Entrepreneurship is a growing trend across the globe and budding entrepreneurs across the globe are striving to foray into the world of business with innovative and disruptive ideas. Globally, the developed economies contribute to 80% of the unicorns and the rest 20% of the unicorns are mostly concentrated in China, India and Russia.
This blog post tries to highlight the various factors that affect the success rate of an entrepreneur and compare the boosters and blockers per factor for the emerging and developed economies. The blog is inspired by the Haaga-Helia Business Innovation Conference 2020 (HHBIC) paper on “Innovativeness and entrepreneurial intentions – Finland, Lithuania and USA in comparison” by Tiina Brandt and Isaac Wanasika.
One of the major factors determining the success rate of entrepreneurship is the availability of funding. According to nvca.org, 52% of global venture funding is in the US market. Emerging economies tend to have a higher number of self-funded entrepreneurs and such ventures are more susceptible to cash crunches and hence exit.
Various governmental support is available, especially in Western Europe, which eases the burden of entrepreneurs. Important point to note is that Tech Entrepreneurship is easier in emerging economies and funding from global investors are readily available for tech startups.
Generic skills for workforce: The emerging economies have the advantage of numbers, as all the countries are an education hotspot and are churning employable workforce in high numbers.
High-end technological skills: The developed economies have an edge as most of the universities offer specialization in high-end technologies. In emerging economies, some top universities offer these specializations, however most of these talents are hired by technological giants like Amazon, Google and Apple.
Entrepreneurial skills: In developed nations, entrepreneurial courses are offered by most universities. Students are encouraged to follow the path of entrepreneurship. This trend is picking up in the emerging economies.
Solving a societal issue or challenge and bringing disruption to common ways of working has been one of the success mantras for entrepreneurs. Uber, AirBnB, Amazon and N26 have disrupted the common way of working. Whereas, several MedTech, EduTech and SocialTech entrepreneurs are trying to solve major social issues.
The emerging economies possess more opportunities to impact and uplift the society, especially in the areas of healthcare, education, communication and infrastructure. In comparison, the developed economies face lesser issues in the above areas and are focusing on providing higher value services in healthcare, education and communications industry.
For entrepreneurs, physical infrastructure especially in Supply Chain oriented business is very important. Similarly, technical infrastructure is the base requirement for tech entrepreneurs, not only to build the product but also to roll out the product to the masses.
Though infrastructure development is progressing in a rapid scale in all the emerging economies, it will take decades to match the scale of the developed nations. For perishable products, warehousing, supply chain and distribution storage facilities are factors to be accounted for in an emerging economy. Whereas, these services can be procured in “as-a-service” model in developed economies.
This probably is one of the softer aspects which impacts the emerging economies negatively. Securing a job is given primary focus and entrepreneurship is a back-up plan. A high-paying job provides economic stability for an individual and this is given precedence. In recent years, with economic uplift, the trend is changing, and more young professionals are venturing into the world of entrepreneurship.
To conclude, the developed nations are currently having more economic, social and infrastructural support to pursue entrepreneurship. Various governmental, social and institutional support systems are available to guide a budding entrepreneur to success. More importantly, there are means to handle entrepreneurial failures.
The emerging economies are full of opportunities and with the uplift of the economic standards, the hardships of an entrepreneurial beginning are diminishing. Governments are starting various support systems and changes are visible. In the coming decade we expect that the gap will be substantially marginalized due to the efforts being taken.