Global Entrepreneurship Monitor (GEM) Singapore 2006

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Summary Findings of the Global Entrepreneurship Monitor (GEM) Singapore 2006 Study

Summary Findings of the Global Entrepreneurship Monitor (GEM) Singapore 2006 Study

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  • 1. NUS Entrepreneurship Centre Global Entrepreneurship Monitor Study GEM 2006 Global Entrepreneurship Monitor Study Highlights on Singapore GEM 2005 FEBRUARY 2007 Highlights on Singapore 1
  • 2. NUS Entrepreneurship Centre GEM 2006 Singapore Research Team Prof. Wong Poh Kam (PohKam@nus.edu.sg) Ms. Lena Lee Ms. Ho Yuen Ping NUS Entrepreneurship Centre 2
  • 3. NUS Entrepreneurship Centre GEM Singapore 2006 Overview of GEM Research Methodology 3
  • 4. NUS Entrepreneurship Centre Overview of GEM Singapore 2006 An annual GEM cross-national assessment of the level of entrepreneurial activity. 10 countries in 1999, 21 in 2000, 28 in 2001, 37 in 2002, 31 in 2003, 34 countries in 2004 and 2005, and 42 countries in 2006. For Singapore, this is our seventh year of participation. NUS Entrepreneurship Centre was invited to carry out the Singapore Country Study since 2000. Funded by National University of Singapore (NUS) and supported by Action Community For Entrepreneurship (ACE). 4
  • 5. NUS Entrepreneurship Centre GEM Conceptual Model General National Major Framework Conditions Established Firms (Primary Economy) • Openness (External Trade) • Government (Extent, Role) National • Financial Markets (Efficiency) • Technology, R&D (Level, Intensity) Micro, Small Economic • Infrastructure (Physical) And Medium Firms Growth • Management (Skills) • Labour Markets (Flexible) (Secondary Economy) (GDP, Jobs) • Institutions (Rule of Law) Social, Cultural Entrepreneurial Political Opportunities Context Entrepreneurial Framework Conditions Entrepreneurs Business • Financial Opportunity / Necessity Churning • Government Policies • Government Programmes • Education and Training • R&D Transfer • Commercial, Legal Infrastructure • Internal Market Openness Entrepreneurial • Access to Physical Infrastructure Capacity • Cultural, Social Norms • Skills • Motivation 5
  • 6. NUS Entrepreneurship Centre GEM Research Methodology & Data Sources GEM employs 3 approaches: Adult Population Surveys 2000 adults or more were selected in each country for a random sampling survey using a common survey instrument. In Singapore, the survey was carried out in June 2006 (Sample size for Singapore: 4,011) The results of the analysis are drawn from the responses of the working age group (18 to 64 years old). This year, a total of 106,495 individuals in 42 countries were surveyed by GEM. 6
  • 7. NUS Entrepreneurship Centre GEM Research Methodology & Data Sources Country Experts Interviews Up to 50 key informants were interviewed by the GEM national research team in each country in 2006 (36 for Singapore).The key informants include entrepreneurs, investors, government policy makers and venture support professionals. The informants were asked to assess the environment for entrepreneurship in their country along NINE dimensions: • Financial Support • Government Policies • Government Programmes • Education and Training • Research and Development Transfer • Commercial and Professional Infrastructure • Barriers to Entry • Access to Physical Infrastructure • Cultural and Social Norms 7
  • 8. NUS Entrepreneurship Centre GEM Research Methodology & Data Sources Collection of Secondary National Social-Economic Data for each country International benchmark Social-Economic data from World Bank, World Competitiveness Report National sources of data on venture capital investment, firm formation, etc. 8
  • 9. NUS Entrepreneurship Centre Key Indicators of Entrepreneurial Activities in GEM 2006 Total Entrepreneurial Activity (TEA) Rate (Early-Stage Entrepreneurship) • Nascent Start-up vs. New (“Baby”) Businesses • Opportunity vs. Necessity Other Entrepreneurship Indicators • High Employment Growth Potential TEA rate • Early-Stage Businesses with New Technology • Early-Stage Businesses with New Markets • Early-Stage Businesses with Export Markets • Entrepreneurial Intention Rate • Prevalence of Business Discontinuation (Exit rate) Financing for new business • Prevalence of informal (business angel) investment 9
