Entrepreneurial Work by Employees in Enterprises

Transcription

1 Thomas Schøtt Entrepreneurial Work by Employees in Enterprises

2 Entrepreneurial Work by Employees in Enterprises Thomas Schøtt

3 Thomas Schøtt (and GERA for items quoted from GEM surveys). University of Southern Denmark Department of Entrepreneurship and Relationship Management Engstien Kolding Denmark [email protected] Layout og tryk: Jørn Thomsen Elbo A/S, Kolding ISBN: Gengivelse af denne bog eller dele heraf er ikke tilladt uden forfatterens tilladelse, ifølge gælden lov om ophavsret.

4 Preface Entrepreneurial work is discovery and exploitation of opportunities. Entrepreneurial work is done by independent entrepreneurs founding new businesses and by especially entrepreneurial employees in existing enterprises. Here we first focus on entrepreneurial work by employees. How is entrepreneurial work by employees organized in time into an idea-phase and an implementation-phase, and organized in social roles of leader and supporter of entrepreneurial work? What is the volume of entrepreneurial work in various countries around the world, and is Denmark at the top or at the bottom? What characteristics of an employee - gender, age, education - make an employee go into entrepreneurial work rather than routine work? Do entrepreneurially working employees differ from routinely working employees and independent entrepreneurs in their competencies and work-qualities? Does industry differ from other sectors in entrepreneurial work by employees? Do industrial business relations promote innovation, exporting and growth-expectations? Do partnerships among public and private enterprises promote innovation? Then we focus on entrepreneurial work by independent entrepreneurs who start or run their own businesses. Has the level of independent entrepreneurial activity in Denmark declined during the economic recession, and is the Danish level higher or lower than in other societies? Are the cultural and institutional framework conditions in Denmark deteriorating or stable despite the recession, and are Danish conditions better or worse than in other societies? How do the framework conditions shape independent entrepreneurship, and what are the effects of culture and institutions? These questions are addressed by analyzing data from our surveys in 2011 and preceding years in Denmark and many other countries, gathered mainly in our research program Global Entrepreneurship Monitor, GEM, and this year also by a survey of industrial and other firms in Denmark. Our up-to-date surveys and analyses provide leading indicators of current changes in entrepreneurship. This study is a sequel to my six research monographs, Entrepreneurship in Denmark 2005; Entrepreneurship in the Regions in Denmark 2006; Growth-Entrepreneurship in Denmark 2007; Education, Training and Networking for Entrepreneurship in Denmark 2008; and Social and Commercial Entrepreneurship in Denmark 2009; and Training and Network Organization in Entrepreneurship in Denmark This study is the thirteenth in the series of annual thematic studies of entrepreneurship in Denmark, with up-todate analyses covering each year from 1999 through The series is part of the research program Global Entrepreneurship Monitor (GEM), conducted by the international consortium Global Entrepreneurship Research Association (GERA), in which the Danish team is headed by the main author. The Danish team and the consortium have collected most of the data, but the analyses and interpretations are of course the sole responsibility of the author. The study was generously supported by a grant from the Danish Industry Foundation, Industriens Fond. The University of Southern Denmark through our Department of Entrepreneurship and Relationship Management granted me time and facilities for 3

5 the research. The study benefitted from collaboration with Torben Bager, Majbritt R. Evald and Mahdokht Sedaghat and discussions with our numerous colleagues in GEM/ GERA around the world. This monograph can also be viewed on the internet at www. gemconsortium.org University of Southern Denmark, Winter solstice 2011 Thomas Schøtt

6 Contents Preface Contents Sammenfatning Summary in Danish PART 1 INTRODUCTION Chapter 1 Introduction: Entrepreneurial work by employees and independent entrepreneurs PART 2 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 ENTREPRENEURIAL WORK BY EMPLOYEES Phases and roles in entrepreneurial work by employees Entrepreneurial work by employees in Denmark and in other countries around the world Employees entrepreneurial versus routine work shaped by their background Competencies and work-qualities of entrepreneurial employees contrasted routine employees and independent entrepreneurs Job-creation through entrepreneurial work by employees and independent entrepreneurs Chapter 8 PART 3 ENTREPRENEURIAL WORK BY EMPLOYEES IN DANISH INDUS- TRY Chapter 7 Employees in industry: Entrepreneurial employees compared to routine employees Entrepreneurial employees: Industry compared to private non-industry and the public sector Chapter 9 Industrial and other firms relations shaping innovation, export and growthexpectation Thomas Schøtt and Mahdokht Sedaghat Chapter 10 Collaborations among and between public and private actors. Majbritt R. Evald, Thomas Schøtt, Ann H. Clarke and Kristin B. Munksgaard PART 4 INDEPENDENT ENTREPRENEURSHIP Chapter 11 The changing level of independent entrepreneurship in Denmark and other societies Chapter 12 National conditions for independent entrepreneurship: Trends in Denmark and comparisons Chapter 13 Effects of framework conditions upon level of independent entrepreneurship PART 5 CONCLUSIONS Chapter 14 Entrepreneurial work by employees and independent entrepreneurs in Nordic, Anglo-Saxon, and Continental countries. Torben Bager and Thomas Schøtt Appendix Technical specifications Bibliography National teams in Global Entrepreneurship Monitor in

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8 Sammenfatning Danish Summary Entreprenørielt arbejde, entrepreneurial work, betegner det foretagsomme arbejde, der består i at opdage og udnytte muligheder, især forretningsmuligheder, for at starte og udvikle foretagender. Arbejdet på opdagelsen og udnyttelsen har en organisering. Opdage muligheder Organisering Udnytte muligheder Entreprenørielt arbejde udføres i organisatoriske rammer, dels ved opstart af nye virksomheder og dels ved udvikling af nye forretningsområder eller aktiviteter inden for eksisterende virksomheder. Mellem disse to rene organisationsformer er to blandingsformer, en eksisterende virksomheds opkøb af en ny virksomhed, og en ny virksomhed der dannes ved spin-off eller udskillelse fra en eksisterende virksomhed. Eksisterende virksomheder Opdage muligheder Overtagelse af en ny virksomhed af en eksisterende virksomhed Spin-off af en ny virksomhed fra en eksisterende virksomhed Udnytte muligheder Nye virksomheder Entreprenørielt arbejde udføres dels i rollen som selvstændig iværksætter der starter egen virksomhed og dels i rollen som entreprenant medarbejder der udvikler nye aktiviteter for sin arbejdsgiver. 7

9 Sammenfatning Danish Summary I den eksisterende virksomhed udføres det entreprenørielle arbejde ofte af en medarbejder, der undertiden betegnes intraprenør, i rollen som leder af det entreprenørielle arbejde snarere end som støtter af arbejdet. Det entreprenørielle arbejde forløber ofte i to faser, opdagelsen af en mulighed som mere konkret betegnes som idéfasen, og udnyttelsen af muligheden som mere konkret kaldes implementeringsfasen, hvori idéen søges gennemført. Ved opstarten af en ny virksomhed udføres det entreprenørielle arbejde ofte af en ejer-leder, der ofte betegnes som entreprenør eller iværksætter, og mere formelt i rollen som eneste ejer-leder eller som med-ejer-leder i et team af ejer-ledere. Opdagelse og udnyttelse af en mulighed bliver her ofte konkretiseret i tre faser, en intentionsfase hvori der planlægges en opstart, en opstartsfase hvor virksomheden begyndes, og en operativfase hvor virksomheden udvikler sig. Eksisterende virksomhed Medarbejder som intraprenør Roller: Leder og støtter Faser: Idéfase og implementeringsfase Opdage mulighed Overtagelse Spin-off Udnytte mulighed Ny virksomhed Ejer-leder som entreprenør/iværksætter Roller: ene ejer-leder og med-ejer-leder Faser: Intention, opstart, operativ Entreprenørielt arbejde udføres til dels som en erhvervsbeskæftigelse, der egentlig bør betegnes entreprenør efter det oprindelige franske entrepreneur, der i angelsaksiske samfund er blevet til betegnelsen for denne beskæftigelse. Entreprenør sammenfatter hermed de beskæftigelser, der ofte betegnes iværksætter, ejer-leder og selvstændig erhvervsdrivende, og også beskæftigelsen som entreprenant medarbejder i en eksisterende virksomhed, omend dette sjældent udkrystalliseres som en særskilt og anerkendt beskæftigelse. Betegnelsen entreprenør, og den danske betegnelse iværksætter, bruges i megen daglig tale for rollen som selvstændig starter af egen virksomhed, mens rollen som entreprenant medarbejder inden for eksisterende virksomheder undertiden betegnes intraprenør. Jeg foretrækker her at undgå betegnelsen intraprenør og i stedet bruge betegnelsen entreprenant medarbejder, entrepreneurial employee. Entreprenørielt arbejde er til dels etableret og institutionaliseret som en samfundsin- 8

10 Sammenfatning Danish Summary stitution med institutionelle og kulturelle rammer. Den kulturelle værdi, der af samfundet tillægges entreprenørskab, kommer kulturelt til udtryk i prestige af entreprenør som erhvervsbeskæftigelse, i anerkendelse af veludført entreprenant virke og også i undervisning i entreprenørielt virke. Institutionaliseringen af entreprenørielt arbejde foregår også i verdenssamfundet, hvor et verdensomspændende netværk af indflydelsesrige organisationer, centreret omkring OECD, Verdensbanken og Forenede Nationer (især FNs organisation for industriel udvikling UNIDO), rådgiver om rammevilkår der kan fremme entreprenørielt arbejde, også i Danmark (OECD 2008). Den verdensomspændende institutionalisering af entreprenørielt virke er et led i moderniseringen, udviklingen og globaliseringen af menneskeheden. Siden 1990erne er den globale institutionalisering af entreprenørielt virke også fremmet af en international sammenslutning af forskere, nu veletableret som Global Entrepreneurship Research Association (GERA), især gennem konsortiets forskningsprogram Global Entrepreneurship Monitor (GEM), som dette studie og forfatteren er tilknyttet, som National Team Leader for det danske forskerteam, der også omfatter medforfatterne. I forskningsprogrammet Global Entrepreneurship Monitor gennemfører vi i konsortiet hvert år en spørgeskemaundersøgelse af befolkningen i hvert deltagende land og næsten hvert år også en ekspertvurdering af landets rammevilkår. Op til nu, siden begyndelsen i 1999, har 90 lande (eller lande-lignende samfund) deltaget i et eller flere år. Danmark har deltaget i hvert af de 13 år, så vi opdaterer løbende og spotter de aktuelle udviklingstendenser. Ved sammenligninger af mange lande kan vi studere den generelle dynamik i entreprenørielt arbejde, som den typisk er i mange lande, især i de højt udviklede lande, og mere specifikt den danske dynamik. I denne bogs næste del sættes fokus på entreprenørielt arbejde der udføres af medarbejdere i eksisterende virksomheder. De store spørgsmål er (i Part 2): - Hvordan og hvor vidt bidrager organisering af medarbejderes entreprenørielle arbejde til virksomheders vækst og jobskabelse? Det første mere konkret spørgsmål om medarbejderes entreprenørielle arbejde er (Chapter 2): - Hvordan kan vi definere entreprenørielt arbejde så det kan skelnes fra rutine-arbejdet? - Hvordan organiseres det entreprenørielle arbejde med en arbejdsdeling i tid i faser og i socialt rum et hierarki af roller som leder og støtter? Entreprenørielt arbejde kan defineres som deltagelse i udviklingen af nye aktiviteter på arbejdspladsen, og når det eksemplificeres i interview med medarbejdere, så er det tilstrækkelig velafgrænset til at de kan fortælle hvorvidt de udfører og leder entreprenørielt arbejde, eller understøtter det, og om de deltager i idéfasen eller implementeringsfasen, eller begge. I vores spørgeskemaundersøgelse finder vi at medarbejdere i betydelig udstrækning deltager og leder entreprenørielt arbejde. Mange deltager i idéfasen og mange i implementeringsfasen, og mange i begge faser. Mange deltager som ledere, mange som støtter, og mange som både leder og støtter. Men rollen som leder af entreprenørielt arbejde er 9

