New Global Entrepreneurship Monitor Research: 43% of Survey Respondents Know Someone Who Stopped a Business Due to the Pandemic
5 May 2021 - London – In most countries across the world in 2020, there were more people who knew someone who stopped a business than knew someone who started one, according to the Global Entrepreneurship Monitor (GEM) 2020/2021 Global Report.
Among the adults (ages 18-64) from 43 economies participating in GEM’s Adult Population Survey (APS) during the summer of 2020, 43% knew someone who had stopped a business in 2020 as a result of the pandemic, while 25% knew someone who had started a business amid the pandemic.
There was a total of 135,942 respondents with highly varying participation rates between economies. Among many examples of this, 72% of adults in Indonesia knew someone who had stopped a business due to the pandemic, compared to just 16% of adults in Taiwan. In all of the Latin America & Caribbean GEM participating countries except Uruguay, more than half of adults knew someone who started a business as a result of the pandemic, as they did in Indonesia, Angola, Oman and India. In the United States, 22% know someone who started business due to pandemic, while 42% know someone who stopped a business.
“Due to COVID-19, both the markets and the rules of the game have changed and entrepreneurs will increasingly come up with new solutions for the challenges the world faces,” said Niels Bosma, Chair of the GEM Board. “These findings underscore why it is crucial for governments to not just focus on keeping existing businesses alive, but also nurture a fertile ground for new entrepreneurship that can safeguard the jobs of the future.”
The state of entrepreneurial activity
One key GEM measure is the level of Total early-stage Entrepreneurial Activity (TEA): the percentage of adults actively engaged in starting or running a new business.
Until August 2020, rates of early-stage entrepreneurial activity had not changed significantly, compared to 2019 in most economies.
However, relative to 2019, there was a marked decrease in established business (businesses in operation for more than 42 months), indicating the pains experienced during the first six months of the pandemic. This finding is indicative of the difficulties new businesses experienced in moving to their next level of development during the first six months of the pandemic.
“Falls in the rate of established business ownership are worrying, and indicate a downward shift in employment opportunities,” said Professor Stephen Hill, lead author of the Global Report. “Established businesses provide stable long-term jobs. New businesses are essential, since they will create sustainable jobs, but mostly in the future. However, because of the pandemic, economies need more jobs right here and now, as well as an assurance of jobs for down the road.”
The pandemic is leading to massive layoffs and closures in many countries. GEM survey data overwhelmingly indicates that household income has taken a substantial hit around the world.
Entrepreneurs are by nature good at spotting opportunities, and in turn, resilient in riding out bad times. Of the 43 economies studied, there are nine where more than half of those starting or running a new business agree that the pandemic led to new opportunities they could pursue.
Separately, GEM investigates what motivates entrepreneurs.
“We observed that most of the entrepreneurial population from Europe, North America, Latin-America and the Caribbean were motivated to create a business for making a difference in the world,” explained Maribel Guerrero, Professor at Universidad del Desarrollo in Chile. “Most of the entrepreneurial population from Central, East Asia, Middle East and Africa were motivated to create a business for building wealth or higher income.”
National Entrepreneurship Context Index and Economy Profiles
The report also features GEM’s National Entrepreneurship Context Index (GEM NECI). The index measures the 12 entrepreneurial environment conditions (EFCs) that make up the context in which entrepreneurial activity takes place in a country. In its latest ranking, Indonesia, Netherlands and Taiwan are the top three.
In total, the report findings are based on interviews and surveys with nearly 140,000 adults from 46 economies, including both the APS and the National Expert Survey.
From Central and East Asia, the economies are India, Indonesia, Japan, Kazakhstan, Republic of Korea and Taiwan.
From the Middle East and Africa, the economies are Angola, Burkina Faso, Egypt, Iran, Israel, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Togo and United Arab Emirates.
From the Latin American and Caribbean, the economies are Brazil, Colombia, Chile, Guatemala, Mexico, Panama, Puerto Rico and Uruguay.
