Iii a - potter the missing entrepreneurs
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The upgrading of workforce skills is key to the competitiveness of SMEs. In today’s business environment there is a premium on innovation that enables firms to develop new products and services,......

The upgrading of workforce skills is key to the competitiveness of SMEs. In today’s business environment there is a premium on innovation that enables firms to develop new products and services, new production processes and new business models. This requires both in-house innovation and the ability to absorb knowledge from other firms and organisations, both of which call for a skilled labour force. Skills are also a critical but understated resource for entrepreneurship seen in the sense of business creation. Similarly to workforce skills, entrepreneurship skills will boost the competitiveness of local businesses thanks to the improved strategic and management competences of the entrepreneur.

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  • Labour Force Participation Ratesin the EU for 2011:Adult (15-64):71.2%Youth (15-25):42.7%Women (15-64):64.9%Unemployment Rates in the EU for 2011:Adult (15-64):9.7%Youth (15-25):21.3%Women (15-64):9.8%The EU2020 Growth Strategy aims to increase the labour force participation rate in the EU to 75%.Women are less active than men in the labour market and there could be a role for policy to help increase participation in the labour marketYouth have lower activity rates because many are still in education and training, but more than one-fifth of those active in the labour market do not have a job. This is much higher in some countries such as Greece (53.9% in 2012Q2), Spain (53.3% in 2012Q2) and Portugal (35.5% in 2012Q2).High youth unemployment is not new. Youth unemployment rates are historically double the adult rates.Policy makers have a number of tools to increase activity and address high unemployment. Entrepreneurship is one approach.
  • “Regardless of whether or not you would like to become self-employed, would it be feasible for you to be self-employed within the next 5 years?”Overall in the EU, 8% of the adult population (15-64) believe that entrepreneurship is feasible in the next 5 years while another 21% believe that it is quite feasible.Youth and young adults are the most likely to feel that it is very feasible (12% and 10%) and quite feasible (30% and 30%).Women believe that business start-up is less feasible (6% very feasible and 18% quite feasible) than men (10% and 21%).This shows that a number of people believe that entrepreneurship is an option for them and policy can help support them.But there is also another role for policy which is to increase awareness of entrepreneurship and to change attitude towards it.
  • One way measure entrepreneurship activity is to look at new business start-ups: The New Business Ownership Rate (GEM) is the proportion of the population that are currently an owner-manager of a new business that has paid salaries, wages or any other payments to the owners for more than three months, but not more than 42 months.This graphs present the rates for EU countries; data were pooled from 2007 to 2011 to increase the sample size within each country to obtain more robust results.A number of observations can be made. There is much variation across countries Start-up rates are also low for women, suggesting unrealized potential and a role for policy to help turn this potential into realized action Start-up rates for youth equal to or higher than the start-up rates for adults:Young people are more likely captured by this measure than adults because this is closer to a “flow” measure than a “stock”This shows their confidence and openness to entrepreneurship that was evident on the previous slideYoung people have a difficult time entering the labour market due to their lack of experience and high start-up rates may be a reflection of a lack of opportunities in paid employmentYouth entrepreneurship is not a panacea for solving the youth unemployment problem but it does have a role to play in facilitating a route into the labour market for a limited group of young people with the ambition and wherewithal to become entrepreneurs
  • Young people lack savings and find it more difficult than adults to obtain external finance, including debt finance. Banks apply a set of parameters in the assessment of loan proposals, which include credit history, past business performance and collateral, which are all likely to be lower in youth-owned firms. Many role model for young people (e.g. families, teachers) are often not very aware of the requirements and opportunities of entrepreneurship, which results in a lack of encouragement for entrepreneurial activities, or even negative social attitudes that act as an obstacle to youth entrepreneurshipIt is generally argued that education and training programmesdo not do enough to nurture entrepreneurial attitudes and skills, but rather prepare students for paid employmentPrior work and entrepreneurship:Young people typically lack human, financial and social capital necessary both to set up and successfully run a new business. Relative to older individuals, younger people are less likely to have sectoral, managerial or prior business experience and are more likely to be unemployed. They may, therefore, lack the skills needed to set up or run their business. Young people likely have limited business networks and business-related social capital. This may have consequences for setting up and running their businesses and building ‘legitimacy’ amongst key stakeholders (e.g. financiers, customers, suppliers). Women entrepreneurs feel uncomfortable about lending institutions. Madill et al. (2006) find that male entrepreneurs feature more continued relationships with lenders and this positively influences their ability to raise finance. Female applicants are more closely scrutinised on their business knowledge (Carter et al., 2007). Being a women, therefore, increases the probability of perceiving financial barriers to start-ups (Roper & Scott, 2009). Many societies continue to ascribe housebound and family-related roles to women, which implicitly make entrepreneurship a less-desirable career choice for women (Pfau-Effinger, 2004). Traditional gender roles also affect the feasibility of entrepreneurship, because