Global Entrepreneurship Monitor Northern Ireland Report 2014
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Global Entrepreneurship Monitor Northern Ireland Report 2014 Global Entrepreneurship Monitor GEM: Northern Ireland Report 2014 Mark Hart, Karen Bonner and Jonathan Levie The Global Entrepreneurship Monitor (GEM) is an international project involving 73 countries in 2014 which seeks to provide information on their entrepreneurial landscape. Many studies have shown that entrepreneurship is an important driver for economic growth, competitiveness and job creation. The results of the GEM data analysis are used as key benchmarking indicators by regional and national authorities around the world. The sample size in Northern Ireland was 1,738 adults aged over 16 years of age in 2014. 2 Main Findings • The rate of early-stage entrepreneurship • Attitudes among the non-entrepreneurial (TEA) in Northern Ireland for 2014 was 6.7%, population are more optimistic in 2014 compared to 5.1% in 2013. The increase was although somewhat still dampened consistent with that for the UK as a whole, compared to the pre-recession period. In and the 2014 rate compared with 8.6% in 2014 25.2% of the non-entrepreneurial the UK overall, 9.1% for the English regions, working age population in Northern Ireland 5.4% in Scotland and 7.1% in Wales. agreed there were good opportunities for starting a business in their local area in the • Necessity-driven TEA in Northern Ireland next six months, compared with 36.8% stood at 0.7% in 2014 compared to 0.5% in across the UK. The rate in Northern Ireland 2013, while opportunity-driven TEA rose from remains significantly lower than the peak of 4.6% to 6.0%. 39.0% in 2007. • The female TEA rate in Northern Ireland • Some 43.7% of non-entrepreneurial stood at 4.4% in 2014 which was its highest individuals of working age in Northern Ireland rate on record (UK 6.0%), however, the (UK: 43.0%) who agreed there were good female to male ratio of TEA was 47%, which start-up opportunities reported they were is still the lowest in the UK (UK 49%, down afraid of starting a business in case it might from 66%). fail. • The TEA rate of young adults aged 18 to 29 • The proportion of non-entrepreneurial in Northern Ireland rose in 2014 continuing working age adults in Northern Ireland who the general upward trend for this age group, expect to start a business within the next rising from 4.1% in 2002 to 6.7% in 2014 three years was up significantly from 3.4% (UK: 4.2% to 7.3%). There was a larger in 2013 to 6.6% in 2014; this was consistent increase in the TEA rate among 30 to 64 year with the increase in the UK. olds between 2002 and 2014, rising from 3.5% to 6.7% (UK: 5.8% to 9.3%). • Around 17% of TEA entrepreneurs in Northern Ireland had high growth expectations compared to only 2% of established business owners; the latter is around half that of the comparable UK rate. 3 Background The Global Entrepreneurship Monitor (GEM) The results from the GEM data analysis are is based on the following premises. First, an used as key benchmarking indicators by economy’s prosperity is highly dependent on regional and national authorities around the a dynamic entrepreneurship sector. Second, world. They also enable comparisons to be an economy’s entrepreneurial capacity is made with the other regions of the UK and composed of individuals from all groups other countries participating in GEM. Overall, in society with the ability and motivation GEM’s unique ability to provide information to start businesses, and requires positive on the entrepreneurial landscape of societal perceptions about entrepreneurship. countries in a global context makes its data Third, high-growth entrepreneurship is a a necessary resource for any serious attempt key contributor to new employment in an to study and track entrepreneurial behaviour. economy, and national competitiveness depends on innovative and cross-border It is important that we better understand the entrepreneurial ventures. determinants of early stage entrepreneurship, because there is evidence to suggest a connection between higher rates of Invest NI sponsored the Northern Ireland entrepreneurship and overall economic component of the GEM UK research project. prosperity, particularly in innovation-driven Stimulating entrepreneurship remains an economies like Northern Ireland. important challenge for the region and Invest NI (and previously Belfast City Council) have committed significant resources over the years in ensuring that it is embedded within their core activities. This is the eleventh year in which Invest NI has participated in GEM. Of the 295,000 respondents to GEM UK surveys for the period 2002-2014, over 34,000 respondents were from Northern Ireland. Northern Ireland now has a large longitudinal database on entrepreneurial attitudes, activity and aspirations. This is particularly useful in conducting trend analysis for important sub-populations in Northern Ireland, such as young people, in relation to other home nations. 