From Europe & North America the economies are: Austria, Canada, Croatia, Cyprus, Germany, Greece, Italy, Latvia, Luxembourg, Netherlands, Norway, Poland, Russian Federation, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom and the United States.
Researchers from participating economies are available for media interviews.
In addition, the Global Report addresses questions like:
- Is there still a gender gap in entrepreneurial activity?
- Has the pandemic affected younger and older entrepreneurs differently?
- How does education attainment impact entrepreneurial pursuits?
Call to action
GEM has been actively and consistently measuring and evaluating levels of entrepreneurial activity since 1999. Over that period, more than 120 economies have been involved in the research, collectively interviewing well over three million individuals. Never has this ongoing research been more relevant than today in the midst of the global pandemic. While it is evident from GEM research that entrepreneurship has been riding a very turbulent wave all over the world owing to the extraordinary circumstances of the pandemic, the true value of the research is at regional or national level.
“The 2020/2021 GEM Global Report not only holds a mirror up to the state of the art of entrepreneurship, but also to the state of economies and policymaking around the world," said Smaiyra Million, Director of the Butler Institute for Free Enterprise through Entrepreneurship at Babson College.
GEM Executive Director Aileen Ionescu-Somers added: “We thank GEM National Teams and our sponsors Babson College and the School of Management Fribourg at the University of Applied Sciences and Arts of Western Switzerland. This report reflects the start of an unprecedented story that will likely play out for some years to come. We invite our stakeholders, particularly policymakers, to accompany us in that journey by reflecting on our results and using them as a benchmark and/or robust source of data and information for their own policy decision-making or activities to boost entrepreneurship.”
On that note, GEM invites you to join its report launch webinar on Monday, May 10 at 9 am US EST, 15:00 CET, 21:00 China Standard Time. Report authors Niels Bosma, Stephen Hill, Maribel Guerrero, Donna Kelley and Thomas Schøtt will share insights and analysis and answer your questions. The session will be moderated by Aileen Ionescu-Somers. Sign up for the webinar.
Global Entrepreneurship Monitor (GEM) is a consortium of national country teams, primarily associated with top academic institutions, that carries out survey-based research on entrepreneurship around the world. GEM is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs! GEM’s Adult Population Survey (APS) provides analysis on the characteristics, motivations and ambitions of individuals starting businesses, as well as social attitudes towards entrepreneurship. The National Expert Survey (NES) looks at the national context in which individuals start businesses.
In numbers, GEM is:
- 22 years of data
- 150,000+ interviews a year
- 100+ economies
- 500+ specialists in entrepreneurship research
- 300+ academic and research institutions
- 200+ funding institutions
GEM began in 1999 as a joint project between Babson College (USA) and London Business School (UK). The consortium has become the richest resource of information on entrepreneurship, publishing a range of global, national and 'special topic' reports on an annual basis.
GEM Global Sponsor
Babson College is the educator, convener, and thought leader of Entrepreneurship of All Kinds ®. The top-ranked college for entrepreneurship education, Babson is a dynamic living and learning laboratory where students, faculty, and staff work together to address the real-world problems of business and society. We prepare the entrepreneurial leaders our world needs most: those with strong functional knowledge and the skills and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in a common purpose to make a difference in the world, and have an impact on organizations of all sizes and types. As we have for nearly a half-century, Babson continues to advance Entrepreneurial Thought & Action ® as the most positive force on the planet for generating sustainable economic and social value.
GEM Report Sponsor
The School of Management Fribourg (HEG-FR) is a GEM Global Report sponsor. HEG-FR is a bilingual public business school located in Fribourg, Switzerland and member of the University of Applied Sciences and Arts of Western Switzerland (HES-SO). Its Institute of Small and Medium Enterprises houses the Swiss chapter of GEM research, which is headed by Professor Rico Baldegger, Ph.D, in collaboration with other colleagues from institutions such as SUPSI Manno in Ticino, Switzerland.
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