they render entry, business survival and development more difficult for women. Entry may be self-restricted to feminized professions, sectors and business fields such as personal services or care professions (Marlow, 2002). Regulatory institutions such as the respective welfare model, family policies and tax policies impact on the degree to which labour market participation of women on equal terms with men is seen as desirable (Elam and Terjesen, 2010; Sjöberg, 2004). For example, where day care is not available and/or women cannot afford to pay for it, as may be particularly the case for less educated women, ethnic minorities or migrants, women face a trade-off between career and family (Kreide, 2003). Women have less managerial and self-employment experience (Boden and Nucci, 2000) and this lack of managerial experience is a barrier to human capital accumulation because women have not had the same opportunities as men to develop in-depth industry knowledge or management skills that will help them recognize opportunities in the market and manage a successful business. Similarly, women are less likely to have developed networks to seek customers, suppliers and support. These factors may make women less likely to start a business and lower their chances of success when they do.
  • “Do you think that you have the required knowledge and skills to start a business?”Only half of the population feel that they have the skills and knowledge to start a business.Women are less likely to feel that they have the skills than men.
  • Training schemes are used to reach different clients groups according to their needs. They can be used to deliver either general business skills (e.g. bookkeeping) or more specialised skills (e.g. evaluation of risk).Training can be a cost effective approach to skills development because it is typically delivered to groups, and in some cases can be delivered online.Mentoring schemes provide individual support that focus on long-term development of the mentee. However, short-term guidance is almost always provided too.Coaching is an approach that is used to deliver more specific skills to an entrepreneur in the short-term.Both mentoring and coaching schemes can be more effective when mentors and coaches come from the same community as the mentee or student. This increases the level of trust.Despite the individual level of support, these schemes do not have to be expensive. There are many examples of schemes for women and youth that use volunteers to keep their costs down.One example is TWIN from Germany.
  • Training schemes are used to reach different clients groups according to their needs. They can be used to deliver either general business skills (e.g. bookkeeping) or more specialised skills (e.g. evaluation of risk).Training can be a cost effective approach to skills development because it is typically delivered to groups, and in some cases can be delivered online.Mentoring schemes provide individual support that focus on long-term development of the mentee. However, short-term guidance is almost always provided too.Coaching is an approach that is used to deliver more specific skills to an entrepreneur in the short-term.Both mentoring and coaching schemes can be more effective when mentors and coaches come from the same community as the mentee or student. This increases the level of trust.Experience is the best way to learn. Two effective methods of teaching, particularly for youth, are start-up competitions and short term projects with experienced entreprenuers.
  • Help with development of business planCoaching to pitch project Start-up grants up to £1 000 and start-up loans up to £5 000; Workshops, mentoring, ad hoc advice and consultation
  • Title of programme and reference Junior Achievement Student Mini-Company Program. The NetherlandsOosterbeek, H., van Praag, M. and Ijsselstein, A. (2008) The impact of entrepreneurship education on entrepreneurship competencies and intentions: An evaluation of the Junior Achievement Student Mini-Company Program. Description of programmeType Development of business start-up skills Setting up and operation of a mini-companyTarget group Vocational college students Objectives To teach students to put theory into practice and to understand what entrepreneurship is all about. Evaluation Type Impact studyAims To assess the impact of the programme on students‟ entrepreneurial competencies and intentions Methods Difference-in-difference study, comparing students participating in the programme and a comparable group in the college in a different location without the programmeThe evaluation measures the impact on the vocational college “AVANS Hogeschool”, which has three locations in the southern part of the Netherlands, in the cities Breda, Den Bosch, and Tilburg.The evaluation compares students on a location that received the treatment (Breda) against a control group composed of students at the same vocational college at a different location that did not receive the treatment (Den Bosch). Instrumental variables approach.Entrepreneurial outcomes are measured with the Escan approach -- Escan is a validated self-assessment test based on 114 items (questions and statements) posed to individuals. It measures entrepreneurial competencies: 1) need for achievement 2) need for autonomy 3) need for power 4) self efficacy 5) Risk taking propensity and more.A short questionnaire was added to the original Escan items to obtain information on students’ backgrounds and the self-perceived likelihood of becoming an entrepreneur within the next fifteen years.Students responded to the survey and Escan before and after receiving the Junior Achievement programmeRegression analysis was used, different models controlled for background and programme of study. Main findings and recommendations The programme was found not to have had the intended effects, and there was no significant difference between the two groups in the development of their entrepreneurial skills. This study is extremely interesting for the analytical techniques employed in a rigorous evaluation. Comment Also, importantly, it concludes that the programme had had no significant impact on participants. More examples are available in: OECD (2009), “Evaluation of Programmes Concerning Education for Entrepreneurship”, report by the OECD Working Party on SMEs and Entrepreneurship, OECD.
