WP1 White Paper:
Growth and growth intentions - a
meta-analysis of existing evidence
Jonathan Levie and Erkko Autio
Entrepreneurial
Ambition and Growth
• Initial research in this theme includes – first 12 months:
• 1.1: Growth and growth ...
WP I Content
• Entrepreneurial firm growth – a meta-analysis
• Entrepreneurial ambition, resources, and SME growth
• Entre...
Content and Data
Literature UK GEM Data Global GEM Data
Business Structure
Database GEDI Data Other
Entrepreneurial firm g...
Country Systems of
Entrepreneurship
(example Scotland vs ’Innovation Driven’ countries)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Oppo...
Growth and Growth Intentions – a
meta-analysis of existing evidence
• How strong is the association between
entrepreneuria...
Why growth intentions matter
• Growing firms associated with job creation, economic
growth
• The UK appears to suffer from...
Meta-analysis
• Disciplined search, statistical comparison of findings
and summarizing of “effects” by size, direction and...
Effect of growth intentions
on realised growth
• For young owners, the average effect size was positive but not
robust.
 ...
Factors associated with
growth intention
• Three types of characteristics
– individual characteristics, business character...
Individual characteristics/
Individual level
• Age
– No clear result for nascent entrepreneurs
Small negative effect for ...
Individual characteristics/
Individual level
• Entrepreneurial experience
 Small negative effect for nascent entrepreneur...
Individual characteristics/
Individual level
• Risk-taking
– Small to medium positive effect for nascent entrepreneurs
fro...
Individual characteristics/
Individual level
• Motivation for starting the business
– at the nascent business stage:
• Pos...
Business characteristics/
Individual level
• High technology
– No evidence that this affects growth intention
• Exporting
...
Country characteristics/
Country level
• Note: all studies based on GEM surveys, employed
partially overlapping data
 Reg...
Country characteristics/
Country level
 Significant large positive effect of prevalence of
wealth motives for starting a ...
Raising Entrepreneurial Growth
Intentions: Implications for Policy
• Business growth’s golden combination:
growth intentio...
Raising Entrepreneurial Growth
Intentions: Implications for Policy
• Entrepreneurship or intrapreneurship?
– Potential inn...
Themes for further research
• Longitudinal study tracking UK nascent
entrepreneurs over time (new database needed)
• Multi...
Contact us:
The authors: j.levie@strath.ac.uk / erkko.autio@imperial.ac.uk
If you would like any more information about th...
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Growth and growth intentions - a meta-analysis of existing evidence - Jonathan Levie and Erkko Autio

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Growth and growth intentions - a meta-analysis of existing evidence - Jonathan Levie and Erkko Autio