  • 10. NUS Entrepreneurship Centre Key Indicators of Factors Affecting Entrepreneurship in GEM 2006 Personal Attitudes towards Entrepreneurship • Know someone who has started a business • Perceive the skills to start a business • Perceive good business opportunities • Do not perceive fear of failure as a deterrent Perception of Social & Cultural Values for Entrepreneurship • Perception of entrepreneurship as a career • Media publicity for entrepreneurship • Preference for uniformity of living standards • Perception of status of successful entrepreneurs Assessment of National Environment for Entrepreneurial Activities • Rating on 9 dimensions of national environment for entrepreneurship by selected key informants 10
  • 11. NUS Entrepreneurship Centre GEM Singapore 2006 Core GEM Indicators Findings 11
  • 12. NUS Entrepreneurship Centre GEM 2006 Singapore – Nascent Start-Up Prevalence Rate * Definition * This variable attempts to measure the proportion of working age adults (age between 18 to 64 years old) in a country who is actively engaged in starting up a new business. To meet the criteria for this variable, the respondent had to fulfill each of the following criteria: if they had done something – taken some action – to create a new business in the past year. they expected to share ownership of the new firm and the firm had not paid salaries for more than 3 months 12
  • 13. NUS Entrepreneurship Centre GEM 2006 Singapore – New Business Prevalence Rate * Definition * This variable attempts to measure the proportion of working age adults (age between 18 to 64 years old) in a country who are currently running a new business (as opposed to trying to start one). To meet the criteria for this variable, the respondent had to fulfill each of the following criteria: they are currently managing a new business. they personally owned all or part of the new business. the firm was started in year 2003 or later (this meant that the business was, at most, 42 months old in June 2006). 13
  • 14. NUS Entrepreneurship Centre GEM 2006 Singapore – Total Entrepreneurial Activity (TEA) Or Early-Stage Entrepreneurship * Definition * TEA is the sum of (1) the propensity of individuals involving in the start-up process (nascent entrepreneurs) (start-up prevalence rate) and (2) the propensity of individuals engaging as owner- managers of firms less than 42 months old (new business prevalence rate) Those that qualified for both are counted only once. 14
  • 15. NUS Entrepreneurship Centre GEM 2006 Singapore – Necessity / Opportunity TEA * Definition * There are two major motivations for individuals to participate in entrepreneurial activities. (1) “Opportunity Entrepreneurship” - those who voluntarily seek to pursue a perceived business opportunity and (2) “Necessity Entrepreneurship” - those who become involved in starting up a new business as a last resort, when other options for work or participation in the economy are perceived as absent or are considered unsatisfactory. 15
  • 16. NUS Entrepreneurship Centre GEM 2006 Singapore – Total Entrepreneurial Activity (TEA) Or Early-Stage Entrepreneurship Among the OECD countries falling in the same income band as Singapore (including USA) that participated in both the GEM 2005 & 2006 surveys (16 countries), the overall TEA rate has decreased slightly from 6.4% in 2005 to 5.9% in 2006. Singapore ranked 16th among the 22 OECD countries with a TEA of 4.9% for 2006, lower than 7.2% in 2005 and 5.7% in 2004. Among the subset of 21 OECD countries that participated in both GEM 2005 & GEM 2006, Spore’s relative ranking is lower in 2006 (15th/21) than 2005 (7th/21). 16
  • 17. NUS Entrepreneurship Centre GEM 2006 - TEA Prevalence Rate & Rank in OECD C o u n tr y R a te R ank C o u n tr y R a te R ank A U S T R A L IA 1 2 .0 1 DENM ARK 5 .3 13 IC E L A N D 1 1 .3 2 M E X IC O 5 .3 14 U N IT E D S T A T E S 1 0 .0 3 F IN L A N D 5 .0 15 NORW AY 9 .1 4 S IN G A P O R E 4 .9 16 GREECE 7 .9 5 FRAN CE 4 .4 17 C Z E C H R E P U B L IC 7 .9 6 GERM ANY 4 .2 18 IR E L A N D 7 .4 7 SW ED EN 3 .5 19 S P A IN 7 .3 8 IT A L Y 3 .5 20 CANADA 7 .1 9 JA P A N 2 .9 21 HUNGARY 6 .0 10 B E L G IU M 2 .7 22 U N IT E D K IN G D O M 5 .8 11 NETHERLANDS 5 .4 12 M ea n 6 .2 Singapore’s 95% confidence interval is 4.3 to 5.5, hence countries ranked from France to Netherlands are ranked within the same band as Singapore 17