11 ikke stabil, i den henseende at ret få af medarbejderne, der har ledet entreprenørielt arbejde i de seneste år, også nu leder sådant arbejde. Denne omskiftelighed i ledelse understreger at rollen som intraprenør endnu ikke er udkrystalliseret i det danske samfund. Omfanget af det entreprenørielle arbejde i landet undersøges (Chapter 3): - Hvor omfattende er medarbejderes entreprenørielle arbejde i Danmark og i andre lande rundt omkring i verden? Spørgerunden i Danmark og tilsvarende i mange andre lande viser at omfanget i Danmark er meget højt, næsthøjest af samtlige undersøgte lande, kun overgået af Sverige. At det entreprenørielle arbejde er af større omfang i et andet land, endda et naboland med næsten samme samfundskultur og arbejdspladskultur, viser klart at der er mulighed og plads til forbedring i Danmark. Men stabiliteten i rollen som leder af entreprenant arbejde er lav i Danmark, den laveste blandt alle undersøgte lande, mens den er meget høj i nabolande såsom Sverige. Den lave stabilitet i rollen som intraprenør er formentlig en hæmsko for at forøge det entreprenørielle arbejde i Danmark. En institutionalisering eller etablering af en særlig rolle og anerkendt karriere, beskæftigelse og job som intraprenør vil formentlig føre til en stigning i det entreprenørielle arbejde i Danmark. Rollen som intraprenør er etableret i nogle få danske virksomheder, nok især på Danfoss, og dette kan blive et forbillede for udbredelsen i den danske virksomhedskultur. Medarbejderes personlige baggrund kan påvirke specialiseringen i deres arbejde (Chapter 4): - Påvirker medarbejderes baggrund såsom køn, alder og uddannelse - om de går ind i entreprenørielt arbejde eller går mere ind i rutinepræget arbejde? Undersøgelsen viser at medarbejderes køn ikke påvirker retningen i deres arbejde, i og med at kvinder og mænd er lige tilbøjelige til at lede entreprenørielt arbejde. Uddannelse har stor indvirkning, på den måde at jo højere uddannelsen medarbejdere har, jo mere sandsynligt er det at de leder entreprenørielt arbejde. Medarbejderes kompetencer og job-kvalitet undersøges (Chapter 5): - Hænger medarbejderes kompetencer og job-kvalitet sammen med specialiseringen i entreprenørielt arbejde? Undersøgelsen viser at entreprenørielle medarbejdere, sammenlignet med rutine-arbejdere, oftere har viden til at starte et foretagende, og oftere kender nogen der starter foretagender. Entreprenørielle medarbejdere har oftere meningsfuldt arbejde med megen selvstændighed i arbejdet, og stor tilfredshed, men ofte med stress. Derfor er det ganske letforståeligt at kun et lille fåtal af de entreprenørielle medarbejdere har intention om at gå ud og starte egen virksomhed. Job-skabelse forventes når medarbejdere udvikler nye aktiviteter (Chapter 6): - Forventes mange job at skabes igennem medarbejderes entreprenørielt arbejde, mere eller mindre som ved selvstændigt iværksætteri? Undersøgelsen viser at entreprenørielle medarbejdere forventer at deres udviklingsarbejde vil føre til skabelse af mange nye jobs, ganske ligesom selvstændige iværksættere forventer at deres opstart af nye virksomheder vil medføre megen jobskabelse. Dette er 10

12 vigtigt for det antyder at ambitiøse ildsjæle ikke blot udfolder sig som selvstændige iværksættere, ofte ganske spektakulært og til megen hyldest i offentligheden, men også udfolder sig med ambitioner på de danske arbejdspladser. Industriens entreprenørielle arbejde kommer i fokus i bogens efterfølgende del, Part 3. Industriens entreprenørielle medarbejdere sammenlignes med de rutine-arbejdende i industrien (Chapter 7): - Er industriens entreprenørielle medarbejdere forskellige fra de rutine-arbejdende i deres baggrund såsom køn, alder, uddannelse og indtægt, i deres job-kvaliteter såsom meningsfuldhed, selvstændighed, stress og tilfredshed, i deres entreprenørielle kompetencer såsom færdigheder, årvågenhed over for forretningsmuligheder, risikovillighed, og i deres intention om at starte egen virksomhed? Industriens entreprenørielle medarbejdere har samme sammensætning med hensyn til køn som de rutine-arbejdende, hvilket nok overrasker. Men de entreprenørielle medarbejdere har betydeligt mere uddannelse end de rutine-arbejdende. De entreprenørielle medarbejdere får betydeligt højere løn, nok til dels fordi de er bedre uddannede og til dels fordi deres entreprenørielle arbejde belønnes. Industriens entreprenørielle medarbejdere har, sammenlignet med de rutine-arbejdende, arbejde der er mere meningsfuldt og selvstændigt. Industriens entreprenørielle medarbejdere har også flere entreprenørielle kompetencer, især har de oftere færdigheder til at starte egen virksomhed og kender oftere opstartere. Men industriens entreprenørielle medarbejdere har sjældent, måske endda sjældnere end de rutine-arbejdende, intention om snart at starte egen virksomhed. Industriens entreprenørielle arbejde sammenlignes med andre sektorers entreprenørielle arbejde (Chapter 8): - Er industriens entreprenørielle medarbejdere forskellige fra de entreprenørielle medarbejdere i den øvrige private sektor og i den offentlige sektor? Er industrien som de andre sektorer i forventninger om vækst i form af jobskabelse? Industriens medarbejdere ser ud til at være tilbøjelige til at arbejde entreprenørielt lidt oftere end medarbejdere i den øvrige private sektor, men mindre ofte end medarbejdere i den offentlige sektor. Industriens entreprenørielle medarbejdere ligner de entreprenørielle medarbejdere i de to andre sektorer i mange henseender, især med hensyn til job-kvaliteter. Industriens entreprenørielle medarbejdere er mænd, lidt oftere end de entreprenørielle medarbejdere i den øvrige private sektor, men i den offentlige sektor er de entreprenørielle medarbejdere langt oftest kvinder. Industriens entreprenørielle medarbejdere har særlig ofte færdigheder til at starte egen virksomhed men har lav årvågenhed for forretningsmuligheder. Industriens entreprenørielle medarbejdere har sjældent intention om at starte egen virksomhed, sjældnere end entreprenørielle medarbejde i den øvrige private sektor, og ligeså sjældent som entreprenørielle medarbejdere i den offentlige sektor, nok lidt overraskende. Industriens entreprenørielle medarbejdere har forventninger til at deres udviklingsarbejde vil føre til skabelsen af mange nye jobs, høje forventninger der deles af entreprenørielle medarbejdere i den øvrige private sektor og af entreprenørielle medarbejdere i den offentlige sektor. 11

13 Entreprenørielt arbejde som udviklingen af nye aktiviteter foregår ikke kun inden for arbejdspladsens mure, men også i samarbejde med andre virksomheder og organisationer, så derfor spørger vi (Chapter 9): - Har industriens og andre sektorers virksomheder samarbejdsrelationer med andre, som fremmer innovation, eksport og forventninger til vækst i form af jobskabelse? Vores undersøgelse, baseret på GEM og et yderligere survey af industrielle og andre firmaer med samme spørgsmål som i GEM, viser at firmaer varierer meget i deres netværk, og at netværk bringer fordele i form af øget innovation, øget eksport og øgede forventninger til vækst og jobs. Disse effekter er stærke iblandt danske virksomheder som helhed, og specielt i industrien. Entreprenørielt samarbejde mellem virksomheder sker i stigende grad i form af offentlig-private innovative partnerskaber (Chapter 10): - Hvor udbredte er samarbejder inden for og på tværs af den private sektor og den offentlige sektor, og hvad drejer samarbejderne sig om, og hvad er deres udvikling af innovation? Undersøgelsen viser at samarbejder er mest udbredte inden for hver sektor, men også betydeligt udbredt på tværs af sektorer. Samarbejdet drejer sig særlig ofte om fælles udviklingsarbejde og er ofte innovativt. Fokus skifter fra entreprenørielt arbejde på virksomhederne til det selvstændige entreprenørielle virke i den næstsidste del, Part 4. Det selvstændige entrepreneurielle virke i Danmark og andre lande afdækkes (Chapter 11): - Hvad er niveauet i selvstændigt entreprenørskab i Danmark? Er udviklingstendensen i niveauet opadgående, stabil, eller nedadgående? Hvor højt er niveauet i Danmark sammenlignet med andre udviklede lande? Undersøgelsen, der opdaterer vores undersøgelser fra tidligere år, viser at Danmark fortsat ligger under midten blandt de udviklede lande, nu især efter at den globale krise der begyndte i 2008 faktisk ramte dansk iværksætteri hårdere end den ramte i andre lande. Det danske niveau af iværksætteri i opstartsfasen, målt som voksenbefolkningens rate af iværksættere, der er i færd med at starte eller lige har startet en virksomhed, faldt under krisen der begyndte i 2008, og er nu noget lavere end det typisk er for de udviklede lande. Men når vi måler den allertidligste fase, fasen hvor folk har en intention om at starte inden for overskuelig fremtid, så ser vi i Danmark en ny stigning i raten af folk der har til hensigt at starte ny virksomhed inden for de næste få år. Denne nylige stigning i intentioner i Danmark kan betragtes som en forløber, en tidlig eller ledende indikator, for en kommende stigning i opstartsraten. Men vilkårene for at omsætte en intention om at starte til handling kan jo være lammende, så derfor skal vi ikke forvente at den stigende interesse udløser en markant ny stigning i selvstændigt iværksætteriet. Rammebetingelserne for det selvstændige iværksætteri i Danmark og andre lande følges (Chapter 12): - Hvordan er de nationale rammevilkår for entreprenørskab i Danmark? Er kulturelle og institutionelle vilkår i Danmark under forbedring eller forringelse? Hvor gode er vilkårene i Danmark sammenlignet med betingelserne i andre lande? 12

14 Ved ekspertvurderinger har vi opnået indikatorer på rammevilkår i Danmark og i andre lande igennem de senere år. De 14 rammevilkår omfatter 4 kulturelle vilkår individualisme som en kulturel værdi, prestige af den selvstændige iværksætter som erhvervsbeskæftigelse, uddannelse og træning i entreprenørskab, befolkningens færdigheder i entreprenørskab samt 10 institutionelle vilkår: mulighederne for selvstændigt entreprenørskab, finansielle ressourcer, regeringspolitik for selvstændigt entreprenørskab, offentlige støtteprogrammer, overførsel af teknologi til erhvervslivet, kommerciel og juridisk infrastruktur, markedets åbenhed for ny virksomhed, den tekniskfysiske infrastruktur, ophavsrettigheder og patentsystem, samt støtteforanstaltninger til vækst-entreprenørskab. De fleste af rammevilkårene i Danmark er blevet bedre igennem de senere år. Nogle få af vilkårene er stagnerende. Få af vilkårene er alvorligt forringede igennem de senere år, mest adgangen til kapital. Alt i alt er rammen for dansk iværksætteri igennem de senere år blevet mere favorabel. Til trods for forbedringerne, så er vilkårene i Danmark stadig omkring midten i sammenligninger med de andre udviklede lande. De fleste rammevilkår i Danmark er som de typisk er i de udviklede lande, enkelte vilkår er betydeligt bedre i Danmark, og enkelte vilkår er betydeligt ringere i Danmark end typisk blandt de udviklede lande, så alt i alt er rammen i Danmark ret typisk. Rammevilkårenes sammenhæng med niveauet i selvstændigt iværksætteri undersøges (Chapter 13): - Hvad er den nationale dynamik i entreprenørskab? Hvordan påvirker de kulturelle vilkår hinanden? Hvordan er de institutionelle betingelser relateret til hinanden? Hvad er de særskilte effekter fra de kulturelle og institutionelle rammebetingelser på entreprenørskab? Rammevilkårene i et land påvirker niveauet af iværksætteri i landet betydeligt, viser en statistisk analyse af de udviklede lande. Befolkningens færdigheder fremmes betydeligt af undervisning i iværksætteri, og af værdien af individualisme i landet. Mulighederne for iværksætteri fremmes betydeligt af de mere konkrete institutionelle rammer. Gode muligheder i landet koblet med gode færdigheder i befolkningen fremmer niveauet af iværksætteri i samfundet. Den nære sammenhæng mellem rammevilkår og niveauet i iværksætteri illustreres af Danmarks position. Danmarks rammevilkår har været som typisk for udviklede lande (over det seneste årti, som helhed). Den generelle sammenhæng mellem vilkår og niveau, medfører at niveauet i Danmark har været næsten som typisk for udviklede lande. Den tætte kobling mellem rammerne og aktivitetsniveauet illustreres også af USA. USA har haft de bedste rammevilkår, alt i alt, for iværksætteri, ifølge målingerne i GEM (over det seneste årti, som helhed). Disse rammevilkår gør at niveauet i USA har været særdeles højt, et af de højeste blandt de udviklede lande. Entreprenant arbejde i samfundet er organiseret dels som selvstændigt iværksætteri og dels på virksomhederne som medarbejdernes entreprenante arbejde. Danmark er i top i entreprenant arbejde på virksomhederne men nær bunden i selvstændigt iværksætteri, og det omvendte forhold bør undre, men det fortjener en forklaring. I bogens sidste del (Part 5) kapitel spørger vi konkluderende (Chapter 14): 13