  • Until now, one of the project main results has been the preparation – by the inter-regional academic team – of two packages of learning and training materials, especially designed for fostering female entrepreneurship in the Western part of Romania. Having a marked original feature and prepared both in printed and e-learning format, the three learning materials are: Module I – Business start-up, Module II – Business development, and Training for Trainers of professional competences in Entrepreneurship.The target group I – women entrepreneurs – has learned both Module I – Business start-up and Module II – Business development, while targetgroup II – women potential entrepreneurs has learned only Module I – Business start-up.Module I – Business start-up – has the following outline, covering three months, with an overall number of lectures and applications of 72 hours:Lecture 1. Motivations, abilities and ideas to start a sustainable business;Lecture 2. Understanding the business environment, choice and validation of the idea;Lecture 3. Legal forms of business incorporation;Lecture 4. Clients, competitors and selling methods;Lecture 5. Estimating the necessary resources and identifying the financing sources for starting up a business;Lecture 6. Business plan preparation.Module II – Business development has covered also three months, with an overall number of lectures and applications of 72 hours, and has the following outline:Lecture 1. Management of business development;Lecture 2. Internal and external environment analysis. The SWOT analysis;Lecture 3. Business strategy: preparation and implementation;Lecture 4. Investment evaluation and finance;Lecture 5. Business operational management;Lecture 6. Future development of the business and leadership.The research was conducted on a pre-test-post-test methodology, within the AntrESprogramme of women entrepreneurial school. A questionnaire consisting of 13 questions was completed at the beginning and then at the end of the entrepreneurship training programme.Specifically, the questionnaire was applied at the first learning module, e.g. July 2009 and the same questions were asked at the last learning module in November 2009. The results were separately registered for the two target groups: women managers of their own business and women attempting to start their own business, both groups representing the trainees in the so called “territorial centres”, e.g. county capitals: Arad, Baia Mare, Oradea, ReLiLa, Satu Mare, TimiLoara. The pre-test was taken by 405 respondents and the post-test by 387 respondents.The entrepreneurial training programmeAntrES – involving both women entrepreneurs and women potential entrepreneurs (women attempting to start their own business) – has had an important impact on entrepreneurial attitudes and behaviour of the trainees. Using the pre-test-post-test analysis, we found out that the women involved have achieved in self-confidence and self-efficacy, a more realistic perception on what and how a successful business should do. The research on assessing the impact ofAntrESprogramme will continue with evaluating the impact of the training programme on women entrepreneurs and potential entrepreneurs in the local centres (medium towns) and the rural centres where the programme also has been implemented. The results obtained till now are encouraging; even the trainees’ perception is significant affected by theunfavourable economic conditions of the crisis times, the women participants have improved their skills and abilities, but also their perception and entrepreneurial attitude. The preliminary research results presented above confirm the expected positive influence of entrepreneurship education on women’s entrepreneurial perceptions and intentions and the enormous need for women entrepreneurial education in the Western part of Romania, accompanied by “gender-sensitive” strategies and programmes, in order to encourage women entrepreneurship for exploiting the possibilities offered by local and regional potential taking into account opportunities, difficulties and constraints during economic crisis times. Also encouraging for our further efforts is the fact that women in the Western Romania become aware of the importance of the professional training for the success of a business, considering competence and expertise in the field as far conditions for start up a successful business. The crucial test of their learning acquisitions will be the implementation of the business plans they have developed during the training and the effective business creation in the case of women potential entrepreneurs, in these challenging (but maybe full of opportunities) times!