  • 18. NUS Entrepreneurship Centre Entrepreneurial Activity Rates – 95% Confidence Interval, persons per 100 Adults, 18-64 years old. RATES 95% Confidence Interval Overall TEA 2006 4.9 4.3 – 5.5 TEA Opportunity 4.2 3.5 – 4.9 TEA Necessity 0.7 0.5 – 0.9 Consistent with findings from previous years, the majority of early- stage businesses (86%) in Singapore were opportunity-driven. This is comparable with the 82% average for all GEM OECD countries. 18
  • 19. P e rc e n t a g e o f a d u lt p p o p u la t io n b e t w e e n 1 8 - 6 4 y e a rs 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% B e lg iu m Japan S w eden Ita ly U . A ra b E m ira te s G e rm a n y F ra n c e S lo v e n ia S in g a p o re R u s s ia F in la n d M e x ic o NUS Entrepreneurship Centre S o u th A fric a D e n m a rk N e th e rla n d s UK H u n g a ry T u rk e y L a tv ia Canada S p a in Ire la n d C z e c h R e p u b lic G re e c e GEM 2006 - TEA Prevalence Rate & Rank C ro a tia N o rw a y C h ile USA A rg e n tin a In d ia M a la y s ia Ic e la n d B ra z il A u s tra lia U ru g u a y T h a ila n d C h in a In d o n e s ia J a m a ic a P h ilip p in e s C o lo m b ia P e ru 19
  • 20. NUS Entrepreneurship Centre TEA (Early-Stage Entrepreneurial Activity) Rate and GDP per capita, 2006 25% Early-stage Entrepreurial Activity (TEA rate) 2006 TEA rate United Arab Emirates CO Fitted 3rd order polynomial - Arab Emirates and Peru excluded JA PH 20% ID P e rc e n ta g e o f p o p u la tio n b e tw e e n 1 8 -6 4 y e a rs CN TH 15% UY BR MY AU IS IN AR US 10% HR NO CL LV CZ GR ES CA IE UK TR SA HU FI DK SG NL 5% MX RU SI FR DE IT SE FR UA JP BE 0% 0 10,000 20,000 30,000 40,000 50,000 GDP per Capita 2006, in Power Purchasing Parities (PPP) 20
  • 21. NUS Entrepreneurship Centre TEA (Early-Stage Entrepreneurial Activity) Rate and GDP per capita, 2005 30% Early-stage Entrepreurial Activity 2005 Fitted Polynomial Trend (3rd order) 25% Percentage of population between 18-64 years VE 20% TH NZ 15% JM CN CL US 10% BR IS AU CA IE AR NO GR SG MX HR LV ES SW 5% F DK ZA B SI N SE HU JP 0% 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 GDP per Capita 2005, in Power Purchasing Parities (PPP) 21
  • 22. NUS Entrepreneurship Centre TEA Rate (Early-Stage Entrepreneurship) and GDP per capita • There is a U-shaped relationship between TEA & GDP per capita across countries, with lower income countries and the very high income countries showing higher TEA rates. For the bulk of relatively advanced economies falling in the income range of about US$25,000- US$40,000 per capita PPP, the TEA rates generally fall within the range of 3-8% • In 2006, along with Singapore, countries such as UK, Germany, France, Canada, Italy, Sweden, and Belgium reported a fall in its TEA rates in 2006 compared to 2005. In addition the USA also experienced a drop in TEA from 12.4% to 10%. • For countries that experienced an increase in its TEA rates such as Denmark and Netherlands, the rates are by and large around the 5% level. • On the other hand, the TEA rates for Australia & Iceland have been exceptionally high at around 10-12%, while Japan’s TEA rates have been consistently low around 2-3% level. • Singapore’s TEA rates of 5-7% over the years are within the expected range for countries in the per capita income range of US$25,000- US$40,000. 22
  • 23. NUS Entrepreneurship Centre TEA (Early-Stage Entrepreneurial Activity) Rate and GDP per capita among nations in $25,000 to $38,000 income bracket, 2005 vs 2006 14.0% 2005 2006 12.0% AU AU IS 10.0% IS CA 8.0% SG CA ES UK UK 6.0% ES FI NL FI DK IT FR DE FR DK 4.0% SG SE NL BE DE IT SE JP BE 2.0% JP 0.0% 25,000 27,000 29,000 31,000 33,000 35,000 37,000 23
  • 24. NUS Entrepreneurship Centre TEA Rate (Early-Stage Entrepreneurship) and GDP Growth • The link between GDP growth and TEA rate is complex, but there is some evidence that across OECD countries falling in the same income band as Singapore (US$28,000-US$40,000)*, higher GDP per capita income growth is associated with a drop in TEA rates (Pearson correlation = -.746) • Likewise, for Singapore over 2000-06, there is a slight negative correlation between GDP growth and TEA rate (-.451) • There also appears to be some correlation between unemployment rate (+) and wage increase rate (-) and TEA rate * Excluding Australia and Iceland 24