15 - Hænger et samfunds selvstændige entreprenante arbejde sammen med dets entreprenante arbejde på virksomhederne? Vores analyse af formerne for entreprenant arbejde, specielt i de nordiske, angelsaksiske, og de europæiske kontinentale lande, antyder at udtryksformerne nok hænger sammen, men på komplekse måder. Kulturen i det danske samfund og især kulturen i de danske virksomheder, hvor vi jo fandt at entreprenante medarbejdere har jobs, der ofte er særligt meningsfulde, selvstændige og tilfredsstillende gør nok danskere med entreprenant lyst mere tilbøjelige til at lade deres ildsjæle folde sig ud igennem entreprenant arbejde på i de forholdsvis attraktive virksomheder end igennem selvstændigt iværksætteri. 14

16 Chapter 1 Introduction: Entrepreneurial work by employees and independent entrepreneurs Opportunity recognition and exploitation of opportunity is the core of entrepreneurial work. Opportunity denotes the opportunity to make something valued by others, so much that others will exchange and pay for it. Opportunities may abound, but they are more or less recognized, and are recognized by some and not by others. Recognized opportunities are pursued more or less, and are exploited by some more than by others. Organizing turns the recognition of an opportunity into pursuit and exploitation of the opportunity. Recognition is the input, and exploitation is the output. The throughput is the organizing of the pursuit. Recognizing opportunity Organizing Exploiting opportunity The organizing may be housed in an existing enterprise or may be housed in a new enterprise, typically. Organizing may also be housed in a switch, namely either housed in an acquisition of a new business by an existing business, or housed in a spin-off of a new business from an existing business. Existing enterprise Acquisition of a new business by an existing business Recognizing opportunity Spin-off of a new business from an existing business Exploiting opportunity New enterprise 15

17 Organizing within both existing and new enterprises includes ownership and leadership, and also roles in the phases of turning recognition into exploitation. A new enterprise typically has an owner-manager who turns recognition into exploitation. Indeed, a new enterprise is typically a one-person business. The new enterprise is usually considered to go through three phases: the pre-start intending phase, the starting phase, and the post-start operating phase. An existing enterprise is more often an enterprise of some size, with employees who are more or less involved in turning recognition into exploitation. Such an involved employee is often called an intrapreneur, especially when leading rather than merely supporting. The process from recognition to exploitation can be considered to go through two phases, the idea-phase and the implementation-phase. Existing business Employee: Intrapreneur Roles: Leader or supporter Phases: Idea and implementation Recognizing opportunity Acquisition Spin-off Exploiting opportunity New business Owner-manager: Entrepreneur Roles: Sole-owner or co-owner Phases: Intending, starting, operating The abstract and general conception of entrepreneurial work as recognition, pursuit and exploitation of opportunity thus becomes more concrete when we consider its two major social forms, as work by an independent entrepreneur to establish, own and manage a business, and as work by an employee within an existing enterprise. Entrepreneurial activity, more precisely, shall here consider as both - starting and owning-managing an enterprise by an independent entrepreneur, and - leading development of new activities within an existing enterprise by an employee. Entrepreneurial work by employees shall be examined in the next part of the book, Part 2. Conceptualization of entrepreneurial work by employees will be addressed (in Chapter 2), - How can entrepreneurial work by employees be conceptualized and defined, so that we can 16

18 identify it and distinguish it from more routine work? How is entrepreneurial work by employees organized with a division of labor in time and in social space? Specifically, how is it organized in time into phases, an idea-phase and an implementation-phase? And how is it organized in social space into a hierarchy of roles as leaders and supporters? The national volume of entrepreneurial work by employees will be ascertained in Denmark and around the world (in Chapter 3), - What is the volume of entrepreneurial work by employees in Denmark and in other countries around the world? Is the role of being an entrepreneurial employee a stable or transient role, in Denmark and in other countries around the world? Employees kind of work entrepreneurial or routine may be explained by their background (Chapter 4), - How is the background of an employee affecting the employee s kind of work, i.e. affecting whether the employee will become entrepreneurially working or routinely working in the work-place? Competencies and work-qualities of employees working entrepreneurially will be compared across occupations (in Chapter 5), - How are entrepreneurially working employees similar to and different from other occupations - routinely working employees and independent entrepreneurs in their competencies such as entrepreneurial skills, opportunity-perception, and risk-willingness, and in the qualities of their jobs, such as satisfaction in the work-place? Job-creation through entrepreneurial work by employees and by independent entrepreneurs will be ascertained (in Chapter 6), - What is the potential for creation of new jobs through the entrepreneurial work by employees? Furthermore, how does this potential job-creation compare to the potential job-creation through independent entrepreneurship in startups and operating businesses? Entrepreneurial work by employees in industry in Denmark is examined in Part 3. In industry, first, entrepreneurial employees are compared to routine employees (in Chapter 7), - Are the entrepreneurial employees in industry different from the routine employees in industry, in their background such as gender, age, education and income, in their workqualities such as meaningfulness, autonomy, stress and satisfaction, in their entrepreneurial competencies such as skills, opportunity-perception, risk-willingness, and in their intentions whether to starter their own business? Then we narrow our focus even more, to those employees in industry who are entrepreneurial (in Chapter 8), - How are entrepreneurial employees in industry different from entrepreneurial employees in other sectors, namely in private non-industry and in the public sector? Do entrepreneurial employees in these three sectors differ in recruitment or manner of participation 17

19 in entrepreneurial work? Do the entrepreneurial employees differ across the three sectors in their background such as gender, age, education and income? Do the entrepreneurial employees differ across the sectors in work-qualities, in competencies, and intentions to start their own business? An industrial or other firm s entrepreneurial work is not confined within the walls of the firm. Entrepreneurial work may be pursued through networks of collaboration with other enterprises, and this may affect the firm s performance (Chapter 9), - How does a firm pursue network relations of collaboration with other enterprises, and does networking promote the firm s performance in terms of innovation, exporting and expectations for growth in the form of job-creation? Specifically, collaboration is now increasingly pursued through public-private innovation partnerships (Chapter 10), - How are public and private enterprises collaboration within their sector and with the other sector, in the pursuit of benefits such as innovation? National independent entrepreneurship is examined in the next part of the monograph, Part 4. The changing level of independent entrepreneurship in Denmark and other societies is considered (in Chapter 11), - Is the trend in the level of independent entrepreneurship upward, stable or downward? How does the level in Denmark compare to the levels in other societies? The national conditions for independent entrepreneurship are examined; we track trends in Denmark and make comparisons to other societies in the national framework of conditions for entrepreneurship (in Chapter 12), - Are cultural and institutional conditions in Denmark improving or deteriorating? How does the framework in Denmark compare to the framework in other societies? Having considered the national level of independent entrepreneurship and the national framework conditions, we examine their dynamics, the effects of framework conditions upon level of entrepreneurship (in Chapter 13), - How, within a nation, are the cultural conditions affecting one another? How, within a nation, are the institutional conditions interrelated? How are the cultural and institutional conditions affecting independent entrepreneurship? We come full circle in the last part, Part 5, in that we consider both employees entrepreneurial work and independent entrepreneurship, in an effort to understand how they unfold as two forms of entrepreneurial work in society (in Chapter 14), - How are independent entrepreneurship and employee entrepreneurial work jointly shaped by the culture of society and the culture of enterprises in society? 18

20 Before all these substantive questions can be addressed, the methodological question shall be considered now, - How can we investigate the entrepreneurial work by employees and independent entrepreneurs? Entrepreneurship is conceptualized as an activity that is institutionalized with a supportive framework in society, and with a social role for performing the activity, the entrepreneur, including the entrepreneurial employee. Research therefore focuses on the performers of the activity and the framework of conditions affecting their work. To understand why Denmark has its level of entrepreneurial work, we compare Denmark to other societies, that is, we compare their activities and we compare their frameworks, in order to see how the activity is shaped by its framework. Individuals are compared to one another, and societies are compared to one another. This requires comparable data on individuals and comparable data on societies. Global Entrepreneurship Monitor surveys Data on societies and people are gathered in the research program Global Entrepreneurship Monitor conducted by the Global Entrepreneurship Research Association, which maintains an informative homepage (GERA 2007; Reynolds et al., 2005). GEM has so far been in full operation for 13 years, 1999 through 2011, and a total of almost 90 countries or societies have participated. Denmark has participated in each of the 13 years, but most countries have participated in only some of the years. The almost 90 participating countries or societies include 42 developed societies: Australia, Austria, Belgium, Bosnia and Herzegovina, Canada, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Macedonia, Montenegro, the Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Romania, Russia, South Korea, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States. The survey has also been conducted in even more developing societies including: Algeria, Angola, Argentina, Azores, Barbados, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Ghana, Guatemala, India, Indonesia, Iran, Jamaica, Jordan, Kazakhstan, Malaysia, Mexico, Myanmar, Pakistan, Palestine (West Bank and Gaza), Panama, Peru, Philippines, Saudi Arabia, South Africa, Syria, Thailand, Tonga, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates, Uruguay, Vanuatu, Venezuela, Yemen and Zambia. Results are robust with respect to a slightly different classification of developed versus developing countries, but, of course, for many other purposes a continuum is more informative, for example that mapped in the World Values Survey (Inglehart and Wenzel 2005). The performers of entrepreneurial work are identified and investigated in a survey of the adult population. In Denmark we have in each of the 13 years from 1999 to 2011 conducted a national probability sample survey of the adult population, with a new sample each year, pooling them for a total of respondents interviewed on the telephone. Weighting the respondents enhances the validity of these surveys (weights, based on gen- 19

