In the 5 years 2013 - 2017, participating GEM economies at the factor and efficiency-driven levels of development have demonstrated a strong relationship between perceived business opportunities and capabilities to new business creation.
These countries have surveyed their populations, asking if they believed they had capabilities and opportunities to start their own business. Overall, the results of these surveys have indicated that when a population has higher rates of both perceived business opportunities and capabilities, they also have higher rates of new (TEA rate) and established (Established Business Ownership) business creation rates.
It may seem intuitive that when a population believes that it has both the opportunities and capabilities to start a business, it would lead to more businesses being created. However, there is much to learn about this relationship by examining the data.
For example, there appears to be a stronger correlation between these traits and TEA rate (which includes nascent and new business), than there is for established business ownership rate. Additionally, it is noteworthy that in high income countries (classified as innovation-driven economies), there is no correlation between either of these traits and new business creation.
In lower-income countries surveyed by GEM, a strong relationship exists between a population’s perceived business opportunities and their TEA rate from 2013 to 2017. There is a positive correlation between these two variables, r = 0.658, n = 190, p = 0.0001. Below are the rates graphed over 2013 to 2017:
Similarly, there is a positive correlation between a population’s perceived entrepreneurial capabilities and its TEA rate, r = 0.695, n = 190, p = 0.0001. Below are these rates graphed from 2013 to 2017:
There is positive correlation between a lower-income countries’ opportunities and capabilities and its established business rate, however the relationship is a bit weaker than the relationship to TEA rates. There is also more variance. Below are two graphs depicting this relationship:
This suggests that perceived opportunities and capabilities may push more nascent entrepreneurs into starting a business, but it requires additional factors to maintain a business.
Analysis by Forrest Wright (GEM Global Data Team)