  • 25. NUS Entrepreneurship Centre Pearson Correlations between TEA (Early-Stage Entrepreneurship) and OECD Average Annual GDP per capita PPP growth OECD Average GDP per capita PPP OECD Average Growth TEA 2000 4.43 4.04 2001 1.35 6.43 2002 1.45 5.12 2003 1.42 5.15 2004 2.96 4.89 2005 2.39 5.26 2006 3.12 4.76 25
  • 26. NUS Entrepreneurship Centre Pearson Correlations between TEA (Early-Stage Entrepreneurship) and Macro-Economic Factors Singapore OVERALL TEA TEA TEA OPPORTUNITY NECESSITY GDP growth -0.451 0.117 -0.781* Unemployment Rate 0.238 -0.340 0.289 Wage Increase -0.645 -0.142 -0.759* * Significant at the 5% level 26
  • 27. NUS Entrepreneurship Centre TEA Rates: Summary Findings The 32% overall decrease in Singapore’s TEA from 7.2% in 2005 to 4.9% in 2006 appears to be across all demographic groups, although somewhat higher among males, the young and educated: – A decrease in New Business Prevalence Rate from 3.7% in 2005 to 2.5% in 2006, and a decreased in Start-up Prevalence Rate from 3.9% in 2005 to 2.7% in 2006. (Note: 0.3% are involved in both new and nascent businesses) – A decrease in Opportunity TEA from 6.1% in 2005 to 4.2% in 2006, and a decrease in Necessity TEA from 1.2% in 2005 to 0.7% in 2006. – A decrease in Prevalence of Male TEA from 9.6% in 2005 to 6.0% in 2006, and a decrease in Female TEA 5% in 2005 to 3.6% in 2006. – A decrease in TEA among individuals in all age-groups, particularly those in the 18-24 years group, which experienced a 52% fall, and those in the 55-64 years group, which experienced a 45 % fall. – A 49% decrease in TEA among individuals with Secondary and Polytechnic education respectively, a 54% decrease among individuals with JC education, and a 38% decrease among university graduates 27
  • 28. NUS Entrepreneurship Centre Summary of Level of Entrepreneurial Activity in Singapore (2000 – 2006) 2000 2001 2002 2003 2004 2005 2006 TEA 4.2 6.6 5.9 5.0 5.7 7.2 4.9 Opportunity TEA - 5.1 4.9 3.9 5.0 6.1 4.2 Necessity TEA - 1.2 0.9 1.0 0.6 1.2 0.7 Male TEA 5.8 9.7 9.3 6.5 8.2 9.6 6.0 Female TEA 2.7 3.6 2.7 3.5 3.4 5.0 3.6 Nascent 2.3 4.2 4.0 3.0 3.0 3.9 2.7 New Business 1.9 2.4 2.0 2.3 2.8 3.7 2.5 Polytechnic 2.9 4.0 4.2 6.4 8.6 11.9 6.1 University 4.0 9.7 4.1 9.6 10.0 11.5 7.1 Source: GEM Master Dataset 2000 - 2006 28
  • 29. NUS Entrepreneurship Centre GEM 2006 Singapore –Business Angel Prevalence Rate * Definition * To meet this criterion for operating as an informal investor (business angel), individuals had to fulfill the following criterion: they had in the past three years personally provided funds for a new business started by someone else public traded shares or mutual funds excluded Among the 22 OECD countries, Singapore is ranked 8th in 2006 compared to 9th/24 in 2005. Singapore’s informal investment prevalence rate is 3.0% for 2006, slightly lower than 3.5% in 2005 but higher than 2.7% in 2004. (Note: 95% confidence interval for 2006 is 2.2 to 3.8) 29
  • 30. NUS Entrepreneurship Centre GEM 2006 – Business Angel Prevalence Rate & Rank in OECD 8 7 6 5 4 3 2 1 0 Australia Iceland United Kingdom Netherlands Denmark Japan Finland Spain France Singapore Greece Canada Belgium Hungary Czech Republic United States Mexico Sweden Average Germany Ireland Italy Singapore’s 95% confidence interval is 2.2 to 3.8, hence countries ranked Norway from Denmark to Canada are ranked within the same band as Singapore 30
  • 31. NUS Entrepreneurship Centre GEM 2006 – Informal Investor Relationship to Investee % CLOSE FAMILY 35.3 OTHER RELATIVE 17.7 WORK COLLEAGUE 6.8 FRIEND or NEIGHBOR 34.6 STRANGER 5.6 Total 100 Compared to 2005, there is a significant increase in the proportion of family and relative investment 31
  • 32. NUS Entrepreneurship Centre GEM Singapore 2006 Other Indicators of Entrepreneurial Activities in 2006 * Key Findings for Singapore * 32