21 der, age and region, are used mainly in the analyses in Chapters 11 and 13). The questionnaire asks the adults about their involvement in entrepreneurship, so as to identify entrepreneurs, including entreprenurial employees, and about their values. The entrepreneurs are asked about their experiences and characteristics of their enterprises. Similar surveys have been conducted around the world, asking the same questions everywhere, and pooled into a total of far more than one million respondents interviewed in the years 1999 to 2011 in the almost 90 countries or societies. The conditions affecting entrepreneurship have been measured, in 2009 and preceding years, in Denmark and in the other countries participating in GEM that year. The framework conditions in a country are rated by a panel of experts usually comprising about 40 experts in the country. The panel rates several conditions, so each condition is scored. Thereby we create a time series for each framework condition in Denmark so as to track changes (Chapter 12), to understand dynamics in the country, and to offer indicators for policy-making. We also compare conditions in Denmark to conditions in other countries in order to estimate effects of conditions upon entrepreneurship (Chapter 13), and also to offer comparative indicators for policy-making. The coupling between entrepreneurship and its conditions, especially policies, differs between developed countries and developing countries. In a typical developed society there is a tight coupling between entrepreneurship and policy, whereas the coupling is far looser in a typical developing society (Schøtt and Jensen 2009). Therefore, it is often most informative to examine the two kinds of societies separately, and to compare Denmark to the other developed societies. However, comparing widely different countries, such as Denmark and Iran as I am currently pursuing, can yield an understanding of how entrepreneurship is affected by national culture traditionalism versus rationalism-secularism and how entrepreneurship affects development. Registry data Independent entrepreneurship can also be investigated through data from registries. Registries are compiled by Statistics Denmark on persons, firms and people s work in firms (Danmarks Statistik 2005). The registry data on persons cover the lives of people. The Danish registries of individuals are very rich and unique, better than registries in most other countries, so they enable original and detailed analyses of, for example, the processes leading into the entrepreneurial vocation, out of it, and switches (Erhvervsog Boligstyrelsen, 2002). The national registries of individuals are rather idiosyncratic to each country, and have apparently not been used for individual-level comparisons among people in different nations. The registry data on firms cover the evolution of firms. The Danish registries of firms are also better than registries in most other countries, so they allow analyses of the growth of firms in Denmark (Erhvervs- og Byggestyrelsen, 2008, 2009, 2010, 2011). The national registries of firms are rather idiosyncratic to each country, but are nevertheless used for comparisons among countries (Eurostat 2005; Hoffmann et al, 2005; OECD 2008). Registry-based measures of entrepreneurial activity are fairly highly correlated with our TEArate (Schøtt, 2005b). But, of course, the differences among countries in registration reduce validity of the comparisons among countries. 20

22 Our adult population survey has some distinct advantages over registry data. First, our survey is up-to-date and provides up-to-date leading indicators on independent entrepreneurship. Second, our survey goes beyond the behavior and investigates, for example, people s intentions to become entrepreneurs, their motivations, and their expectations. Third, our survey can study entrepreneurial employees which no registry data are suited for. Fourth, our survey is conducted around the world, using the same method everywhere, so as to enable valid comparisons. Having now reviewed our methods, we can embark on our analyses of entrepreneurial work in society. 21

23 Chapter 2 Phases and roles in entrepreneurial work by employees The question here is, How is entrepreneurial work by employees organized with a division of labor in time and in social space? Specifically, how is it organized in time into phases, an idea-phase and an implementation-phase? And how is it organized in social space into a hierarchy of roles as leaders and supporters? Data This chapter uses the data from our Global Entrepreneurship Monitor survey in 2011 in Denmark of the adult population, a sample of 2015 adults. The adults were asked whether they were employed. The employed adults were asked whether they had been involved in entrepreneurial work. - In the last three years, have you been involved in the development of new activities for your main employer, such as developing or launching new goods or services, or setting up a new business unit, a new establishment or subsidiary? Those involved in entrepreneurial work were asked whether they participated in the idea-phase and participated in the implementation-phase. - I will now mention two phases that can be identified for developing new activities. Could you indicate for each of these phases whether you have made a contribution in the past three years? - The first phase consists of idea development for a new activity. This includes for example active information search, brainstorming on new activities and submitting your own ideas to management. Have you been actively involved in this phase in the past three years? - The second phase concerns preparation and implementation of a new activity. This includes for example promoting your idea, preparing a business plan, marketing the new activity or finding financial sources and acquiring a team of workers. Have you been actively involved in this phase in the past three years? If they participated in a particular phase, they were also asked if they in that phase played a leading role or a supporting role. And could you tell me whether you had a leading or a supporting role in this phase? Phases in entrepreneurial work by employees Most of the employees, who were involved in entrepreneurial work, participated in the idea-phase, Table 2.1. Most of the employees also participated in the implementationphase. Indeed, most participated in both phases, while rather few participated in only one of the phases. 22

24 Table 2.1 Participation in idea-phase and implementation-phase Implementation-phase Idea-phase Participate No participation Total Participate 61% 4% 65% No participation 22% 13% 35% Total 83% 17% 100% This indicates that the division of labor between the two phases is small. Employees are not specialized in just one of the two phases, but typically participate in both phases, both developing an idea and implementing it. Roles in entrepreneurial work by employees Many of the employees, who were involved in entrepreneurial work in either phase, were playing a leading role. Indeed, about half of the involved employees played a leading role in at least one of the phases, as marked in bold in Table 2.2. The other half of the involved employees were not playing any leading role, but were playing a supporting role or some other roles in both phases. The division of labor between leading role and supporting role is rather pervasive, employees are typically specialized in either a leading role or in a supporting role, and less typically play both roles. 23

25 Table 2.2 Leading and supporting roles in idea-phase and implementation-phase Role in implementation phase Role in idea-phase Lead role Lead and support role Support role Not partici-pating in ideaphase Total Lead role 15% 2% 3% 1% 21% Lead and 2% 10% 5% 0% 17% support role Support 1% 2% 21% 3% 27% role Not participating 2% 3% 16% 13% 35% in impl.-phase Total 21% 17% 45% 17% 100% Those who perform the recognition, pursuit and exploitation of discovery are mainly those who lead the development of ideas and their implementation, and not so much those who play supportive and other roles. This bounds the occupation of intraprenurs, the performers of entrepreneurial work within existing enterprises. This boundary corresponds to the boundary around entrepreneurs as those starting and owning-managing enterprises. 24

26 Chapter 3 Entrepreneurial work by employees in Denmark and in other countries around the world Conceptualization of entrepreneurial work by employees will be addressed here, - How can entrepreneurial work by employees be conceptualized and defined, so that we can identify it, distinguish it from more ordinary work, and ascertain the volume of entrepreneurial work by employees in Denmark and in other countries around the world? Entrepreneurial work by employees is here conceptualized broadly as the development of new activities performed by employees for the employer. Examples are employees involvement in developing or launching new goods or services or setting up a new business unit, a new establishment or subsidiary. Entrepreneurial work thus encompasses far more than innovative work. Participation in development of new activities, as extent of participation in the adult population or among employees, is indicative of the amount of such entrepreneurial work by employees. But participation includes not only leading work but also supportive work, and our common conception of entrepreneurship emphasizes more initiative than support. So participation in entrepreneurial work is too encompassing for an appropriate definition. A more appropriate definition should include leadership, especially for identifying the persons recognizing, pursuing and exploiting opportunities. Therefore entrepreneurial work will be defined, more precisely, as leading development of new activities. Including a criterion of leadership is also quite consistent with defining an independent entrepreneur as an owner-manager of an enterprise. Data Data for this chapter is our sample of adults, the sample of 2015 adults interviewed in our GEM Adult Population Survey in Denmark in 2011, as well as the samples interviewed by GEM in other countries. The adults were asked whether they were employed. The employed adults were asked whether they had participated in entrepreneurial work during recent years, and, if so, whether they were presently participating in entrepreneurial work. Participants in entrepreneurial work were asked whether they had played a leading role in the entrepreneurial work. More precisely, our questionnaire included the following. Employees here comprise both part-time employees and full-time employees and also comprise employees who have another occupation besides being employed. Employees were asked, - In the last three years, have you been involved in the development of new activities for your main employer, such as developing or launching new goods or services, or setting up a new business unit, a new establishment or subsidiary? 25

27 Employees who had been involved in this way were then asked about current participation,... and are you currently involved in the development of such new activity? Employees who had been participating were asked about participation in the idea-phase and the implementation-phase, and their role in each phase... and could you tell me whether you had a leading or a supporting role in this [first, idea] phase?... and could you tell me whether you had a leading or a supporting role in this [second, implementation] phase? A participant can thus be considered leading if playing such a leading role. Participating and leading entrepreneurial work in Denmark Each kind of participants in entrepreneurial work can be considered as a rate in the adult population and as a rate among employees, Table 3.1. Table 3.1 Participants in entrepreneurial work in last three years, leading participants in last three years, and leading participants at present Percent of adults Percent of employees Participants in last three years 33.0% 44.9% Leading participants in last three 15.1% 20.7% years Leading participants at present 9.2% 12.6% N respondents 1986 adults 1456 employees In short, 9.2% of the adults or 12.6% of the employees are currently leading entrepreneurial work in enterprises. They are about as many as the persons who are owningmanaging a starting or operating business. We can therefore reasonably say that the amount of entrepreneurial work by employees is of a volume similar to the amount of independent entrepreneurship. Later, in Chapter 6, the potential job-creation through entrepreneurial work by employees shall be compared to the potential job-creation through independent entrepreneurship. Stability and transiency in leading entrepreneurial work in Denmark Leading entrepreneurial work is typically rather informal, it is not a task that is trained for, it is not an appointment, it is not recognized as an occupation, and it is not crystallized as a role that persons play rather permanently. This is in contrast to, for example, the managerial role. A manager is a role that persons are typically trained and appointed to, and they usually play a managerial role stably for many years. 26

28 The above table shows that 20.7% of the employees had been leading participants during the last three years, but only 12.6% are also currently participating, a fraction of.6. By contrast the fraction of managers in the last three years who are also currently managing is undoubtedly far higher than.6. That the fraction is much higher than 0 shows that there is some stability in leading entrepreneurial work in Denmark. But that the fraction is much less than 1 shows that the stability is actually rather low. Rather, we would say there is considerable transiency in the role of leading entrepreneurial work by employees in Denmark. Denmark shall now be compared to other countries, both in amount of entrepreneurial work by employees and in stability versus transiency in leading entrepreneurial work. Entrepreneurial work in countries around the world The volume of entrepreneurial work by employees in a country shall now be compared across countries, - What is the volume of entrepreneurial work by employees in Denmark compared to other countries? What is the stability versus transiency in the role of leader of entrepreneurial work in Denmark compared to other countries? Entrepreneurial work in Denmark was considered in the above. The conclusions were that the volume in Denmark seems large, rather similar to the volume of independent entrepreneurship. Stability in the role of leading entrepreneurial activity, moreover, seems substantial, but it appears that transiency is considerable. These conclusions are vague without comparisons. However, they acquire more significance when compared to entrepreneurial work in other countries. R ate of employees leading entrepreneurial work in Denmark and other countries Employees leading entrepreneurial work in recent years and at present can be considered as a rate in the adult population and as a rate among employees, Table 3.2. Table 3.2 Leaders in entrepreneurial work in last three years, and leaders at present, in each country Leaders in last three years Leaders at present Leaders in last three years Leaders at present Percent of employees Percent of adults Sweden Denmark Belgium Finland

29 Chile Nigeria Holland United States Ireland Uruguay Bosnia and Herzegovina Slovenia Croatia Australia Lithuania United Kingdom Hungary Romania Germany France Peru Argentina Switzerland S.Korea Slovakia Czech Republic Singapore Spain Portugal Japan Poland Latvia Thailand Colombia Greece United Arab Emirates China

30 Taiwan Algeria Brazil Trinidad and Tobago Iran Venezuela Mexico Turkey South Africa Barbados Pakistan Russia Malaysia Jamaica Panama Table 3.2 shows that the rate of employees leading entrepreneurial work, by any and all of the four measures, is very high in Denmark compared to other countries. Only Sweden is higher. An explanation of differences among countries in their level of entrepreneurial work by employees will be pursued in our last chapter, Chapter 14. Stability and transiency in leading entrepreneurial work in Denmark compared to other countries Leading entrepreneurial work is typically rather informal, it is not a task that is trained for, it is not an appointment, it is not recognized as an occupation, and it is not crystallized as a role that persons play rather permanently. This is in contrast to, for example, the managerial role. A manager is a role that persons are typically trained and appointed to, and they usually play a managerial role stably for many years. The above table shows that 20.7% of the employees in Denmark had been leading participants during the last three years, but only 12.6% are also currently participating, a fraction of.6 in Denmark. The fraction of recent leaders who are also currently participating in entrepreneurial work is calculated for each country, Table

