Panos Caribbean, 12th October 2012 - Barbadians who were engaged in early stage entrepreneurial activity are older and better educated than the average individual who pursues own account business activity within countries surveyed globally by the Global Entrepreneurial Monitor (GEM) 2011, and especially those within the Caribbean.
The GEM measures entrepreneurial activity among participating countries which numbered 54 in 2011. Barbados is the third country in the Caribbean following Jamaica and Trinidad and Tobago to join the global research project. In the region, Colombia is also a participant.
Lead researchers for GEM 2011 in Barbados were Ms. Marjorie Wharton and Dr. Donley Carrington of the Cave Hill School of Business (CHSB), University of the West Indies. Speaking during a presentation of research findings on Friday October 5 at the launch of the 2011 Barbados report at the CSBM, Dr. Donley Carrington noted that the majority of Total Early Stage Entrepreneurs (TEA) are people who have completed secondary education, with individuals who have post-secondary education running a close second.
The smallest group by percentage, around 5 per cent, completed only some secondary education.
GEM studies entrepreneurial behaviour at the grassroots level, looking at the attitudes, aspirations and practices of individuals as opposed to firm level data which is collected by other forums. A group of 36 individuals participated in a National Expert survey in Barbados, while an Adult Population Survey was conducted among 2,809 individuals over 18.
In addition to the NES, the GEM report also makes use of standardized national data from other sources such as the International Monetary Fund, United Nations, World Economic Forum and the World Bank.
Carrington reported that while the age group 25-34 is dominant in total early stage entrepreneurial activity in global economies surveyed, GEM 2011 showed that the category 35-44 tends to be more dominant in Barbados.
In the efficiency driven economies - among which Barbados is classified – in 2011 there was a steep increase in entrepreneurship in the 25-34 age group. “In the case of Barbados, the tendency was more towards middle aged entrepreneurs, individuals who may have gained education or experience that they often use as a foundation on which they build their entrepreneurial activity,” the university lecturer said.
Also unique about the island was the percentage of the population in the age range 65-99 who were involved in early stage entrepreneurship. The results showed that three per cent of the population in this age range was entering into entrepreneurial activities after retirement. “This should be noted by policy makers,” Carrington said.
GEM 2011 Barbados also indicates that the percentage of males involved in early stage entrepreneurship is almost double that of the percentage of females involved. These figures indicate a pattern which mirrors ownership among established businesses, which are predominantly owned and/or managed by men.
The data is reflective of global trends. However they track below Jamaica where females represent 51 per cent, and males 49 per cent of the sample for TEA.
The GEM Model recognizes three phases of entrepreneurial activity; namely starting a new business, running a new business or running an established business, and discontinuing a business. Nascent entrepreneurs are identified as those with the first three months of paying salaries, having started their venture.
Beyond three months and up to three and a half years, operations are classified as new businesses. New business owners together with the nascent entrepreneurs account for the total early-stage entrepreneurship activity (TEA).
The researchers view as an anomaly the fact that the percentage of businesses that survive nascent stage and move on to being classified as new entrepreneurial activity is below the average for the efficiency driven economies in general and more specifically below the figures for Colombia and Trinidad and Tobago.
“This needs to be addressed. Greater support and a stronger ecosystem need to be established to ensure that a larger percentage of start-up businesses are able to survive and to thrive,” GEM 2011 notes.
The report indicates that those engaged in early stage entrepreneurial activity in Barbados were responding for the most part to clear opportunities, as opposed to other islands where TEA is mostly necessity-driven.
“In further examining the early stage entrepreneurial activity, it can be seen that the majority (58 per cent) of activity in Barbados is driven by the desire to capitalize on an opportunity that is present rather than the individual being forced into it out of necessity (5 per cent).
“This figure for opportunity driven entrepreneurial activity is significantly above the average for efficiency driven economies in general and in particular those of Colombia and Trinidad and Tobago,” it is noted in the report.
Using 12 entrepreneurial framework condition categories, Barbados’ rankings in nine categories were within the top 50.
In particular, the report notes, Barbados’ strengths in terms of its stable, transparent, and reliable institutions (18th), high-quality infrastructures (22nd), and excellent educational system are strengths that can be leveraged for further development, the researchers note. Barbados ranks 5th in terms of primary education quality, 15th for the entire system, and 10th for the quality of math and science education.
But, the island is below average on the identification of opportunities. “Trinidad and Tobago and Colombia, which also classify as efficiency economies, have much higher rates of perceived opportunities. Trinidad and Tobago has a rating of 62 per cent and Colombia has a rating of 73 per cent,” Carrington noted.
In order for entrepreneurial activities to take place, individuals must not only see opportunities in the economy, but they must also believe that they have the capability to take advantage of these opportunities that present themselves, GEM 2011 clarifies.
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