  • 33. NUS Entrepreneurship Centre GEM 2006 –High Employment Growth Potential TEA Definition: High Employment Growth Potential (Aspiration) entrepreneurial activity rate is defined as new start-ups that indicated they intend to employ at least 20 people in 5 years. Prior literature has shown that a small proportion of new businesses eventually contribute the bulk of job and value creation in most countries; this indicator seeks to focus on such high growth potential ventures. Comparatively, a larger proportion of Singapore's entrepreneurial activity i.e. 18% or close to 1 in 5 new start-ups exhibits growth aspiration compared to the average for all OECD countries i.e. 10% or about 1 in 10 new start-ups. High employment growth potential TEA rate varies from 0.04% for Japan to 2.2% for Iceland. Singapore’s high employment growth potential TEA rate is 0.9% (vs 1.5% in 2005) (close to 1 in 5 new start-ups), ranking 6th out of the 22 OECD countries, better than its overall TEA ranking (16th out of 22 countries). (Note: 95% confidence interval for 2006 is 0.7 – 1.1) 33
  • 34. NUS Entrepreneurship Centre GEM 2006 – High Employment Growth Potential TEA Rate & Rank among OECD Countries Country Rate Rank Country Rate Rank Iceland 2.2 1 Germany 0.5 13 United States 1.4 2 Hungary 0.5 14 Ireland 1.3 3 Italy 0.5 15 Czech Republic 1.2 4 Sweden 0.5 16 Australia 1.0 5 Finland 0.4 17 Singapore 0.9 6 Spain 0.3 18 United Kingdom 0.7 7 France 0.3 19 Norway 0.7 8 Belgium 0.3 20 Canada 0.7 9 Mexico 0.1 21 Denmark 0.7 10 Japan 0.04 22 Greece 0.6 11 Netherlands 0.6 12 Mean 0.7 Singapore’s 95% confidence interval is 0.7 to 1.1, hence countries ranked from Denmark to Australia are within the same band as Singapore 34
  • 35. NUS Entrepreneurship Centre GEM 2006 – Percentage of TEA (Early-Stage Entrepreneurship) with Latest Technology * Definition * Proportion of start-ups and new businesses indicating that they employed the latest technology (technology available since 1 year ago). 11.7% of early-stage businesses in Singapore employed the latest technology compared to the average of 11.2% for all 22 OECD countries. This ranks Singapore 8th out of 22 OECD countries, ahead of countries such as Sweden, Germany and Iceland. 35
  • 36. 0 5 10 15 20 25 30 35 40 Spain Germany Hungary Netherlands Ireland Denmark NUS Entrepreneurship Centre United States with Latest Technology United Kingdom Australia Japan GEM 2006 - Percentage of TEA (Early-Stage Entrepreneurship) Sweden Canada Iceland Mexico Singapore Finland France Italy Norway Belgium Greece Czech Republic Average 36
  • 37. NUS Entrepreneurship Centre GEM 2006 - Percentage of TEA (Early-Stage Entrepreneurship) with New Markets * Definition * Proportion of start-ups or new businesses that sold their products or services to what they believed were entirely new markets. 18.2% of early-stage businesses in Singapore sold their products or services to entirely new markets, compared to the average of 12.4% for all 22 OECD countries. This ranks Singapore 3rd out of 22 OECD countries. 37
  • 38. 0 5 10 15 20 25 30 Hungary Japan Czech Republic France Belgium with New Markets Australia NUS Entrepreneurship Centre Finland Germany United Kingdom United States Greece (Early-Stage Entrepreneurship) GEM 2006 – Percentage of TEA Mexico Netherlands Iceland Ireland Canada Norway Sweden Spain Singapore Italy Denmark Average 38
  • 39. NUS Entrepreneurship Centre GEM 2006 – Percentage of TEA (Early-Stage Entrepreneurship) with more than 75% Export Markets * Definition * Proportion of start-ups and new businesses with more than 75% of its actual or intended customers living outside the country i.e. overseas market. 21% of early-stage businesses in Singapore (about 1 in 5 start-ups) have more than three-quarter of its customers living abroad compared to the average of 8.1% (1 in 10 start-ups) for all 22 OECD countries. This ranks Singapore 1st out of 22 OECD countries, reflecting Singapore’s small domestic market, . 39
  • 40. 0 5 10 15 20 25 Italy Japan Germany Mexico Netherlands United States France NUS Entrepreneurship Centre Finland Spain Czech Republic Hungary Ireland Australia GEM 2006 - Percentage of TEA (Early-Stage Entrepreneurship) United Kingdom Norway Greece with more than 75% Export Markets Canada Iceland Denmark Belgium Sweden Singapore Average 40
  • 41. NUS Entrepreneurship Centre GEM 2006 – Entrepreneurial Intention Rate * Definition * Proportion of Adult Population that have not engaged in any start-ups or new businesses but expects to start a new business in the next three years Includes any type of self employment May be alone or with others Singapore’s Entrepreneurial Intention rate is 11.8% in 2006, declined from 17.0% in 2005 (Note: 95% confidence interval for 2006 is 7.9 – 15.7) This ranked Singapore 8th out of the 22 OECD countries, falling slightly from its 4th position out of 24 OECD countries in 2005. 41