31 Table 3.3 Fraction of recent leaders who are presently doing entrepreneurial work Fraction Japan.9 Belgium.9 Spain.9 S.Korea.9 Finland.8 Uruguay.8 Peru.8 Croatia.8 Sweden.8 Czech Republic.8 France.8 Poland.8 United Kingdom.8 Australia.8 United States.8 Slovenia.8 Slovakia.8 Argentina.8 Ireland.8 Singapore.8 Romania.8 Chile.8 Bosnia.7 Germany.7 Netherlands.7 Switzerland.7 Lithuania.7 Hungary.7 Portugal.6 Denmark.6 Table 3.3 shows that in Denmark stability is lowest. Transiency in the role of leading entrepreneurial work is highest in Denmark. This result is useful for considering policy and human resource management. Employee entrepreneurial work could probably be enhanced by reducing transiency and creating more stability in the role of leading entrepreneurial work. 30

32 Chapter 4 Employees entrepreneurial versus routine work shaped by background: gender, age, education Employees differ in their kinds of work. Some employees become entrepreneurial in their work, whereas other employees become routine in their work. The question here is, How is employees kind of work entrepreneurial versus routine affected by their conditions, their background such as gender, age and education? We know that people s gender affects independent entrepreneurship in the way that men are much more likely than women to start a business. But are male employees more likely than female employees to work entrepreneurially, and female employees more likely than male employees to work routinely? We know that people s age affects independent entrepreneurship in the way that midaged persons (in their 30s) are more likely than younger or older persons to start a business. But are mid-aged employees more likely than younger or older employees to work entrepreneurially? We know that people s education affects independent entrepreneurship in that way that educated persons are more likely than less educated persons to start a business. But are educated employees more likely than less educated employees to work entrepreneurially? These questions are answered here. Data The data analyzed in this chapter are the data on the employees identified in our survey of the adult population. The sample of employees number 1290 persons who are fulltime or part-time employees, and who are not self-employed, and who had answered questions about their work. An employee s work is considered entrepreneurial if the employee during the last three years had been leading development of new activities for the employer. If not, the employee s work is considered routine. Employees gender affecting their entrepreneurial versus routine work Female employees and male employees seem to differ in their tendency to lead entrepreneurial work in the way that female employees seems more likely than male employees to lead entrepreneurial work, Table 4.1 (the difference is marginally statistically significant; the p-value in the two-sided chi-square test is.06). Table 4.1 Employees entrepreneurial versus routine work, dependent on gender 31

33 Female Male Entrepreneurial work 22% 18% Routine work 78% 82% Total 100% 100% N employees That female employees are more likely than male employees to lead entrepreneurial work is quite surprising, both because female employees are less likely than male employees to be appointed to positions as formal leaders, and because women are less likely than men to become independent entrepreneurs. Employees age affecting their entrepreneurial versus routine work Employees of different ages differ in their tendency to become leaders of entrepreneurial work, Table 4.2 (differences are statistically significant; the p-value in a chi-square test is.05). Mid-aged employees appear more likely than younger employees and older employees to lead entrepreneurial work. Table 4.2 Employees entrepreneurial versus routine work, dependent on age Entrepreneurial work 16% 24% 20% Routine work 84% 76% 80% Total 100% 100% 100% N employees That mid-aged employees are especially likely to lead entrepreneurial work is similar to independent entrepreneurship, where mid-aged persons are more likely than younger persons and older persons to start their own business. Employees education affecting their entrepreneurial versus routine work Employees with different levels of education differ in their tendency to lead entrepreneurial work, Table 4.3 (the differences are highly significant; the p-value in a chisquare test is less than.0001). Highly educated employees are far more likely than less educated employees to lead entrepreneurial work. 32

34 Table 4.3 Employees entrepreneurial versus routine work, dependent on education Primary school General secondary school Vocational secondary school Vocational education Short higher education Mediumlength higher education Bachelor education Long higher education Entrepreneurial 6% 10% 11% 13% 19% 33% 18% 34% work Routine 94% 90% 89% 87% 81% 67% 82% 66% work Total 100% 100% 100% 100% 100% 100% 100% 100% N employees That employees education increases their likelihood of leading entrepreneurial work is similar to independent entrepreneurship, where people s education also increases their tendency to start their own business. In short, we conclude from the above analyses that the background of employees affects the kind of work in the ways that female employees are more likely than male employees to work entrepreneurially, mid-aged employees are especially likely to work entrepreneurially, and highly educated employees are far more likely than less educated employees to work entrepreneurially. Next, we turn this around, and examine how entrepreneurial employees differ from other occupations. 33

35 Chapter 5Competencies and workqualities of entrepreneurial employees contrasted routine employees and independent entrepreneurs. The entrepreneurial employees are an occupational group that may be compared and contrasted to other occupations. On the one hand, the entrepreneurial employees can be compared to the independent entrepreneurs, where these two occupational groups are similar in their entrepreneurial work, and different in their employment status, one group is employees and the other group is self-employed. On the other hand, the entrepreneurial employees can be compared to the routine employees, where these two groups are similar in the employment status as employees, and different in their kind of work, one group is entrepreneurial and the other group is working routinely. The two other occupations, the routine employees and the independent entrepreneurs differ both in their employment status and in their kind of work. The entrepreneurial employees thus form an occupational group in between the two other occupations. We should therefore expect that the entrepreneurial employees have some similarities with routine employees and some similarities with independent entrepreneurs, but that these two other occupations are widely different in many things. The things we can here examine are their backgrounds, their competencies, and their work-qualities. The questions thus are - How are entrepreneurial employees similar to and different from other occupations routine employees and independent entrepreneurs in their backgrounds, competencies and work-qualities? Data The data for this chapter is the sample of adults in the three occupational groups identified in our adult population survey in Denmark in Here 2015 randomly sampled adults were interviewed, including 253 entrepreneurial employees, 1033 routine employees, and 224 self-employed. All were asked about their background such as age, education and income, their entrepreneurial competencies, and their work-qualities. The three occupational groups backgrounds: gender, age, education, income The gender composition differs among the entrepreneurial employees, the routine employees and the independent entrepreneurs, Table 5.1 (the differences are statistically significant; a chi-square test has a p-value less than.0001). 34

36 Table 5.1 Gender of independent entrepreneurs, entrepreneurial employees and routine employees Independent entrepreneurs Entrepreneurial employees Routine employees Women 28% 56% 49% Men 72% 44% 51% Total 100% 100% 100% N respondents The independent entrepreneurs are men far more often than women, and the routine employees are slightly more often men than women. By contrast, however, the entrepreneurial employees are more often women than men. The age composition differs among the three occupational groups, Table 5.2 (the differences are statistically significant; a chi-square test has p-value less than.0001). Table 5.2 Age of independent entrepreneurs, entrepreneurial employees and routine employees Independent entrepreneurs Entrepreneurial employees Routine employees years of age 19% 28% 38% years of age 43% 42% 33% years of age 38% 30% 29% Total 100% 100% 100% Mean 45 years 42 years 40 years N respondents The entrepreneurial employees tend to be older than the routine employees but younger than the independent entrepreneurs. Educational level differs among the three occupational groups, Table 5.3 (the differences are statistically significant; a chi-square test has p-value less than.0001). 35

37 Table 5.3 Independent entrepreneurs Education of independent entrepreneurs, entrepreneurial employees and routine employees Entrepreneurial employees Routine employees Long higher education 21% 24% 12% Bachelor education 2% 4% 4% Medium-length higher education 16% 36% 18% Short higher education 7% 7% 8% Vocational education 30% 19% 32% Vocational secondary school 7% 4% 7% General secondary school 8% 4% 9% Primary school 9% 3% 10% Total 100% 100% 100% Mean level N respondents Table 5.3 shows that the entrepreneurial employees typically have a higher education. They tend to be much more educated than both the independent entrepreneurs and the routine employees. Income level (annual house-hold income, before taxes) differs among the three occupational groups, Table 5.4 (the differences are statistically significant; a chi-square test has p value less than.0001). Table 5.4 Income of independent entrepreneurs, entrepreneurial employees and routine employees Independent entrepreneurs Entrepreneurial employees Routine employees High income 18% 12% 6% Medium income 40% 55% 44% Low income 42% 33% 50% Total 100% 100% 100% Mean income N respondents

38 Table 5.4 shows that entrepreneurial employees have incomes that are concentrated around the middle, and higher than the incomes of routine employees. The incomes of independent entrepreneurs (including starters and well-established owner-managers) are more spread, some are very high and many are low, with an average rather similar to the average of entrepreneurial employees. Work-qualities of entrepreneurial employees Work-qualities of entrepreneurial employees will be compared so as to answer the questions, - How are entrepreneurial employees similar to and different from other occupations - routinely working employees and independent entrepreneurs in the qualities of their jobs, such as empowerment and satisfaction in the work-place? Empowerment in the form of psychological empowerment at work refers partly to the feeling of meaningfulness of the work and partly to the feeling of autonomy in the work (Gretchen Spreitzer). These qualities also express a realization of one-self (Maslow). These qualities of the work situation are measured by asking employees and self-employed persons to what extent they agree (or disagree) with the following statements, - I can decide on my own how I go about doing my work. - The work I do is meaningful to me. We also consider the absence of stress as a quality of the work, and measure this as extent of agreement with the statement, - At my work, I am not exposed to excessive stress. Furthermore, satisfaction with work and satisfaction with income are also important qualities of the work, and are measured by asking for extent of satisfaction, - Overall, how satisfied are you with your current work? - Overall, how satisfied are you with your current work income (including both salary and non-salary income such as payment in kind and other benefits)? Each statement is rated on a scale from -2 (very dissatisfied or disagree very much) through 0 (neutral) up to 2 (very satisfied or agree very much). For each work-quality the average of the ratings in each occupational group is listed in Table 5.5. The people tend to consider their work to be highly meaningful, in so far as the three averages are rather close to the highest, 2. But the groups also differ in meaningfulness (the differences are statistically significant; in an anova-test the p-value is less than.0001). The entrepreneurial employees consider their work more meaningful than the routine employees do, and a little less meaningful than the independent entrepreneurs consider their work. Autonomy in work differs among the occupations in the same way (the differences are statistically significant; in an anova-test the p-value is less than.0001). The entrepreneurial employees decide more than the routine employees do, but decide less than the independent entrepreneurs do. Stress from work differs among the three occupations (the differences are statistically significant; in an anova-test the p-value is.0002). The entrepreneurial employees are more stressed than both the independent entrepreneurs and the routine employees. 37

39 Satisfaction with work differs among the three occupations (the differences are statistically significant; in an anova-test the p-value is.0003). The entrepreneurial employees are more satisfied with their work than the routine employees, but less satisfied that the independent entrepreneurs are with their work. Satisfaction with income is rather similar among the three occupational groups (the differences are not statistically significant; in an anova-test the p-value is.41). Table 5.5 Work-qualities of independent entrepreneurs, entrepreneurial employees and routine employees Independent entrepreneurs Entrepreneurial employees Routine employees Meaningfulness of work Autonomy in work No stress in work Satisfaction with work Satisfaction with income In short, as expected, the entrepreneurial employees are in several ways between the routine employees and the independent entrepreneurs. Notably, the entrepreneurial employees are autonomous, meaningfully feeling and satisfied more than the routine employees and less than the independent entrepreneurs. But in stress they are not between the two, but are more stressed than both other occupational groups. Competencies of entrepreneurial employees contrasted routine employees and independent entrepreneurs Competencies of employees working entrepreneurially will be compared so as to answer the question, - How are entrepreneurial employees similar to and different from other occupations - routine employees and independent entrepreneurs in their competencies such as entrepreneurial skills, opportunity-perception, and risk-willingness? Entrepreneurial skillfulness is measured by asking the adults in our GEM-survey, - Do you have the knowledge, skill and experience required to start a new business? Opportunity-perception is measured by asking, - In the next six months, will there be good opportunities for starting a business in the area where you live? Risk-willingness is measured by asking, - Would fear of failure prevent you from starting a business? 38

