The Entrepreneurial Potential of the Russian Adult Population: Some Results of the Global Entrepreneurship Monitor 2006-2007 in Cross-national Comparison
The participation of a Russian team in the GEM Consortium made it possible to collect data for Russia on the level of development and the structure of entrepreneurial potential that are comparable to analogous indicators in other countries participating in the GEM. (It should be noted that in 2006 and in 2007 the GEM was based on analysis of survey results from 42 countries, with a total sample of more than 170600 people.). Entrepreneurship is taken to mean any attempt to create a new enterprise or business, including self-employment, the creation of a new entrepreneurial structure or the expansion of a pre-existing business, undertaken by an individual, a group of individuals or an existing business structure.
This article is devoted to the content and interconnection analysis of the categories «interest» and «entrepreneurial risk». The logical connection analysis of the categories is carried out by using not only the theoretical point of view, but also the practice of application.
Recent research of entrepreneurial activity is undoubtedly among the most dynamically developing areas of socio-economic studies and this is well maintained by the number of published papers, researchers attending panel discussions on entrepreneurial activity, and the growing lists of international peer review journals and conferences. However, along with the entrepreneurship legitimization problems, so far, prospects for development of entrepreneurial activity research remain uncertain.
Changes in methods and structure of this research mostly relate to the fact that Russia is undergoing a large-scale development of statistical methodologies to ensure consistency of the country’s statistics with international standards, and those of OECD as such, improve National Accounts System along with demographic data and National Healthcare statistics, design methodology for basic tables “costs-output”, and for statistical surveys of workforce, quality of life and households. In order to align with the business-logic and obtain timely and reliable statistical data on entrepreneurship, we find the conducted work critically important to meet current challenging issues. From this perspective, the research of anatomy of entrepreneurial activity can become a key element of the economic development evaluation and address the challenges of the modern society.
Keywords: statistics, entrepreneurship, entrepreneurial activity, economy, challenges.
JEL Classification: M21; O1
The study is based on the GEM Russia Adult Population Survey (APS) 2006-2009 data sets. The APS survey in Russia is steadily based on the nationwide, multi-stage, stratified and probability sample (N=2000) that represents the entire adult population older than 18 years. The sample design is based on the Census 2002 data revised by the data of Rosstat (Russian Government Statistical Committee) on January 1st, 2009. To collect data, face-to-face interviewing is used. GEM estimates the level of involvement in early-stage entrepreneurial activity by calculating the sum of nascent entrepreneurs and new business owners. The GEM methodology is briefly characterized on the project website (www.gemconsortium.org).
The crisis in Russia lead to an increase of the role of economic reasons of business discontinuation, but most of former entrepreneurs who discontinued a business from economic reasons will in mid-term perspective try to (re)start anew, in contrast to those who would never try it once more; most of the latter group are escaping from other than economic reasons. They would hardly re-start again under any macroeconomic conditions. From this point of view, the crisis influenced the entrepreneurial potential only temporary.
Meanwhile, this temporary effect was rather strong - the intensity of business discontinuation under the crisis grew compared with previous years, and the difference between entries and exits became negative.
Persons with entrepreneurial past, who quit a business forever, form a ‘big loss’ of entrepreneurial potential because of their experience and skills. The factors which play a role in deciding whether to (re)start again or not, are gender and education: men and persons with higher education are more often considering a possible entrepreneurial comeback, while women and respondents with lower level of education tend more often to escape from business definitively.
Besides, there are subjective factors - negative perceptions of opportunities to do a business and low self-efficacy - which play an important role preventing a significant part of former entrepreneurs to start up anew.
The crisis have had a negative impact on the motivation to start-up among non-entrepreneurial part of population; however, the share of necessity driven should didn’t become higher than the share of opportunity driven potential entrepreneurs – maybe, because of a relatively moderate impact of the crisis on the situation on labour market.
The crisis in Russia did lead neither to a deterioration of motivational structure of early entrepreneurship nor to any dramatic increase of those who entirely resigned as entrepreneurs. That is why efficient government policy to promote entrepreneurship should encourage adults both to start-ups by promoting skills and self-efficacy (to increase the share of opportunity entrepreneurs) as well as to ease the process of closing down inefficient existing businesses.
The paper differentiates the main reasons of entrepreneurial motivation to start-up, and what supports ability to innovate among entrepreneurs in the Netherlands and Russia.
The paper considers the financial choice of entrepreneurs at their initial stage of development as a key criterion of a new firm potential riskiness. The main objective of the research is the methodology elaboration aimed at the numerical estimation of the role of informal financial resources involved in the small business creation. Two fundamental considerations have been tested. The former implies that informal investment is a substitution for unavailable formal sources, including venture capital (because of the lack of essential networks and connections with business associations). The latter performs the opposite concept of negative effects: economic reasoning discouragement and inefficient resources allocation. A special technique is introduced in order to measure the credit quality of early entrepreneurial activity and to estimate its contingency with the financial strategy. The methodology validation is realised under Global Entrepreneurship Monitor conceptual framework. The results are received for 42 countries in 2006-2007, depicting the influence of informal support on potential losses under the second consideration. As a result, informal investments are inefficient when the concentration of credit risk in the economy is rather high. Investorsђ expectations about the entrepreneurial growth of the firm are pessimistic, anticipated returns on investments are too low to be economically reasonable. The outcome leads to the irrecoverable losses, both financial (short-received profitability) and nonfinancial (decreased output, the lack of innovativeness, flexibility, and inventiveness).
The goals of this paper is to investigate the type of interdependence between entrepreneurial activity and the level of economic development through econometric analysis of longitudinal data. We also check via cluster analysis whether the classification of countries on factor-, efficiency-, innovation-driven is applicable for the collected data. We use data supported by the World Development Indicators and the Pew Research Center for a period of 2003–2012.