There are more than 582 million people in this world in the process of starting or running their own business. This number — released by the latest Global Entrepreneurship Monitor that surveyed 65 different economies worldwide — reinforces the impact entrepreneurship has on economic growth and societal well-being.
Yet concerns remain around how to provide the right environment to support entrepreneurs who are well-equipped to pursue opportunities, survival, and growth.
The bulk of our efforts to support entrepreneurs typically concerns particular policies or initiatives, such as reducing taxes for small business and training would-be entrepreneurs. Taking a hard look at any one economic environment can help detect gaps that may pose constraints for such activities, and require intervention in the form of targeted policies or programs.
Yet this still misses an important step: an evaluation of the region’s specific entrepreneurship profile, which can show exactly where these initiatives should be targeted in order to have the most impact.
Imagine, for instance, a region where we find that women or youth are not starting businesses. Overall entrepreneurship levels are depressed, in addition to the range of opportunities from which society can otherwise benefit.
This is where research like the Global Entrepreneurship Monitor, which provides a comprehensive picture of entrepreneurship, can help. It enables evaluators to compare results between countries in the same region or at the same economic development level.
It also offers insight into the relationship between stages. Are there many people wanting to start a business, but few actually starting? Why is this the case? Does this suggest that people need to generate their own income, but are constrained in some way in their attempts to actually start?
We can, and should, also look at the relationship between the startup to new business phase and the mature to established business phase. A region may report a lot of startup activity, but demonstrate low mature business ownership. Could this signal that many people have the need or opportunity to start a business, but the inability to sustain them? Is this because of their own preferences or competencies, or the environment in which they operate? It could also mean that there has been a recent shift in activity, with an upsurge in startup actions that have not yet translated into mature business. Longitudinal analyses can reveal useful information in this regard.
The Global Entrepreneurship Monitor additionally measures the quality of entrepreneurship, including the industries they compete in, the jobs they aspire to create, the innovativeness of their offerings, and the international scope of their businesses.
That said, it’s important to recognize that all entrepreneurs are not created equal and there is no one-size-fits all profile of entrepreneurship. For example, while no one should be constrained from exercising their entrepreneurial ambitions, having more entrepreneurs does not necessarily make any one society ‘better’ than another. And a region full of self-employed entrepreneurs working out of their homes with laptops does not necessarily point toward compelling these people to move into offices and create more jobs.
This all suggests that an economy needs to evaluate its entrepreneurship profile, with an eye toward its own uniqueness. Efforts directed toward entrepreneurship need to pay attention to how it has evolved in its own distinct way, combined with a comprehensive profile assessment. This more holistic understanding of entrepreneurial activity can guide efforts toward improving the value a society gains from its entrepreneurs.
Donna Kelley, Ph.D., is the Frederic Hamilton Chair of Free Enterprise at Babson College, where she teaches courses in entrepreneurship. She is a member of the oversight board of the Global Entrepreneurship Monitor.
The views expressed by contributors are their own and are not the views of The Hill.