40 Acquaintance with startups is measured by asking, - Do you know someone personally who started a business in the past 2 years? For each such competency, the percentage of persons within each occupational group, who have the competency, is listed in Table 5.6 (for each such competency, the three groups differ significantly; the p-value is less than.0002). Independent entrepreneurs Table 5.6 Competencies of independent entrepreneurs, entrepreneurial employees and routine employees Entrepreneurial employees Routine employees Entrepreneurial skill 83% 40% 28% Opportunity-perception 59% 48% 43% Risk-willingness 75% 61% 50% Acquaintance with startups 56% 41% 27% Table 5.6 shows that, for each competency, the entrepreneurial employees are in between the other two occupational groups. The entrepreneurial employees are skilled, perceiving opportunities, risk-willing and acquainted with startups more often than routine employees but less often than independent entrepreneurs. Entrepreneurial employees intention to start a new business Some entrepreneurial employees of course intend to start their own business, rather than unfolding their entrepreneurial potential for their employer in the current work place. We would expect the entrepreneurial employees to be in between the routine employees and the already independent entrepreneurs. The intention to start is measured by asking the adults in our GEM-survey, - Are you, alone or with others, expecting to start a new business, including any type of selfemployment, within the next three years? The intentions across the three occupational groups are listed in Table 5.7 (the differences are statistically significant; in a chi-square test the p-value is less than.0001). The entrepreneurial employees intend to start, as expected, more often than the routine employees and less often than the independent entrepreneurs. 39

41 Table 5.7 Independent entrepreneurs Intentions of independent entrepreneurs, entrepreneurial employees and routine employees. Entrepreneurial employees Routine employees Intend to start own business 29% 8% 6% No intention to start 71% 92% 94% Total 100% 100% 100% The entrepreneurial employees are actually rather similar to the routine employees in their rare intention to start a business. In most other entrepreneurial orientations, the entrepreneurial employees are around mid-way between the routine employees and the independent entrepreneurs, but not in this one respect. Thus, being an entrepreneurial employee is not a stepping stone to becoming an independent entrepreneur. Rather, it seems to be a way of life. This interpretation is quite consistent with their empowerment and satisfaction with their work. In the work-place the entrepreneurial employees tend to have more autonomy, have more meaningful work, be more satisfied with their work, and have higher income than the routine employees, who are undoubtedly a more salient reference-group than the independent entrepreneurs. 40

42 Chapter 6 Job-creation by entrepreneurial employees and independent entrepreneurs When new business activities are developed, new jobs are often created. So when employees develop new business activities for their employer in the existing enterprise, the enterprise may be expected to grow. When young independent entrepreneurs start a new business, they may expect it to become a sizeable business. An established ownermanager may also expect the company to expand, but might of course also expect it to contract, especially during crisis. Job-creation through entrepreneurial work by employees and by independent entrepreneurs will be ascertained, - What is the potential for creation of new jobs through the entrepreneurial work by employees? Furthermore, how does this potential job-creation compare to the potential job-creation by independent entrepreneurs through the start of new businesses and through the well-established businesses? Data Data for ascertaining the potential job-creation is our sample of persons who in our GEM Adult Population Survey in Denmark in 2011 were identified as doing entrepreneurial work as employees, starters of new businesses, and owner-managers of operating businesses. In our survey of 2015 adults we identified persons doing entrepreneurial work, comprising entrepreneurial employees, starters and owner-managers. The entrepreneurial employees were asked about expected new jobs, - How many people do you expect to be working on the new activity five years after its introduction? The starters were likewise asked about expected new jobs, - Not counting owners, how many people, including both present and future employees, will be working for this business five years from now? The owner-managers of operating firms were asked about current jobs, - Not counting the owners, how many people are currently working for this business? and expected jobs - Not counting owners, how many people, including both present and future employees, will be working for this business five years from now? The owner-manager s expectation for change in jobs in the operating business is then the difference between these two numbers. 41

43 Jobs expected from entrepreneurial endeavors The new jobs expected by the entrepreneurial employees, by the starting independent entrepreneurs, and by the operating independent entrepreneurs, are shown in Table 6.1. Few of the entrepreneurial employees (4%) expect that five years later none will be working on the new activity they are developing. By far most entrepreneurial employees expect that many new jobs will be created by the new activity they are developing. The independent entrepreneurs starting a new business are more modest in their expectations, in that several of the starters (17%) expect no change in jobs. The owner-managers operating an existing business have even lower expectations, in that some (11%) expect fewer jobs, and by far most (66%) expect no change in jobs, and very few expect many more jobs. Expectations for new job creation are thus highest among the entrepreneurial employees, lower among the independent entrepreneurs starting a new business, and lowest among the owner-managers of operating businesses. Table 6.1 Jobs expected by entrepreneurial employees, starting businesses, and operating businesses Entrepreneurial employees Starting new businesses Operating businesses 100 or more new jobs expected 20% 4% 2% 10 to 99 new jobs expected 46% 24% 7% 1 to 9 new jobs expected 37% 56% 14% No change in jobs expected 4% 17% 66% Fewer jobs expected % Sum 100% 100% 100% Total new jobs expected by sample Total new jobs expected by population 43 million 3 million 2 million The numbers of new jobs expected by the entrepreneurial employees can be added up in the sample; they add up to new jobs expected in our sample. Likewise, the number of new jobs expected by the starters can be added up in the sample; they add up to 1696 new jobs expected in our sample. Also, the number of new jobs expected by the owner-managers of operating businesses can be added up in the sample; they add up to 822 new jobs expected in our sample. Our sample is altogether 2015 interviewed adults. These 2015 adults are interviewed in the population of roughly 4 million adults, so the sample is roughly 1/2000 of the population. The total new jobs expected in the population may therefore be estimated as roughly 2000 times the new jobs expected by the 42

44 sample. These total new jobs expected by the population are listed in the bottom row of the table. Immediately, I emphasize that this estimate of expectations is extremely crude and in some ways misleading. First, the sum across activities or businesses was actually estimated by summing across leading persons. But leading persons form teams as the entity in the activity creating the jobs, so a better estimate should divide each respondent s expectation by team-size before summing. The team-size for the entrepreneurial employees is unknown, so we cannot calculate that better estimate. Second, these are the highly involved persons personal expectations, and such expectations are more wishful thinking than realistic forecasts (among the three kinds of persons, the most realistic are probably the experienced owner-managers, and their expectations are the most modest ones). Third, the job-creation far exceeds the whole population of the country, manifold! So the estimated is quite unrealistic, if considered as a kind of collective expectation. Inevitably, the expectations cannot be met. Instead of viewing such estimates as predictions, and then discarding them as unrealistic or even megalomaniac and therefore useless, the expectations can more informatively be considered as the entrepreneurs ambitions or aspirations. Policy-making that aims at promoting job-creation should therefore not focus on heightening people s ambitions, because they are already high, but should rather focus on supporting fulfillment of entrepreneurs ambitions, and also on handling the many inevitable disappointments when entrepreneurs cannot meet their own ambitions. Entrepreneurial work by employees in industry in Denmark will be examined in the next part. 43

45 Chapter 7 Employees in industry: Entrepreneurial employees compared to routine employees Industry in Denmark will now be the focus, as entrepreneurial work unfolds in this sector. The questions are, - Are the entrepreneurial employees in industry different from the routine employees in industry, in their background such as gender, age, education and income, in their workqualities such as meaningfulness, autonomy, stress and satisfaction, in their entrepreneurial competencies such as skills, opportunity-perception, risk-willingness, and in their intentions whether to starter their own business? These questions were addressed for Danish employees in all sectors in the preceding chapters, but now we focus on one sector, industry. Data The data for this chapter is the sample of employees in industry in Denmark, identified in our GEM Adult Population survey of 2015 adults in Denmark in This identified a sample of 264 employees in industry, of whom 51 worked entrepreneurially and 213 worked routinely, using the distinction made earlier. Background of entrepreneurial employees compared to routine employees The first question is whether, among the employees in industry in Denmark, the entrepreneurial employees differ from the routine employees in their background, specifically in gender, age, education and income. The gender composition of entrepreneurial employees is similar to the gender composition of the routine employees, Table 7.1 (the difference is so small that it is not significant). Table 7.1 Gender of employees in industry, by kind of work Entrepreneurial employees Routine employees Female 33% 29% Male 67% 71% Total 100% 100% N employees

46 The age of the entrepreneurial employees is 42 years, on average, and the age of the routine employees is 41 years, on average, so they do not differ significantly. The education differs between the entrepreneurial employees and the routine employees, Table 7.2. Entrepreneurial employees tend to be more educated than the routine employees (the difference is statistically significant; the p-value is.0001). The difference in educational level is actually quite large. Table 7.2 Education of employees in industry, by kind of work Entrepreneurial employees Routine employees Long higher education 32% 7% Bachelor education 2% 2% Medium-length higher education 24% 8% Short higher education 8% 7% Vocational education 22% 42% Vocational secondary school 0% 10% General secondary school 10% 8% Primary school 2% 17% Total 100% 100% Mean level of education N employees Income, household income before taxes, also differs, Table 7.3. Entrepreneurial employees tend to have much higher income than routine employees (the difference is statistically significant; the p-value is.0001). Table 7.3 Income of employees in industry, by kind of work Entrepreneurial employees Routine employees High income 25% 5% Medium income 52% 43% Low income 23% 52% Total 100% 100% Mean income N employees

47 In short, in industry in Denmark, there is no significant gender difference between entrepreneurial employees and routine employees, and no significant age difference. In education and income, however, there are large differences, the entrepreneurial employees are much more educated and have much higher income than the routine employees. Work-qualities of entrepreneurial employees compared to routine employees The next question is whether, among the employees in industry in Denmark, the entrepreneurial employees differ from the routine employees in their qualities of work. Expectedly, entrepreneurial employees have better work-quality than routine employees. Meaningfulness differs, Table 7.4 (the difference is statistically significant; p-value.01). As expected, entrepreneurial employees tend to consider their work meaningful, more than routine employees do. Autonomy in work also seems to differ, Table 7.4 (the difference is marginally significant; p-value is.06 one-sided). As expected, entrepreneurial employees then have autonomy, more than routine employees have. Stress, satisfaction with work, and satisfaction with income, do not differ significantly between entrepreneurial employees and routine employees, Table 7.4 (the p-values exceed.15). Table 7.4 Work-qualities of employees in industry, by kind of work Entrepreneurial employees Routine employees Meaningfulness of work Autonomy in work No stress from work.2.4 Satisfaction with work Satisfaction with income.7.6 In short, as expected, entrepreneurial employees have more meaning and more autonomy in their work than routine employees, but stress and satisfaction does not differ by kind of work. Entrepreneurial competencies of entrepreneurial employees and routine employees The next question is whether, among the employees in industry in Denmark, the entrepreneurial employees differ from the routine employees in their entrepreneurial competencies. Expectedly, entrepreneurially working employees would more often posses en- 46

48 trepreneurially competencies than routinely working employees. The competencies are those examined earlier. Entrepreneurial skills differ, Table 7.5. As expected, entrepreneurial employees are far more often entrepreneurially skilled than routine employees (the difference is statistically significant; p-value.0005 one-sided). Acquaintance with a start-up differs, Table 7.5. As expected, entrepreneurial employees more often knows someone starting their own business (the difference is statistically significant; p-value.001 one-sided). Opportunity-perception and risk-willingness, unexpectedly, seem rather similar between the two kinds of employees, Table 7.5 (the differences are so small that they are not significant; the p-values exceed.14). Table 7.5 Competencies of employees in industry, by kind of work Entrepreneurial employees Routine employees Entrepreneurial skills 62% 37% Acquaintance with startup 53% 30% Opportunity-perception 45% 40% Risk-willingness 62% 54% In short, entrepreneurial employees are skilled and acquainted with a start-up more frequently than routine employees, as expected. Unexpectedly, the two kinds of employees do not differ significantly in opportunity-perception and risk-willingness. Intention to start own business Are entrepreneurial employees intending to start their own business more often than routine employees? We would expect this. Among both kinds of employees, however, roughly ten percent intend to start up, Table 7.6 (the difference is so small that it is not significant). Table 7.6 Employees intention to start their own business, by kind of work Entrepreneurial employees Routine employees Intention to start business 8% 11% No intention 92% 89% Total 100% 100% 47

49 In industry, in conclusion, the entrepreneurial employees are similar to the routinely working employees in many ways. Notably, and surprisingly, the gender composition is similar. Education, however, differs, in the way that entrepreneurial employees tend to be much more educated than routine-working employees. Income also differs in the way that entrepreneurial employees have much higher income than routine employees. Work-qualities differ in the way that entrepreneurial employees have jobs that are more meaningful, autonomous and satisfying. Entrepreneurial employees also have more entrepreneurial competencies, in the way that they more often have skills for starting a business and are acquainted with a startup. 48

