impact of the Business Environment on Young Firm Financing

How much do young firms rely on external financing? Are they affected by the business environment the same way as older firms? These questions are addressed in a recent paper by a World Bank team: “The Impact of the Business Environment on Young Firm Financing.”

It turns out that “younger firms use less formal finance and use more informal finance relative to older firms” and that “the institutional environment is disproportionally more important for younger firms.” The exception is in low-income countries, where formal financing is limited for all firms.

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