  • 42. NUS Entrepreneurship Centre GEM 2006 – Prevalence of Entrepreneurial Intention Rate & Rank among OECD countries Country Rate Rank Country Rate Rank Iceland 20.0 1 Hungary 9.6 13 Mexico 18.3 2 Canada 8.7 14 France 14.8 3 Denmark 8.2 15 Australia 14.8 4 United Kingdom 7.8 16 Greece 14.0 5 Belgium 7.3 17 United States 13.5 6 Finland 7.0 18 Czech Republic 12.8 7 Germany 6.7 19 Singapore 11.8 8 Spain 6.4 20 Sweden 11.2 9 Netherlands 5.6 21 Norway 10.4 10 Japan 2.4 22 Italy 10.2 11 Ireland 9.8 12 Mean 10.5 Singapore’s 95% confidence interval is 7.9 to 15.7, hence countries ranked from Denmark to France are within the same band as Singapore 42
  • 43. NUS Entrepreneurship Centre GEM 2006 – Prevalence of Businesses Discontinuance (Exit Rate) * Definition * Proportion of Adult Population that has in the past 12 months shut down, discontinued or quit : A business that was owned and managed by the individual Any form of self employment Selling goods and services Excludes those who sold off businesses Singapore’s business discontinuance rate in 2006 is 2.2% (2.3% in 2005), ranking 10th among the 22 OECD countries. 43
  • 44. 0 1 2 3 4 5 6 7 8 Netherlands Belgium Hungary Japan Spain Italy Ireland NUS Entrepreneurship Centre Denmark Germany Finland United Kingdom Sweden Singapore Canada (Exit Rate) United States Greece Norway Iceland France Czech Republic Australia Mexico Average GEM 2006 – Prevalence of Businesses Discontinuance 44
  • 45. NUS Entrepreneurship Centre GEM 2006 Personal Attitudes of Singaporeans Toward Entrepreneurship 45
  • 46. NUS Entrepreneurship Centre GEM 2006 – Attitudes and Perceptions of Singaporeans towards Entrepreneurship 26.3% of adult population surveyed know someone who has started business, lower than 31.3% in 2005 and the OECD average of 36.3%. 25.4% of those surveyed perceived to have the skills to start a business, lower than 29% in 2005 and the OECD average of 41.1%. 15.7% of those surveyed between 18 – 64 years old perceived good business opportunities, lower than 17.5% in 2005 and the OECD average of 34.1%. In terms of fear of failure, 65.6% do not perceive fear as a deterrent, compared to the OECD average of 65.0%. This represents a slight increase from 61.5% in 2005. 46
  • 47. NUS Entrepreneurship Centre GEM 2006 – Attitudes and Perceptions of Singaporeans Towards Entrepreneurship Entrepreneurial Population Attitude Ratings (Source: Adult Population Survey, Rating % of answering “Yes”) SG SG ALL 22 GEM OECD COUNTRIES (2006) High Low 2005 2006 Mean Score (Ctry) Score (Ctry) Know someone who started a business 31.3% 26.1% 36.3% 60.8% (IS) 26.1% (SG) Have skills to start a business 29.0% 25.4% 41.1% 53.2% (CA) 15.7% (JP) Perceive good start-up opportunities in next 6 months 17.5% 15.7% 34.1% 64.6% (DK) 9.2% (JP) Fear of failure is not a deterrent 61.5% 65.6% 65.0% 79.0% (US) 42.2% (GR) Source: 1) GEM 2006 Adult Population Survey 2) GEM 2006 Master Dataset 47
  • 48. NUS Entrepreneurship Centre GEM 2006 Indicators of Social & Cultural Values for Entrepreneurship 48
  • 49. NUS Entrepreneurship Centre GEM 2006 – Starting Business is a Good Career Choice *Definition* Proportion of Adult Population that perceives starting a business is a good career choice. 48.2% (vs 46.8% in 2005) of Singaporeans perceive that starting a business is a good career choice, compared to an average of 57.8% (55.4% in 2005) in the OECD countries. This ranked Singapore 19th out of 22 countries (18th/24 in 2005). 49
  • 50. 0 20 40 60 80 100 Japan Finland Belgium Singapore Mexico NUS Entrepreneurship Centre Sweden United States Denmark United Kingdom Hungary Germany Australia Norway Greece France Czech Republic Iceland Ireland Choice in OECD Countries Spain Canada Italy Netherlands Average GEM 2006 – Starting Business is a Good Career 50
  • 51. NUS Entrepreneurship Centre GEM 2006 - New Business Success is High Status *Definition* Proportion of Adult Population that perceives starting a new business provides high level of status and respect. 54.1% (vs 57.8% in 2005) of Singaporeans believe that new business success is accorded with high status in this country, compared to an average of 65.2% (66.2% in 2005) in the OECD countries. This ranked Singapore 17th among the 22 countries (21st/24 in 2005). 51