50 Chapter 8 Entrepreneurial employees: Industry compared to private non-industry and to public sector The employees both the entrepreneurial and the routine in industry were the focus of the preceding chapter. We now narrow our focus even more, to those employees in industry who are entrepreneurial. We ask ourselves, How are entrepreneurial employees in industry different from entrepreneurial employees in other sectors, namely in private non-industry and in the public sector? Do entrepreneurial employees in these three sectors differ in recruitment or manner of participation in entrepreneurial work? Do the entrepreneurial employees differ across the three sectors in their background such as gender, age, education and income? Do the entrepreneurial employees differ across the sectors in work-qualities, in competencies, and intentions to start their own business? Do the sectors differ in their leading entrepreneurial employees expectations for creation of jobs? Data Data for comparing entrepreneurial employees in industry and other sectors is the sample of entrepreneurial employees identified in our GEM adult population survey of 2015 adults. We identified entrepreneurial employees, of whom some were in industry, some in private non-industry, and some in the public sector (here including the tiny nonprofit sector). They were asked questions about their work as described in earlier chapters. Participation in entrepreneurial work by employees in industry and other sectors Employees participation in entrepreneurial work may be more or less extensive. Many employees are working routinely and never involved in any entrepreneurial work. Many employees have participated in entrepreneurial work in recent years, but mostly as supporting it rather than leading it, and such supportive work is also considered routine. Some employees have been leading entrepreneurial during recent years, and some of them are even leading entrepreneurial work at present. Those leading entrepreneurial work we consider to be the entrepreneurial employees. Participation differs among the sectors, Table 8.1. Employees in industry participate more frequently than employees in private non-industry, by any of the counts. Employees in industry participate less often than employees in the public sector, by any count. 49

51 Table 8.1 Employees participation in entrepreneurial work, by sector Private non-industry Industry Public sector Participated in last three years Leading in last three years Leading at present N employees In short, employees in industry participate in entrepreneurial work more frequently than employees in private non-industry but less frequently than employees in the public sector. Background of entrepreneurial employees in industry and other sectors Gender composition of the entrepreneurial employees differs among the three sectors, Table 8.2. The entrepreneurial employees in industry are mostly men, like in private non-industry, whereas the entrepreneurial employees in the public sector are mostly women. Table 8.2 Gender of entrepreneurial employees, by sector Private Industry Public sector non-industry Female 40% 33% 67% Male 60% 67% 33% Total 100% 100% 100% N employees Age of the entrepreneurial employees differs among the three sectors. The age of entrepreneurial employees in industry is 42 years, on average, while the age of entrepreneurial employees in private non-industry is 40 years, on average, and the age of entrepreneurial employees in the public sector is 45 years, on average. Education of the entrepreneurial employees differs among the three sectors (the differences are statistically significant). The education of entrepreneurial employees in industry tends to be a little higher than the education of entrepreneurial employees in 50

52 private non-industry. But the education of entrepreneurial employees in industry tends to be a little less than the education of entrepreneurial employees in the public sector. Incomes of the entrepreneurial employees differ among the three sectors (the differences are statistically significant). The incomes (annual household incomes before taxes) of entrepreneurial employees in industry are the highest, on average, in that they tend to be higher than the incomes of entrepreneurial employees in private non-industry and also higher than the incomes of entrepreneurial employees in the public sector. In short, entrepreneurial employees differ across sectors in their background. Entrepreneurial employees in industry are especially often men, and their incomes are particularly high. Work-qualities of entrepreneurial employees in industry and other sectors Does industry differ from the other sectors in its entrepreneurial employees work-qualities? The sectors are not significantly different in most qualities of work, Table 8.3 (the p-values exceed.12 for four of the five qualities). Autonomy in work differs significantly among the sectors (p-value.008), in the way that autonomy is high in private non-industry and low in the public sector, with industry in between. Table 8.3 Work-qualities of entrepreneurial employees, by sector Private Industry Public sector non-industry Autonomy in work Meaningfulness of work No stress from work Satisfaction with work Satisfaction with income Competencies of entrepreneurial employees in industry and other sectors We would expect entrepreneurial competencies to be more prevalent among entrepreneurial employees in the private sectors than in the public sector. There are, indeed, some differences across the three sectors, Table 8.4. As expected, entrepreneurial skills differ in the way that they are more frequent in industry and private non-industry than in the public sector (p-value is.002). As also expected, acquaintance with a startup differs in the way that this is more frequent in industry and private non-industry than in the public sector (p-value is.003). Neither opportunity-perception nor risk-willingness differ significantly across the sectors (p-value exceed.30), which seems surprising. 51

53 Table 8.4. Competencies of entrepreneurial employees, by sector Private Industry Public sector non-industry Entrepreneurial skills Acquaintance with startup Opportunity-perception Risk-willingness Intentions of entrepreneurial employees to start their own business We might expect entrepreneurial employees to have an intention of starting their own business, especially in the private sectors, more often than in the public sector. Indeed, the sectors differ, Table 8.5 (differences are statistically significant, with p-value.007), but not quite as expected. Entrepreneurial employees in industry have intentions to start their own business less often than those in private non-industry. Indeed, entrepreneurial employees in industry are like those in the public sector, only few intend to start their own business. Table 8.5 Intentions among entrepreneurial employees to start own business, by sector Private Industry Public sector non-industry Intend to start own business 21% 8% 8% No intention to start own business 79% 92% 92% Total 100% 100% 100% N entrepreneurial employees Job-creation by entrepreneurial employees in industry and other sectors Entrepreneurial employees often expect their development of new activities for their employer to lead to the creation of new jobs. We asked those currently leading entrepreneurial work how many new jobs they expected, Table 8.6. By far most of the entrepreneurial employees expected their work to lead to the creation of many jobs, on average roughly 100 jobs. In the sample (from about 2000 interviewed adults), their expected job creation is several thousand, so the entrepreneurial work in the whole adult population (of roughly 4 million) would expectedly be a creation of several million jobs in each sector. Some reservations about this kind of estimation were made in an earlier chapter. 52

54 Table 8.6. Job-creation Private Industry Public sector non-industry 100 or more jobs expected 16% 26% 20% 10 to 99 jobs expected 32% 46% 56% 1 to 9 jobs expected 47% 26% 21% No jobs expected 5% 3% 3% Total (N employees) 100% (73) 100% (35) 100% (104) Median jobs expected Mean jobs expected Total in sample Total in adult population 10 million 7 million 26 million My conclusion is not that these entrepreneurial employees are unrealistic or even megalomaniacs. Rather, my interpretation is that the expected job-creation should be interpreted as ambition or aspiration. In industry, in conclusion, employees appear to participate in entrepreneurial work more frequently than employees in other private sectors, and perhaps a little less frequently than employees in the public sector. In industry, the entrepreneurial employees are mostly men, like in other private sectors, but unlike in the public sector where most entrepreneurial employees are women. In industry, work-qualities of the entrepreneurial employees are rather similar to the work-qualities of employees in the other private sectors and in the public sector. In industry, some competences are higher, in the way that entrepreneurial employees more often have entrepreneurial skills and more often are acquainted with a startup, compared to entrepreneurial employees in the public sector. In industry, the entrepreneurial employees rarely intend to start their own business, even more rarely than entrepreneurial employees in other private sectors and as rarely as entrepreneurial employees in the public sector. In industry, the entrepreneurial employees are ambitiously expecting growth in the form of creation of many jobs, similarly to entrepreneurial employees in the other private sectors and in the public sector. 53

55 Chapter 9 Industrial and other firms relations shaping their innovation, export and grow th-expectation Thomas Schøtt and Mahdokht Sedaghat Entrepreneurial work is not confined within the walls of the firm, but may extend to entrepreneurial work together with other enterprises. Competitive advantage accrues to people who are able to manage a network of collaborative networks (Shuman et al., 2009). Network relationships are important factors affecting innovation performance and productivity (Luke et al., 2004). Firm s performance is related to their degree of centrality within their social network (Ferriani, et al., 2009). Scholars have found that firms can gain access to different resources and they can seek to achieve competitive advantage through strong collaborations. Relationships with other organizations may enable firms to create credibility, financing, build a positive image, gain information and enhance their performance such as innovation, growth and export (Zhao et al., 1995). In this chapter we ask how a firm s performance is affected by its networking. The aspects of performance are here innovation, exporting and growth-expectation. Specifically we examine the effects of networking on innovation networking on export networking on growth-expectation innovation on export innovation on growth-expectation export on growth-expectation The hypothesize effects are illustrated in Figure 9.1. The effects form a causal model, where networking is the cause, and growth-expectation is the ultimate effect, while innovation and export are considered intervening variables. 54

56 Figure 9.1 Hypothesized effects Growth- expectation Networking Innovation Exporting This model will be examined here, for the businesses in Denmark, and specifically for firms in industry. Data We consider the universe or population of firms in Denmark in Our sample is 471 firms whose owner-managers were surveyed in the Global Entrepreneurship Monitor or a survey with the same questions that we conducted specifically for focusing on firms in industry in Denmark. Our analyses are all based on these 471 firms, but in a table or computation the number of analyzed cases may be slightly less than 471 because of occasional missing information. The survey asked for each firm s relations, innovation, export and current size and expected future size. Our variables are on networking, innovation, exporting and growth-expectation. Our analyses will also control for other characteristics of firms, namely their proprietorship (sole-proprietor or shared proprietorship), owner-team size (number of persons owning-managing the firm), age of the firm, and size of the firm (number of persons working for the firm). Relationships around a firm A firm s relationships in this study are collaborative relationships. Collaboration is with a specific kind of organization and is about a specific activity. Such questions were asked in the sixth European Community Innovation Survey in the format Is your firm collaborating with about? so this format seems valid and reliable (Sixth, 2008). In 55

57 our survey we asked the owner-managers of 471 firms about nine relationships. Relationships around a firm are measured by asking, -Is your firm collaborating with a research institution or other know-institution about developing new products or services? -Is your firm collaborating with other firms or organizations about developing new products or services? -Is your firm collaborating with customers about developing new products or services? -Is your firm collaborating with other firms or organizations about getting supplies? -Is your firm collaborating with other firms or organizations about producing goods or services? -Is your firm collaborating with other firms or organizations about marketing or sales? -Is your firm collaborating with other firms or organizations about delivering your products or services? -Is your firm collaborating with other firms or organizations about training somebody working for your firm? -Is your firm collaborating with other firms or organizations about sharing equipment or facilities? Firms often have such collaborative relationships. Some relations are more frequent than others, Table 9.1. Firms frequently collaborate with customers about developing new products or services, and frequently collaborate with other firms or organizations about their production or about sales. Firms rarely collaborate with others about training or about sharing facilities. Firms do not often collaborate with research institutions or other knowledge-institutions about developing new products or services. Table 9.1. Firms relationships Collaboration of the firm with Number of firms Percent firms with this collaboration a research institution or other knowledgeinstitution % about developing new products or services other firms or organizations about developing % new products or services customers about developing new products or % services other firms or organizations about getting % supplies other firms or organizations about producing goods or services % 56

58 other firms or organizations about marketing or sales other firms or organizations about delivering products or services other firms or organizations about training somebody working for the firm other firms or organizations about sharing equipment or facilities % % % % Relations tend to go together, they are correlated. Underlying the relations is a tendency for networking. A firm s relations can be considered manifestations or expressions of the firm s propensity to network. Statistically, the relations are manifest or measured indicators of an underlying latent factor, networking, which is not itself measured, but can be considered a factor in factor-modeling and structural equations modeling. Innovation of a firm Innovation of a firm here refers to the newness of its technology, newness to customers and competitiveness. These three aspects of innovation are measured. Newness of technology is measured by asking, - Have the technologies or procedures required for this product or service been available for less than a year, or between one to five years, or longer than five years? Newness to customers is measured by asking, - Do all, some, or none of your potential customers consider this product or service new and unfamiliar? Competitiveness is measured by asking, - Right now, are there many, few, or no other businesses offering the same products or services to your potential customers? Firms differ in innovation, Table 9.2. In terms of newness of technology, very few firms are highly innovative, as most firms use old technology. In terms of newness to customers, also many firms are low in innovation. Also, many firms have many competitors, indicating that they are low in innovation. 57

