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Small Business Economics

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01.12.2013

Moving on from nascent entrepreneurship: measuring cross-national differences in the transition to new business ownership

verfasst von: Heiko Bergmann, Ute Stephan

Erschienen in: Small Business Economics | Ausgabe 4/2013

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Abstract

Nascent entrepreneurship and new business ownership are subsequent stages in the entrepreneurial process. We illustrate how information from the largest internationally harmonized database on entrepreneurship, the Global Entrepreneurship Monitor project, can be used to approximate the entrepreneurial process. We make a methodological contribution by computing the ratio of new business ownership to nascent entrepreneurship in a way that reflects the transition from nascent to new business ownership and provides cross-nationally comparable information on the efficiency of the entrepreneurial process for 48 countries. We report evidence for the validity of the transition ratio by benchmarking it against transition rates obtained from longitudinal studies and by correlating it with commonly used entrepreneurship indicators and macro-level economic indices. The transition ratio enables future cross-national research on the entrepreneurial process by providing a reliable and valid indicator for one key transition in this process.

Vorheriger Artikel Behavioral credit scoring model for technology-based firms that considers uncertain financial ratios obtained from relationship banking

Nächster Artikel Gender gap in latent and nascent entrepreneurship: driven by competitiveness

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The minimum sample size per country and year is 2,000 respondents. However, the entrepreneurial activity indicators are only calculated for people in the age range of 18–64 years, which reduces the number of eligible cases for some countries (the lowest number of respondents per country was 1,628).

The half year is added to the 3-year time-span because data collection in the GEM project usually takes place in the summer. Thus, if somebody says, for example, in the summer of 2010 that the first year he received wages, profits or payments in kind was 2007, the business can be up to 3.5 years old.

That is, the commonly used NBOM rate is likely to be influenced by a survivor bias. This rate does not capture all people who have started a new business in the last 3.5 years, but only those whose business is still active and who are still involved in this business when being surveyed. A NBOM who has already abandoned the business that he/she started less than 3.5 years ago will not be captured by this measure. Thus, the commonly used NBOM measure depends to some extent on the survival rate of new businesses in the early years of their existence (Wennekers et al. 2005: 297). If the survival rate is high, then the NBOM rate and consequently the NBOM/NE ratio are high (Reynolds and Curtin 2011b).

As explained above, it is not possible to calculate a rate for new businesses that are exactly 1 year old because GEM only asks for the first year of wages, profits or payments in kind and because data collection in the GEM project takes place at midyear.

It should be noted that although the adapted rate of new business owner managers (NBOM1 rate) is superior from a theoretical point of view, it correlates highly with the commonly used measure of NBOM (Pearson correlation: 0.98).

Due to the cost of data collection, GEM data are not available for all countries for all time periods.

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Titel: Moving on from nascent entrepreneurship: measuring cross-national differences in the transition to new business ownership
verfasst von: Heiko Bergmann
Ute Stephan
Publikationsdatum: 01.12.2013
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 4/2013
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-012-9458-4

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