  • 52. 0 20 40 60 80 100 Japan Czech Republic United States Mexico Belgium Singapore NUS Entrepreneurship Centre Spain Sweden Netherlands Greece Hungary France Norway Italy Canada Australia in OECD Countries Iceland United Kingdom Denmark Germany Ireland Finland Average GEM 2006 - New Business Success is High Status 52
  • 53. NUS Entrepreneurship Centre GEM 2006 – Media Publicity for New Business *Definition* Proportion of Adult Population that perceives there is sufficient media publicity for new businesses. 60% (vs 70.2% in 2005) of Singaporeans perceive that there is sufficient media publicity for new businesses, compared to an average of 55.3% (54.7% in 2005) in the OECD countries. This ranked Singapore 8th out of the 22 countries (6th/24 in 2005). 53
  • 54. 0 20 40 60 80 100 Hungary Denmark Belgium France Greece Spain NUS Entrepreneurship Centre Italy Germany Mexico Japan United States United Kingdom Sweden Netherlands Singapore Czech Republic OECD Countries Australia Finland Canada Norway Iceland Ireland Average GEM 2006 – Media Publicity for New Business in 54
  • 55. NUS Entrepreneurship Centre GEM 2006 – Uniform Living Standards *Definition* Proportion of Adult Population that prefers a uniform living standard. 53% (vs 51.5% in 2005) of Singaporeans prefer a uniform living standard, compared to an average of 63% (60.1% in 2005) in the OECD countries. This ranked Singapore 19th out of 22 countries (19th/24 in 2005). 55
  • 56. 0 20 40 60 80 100 Japan Denmark United States Singapore Mexico Netherlands France NUS Entrepreneurship Centre Sweden Iceland Belgium Spain Greece Czech Republic Finland Germany Norway Hungary Australia United Kingdom Standards in OECD Countries Canada Italy Ireland GEM 2006 – Preference for Uniform Living Average 56
  • 57. NUS Entrepreneurship Centre GEM Singapore 2006 Assessment of National Environment for Entrepreneurship 57
  • 58. NUS Entrepreneurship Centre 9 Dimensions of Entrepreneurial Environment • Financial Support • Government Policies • Government Programmes • Education and Training • Research and Development Transfer • Commercial and Professional Infrastructure • Barriers to Entry • Access to Physical Infrastructure • Cultural and Social Norms Each dimension is measured using several sub-indicators 58
  • 59. NUS Entrepreneurship Centre Breakdown of Key Informants – 2000 - 2006 2000 2001 2002 2003 2004 2005 2006 Entrepreneurs 17 6 18 11 16 19 18 Policy Makers 12 9 4 8 4 3 0 Investors 6 5 7 6 9 8 0 Venture Support 4 11 7 8 7 6 18 Total 39 31 36 33 36 36 36 Source: Singapore Expert surveys 2000-2006 59
  • 60. NUS Entrepreneurship Centre Entrepreneurship Environment –Financial Support (A) Financial Support 2 2000 2001 2002 2003 2004 2005 2006 1 0 -1 -2 A 01 A 02 A 03 A 04 A 05 A 06 A01 – In my country, there is enough equity funding available for new and growing firms. A02 – In my country, there is enough debt equity for new and growing firms. A03 – In my country, public subsidies have a major impact promoting firm creation and growth. A04 – In my country, private individuals (other than founders) are an important source of financial support for new and growing firms. A05 – In my country, venture capitalists are an important source of private support for new and growing firms. A06 – In my country, initial public offerings (IPO) are an important source of equity for new and growing firms. 60
  • 61. NUS Entrepreneurship Centre Entrepreneurship Environment – Dimension on Cultural Norms (I) Cultural and Social Norms 2002 2003 2004 2005 2006 2 1 0 -1 -2 I01- In my country, the national culture is I02 supportive of individual success achieved through own personal efforts. I01 highly I03 I04 I05 I02- In my country, the national culture emphasises self-sufficiency, autonomy, and personal initiative. I03- In my country, the national culture encourages entrepreneurial risk-taking. I04- In my country, the national culture encourages creativity and innovativeness I05- In my country, the national culture emphasises the responsibility that the individual (rather than the collective) has in managing her own life. 61