  1. 1. WP1 White Paper: Growth and growth intentions - a meta-analysis of existing evidence Jonathan Levie and Erkko Autio
  2. 2. Entrepreneurial Ambition and Growth • Initial research in this theme includes – first 12 months: • 1.1: Growth and growth intentions – A systematic review of existing evidence on the causes and growth consequences of the growth intentions of business owners • 1.2: Entrepreneurial Ambition, Resources and SME Growth Recent evidence suggests that high-aspiration early-stage entrepreneurship is associated with subsequent macro- economic growth. This project will examine the effect of regional, local, peer-group, firm-level, and individual-level factors that influence both the propensity to engage in ambitious entrepreneurship and to achieve rapid growth
  3. 3. WP I Content • Entrepreneurial firm growth – a meta-analysis • Entrepreneurial ambition, resources, and SME growth • Entrepreneurial ambition and growth – an international comparison • Bottlenecks in UK Systems of Entrepreneurship • Developing policy insights – policy portfolio analysis
  4. 4. Content and Data Literature UK GEM Data Global GEM Data Business Structure Database GEDI Data Other Entrepreneurial firm growth – a meta- analysis A novel meta-analysis technique Entrepreneurial ambition, resources, and SME growth Multi-level analysis of local, peer group, firm and individual-level effects Multi-level analysis of local, regional and firm- level effects Entrepreneurial ambition and growth – an international comparison Multi-level analysis with focus on institutional and framework conditions (e.g., IP protection; culture; social reference groups; other) Bottlenecks in UK Systems of Entrepreneurship Multi-level analysis of the effect of bottlenecks on growth and growth ambition Multi-level analysis of the effect of bottlenecks on growth and growth ambition Identification of bottlenecks at regional (data permitting) and home country levels Developing policy insights – policy portfolio analysis Policy portfolio optimisation analysis
  5. 5. Country Systems of Entrepreneurship (example Scotland vs ’Innovation Driven’ countries) 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Opportunity Perception (Attitudes) Startup Skills (Attitudes) NonFear of Failure (Attitudes) Networking (Attitudes) Cultural Support (Attitudes) Opportunity Startup (Activity) Tech Sector (Activity) Quality of Human Resources (Activity) Competition (Activity) Product Innovation (Aspirations) Process Innovation (Aspirations) High Growth (Aspirations) Internationalisation (Aspirations) Risk Capital (Aspirations) Lower Quartile Median Upper Quartile zUKID_Scotland
  6. 6. Growth and Growth Intentions – a meta-analysis of existing evidence • How strong is the association between entrepreneurial growth intentions and subsequent performance? • What affects entrepreneurial growth intentions at the individual level and national level, and how big are these effects? • What can be done to raise entrepreneurial growth intentions in the UK? • What further research needs to be done in this area?
  7. 7. Why growth intentions matter • Growing firms associated with job creation, economic growth • The UK appears to suffer from a growth intention gap in relation to the United States • The prevalence of growth-oriented entrepreneurs has declined since 1999 in the UK but not in the US • Case-based comparisons of UK and US firms suggest “high growth is much more linked to motivations and the managerial capacity of firms than the immediate environment” (Treasury/BERR report, 2008)
  8. 8. Meta-analysis • Disciplined search, statistical comparison of findings and summarizing of “effects” by size, direction and robustness • Effect of growth intention on realised growth – Only quantitative empirical studies that measured growth intention and size at time t0 and then measured realised growth at a later time t1 were included – 13 studies • Effect of other factors on growth intention – individual, firm and country level factors – 39 studies
  9. 9. Effect of growth intentions on realised growth • For young owners, the average effect size was positive but not robust.  For established business owners and sales growth, the average effect size was small to medium (0.22), positive and robust.  For established business owners and employment growth, the average effect size was medium (0.33), positive and robust. • Tests suggested that growth intentions had a direct effect on subsequent realised growth; i.e. that the effect did not operate solely through other variables. • But some studies have found evidence of indirect effects as well.
  10. 10. Factors associated with growth intention • Three types of characteristics – individual characteristics, business characteristics and contextual characteristics • Three phases in business evolution – nascent (active, but pre-start), new and established for at least three years • Two levels of analysis – individual level and country level
  11. 11. Individual characteristics/ Individual level • Age – No clear result for nascent entrepreneurs Small negative effect for younger owners of new businesses – No clear result for established owners • Gender – Male early-stage entrepreneurs are more likely to have growth intentions than female early-stage entrepreneurs Small positive effect for male nascent entrepreneurs Small positive effect for male new business owners – Results for established business owners are mixed • Education Generally positive, but not in all contexts – Effect size for nascent entrepreneurs is very small
  12. 12. Individual characteristics/ Individual level • Entrepreneurial experience  Small negative effect for nascent entrepreneurs  Small positive effect for established business owners • Management experience – Mixed results – signalling that other factors must moderate this relationship • Industry experience – Mixed results – other factors must moderate this relationship
  13. 13. Individual characteristics/ Individual level • Risk-taking – Small to medium positive effect for nascent entrepreneurs from one sample, two studies Small to medium positive effect for established business owners – Direction of causality? • Achievement motivation Small positive effect for established business owners • Innovation/innovativeness Small positive effect for nascent, new and established business owners
  14. 14. Individual characteristics/ Individual level • Motivation for starting the business – at the nascent business stage: • Possible positive effect of wealth-seeking, at least in the US • No effect of independence seeking • Self-efficacy (task self-confidence) – Insufficient evidence
  15. 15. Business characteristics/ Individual level • High technology – No evidence that this affects growth intention • Exporting – One study each on nascent, new and established business owners, all positive • Age of business – No clear result; other factors appear to influence this relationship • Size of business – No clear result; other factors appear to influence this relationship
  16. 16. Country characteristics/ Country level • Note: all studies based on GEM surveys, employed partially overlapping data  Regulatory burden in a country had a small to medium negative effect on the prevalence rate of growth- oriented early-stage entrepreneurs  Regulatory burden in a country had a medium to strong negative effect on the relative prevalence rate of growth-oriented early-stage entrepreneurs  Regulatory protection/rule of law had a medium positive effect on relative prevalence of growth- oriented early-stage entrepreneurs
  17. 17. Country characteristics/ Country level  Significant large positive effect of prevalence of wealth motives for starting a business on relative prevalence of growth-oriented early-stage entrepreneurs  Significant medium to large negative effect of prevalence of independence motives for starting a business on relative prevalence of growth-oriented early-stage entrepreneurs
  18. 18. Raising Entrepreneurial Growth Intentions: Implications for Policy • Business growth’s golden combination: growth intention, innovation and exporting – What if UK entrepreneurs saw the EU as their home market? • Raising or enabling aspirations? – If UK entrepreneurs were motivated by the pursuit of wealth, they would have clear incentives to grow in the current regulatory climate – But they do not appear to be as motivated by wealth as US entrepreneurs
  19. 19. Raising Entrepreneurial Growth Intentions: Implications for Policy • Entrepreneurship or intrapreneurship? – Potential innovative, growth-oriented entrepreneurs may have choices about the context in which they could act as entrepreneurs – The UK provides a relatively good environment for “intrapreneurship” – Widen the debate from ‘understanding why aren’t there more growth-oriented business owners in the UK’ to ‘understanding occupational choice of growth- oriented entrepreneurs and intrapreneurs in the UK’
  20. 20. Themes for further research • Longitudinal study tracking UK nascent entrepreneurs over time (new database needed) • Multi-level studies: individual, peer, business and country characteristics/ Individual level of analysis (existing databases) • Moderation studies: How the effect of one factor on growth intention is influenced by another factor • Costs and benefits of entrepreneurship over intrapreneurship for projects with growth potential
  21. 21. Contact us: The authors: j.levie@strath.ac.uk / erkko.autio@imperial.ac.uk If you would like any more information about the ERC and any of its activities please contact the Director, Stephen Roper at stephen.roper@wbs.ac.uk or the Deputy Director, Mark Hart at mark.hart@aston.ac.uk. More details about the activities of the ERC and our latest events can be found at: www.enterpriseresearch.ac.uk

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