The Canadian population generally has positive attitudes towards entrepreneurship. This is among the many key findings noted in the GEM Canada 2022/2023 National Report, authored by GEM Canada researchers Geoff Gregson and Chad Saunders.
The report noted that there has been a drop in the identification of entrepreneurial opportunities, capabilities and intentions to start a business. These three indicators had been increasing since 2019.
Also, Canada’s total early-stage entrepreneurial activity (TEA, percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business) decreased between 2021 and 2022. Canada was one of five GEM economies in which the level of TEA fell at the start of the pandemic in 2019-20, recovered somewhat in 2021, and then fell again in 2022.
The report Executive Summary highlights four key recommendations to foster entrepreneurship in Canada, summarized below.
1. Promote public awareness of entrepreneurship’s benefits.
To address the decline in perceived entrepreneurial opportunities, capabilities and intentions, one policy suggestion is to reinvigorate public awareness of the benefits of entrepreneurship and promote local and national support mechanisms for entrepreneurs and new businesses. These efforts could be complementary to and integrated with more direct policy suggestions to support entrepreneurship.
2. Support entrepreneurial activity and business growth in the extractive and transforming sectors.
The report showed a TEA decrease in the extractive sector (oil, gas, mining, etc), which halts three years of continuous growth. Canada’s established business ownership (EBO) rate for the sector is also significantly higher than its TEA rate, suggesting that more entrepreneurial activity is necessary to feed sector growth. The high value transforming sector also experienced a significant EBO decrease. It is important to stimulate more entry into these high value sectors and support business growth and ownership succession. Policies could include greater promotion of opportunities in these sectors, peer-to-peer support and recruitment and development of highly qualified managers and owners.
3. Target ‘ease of entry’ framework conditions that limit trade for entrepreneurs and established businesses.
Government could consider targeting the entrepreneurial framework conditions that directly limit the ability of entrepreneurs and established businesses to trade and sell their goods and services nationally and internationally. Substantially fewer new entrepreneurs in Canada had customers nationally or outside the country in 2022.
The Report showed that Canada’s ‘ease of entry’ framework conditions (burdens and regulations and market dynamics) are insufficient, which has created high inter-provincial non-tariff trade barriers. International assessments, such as those from the OECD, identify Canada as ‘unusual’ in the degree to which differences in technical standards and regulations across sub-national jurisdictions hamper flows of goods and services. Given that the intensity of exporting is associated with firm size, these barriers are particularly challenging for new and small businesses.
4. Address under-representation in entrepreneurial activity in Canada.
The Report found that more needs to be done in Canada to bridge the gender gap for early-stage entrepreneurial activity. Attention should also be paid to increasing support for younger entrepreneurs, as the most significant decrease in total entrepreneurial activity in 2022 was in the 18–24-year age group. Another underrepresented group are those with lower educational levels. Special attention could also be paid to under-represented groups in the transforming and extractive sectors, which are closely associated with innovation and growth-oriented businesses and play to Canada’s strengths in science, technology, engineering and mathematics (STEM).
Supporting different under-represented groups to pursue entrepreneurship will contribute to Canada’s economic growth and stimulate the innovation required to exploit new opportunities, generate employment, promote productivity and help to address Canada’s most pressing societal challenges.
Access the full report.