4 How GEM Measures Entrepreneurial Activity The Global Entrepreneurship Monitor (GEM) The 2014 GEM global study was based on research consortium has been measuring an analysis of adult population survey (APS) the entrepreneurial activity of working age results from 73 economies and more than adults across a wide range of countries in 206,000 adults across the world. The core of a comparable way since 1998. In 2014, the the APS is identical in each country and asks study conducted surveys in 73 sovereign respondents about their attitudes towards nations and represented the world’s entrepreneurship, if they are involved in most authoritative comparative study of some form of entrepreneurial activity, and if entrepreneurial activity in the general adult so what their aspirations for their business population. A telephone survey of a random are. The global GEM Executive 2014 Report sample of the adult population is conducted was published in February 20151 and can be each year between May and September. downloaded from www.gemconsortium.org GEM’s primary focus is on the study of From the survey, we examine individual three areas: entrepreneurs at three key stages: • To measure differences in the level of • Nascent entrepreneurs (NAE): The stage entrepreneurial activity between countries. at which individuals begin to commit resources, such as time or money, to • To uncover factors leading to appropriate starting a business. To qualify as a levels of entrepreneurship. nascent entrepreneur, the business must not have been paying wages for more than • To suggest policies that may enhance the three months. national level of entrepreneurial activity. • New business owner-managers (NBO): Those whose business has been paying income, such as salaries or drawings, for more than three, but not more than forty-two, months. • Established business owner-managers (EBO): Those whose business has been paying income, such as salaries or drawings, for more than forty-two months. 1. Singer, S., Amoros, J., E.,and Moska, D. (2014) Global Entrepreneurship Monitor 2014 Global Report. London: Global Entrepreneurship Research Association. 5 In addition, we measure general intention to start a business by asking individuals if they expect to start a business within the next three years. Finally, we ask individuals if they have sold, shut down, discontinued or quit a business, in the past year. It is important to understand that the main subject of study in GEM is entrepreneurs rather than the businesses that they run. GEM measures the entrepreneurial activity of people from intention to exit. The first two stages of active business development, the nascent entrepreneur stage2 and the new business owner-manager stage3, are combined into one index of Total early-stage Entrepreneurial Activity, or TEA, which is represented in Figure 1 below. Figure 1: The Entrepreneurial Process and GEM Operational Definitions. (Source: Xavier et al., 2013, p.13) Potential Discontinuance Entrepreneurs: Beliefs and Entrepreneurship Phases Attitudes Total early-stage Entrepreneurial Activity (TEA) Intentions Nascent New Established 2. The active planning phase in which the entrepreneur has done something during the past 12 months to help start a new business, a new business that he/she will at least part own, and which has not paid wages or other income to the owners in the past 3 months. 3. The second phase is defined as from 4 to 42 months after the new venture begins to provide income to the owners. Entrepreneurs who at least part own and manage a new business that has been paying some form of income to the owners for at least 4 and not more than 42 months are referred to as new firm entrepreneurs. 6 As much of this entrepreneurial activity is has been measured, adding to our pre-start-up or includes very small new knowledge about the variety of contexts businesses that do not have to register, in which entrepreneurial activity can be TEA rates will not necessarily match with expressed. In addition to activity, the GEM published official statistics on business survey asks all respondents about their ownership and, indeed, should not be attitudes to entrepreneurial activity, and asks interpreted as such. Rather, GEM enables entrepreneurs about their aspirations. the measurement of the propensity of individuals in particular countries to be The methodology, sample sizes and entrepreneurial given the current social, weighting systems used for the GEM UK cultural and economic framework conditions 2014 adult population survey are explained that exist there. in more detail in the GEM UK 2014 report (www.gemconsortium.org). An important The TEA index does not measure all change in the sample design was introduced in 2010 when 10% of respondents in each entrepreneurial activity and is not based on Government Office Region (GOR) were a survey of business entities. It measures the selected at random from households which characteristics of entrepreneurial individuals had mobile phones but not fixed phone and the types of entities they establish.