Wednesday, August 10, 2005

Opportunity is the mother of innovations

I glanced at the latest Global Entrepreneurship Monitor, an annual research program that measures the national level of entrepreneurial activity in 37 countries. From a Swedish perspective it is a sad reading. Sweden is leading in many innovation indicators such as most patents per capita etc, but is ranked at the bottom of the entrepreneurial list. But you can draw a few other interesting conclusions (if I interpret the survey correctly.)

Necessity is the mother of inventions, but opportunity is the mother of innovations. In general most entrepreneurs perceive a business opportunity. Income and education are the factors. Necessity entrepreneurship is common in low-income countries, while opportunity entrepreneurs dominate in high-income countries. From the report: 65% are opportunity entrepreneurs versus 35% who have no other employment options. In low-income countries those with lower levels of education start businesses, and vice versa. More educated entrepreneurs are pursuing more opportunity-based ventures, while less educated entrepreneurs are involved out of necessity.

The report shows a “U-shaped” relationship between entrepreneurial activity and per capita GDP. The activity declines as countries attain higher national income, (reaching its lowest point at about US $30,000 per capita GDP), but rising again as the GDP rises. For example, South Africa has high rates but low national incomes, whereas the U.S. and Iceland have both high rates and high national incomes. I wonder what will show up if you for example compare California with Arkansas?

Also, as national incomes increase, so does the proportion of start-ups in the services sector. And only 3 percent of all start-ups qualify as businesses that expect to have few competitors, intend to bring innovations to the market and use state-of-the-art technology.

My personal thoughts: The Swedish problem (and EU) is lack of entrepreneurial mindset. I strongly suspect that generous employment protection and unemployment benefits reflect the low entrepreneurial rate in Sweden. Most people who have a higher-level education are more likely to work for wages than become entrepreneurs. There must be very good opportunities to leave a well-paid work.
Entrepreneurship Index
New Zealand14.7
Iceland13.6
Australia13.4
United States11.3
Canada8.9
Poland8.8
Ireland7.7
Norway7.0
Israel6.6
United Kingdom6.3
France6.0
Greece5.8
Singapore5.7
South Africa5.4
Denmark5.3
Spain5.2
Netherlands5.1
Germany4.5
Finland4.4
Italy4.3
Hungary4.3
Portugal4.0
Sweden3.7
Croatia3.7
Belgium3.5
Hong Kong3.0
Slovenia2.6
Japan1.5

2 Comments:

Blogger Jack said...

Thanks for the insightful comment at Jersey Perspective. I'll have to link to this site, it provides an interesting perspective on issues that many bloggers avoid. Are you Swedish? Come by again.

- Jersey Perspective

5:42 AM  
Blogger Jan Sandred said...

Yes, I'm Swedish. I work closely with global issues like innovation and competitiveness.

4:55 PM  

Post a Comment

<< Home