  • 62. NUS Entrepreneurship Centre GEM 2006 Singapore’s Entrepreneurial Environment Scoreboard Entrepreneurship Environment Ratings by Country Informants (Source: Country Expert Survey; Scale 1 = Low to 5 = High) SG 18 GEM OECD Countries (2006)* High Low ITEM 2005 2006 Mean Score (Ctry) Score (Ctry) Availability of capital 3.1 3.5 2.9 3.9 (US) 2.3 (IE) Government policy support 3.5 3.5 2.7 3.5 (SG) 2.0 (HU) Low regulation and taxation burden 4.0 3.8 2.7 4.0 (IS) 1.5 (IT) Government program effectiveness 3.4 3.4 3.0 3.5 (DE) 2.3 (HU) Effectiveness of primary & secondary education & training 2.6 3.1 2.4 3.1 (SG) 1.8 (DE) Effectiveness of university & mgmt. education & training 2.9 3.3 2.9 3.7 (US) 2.2 (DK) R&D transfer effectiveness 3.0 3.2 2.7 3.2 (SG) 2.4 (NL) Business service effectiveness 3.4 3.5 3.4 4.0 (US) 2.8 (MX) Rapidity of change in markets 2.8 3.1 2.7 3.5 (IS) 1.9 (FI) Market accessibility 3.0 3.3 3.0 3.4 (NL) 2.4 (MX) Ease of access to physical infrastructure 4.7 4.6 4.0 4.7 (US) 2.8 (IT) Cultural value placed on independence 3.0 3.5 2.9 4.5 (US) 2.3 (HU) * Only 18 OECD countries (including Singapore) provided data on the entrepreneurship environment ratings by country informants. 62
  • 63. NUS Entrepreneurship Centre GEM 2006 - Overall Assessment of Singapore’s Environment for Entrepreneurship • The expert informants’ ratings on all entrepreneurship environment indicators in 2006 were above the averages of the 18 GEM OECD countries • Singapore was rated the highest on three attributes– “effectiveness of primary & secondary education & training” (3.1), “government policy support” (3.5), and “R&D transfer effectiveness” (3.2). • Singapore is also near the top among the surveyed countries in terms of “government programme effectiveness” (3.4), “market accessibility” (3.3), and “ease of access to physical infrastructure” (4.6). • Overall, in comparison with 2005, the ratings of Singapore’s environment for entrepreneurship in 2006 appear to have generally improved on most dimensions, and stayed more or less constant for a small number of dimensions (“government policy support”, “government programme effectiveness”, and “ease of access to physical infrastructure”, and “regulation and taxation burden”). 63
  • 64. NUS Entrepreneurship Centre GEM Singapore 2006 Conclusions 64
  • 65. NUS Entrepreneurship Centre Conclusions Entrepreneurial activity levels across the 16 participating member countries of the (OECD) group falling in the same income band as Singapore (including USA) have dropped from an average of 6.4% in 2005 to 5.9% in 2006. Consistent with this observed decline trend in the OECD countries with the same income bracket as Singapore, Singapore’s early-stage entrepreneurial level, as measured by the Total Entrepreneurial Activity (TEA) rate, also decreased from 7.2% in 2005 to 4.9% in 2006. The data for the OECD countries show that the bulk of relatively advanced countries in the US$25,000-US$40,000 per capita range reported TEA rates in the 3% to 8% region, with the mean clustering around 5%. The fall in Singapore’s TEA rate in 2006 is likely to be partly due to favourable GDP and employment growth. The majority of OECD countries also experienced a decline in TEA rates between 2005 and 2006. 65
  • 66. NUS Entrepreneurship Centre Conclusions Compared to the average level of GEM OECD countries, Singapore fared better in terms of start-ups that are technology-oriented, intended to penetrate new markets and overseas market, and have higher employment growth aspiration. The assessment of Singapore’s environment for entrepreneurship showed improvement across most environmental indicators, particularly the availability of capital for start-ups and the effectiveness of education and training programmes. Compared to the other OECD countries participating in the GEM, Singapore received higher ratings on all the indicators. Unlike lower income countries or countries with unfavourable policy environment, Singapore’s challenge may be one of coping with the paradox of success, resulting in high perceived opportunity cost of starting up on one’s own and a social norm less supportive of entrepreneurship. A key policy focus should be on promoting high tech and innovative startups that can internationalize, not just start-ups in general 66
  • 67. NUS Entrepreneurship Centre The full Singapore report can be downloaded from the NUS Entrepreneurship Centre website: www.nus.edu.sg/nec To download Global Executive report, GEM website: www.gemconsortium.org.sg 67