UK ninth most entrepreneurial economy globally

The UK has slipped from sixth to ninth place in the 2014 Global Entrepreneurship and Development Index (GEDI).

The researchers behind the GEDI study suggest that attitudes and entrepreneurial aspirations in the UK are holding back UK entrepreneurial performance. They found that while UK entrepreneurial activity is innovative and enjoys strong cultural support, its full potential may be held back by negative attitudes and a lack of ambition, relative to leading entrepreneurial economies.

The researchers found that the overall UK performance in entrepreneurship is world class. However, the different elements making up entrepreneurship in the UK – such as ability, attitudes and ambition – are not as well balanced as in the very leading entrepreneurial economies such as the US, which ranked first in the Index, and Australia, which ranked second.

In the study of the UK and 119 other countries across the world, the team analysed data from more than 3,000 highly skilled individuals with business ideas, alongside data describing how well each country supports entrepreneurial activity. The researchers found that while entrepreneurial activity is innovative in the UK, Britons were less likely to choose entrepreneurship as a career path because they had a wealth of employment options available to them. This made them reluctant to leave secure, well paid jobs for the uncertainty of starting up a business.

This is in comparison to countries such as the US and Australia, where highly skilled individuals with innovative ideas are more likely to set up businesses despite the risks. In these countries, innovative entrepreneurs also show ambition to grow their businesses and they are supported by more positive attitudes than in the UK. The high valuation of entrepreneurship means that highly skilled individuals are more likely to set up growth-oriented, high-quality businesses. The researchers say this type of ‘can-do’ environment provides a platform for aspiring entrepreneurs to develop a bigger network of contacts who can provide support, in the form of advice or even financial backing.

The study was carried out by researchers from Imperial College Business School in association with George Mason University, the London School of Economics and Political Science and the University of Pécs.

Professor Erkko Autio, co-author of the study from Imperial College Business School, said: “Although the UK is a world-leading entrepreneurial economy, our study shows that a relative lack of ambition and positive attitudes may hold the UK back from realising its full entrepreneurial potential.

“Enterprising people who are highly skilled should be encouraged to see setting up their own business as an exciting alternative to full-time employment. However, our report shows that many still crave the security of full-time employment.

“Entrepreneurship creates social benefits that extend beyond the individual, such as job creation, increasing competition and enhanced economic dynamism. Our report pinpoints areas that the government can focus on to help aspiring entrepreneurs make the leap from the safety of a well-paid job into what they may feel is riskier territory.”

This year’s GEDI index, now in its fourth edition, identifies the strengths and weaknesses of the economies of 120 countries and compares their entrepreneurial characteristics. The Index compared the experience of male and female entrepreneurs for the first time, to reflect the increasing participation and importance of women in entrepreneurship around the world.

The researchers found that the UK has fewer female entrepreneurs, relative to males, than many other countries such as Germany, the USA and Australia.  They suggest that increasing female entrepreneurship could improve the UK’s performance.

The researchers also found that UK entrepreneurs are strong in innovation. The UK ranks first in Europe and third overall, for its level of start-up activity in the medium and high technology sectors. In recent years, the Government has been fostering technology clusters such as ‘silicon roundabout’ in Shoreditch, London. These clusters have given entrepreneurs access to high quality training and development to help them grow their businesses. These companies are also doing better because they are providing niche products and services that are not currently offered by other businesses.

Another trend that emerged from the survey was that UK entrepreneurs were less inclined to grow their business globally or employ large numbers of people.  This resulted in a lower ranking for the UK in the “aspiration” category, coming ninth in Europe and fifteenth globally.

Britain could also improve the way highly skilled people viewed entrepreneurship, coming eleventh in Europe in this regard. UK also ranks lower than the US in entrepreneurial networking, meaning that gaining mentoring support and learning from the experiences of others is relatively more difficult here.

The authors suggest that GEDI could be used by UK Government policymakers to develop more targeted strategies that enhance the conditions that will allow for more entrepreneurial activities in the UK economy.

See the press release of this article