  • 1. Training and mentoring support should be should be delivered within an integrated support scheme that supports pre and post start-up activities.2. Mentors from different communities should be identified and used to deliver services. Peer mentoring schemes have been successful. This is particularly true for women who, according to anecdotal evidence, have higher levels of trust with other women. However, there is little evidence to suggest that the needs of women are different from those of men so support should be mainstreamed where possible.3. It is important to involve the different communities in the delivery of training and mentoring schemes because there will be an increased awareness of the specific context and distinctive needs of different disadvantaged and under-represented groups. Therefore, organisations that have experience with the client community should be partners in delivery support.4. Targeted awareness campaigns are needed within the different communities because they will improve outreach and increase the level of trust between the potential clients and the service provider.

Transcript

  • 1. THE MISSING ENTREPRENEURS: ENTREPRENEURSHIP AND SOCIAL INCLUSION IN EUROPE INCLUSIVE ENTREPRENEURSHIP: OBSTACLES AND OPPORTUNITIES FOR JOB CREATION 28 NOVEMBER 2012 COPENHAGEN, DENMARKDr. Jonathan Potter, Senior EconomistCentre for Entrepreneurship, SMEs and LocalDevelopment, OECD
  • 2. Overview of the project• Objective: – Inform policy makers and programme managers in EU Member States about the potential to support job creation and social cohesion through inclusive entrepreneurship measures at national and local levels• Project activities: – Assemble data on self-employment and entrepreneurship by disadvantaged and under- represented groups (scale and nature of entrepreneurship activity, barriers faced, employment impacts) – Assess current policy approaches and recommend areas for improvement – Profile good practice policies and programmes – Build capacities of policy makers for policy design and implementation• 2012 outputs – Annual Report – Policy Briefs: Youth Entrepreneurship; Senior Entrepreneurship; Social Entrepreneurship – Capacity Building Seminar: Financing for Inclusive Entrepreneurship 2
  • 3. Labour market indicators, 2011 Adult (15-64) Youth (15-25) Women (15-64) 80 70 60 50 40 30 20 10 0 Labour Force Participation Rate Unemployment Rate Source: Eurostat, Labour Force Survey• Women have a lower activity rate• Many youth are still in education and therefore activity rates are low but the youth unemployment rate is double the adult rate 3
  • 4. Feasibility of entrepreneurship “Regardless of whether or not you would like to become self-employed, would it be feasible for you to be self-employed within the next 5 years? ” % Very feasible % Quite feasible % Not very feasible % Not feasible at all % DK/NA EU27 Male Female Youth (15 - 24) Young adults (25 - 39) Core age adults (40 - 54) Seniors (55 +) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Flash Eurobarometer #283, 2009• Youth have an optimistic view on the feasibility of entrepreneurship• Women feel that business start-up is much less feasible than men 4
  • 5. New business ownership by country, 2007-11 Adults (18-64) Youth (18-30) Men Women8% 8%7% 7%6% 6%5% 5%4% 4%3% 3%2% 2%1% 1%0% 0% Source: Tabulations of the 2007-2011 Adult Surveys of the Global Entrepreneurship Monitor (GEM)• There is substantial variation across countries, showing potential institutional barriers and policy opportunities• New business start rates are low for women but this is not true for youth 5
  • 6. Barriers to business start-up Youth Women1. Little savings and difficulty 1. Less comfortable seeking accessing finance finance2. Role models unaware of 2. Gender norms may benefits of entrepreneurship discourage entrepreneurship3. Education and training do 3. Tax, family and social not foster entrepreneurship policies which implicitly4. Lack of prior work and favour traditional roles entrepreneurship experience 4. Less managerial and self-5. Lack of business networks employment experience than men 5. Less likely to have developed networks 6
  • 7. Perception of skills for entrepreneurship “Do you think that you have the required knowledge and skills to start a business?” Adults (18-64) Youth (18-30) Men Women70% 70%60% 60%50% 50%40% 40%30% 30%20% 20%10% 10% 0% 0%-10% Source: Tabulations of the 2007-2011 Adult Surveys of the Global Entrepreneurship Monitor (GEM) • Only half of the population feel that they have the skills and knowledge to start a business • Women are less likely to feel that they have the skills than men 7
