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Entrepreneurial activity in Russia in cross-national comparison: Global Entrepreneurship Monitor ( 2006-2007 )

Entrepreneurial activity in Russia in cross-national comparison: Global Entrepreneurship Monitor ( 2006-2007 ). Prof. Dr. Alexander Chepurenko Mrs. Olga Obraztsova, PhD (Ec.) State University – Higher School of Economics (HSE). Main Points of the Paper.

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Entrepreneurial activity in Russia in cross-national comparison: Global Entrepreneurship Monitor ( 2006-2007 )

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  1. Entrepreneurial activity in Russia in cross-national comparison:Global Entrepreneurship Monitor (2006-2007) Prof. Dr. Alexander Chepurenko Mrs. Olga Obraztsova, PhD (Ec.) State University – Higher School of Economics (HSE)

  2. Main Points of the Paper • 1. GEM methodology and main indicators (more details at: www.gemconsortium.org) • 2. GEM APS results for Russia in 2006 and 2007 • 3. Cross-national comparison of GEM countries (2006-2007) • 4. Some evidences

  3. 1. GEM methodology and main indicators

  4. 1. GEM methodology and main indicators • Following to Kirzner (1973, 1979), GEM views entrepreneurship as an aspect of human action in which all individual-based acts of arbitrage are, to various degrees, expressions of entrepreneurial attitudes of actors • Entrepreneurship: ‘any attempt to create a new venture, including self-employment, undertaken by an individualor a group of individuals’ • Tools: (1) Adult population survey (representative for the respective country, confidence interval - 5 %), (2) Experts’ standardized survey, (3) Experts’ in-depth interviews, (4) secondary statistics (WB ‘Doing Business” etc.) • APS: in Russia – conducted by the HSE, N= 1894 (2006), 1936 (2007)

  5. The GEM Model of Explaining Entrepreneurship Major Established Firms (Primary Economy) General National Framework Conditions New Establishments Social, Cultural, Political Context Micro, Small and Medium Firms (Secondary Economy) National Economic Growth (Jobs and Technical Innovation) Entrepreneurial Framework Conditions Entrepreneurial Opportunities New Firms • Entrepreneurial • Capacity • Skills • Motivation

  6. Ladder of entrepreneurial activity Established business owners – over 42 months (regular business based incomes enabling to maintain it) Entrepreneurial potential of a society Potential entrepreneurs (willing to start-up) Early stage entrepreneurship (0 – 42 months) New, or baby business owners (3-42 months) Nascent entrepreneurs (practical steps to start-up) Latent entrepreneurs (no incomes or salaries from the business after start-up) 0-3 months Start-ups (already obtained first incomes from business) 0-3 months

  7. Most important GEM indicators Total Entrepreneurial Activity index (ТЕА) – share of adult population (18 to 64 aged), taking part at a start-up or being owners/managers of firma younger than 42 months; Established business ownership rate (EBO) • Percentage of 18-64 population who are currently an owner-manager of an established business, i.e., owning and managing a running business that has paid salaries, wages, or any other payments to the owners for more than 42 months.

  8. 2. GEM APS results for Russia in 2006 and 2007

  9. Age Motivation Total Opportunity driven Necessity driven Mixed 2006 2007 2006 2007 2006 2007 2006 2007 18-24 66,7 75 16,7 5 16,7 20 100 100 25-34 59,5 58,6 27 27,6 13,5 13,8 100 100 35-44 37,5 57 40,6 23,8 21,9 19 100 100 45 and older 33,3 47,6 57,1 38,1 9,5 14,3 100 100 Total 49,1 59,3 35,2 24,2 15,7 16,5 100 100 TEA Russia: Age and Motivation Structure, 2006-2007 (%)

  10. Index Potential entrepreneurs Nascent New business owners Established business owners 2006 2007 2006 2007 2006 2007 2006 2007 Male 19,7 13,7 3,6 2,2 3,0 1,5 1,9 1,2 Female 12,4 6,5 1,6 0,6 0,7 0,7 0,8 1,7 Total 15,2 9,2 2,4 1,2 1,6 1 1,2 1,5 Russia: Indicators of entrepreneurial activity in 2006-2007 as for stages and gender (% of adult population)

  11. 3. Cross-national comparison of GEM countries (2006-2007)

  12. 2 possible attempts to countries comparison • 1. Modeling of groups based on expert evaluation of socio-economic, historical, mental similarities • 2. Using of formalized procedures (clustering). • Both attempts have its advantages…

  13. Indicators of some GEM countries in 2006

  14. TEA and GDP per capita compared, GEM 2006

  15. Clusters of GEM participating countries on the basis of TEA 2006 • First step: 6 countries’ clusters - according to Sturges’rule (see following slide) • 2nd step: iterative optimization of the contingent of the groups, seeking k-value (K-mean), which yields a step-like increase in the maximal inter-group dispersion (on aggregate). As a result…

  16. ClusteringofGEMcountries by entrepreneurial activity aТЕА06 priority group. b ТЕА07 priority group. c ЕВ06 priority group. d ЕВ07 priority group

  17. Example: TEA-Clustering (in 2007)

  18. 4. Some evidences (2006) • Russia belongs to the center (at a distance of 0.07) of the cluster 6 of 18 most typical countries with below-average levels of TEA, • Other countries of this cluster - the ‘old Europeans’ like U.K., Belgium, Denmark, Switzerland etc. as well as some transitional countries (Croatia, Latvia, Hungary, Romania), and Brazil, • Among the so-called BRIC – Brazil and Russia have below-average levels of early-stage entrepreneurial activity, whereas • China belongs to an ‘advanced middle’ cluster 4 (like Netherlands, USA, Sweden) and • India - to an even more prospecting small cluster 3 (together with Ireland) with high TEA Index rates • Argentina

  19. 4. Some evidences (2006) • No statistically significant dependence of both TEA and EBO from per capita GDP • Statistically relevant correlationbetween all groups of early entrepreneursand the GDP deflator index (Spearman's Rank Correlation Coefficient- 0,613 by 5%).

  20. 4. Some evidences: TEA and GDP • Statistical analysis of TEA compared with per capita GDP support a non-linear relationship (the regression parameters are significant at a confidence level of 0.95) • In countries with high levels of necessity entrepreneurship, there is no direct positive correlation between TEA and per capita GDP • In countries with higher levels of opportunity entrepreneurship there are higher levels of economic development

  21. 4. Some evidences: EBO and GDP • No support for the dependence of established entrepreneurship on per capita GDP as an aggregate indicator of socio-economic conditions. • H: it is not the aggregate indicator of established businesses, but rather the structure important: the higher the share of opportunity entrepreneurship - the higher the possibility to belong into clusters with high levels of economic development. • Non-linear dependence of EBO-index levels on per capita GDP was not supported (with an R2 of 0.114, the null hypothesis was not rejected to a significance level of 5%).

  22. Thank you for attention! • For more details see: O. Obraztsova, A. Chepurenko, The Development of Russian Private Entrepreneurship in Cross-Country Comparison, in: Voprosy economiki, 2008, No. 8, p. 91-107 (www.vopreco.ru) - in Russian

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