We here at GEM Colombia have a fantastic achievement to share from our GEM 2020 National Report: our country is in the fourth position globally for highest entrepreneurial activity. This result is due to how Colombia has demonstrated strong entrepreneurial spirit. New venture creation within a nation requires an entrepreneurial individual. It means, entrepreneurs.
Unfortunately though, the same report showed clues that Colombians with entrepreneurial intention have been decreasing in recent years, based on our survey of 2107 Colombian citizens from throughout the country. We collected information on all levels: socioeconomic, gender, age and other sociodemographic variables.
Key Data
Entrepreneurship begins when an individual decides to undertake a new venture. The entrepreneurial intention is the first step. It guides the individual’s actions toward the implementation of new business. Thus, in order to foster more entrepreneurial activity, it is necessary to increase the entrepreneurial intention of the population. The GEM 2020 Colombia National Report shows that in 2016 the entrepreneurial intention in our country was 53%. This means that 53% of the adult population in Colombia was thinking of to start a new business in a span of three years. In 2020, this number dropped to 43.3%.
This 10-percentage point drop may be due to many factors, among them individual perceptions, perception of economic opportunities and socio-cultural perception. However, the 10-percentage point drop could be worse. Particularly, the COVID-19 pandemic changed the decreasing trend in 2020. The entrepreneurial intention in 2019 was 42.2% and in 2020 increased to 43.3%. This is explained by the fact that the pandemic led to massive layoffs and closures in Colombia, and individuals needed to continue generating income with entrepreneurship being the best alternative. These factors have an effect on the fall in entrepreneurial intention.
The GEM National Report shows scores contributing to these factors over the last five years. For instance, for individual perception, fear of failure increased more than 10 percentage points in the last five years. In 2016 it was 25.6% and in 2020 it was 39.5%.
The perception about required skills and knowledge to start a new business fell from 67.9% in 2016 to 64.8% in 2020.
In regards to the perception of economic opportunities, in 2016 the score was 51.4%; in 2020 it fell to 47.9%.
Finally, in terms of the perception about entrepreneurship as a desirable career choice, Colombians are losing faith. In 2016 this perception score was 67.2% and by 2020 it dropped to 53.5%.
In the same way, the status and respect for entrepreneurship in Colombia dove from 76.2% in 2016 to 58.3% in 2020.
Takeaways for Policymakers
Even though Colombia has been one of the most entrepreneurial countries in the world, the intention of the population to create new companies has been declining during the last five years. The GEM Colombia National Report offers clues to why this has happened. Individual perceptions of entrepreneurship, the perception of the availability of opportunities and socio-cultural perceptions become essential for entrepreneurs to continue to appear in a country and therefore leads to a greater amount of new ventures.
For policymakers, this study of entrepreneurial intention underscores the importance not only to develop support and promotional policies focused on entrepreneurial activity and outcomes (e.g. new jobs, new value-added, new business models), but also to create policies to develop individual attributes and societal values about entrepreneurship (e.g. psychological traits, demographic, motivations).
While the entrepreneurial activity is growing, Colombians’ entrepreneurial intention is decreasing. To reverse this trend, policymakers should align development-oriented policies that support productive activities (e.g. new venture creation) with the idea that individuals who start a new venture do it because they want to better themselves. GEM, as the largest ongoing study of global entrepreneurial dynamics, can help with this issue. We provide a perspective on entrepreneurship at the country level which is only available in this study.
Fabian Osorio-Tinoco is a professor at Pontificia Universidad Javeriana and a member of the GEM Colombia Team. Access the full report (in Spanish) at the following link.