Entrepreneurs Gain a Foothold Abroad

By + More

With movies like Letters from Iwo Jima and Pan's Labyrinth popping up at this weekend's Oscars, it's clear that English-speaking actors no longer have a monopoly on award-winning films. That's also holding true for start-ups. Around the world, more people are starting businesses, with middle-income countries leading the way, according to the recently released 2006 Global Entrepreneurship Monitor done by the London School of Business and Babson College in Massachusetts. The study, begun in 1999, now looks at entrepreneurship in 42 countries and talks to about 160,000 small-business owners.

The latest findings fit in with results from years past, says Elaine Allen, a Babson professor who wrote the U.S. part of the report as well as the findings on women. In middle-income countries like Peru and the Philippines, where per capita gross domestic product averaged $10,367, people have limited employment options, and that drives them to open their own businesses, she says. "If you look at a country like Norway, there's no necessity because everyone is so wealthy from oil," she explains.

Early-stage companies–those that have been around less than 42 months–grew most in Peru, at a rate of 40.2 percent. In the European Union and Japan, entrepreneurial activity was much lower, with Belgium at the bottom of the survey with a rate of 2.7 percent. The high number of new businesses in Peru shows that there are more opportunities to start up companies and that more people are willing to do so. Many of these countries also had high numbers of established business owners, proving that there's a growing company-friendly environment, says the study.

Unlike in high-income countries, a higher number of new small businesses in low-to-middle-income countries were in sectors such as retail and restaurants, where the owner is selling something directly to consumers. Meanwhile, in higher-income countries, more people were starting companies in the business-services sector.

While they still lag behind men in earning power, more women are catching up by striking out on their own. In many countries, women have been traditionally shut out of corporate environments, making them want to start a side business to supplement family income. Now the growing number of female business owners shows that efforts to help them start companies, such as miniloans and seminars, are paying off, says Allen. After a London conference about the study revealed that women in some countries feel uncomfortable dealing with male bankers, business boosters will focus on new efforts such as increasing the number of women in banking, she says.

Still, women in both developed and developing countries face start-up hurdles. "Women have not had access to venture capital," says Allen. "That's even true when we survey women in Massachusetts. They are much more likely to find creative ways of financing."


You Might Also Like