Meet GEM: The Global Study of Entrepreneurship

There’s no shortage of entrepreneurship stories in pop culture.

Turn on the TV and you may find yourself watching founders like Jamie Siminoff of Ring swim with the Sharks on ABC’s “Shark Tank.” If you’re a movie buff, you may be drawn to one of several feature-length films about famed entrepreneur Steve Jobs. Prefer podcasts? There’s a long list of shows to choose from, including NPR’s How I Built This.

And, that’s just the start. But, to get a glimpse of what entrepreneurship really looks like around the world, and right here in the United States, we have to look beyond the glamorized media narratives and into the behaviors and motivations of everyday entrepreneurs.

Global Trends in Entrepreneurship

That’s what the Global Entrepreneurship Monitor (GEM) aims to do. What launched in 1999 as a joint venture by Babson College and the London Business School has grown into the world’s largest and most developed research program on entrepreneurship. The studies help us uncover and understand the behavior of individuals starting and managing a business—their motivations, their aspirations, and so much more.

So what can GEM data tell us that Hollywood can’t? Here’s a start: Necessity isn’t what motivates entrepreneurs to take a leap and start ventures; it’s opportunity. Seventy-four percent of entrepreneurs across 54 economies around the world start businesses in pursuit of opportunity, according to the 2017/2018 GEM Global Report. Which is good news for local economies, where new businesses can spur short- and long-term job creation. In the United States, 39 percent of entrepreneurs surveyed expect to generate jobs, following by Asia and Oceania at 21 percent, and Europe at 19 percent.

Opportunity-driven motivation is greatest in North America (83 percent), where innovation—the extent at which entrepreneurs are introducing new products—is at 40 percent, the highest among the economies surveyed. By contrast, innovation is lowest in Latin America and the Caribbean at 23 percent.

“The high levels of innovation, growth-oriented entrepreneurship, and startup activity in technology, finance, and professional service sectors distinguishes entrepreneurship in North America from other regions,” said Donna Kelley, a Babson College professor and member of the Board of Directors of the Global Entrepreneurship Research Association, which overseas GEM. “Entrepreneurs here are improving people’s lives through new and advanced products and services, creating jobs, and demonstrating clear impact not only within their society, but around the world.”

A Tale of Three Entrepreneurial Cities

Knowing that Americans see opportunity in entrepreneurship, it’s no surprise that more than 25 million of them started or ran new businesses during a two-year span, according to the 2016 GEM U.S. Report. What is surprising: the variance in total entrepreneurial activity across different cities.

The 2016 report dug deeper into U.S. data, providing a city-level analysis of entrepreneurship in Boston, Miami, and Detroit. Miami is no stranger to being at the top of entrepreneurial activity lists: the south Florida city is No. 1 on the Kauffman Foundation’s 2017 Index of Startup Activity, a measurement of new business creation in the country’s 40 largest metro regions. But, the GEM report revealed that close to one in five entrepreneurs in Miami, and one in six in Detroit, are motivated by necessity. That’s echoed in further findings: Detroit has the highest entrepreneurship levels among the lowest third of the income category.

More fascinating trends across the three cities: Age patterns show high entrepreneurship rates among young people in Detroit, those in mid-career in Miami, and people in their late careers in Boston. And, in Beantown, there’s a wider gender gap—women in the city start businesses at around the half the rate that men do.

Why is all this important to study and understand? Aside from developing a realistic understanding and interpretation of what entrepreneurship really looks like—aside from what we see on our television screens—it comes down to providing the right resources for entrepreneurs in each city.

“It is important to identify a city’s needs and monitor progress relative to entrepreneurship,” said Kelley. “Whether that means, for example, supporting women or youth entrepreneurs, or assisting ventures that introduce innovations or create jobs.”

Posted in Insights

Tagged Research, Entrepreneurship Ecosystems, Global

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