Global Entrepreneurship Monitor

Characteristics of the Entrepreneur

Maria Minniti

Babson College

London, January 20 2005

 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur

GEM estimates that about 73 million people are active

entrepreneurs in the 34 nations that participated in the
project in 2004

Who are these people and do they have anything in

common?

Age, gender, education, and work status are

considered in relation to the GDP per capita of the GEM
nations
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: AGE

25

18-24 years
25-34 years
20 35-44 years
#/ 100 Adults, 18-64 Years Old

45-54 years
55-64 years
15

10

0
low income countries middle income countries high income countries
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: AGE

•Different income groups have different levels of
entrepreneurial activity across all age cohorts

•People between 25 and 34 years of age are the most

active group regardless of the income of their country

•After the age of 35, all populations show a decline in

entrepreneurial activity

•The relationship between age and entrepreneurship is

stable over time
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: AGE

The observed relationship and its stability suggest that age

is important in the decision to become an entrepreneur

Why does the age distribution matter?

•In the short-term, the demographic structure is important

for the immediate level of entrepreneurial activity

•In the long-term, demographic trends may have a

significant impact on the level of entrepreneurship
 Global Entrepreneurship Monitor

Characteristics of the entrepreneur: GENDER

20
#/ 100 Adults, 18-64 Years Old

15

female male

10

0
low income countries middle income countries high income countries
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: GENDER

There are almost twice as many men who are active

entrepreneurs than women

•In middle-income countries men are 75% more

likely than women to be active entrepreneurs

•In high-income countries men are 33% more

likely than women to be active entrepreneurs

•In low-income countries men are 41% more

likely than women to be active entrepreneurs
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: GENDER

Gender differences are consistent across age groups

and across most countries

In no country are there more women who are active

entrepreneurs than men, but there is wide variation
between countries

The gender gap is narrower for necessity

entrepreneurship than for opportunity entrepreneurship
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: GENDER

Why does the gender gap matter?

•A strong correlation exists between the emancipation

and the working conditions of women and the well-being
of a country

•Women represent more than half the world population

and a very large amount of human capital with huge
potential

On March 8, 2005, the 1st GEM Report

dedicated to Women and Entrepreneurship
will be released
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Education

up to some secundary secundary degree post secundary

high income countries

middle income countries

low income countries

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Education

The relationship between education and entrepreneurial activity is

complex and very much country-specific

About 30% of those who start a business have a secondary level

education across all 3 income groups

In high-income countries 57% of entrepreneurs have a post-secondary

education while 13% have not completed a secondary education

In low-income countries 23% of entrepreneurs have a post-secondary

education while about 50% have not completed a secondary education
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Education

GEM results suggest that:

•more educated entrepreneurs pursue more opportunity-based ventures

•less educated entrepreneurs are involved out of necessity

•people who have a secondary level education tend to work for wages
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Education

How does education matter for entrepreneurial activity?

High-income countries need to emphasize R&D, technology

commercialization and scientific education

Low-income countries need a strong commitment to education and

training in order to reduce necessity entrepreneurships

Middle-income countries need a strong commitment to

entrepreneurial education in order to develop an environment more
conducive to entrepreneurship
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Work Status

working not working retired / students

high income countries

middle income countries

low income countries

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Work Status

The overwhelming majority of people starting businesses in all

national income groups are currently working

• In middle-income countries 91% have jobs

• In high-income countries 81% have jobs
• In low-income countries 77% have jobs

The percentage of people starting a business without

being also employed is

• 6% in middle-income countries
• 17% in low income countries
• 5% in high-income countries
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur: Work Status

How does work status matter for entrepreneurial activity?

No clear relationship exists between work status and

entrepreneurial activity

Unemployment and necessity entrepreneurship tend to be

positively correlated

Being employed elsewhere provides security and allows

people to pursue opportunities
 Global Entrepreneurship Monitor

Characteristics of the Entrepreneur:

Who is Involved in Entrepreneurship?
Regardless of the level of income in their countries:

• 25- to 34-year-olds are the most active in entrepreneurship

• Women are less likely than men to start businesses
• Most people who start businesses work elsewhere

In addition:

• In low-income countries, those with lower levels of education

start businesses
• In high-income countries those with higher levels of education
start businesses
• Unemployment and necessity entrepreneurship are highest in
low-income countries