Monday, January 14, 2008

How entreprenuerial is the U.S. (in comparison to other countries)?

If you are like most people, your answer would be 'very entrepreneurial.' But the answer is pretty surprising and interesting.

There is an organization called the Global Entrepreneurship Monitor (GEM) that annually conducts a cross-national assessment of entrepreneurial activity and their latest published assessment from 2006 included 42 countries. They define entrepreneurial activity as people that are in the process of starting their own business or new business owners (of approximately 3 1/2 years or less).

According to their assessment, 10% of the adult population (ages 18-64) in the U.S. in 2006 were considered to be undergoing entrepreneurial activity. The U.S. ranked 15th out of 42, which is pretty good, but definitely not at the top end. The entrepreneurial activity was the highest in Peru (40%), Columbia (22.5) and the Philippines (20.4). The lowest levels of entrepreneurial activity was found in Belgium (2.7%), Japan (2.9) and Sweden (3.5). Here are a few other key findings:

- entrepreneurial activity is generally higher in those countries with lower levels of GDP
- entrepreneurial activity is relatively low in high-income countries (especially the core countries of the EU and Japan)

Is this making any sense yet? Are you surprised that Peru is nearly four times as entrepreneurial as the U.S.? The eye opening part of this study, at least for me, is that people undertake entrepreneurship for different reasons. In the U.S., most of the people start a business because they see an opportunity and want to exploit it. They have other options, but make the choice to become an entrepreneur. However, in many other countries including Peru, entrepreneurship is not always seen as such a luxurious option. For some, other job opportunities do not exist and/or are not satisfactory so entrepreneurship becomes a necessity in order to survive.

So, is the U.S. entrepreneurial? The answer is yes, but don't forget to understand the global context.

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