  • 8. Skills needed for entrepreneurship Technical Skills Business Management Personal Entrepreneurial Skills SkillsWritten and oral Planning and goal setting Inner control / disciplinecommunicationMonitoring environment Decision making Risk takingTechnical business Human Relations Innovative managementTechnology Marketing Change orientatedInterpersonal Finance PersistentListening Accounting Visionary leaderAbility to organise Management Ability to manage changeNetwork building ControlManagement style NegotiationCoaching Venture LaunchBeing a team player Managing GrowthSource: Hisrich, R.D. and Peters, M.P. (1992) – Entrepreneurship: Starting, Developing, and Managing aNew Enterprise – Irwin, Boston, MA 8
  • 9. Training and mentoring services• Training schemes deliver general business (e.g. bookkeeping) and specialised skills (e.g. evaluation of risk) – Courses – Workshops – Seminars• Personal relationships are effective – Mentoring for long-term development – Coaching for building specific skills – Mentors and coaches from the same community as mentees/students• Experience – Start-up competitions – Short-term projects• Training for trainers 9
  • 10. The Prince’s Scottish Youth Business Trust, UK• Target group: Non-bankable young people aged 18 to 25 years• Objectives: Provide business development support (e.g. coaching, workshops, consultation) and microfinace• Type of evaluation: Impact assessment; value for money• Method: Annual survey of participants• Variables: Turnover, employment• Results: – Controlling for deadweight and displacement, impact was £12.2-14.1 million per year and 288-316 FTEs – Total cost per start-up was £2 351; for every £1 spent, generated £17 of additional net sales• Source: Scottish Enterprise (2007), Prince’s Scottish Youth Business Trust (PSYBT) Evaluation of Impact and Strategic Contribution 10
  • 11. Junior Achievement Student Mini-Company Program, The Netherlands• Target group: Vocational college students• Objectives: To teach students to put theory into practice and to understand what entrepreneurship is all about• Type of evaluation: Impact study• Method: Difference-in-difference; compares students at two locations of the same vocational college (one that offers JA and one that does not)• Variables: Surveys of student self assessments on measures of their entrepreneurial traits and skills before and after participation• Results: No significant difference between the two groups• Source: Oosterbeek, H., van Praag, M. and Ijsselstein, A. (2008) The impact of entrepreneurship education on entrepreneurship competencies and intentions: An evaluation of the Junior Achievement Student Mini-Company Program 11
  • 12. AntrES: Women School of Entrepreneurship, Romania• Target group: Existing women entrepreneurs; women attempting to start a business in small towns and rural areas• Objectives: Provide entrepreneurship training; role models• Type of evaluation: Impact assessment• Method: Pre-test, post-test analysis (n=405 for pre-test and 387 for post-test)• Variables: Attitudes, motivations, awareness of available supports, abilities• Results: Women involved have achieved in self-confidence and self- efficacy, a more realistic perception on how to be successful• Source: Badulescu and Dodescu (2010), Entrepreneurial Training and the Attitude toward Entrepreneurship: Assessing the Impact of AntrES programme 12
  • 13. Training and mentoring: Policy recommendations• Ensure that support is provided pre and post start-up• Training for youth should provide entrepreneurship experiences to help overcome a lack of labour market experience• Female mentors should be used in the delivery of business development support for women but policy makers should aim to mainstream support where possible• Deliver training with orgranisations that have experience with different communities to tailor the training to the distinctive needs• Training and mentoring support should be promoted with tailored awareness and communication strategies to improve access and gain trust• Ensure that trainers are aware of the specific needs of youth 13 and women
  • 14. Further information• More information is available online: http://www.oecd.org/document/60/0,3746,en_2649_34417_49308796_1_1_1_1,00.html• More information on capacity building seminar: http://www.oecd.org/cfe/leedprogrammelocaleconomicandemploymentdevelopment/capacitybuildingseminarf inancingbusinessstart-upbyunder-representedgroupstrentoitaly.htm• 2 Policy Briefs are available: – Youth Entrepreneurship – Senior Entrepreneurship• 2 Policy Briefs are forthcoming: – Social Entrepreneurship – Evaluation of Inclusive Entrepreneurship• Annual Report: – Available in February 2013 14