59 Table 9.2 Firms innovation Newness of technology Newness to customers Competitiveness High innovation 4% 30% 14% Medium innovation 6% 27% 42% Low innovation 89% 43% 44% Total 100% 100% 100% Number of firms These three dimensions of innovation tend to go hand in hand. The three measures are positively correlated. They are manifestations of a single underlying factor, innovation, which is thus itself not measured, but has three measured indicators. Statistically, innovation can thus be modeled with a factor-model that can be used for structural equations modeling. Growth-expectation Size of a firm here refers to people who are working for the business. Current size and expected future size are measured by the two questions, - Not counting the owners, how many people are currently working for this business? - Not counting owners, how many people, including both present and future employees, will be working for this business five years from now? Firms differ in size, both at present and expectedly in the future, Table 9.3. Most firms are small at present. Most firms are also expected to be small in the future. The table indicates a tendency for firms, overall, to expand. 58

60 Table 9.3 Firms size at present and expected five years later Size of firm Percent firms with that size at present Percent firms with that size expected five years later 0 employee 30% 29% 1 9 employees 56% 48% employees 13% 21% 100 or more employees 2% 2% Total 100% 100% Number of firms The expectation for growth or change of size of a firm can be measured by the difference between future size and present size. Rather than using the count of persons, we measure size on a logarithmic scale, so the growth-expectation is the logarithm of future size (adding 1 before taking the log) minus the logarithm of the present size (adding 1 before taking the logarithm). Exporting Exporting refers to proportion of customers that live outside the country. We have one question about exporting: - What proportion of your customers normally lives outside your country? Firms differ in their exporting, Table 9.4. Half of the firms have no export, and many have very little export. Only few firms have more customers abroad than within Denmark. Table 9.4 Firm s exporting Proportion of customers who are abroad Percent firms with that proportion of customers abroad 90 to 100 percent of customers are abroad 5% 75 to 89 percent of customers are abroad 3% 50 to 74 percent of customers are abroad 7% 25 to 49 percent of customers are abroad 6% 59

61 10 to 24 percent of customers are abroad 5% 1 to 9 percent of customers are abroad 24% None of the customers are abroad 50% Total 100% Number of firms 469 Exporting is thus measured by a percentage. For analysis we measure export on a logarithmic scale, as the logarithm of the percentage (adding 1 before taking the log). Estimated effects for all firms in Denmark. The effects among networking, innovation, exporting and growth-expectation are estimated for all the firms, in a structural equations model of the causal model in Figure 9.1. In Table 9.5, each effect is indicated by a coefficient, the standardized coefficient, and these are comparable to one another, so we can see which is large and which is small. The effects are listed in Table 9.5. Table 9.5 Effects estimated for all firms in Denmark, both industrial and others, about 450 firms. Effect of networking on innovation is.04 Effect of networking on exporting is.20 Effect of networking on growth-expectation is.14 Effect of innovation on exporting is.32 Effect of innovation on growth-expectation is.10 Effect of exporting on growth-expectation is.01 Networking thus seems to promote exporting much, more than it promotes growth-expectation, and far more than it promotes innovation. Innovation thus seems to promote exporting much, more than innovation promotes growth-expectation. Exporting has no significant effect on growth-expectation. These estimated effects are drawn in Figure 9.2 as arrows where the thickness of the arrow symbolizes the magnitude of the effect. 60

62 Figure 9.2 Estimated effects for firms in Denmark (both industrial and others) Growth- expectation Networking Innovation Exporting Estimated effects for the firms in industry For the firms in industry in Denmark, the effects among networking, innovation, exporting and growth-expectation are estimated, in the structural equations model of the causal model in Figure 9.1. In Table 9.6, each effect is indicated by a coefficient, the standardized coefficient, and these are comparable to one another, so we can see which is large and which is small. The effects are listed in Table 9.6. Table 9.6 Effects estimated for the firms in industry, about 300 firms. Effect of networking on exporting is.15 Effect of networking on growth-expectation is.23 Effect of innovation on exporting is.33 Effect of innovation on growth-expectation is.20 Effect of exporting on growth-expectation seems quite insignificant Effect of networking on innovation seems quite insignificant Networking thus seems to promote both exporting and growth-expectation, but seems not to affect innovation. Innovation seems to promote exporting much, more than innovation promotes growth-expectation. Exporting has no significant effect on growthexpectation. 61

63 These estimated effects are drawn in Figure 9.3 as arrows where the thickness of the arrow symbolizes the magnitude of the effect. Figure 9.3 Estimated effects for firms in industry. Growth- expectation Networking Innovation Exporting Conclusions Firms seem to benefit from their networking. Their collaborative relationships with others in their operations seem to improve their performance in terms of innovation, exporting and expectation for growth. Moreover, these dimensions of performance tend to reinforce one another in the way that innovation promotes export and growth-expectation. These effects are fairly strong for firms in general, and specifically for firms in industry. 62

64 Chapter 10 Collaborations among and between public and private actors: Specifically public-private innovation collabor ation Majbritt R. Evald, Thomas Schøtt, Ann H. Clarke and Kristin B. Munksgaard To meet the challenges of the public sector, the political agenda in the Western world is focussed on the potential of opening up the innovation process and invite private enterprises to contribute and participate through so-called public-private innovation partnerships (PPIP). Public-private innovation partnerships are collaborations between public and private actors who jointly develop products or services, and who share risks, costs, and benefits (Klijn and Teisman, 2003). As such, public-private innovation partnerships can be distinguished from other public-private arrangements such as procurement, outsourcing, service communities or the like. The main characteristic of a publicprivate innovation partnership is that it focuses on developing a solution that afterwards is delivered through public sales. As highlighted by Klijn and Theisman (2003) the common denominator of innovative collaborations between public and private organisations is the joint idea development and sharing of knowledge as well as risk, costs and benefits. In a public-private innovation partnership the solution is not known beforehand and it may not be possible to outline a full task specification prior to the development as this is defined during the joint development effort. When public and private actors engage in ongoing collaborations for innovation, however, it is difficult to draw a strong line between public-private innovation partnerships and ordinary public-private collaborations. Public-private innovation partnerships are gaining increasing attention in the EU (Klijn and Teisman, 2003) and in Denmark (Sørensen and Torfing, 2011), due to its potential advantages. According to Klijn and Teisman, benefits of setting-up publicprivate innovation partnerships can take a variety of forms, for example financial/material benefits (profits, working space, and increased transport capacity), or more intangibly benefits (image and knowledge development). The costs of a public-private innovation partnership can be one-time only (preparation, adaptation of the internal organization), or recurring (organizational co-ordination, adaptation and tuning of substantive objectives). But what is important is the added value of synergy that a public-private innovation partnership creates as public and private actors bring together knowledge and competences from the public and private sector which would otherwise never have been coupled. The promise of creating unique products or services is thus massive (Feller et al., 2011; Fuglsang, 2008). However, public-private innovation partnerships also induce several challenges to the public and private actors involved. One of the challenges (Munksgaard et al., forthcoming) concerns that collaborations 63

65 between public and private actors are assigned to special legislative requirements and extensive EU rules to prohibit discriminating procurement. Concretely, the EU directive 2004/18/EC of the European Parliament and the Council of March 21, 2004, was created to coordinate procedures for the award of public works contracts, public supply contracts and public service contracts (Martin et al., 1997). This public procurement directive holds a strong emphasis on transparent and competitive procedures to meet an objective of open and fair competition. When the joint development effort of a publicprivate innovation partnership results in public procurement this directive applies. Moreover, the special legislative requirements and extensive EU rules also seem to impair the possibilities to build strong and trusting relationships necessary for really opening up the innovation process between public and private actors. When the public sector pursues wide dissemination of partnership results, especially private firms are faced with difficulties as they are investing resources in idea developments without getting any assurance to be part of the value gained when public-private innovation partnership projects are put out to competitive tendering. The special legislative requirements and extensive EU rules thus complicate the building of strong and trusting relationships between public and private actors, and create an imbalance between the benefits and cost that should be shared between the public-private innovation partnership partners especially causing inconvenience for private firms. Another challenge (Munksgaard et al., forthcoming) concerns the embedded differences that exist between public and private partners in public-private innovation partnership settings concerning the core business, values and strategies of public and private actors respectively. The differences between public and private actors result in divergences in their goals and objectives potentially creating tensions in their interaction (as reported in e.g. Currie et al., 2008; Schmidt, 2008). The public partner will be devoted to a public cause whereas the private partner will be concerned with customer preferences leading to differences in the partners problem definitions and related difficulties in realizing a value adding potential. Moreover, when actors engaging in joint innovation projects seek to obtain diverse outcomes, it may further complicate the creation of a business model for applying the new solution. In general public-private innovation partnerships have to deal with differences in values and strategies that seem irreconcilable thus the mutual innovation process involves tensions on several levels as not agreeing on what to innovative is combined with tensions of handling constant conflicts. In the following we set out to explore different types of collaborations among and between public and private enterprises, to be able to explore how public and private innovation collaborations are doing in comparison with other types of collaborations (e.g. public/public and private/private collaborations). We do this as we need to gain more knowledge of how public-private innovation partnerships are perceived by public and private actors. In the following we thus test how public and private actors perceive public-private innovation partnerships by creating several working hypothesis, which can be looked at as preliminary statements of expectations. The hypotheses are mainly based on theories explaining how innovation is created in the public and private sector, and when possible based on the sparse theories of public-private innovation partnerships. 64

66 Concretely we anticipate that while public and public collaborations or private and private collaborations may be more frequently occurring compared to public-private innovation partnerships the different collaboration types will differ according to the content of collaboration (work areas), the ease of collaboration, the technology closeness, and the innovativeness of collaboration. In line with the above introduction we formulate several working hypotheses below. However, before formulating concrete hypotheses, we need to sharpen our conceptualization. Hypothesis development based on the literature review We consider collaboration as a phenomenon that may occur between an enterprise and a sector, i.e. an enterprise in a sector. The unit under consideration is thus a pair consisting of an enterprise and a sector. A pair may have collaboration understood as collaboration occurs or not. Presence or absence of collaboration are outcomes in a pair. Each outcome is more or less probable. The likelihood of one outcome versus the other outcome depends on the characteristics of the pair of enterprise and sector. The enterprise may be public or private, as an important characteristic of the enterprise. The sector may be public or private as an important characteristic of the sector. In the following we examine collaboration through different hypotheses concerning the frequency of different combinations of collaboration, the content of collaboration (work areas), the ease of collaboration and the innovativeness of collaboration. The frequency of collaboration: How frequently different combinations of collaboration occur? We consider public and private enterprises that may be collaborating with public and private sectors. Some of these possible combinations of collaboration occur relatively frequently, and some combinations occur less frequently. We can think about four relative frequencies or probabilities of collaboration - these are cross-classified in Table Table 10.1 Four possible collaborations Enterprise Public enterprise Public-Public: Probability that public enterprises collaborate with the public sector Public-Private: Probability that public enterprises collaborate with the private sector Private enterprise Private-Public: Probability that private enterprises collaborate with the public sector Private-Private: Probability that private enterprises collaborate with the private sector Possible collaboration Public sector Private sector 65

67 These four probabilities are not constrained, they may all be high and near 1, or they may all be small and near 0, or, indeed, they may all be quite different from one another. The probabilities may be higher in one society than in another society. Over time, some probabilities may change, indeed some may increase and some may decrease. We shall here consider the probabilities in present-day Denmark. An image is that Denmark is a society in which there has been a divide between the private and the public sector historically, between private enterprises seeking profit for their owners and public enterprises serving the people (Currie et al., 2008; Schmidt, 2008). As such there seem to be a path dependency concerning which sector private and public enterprises collaborate with typically collaborating with others within the same sector. Opposing collaborating between sectors is rare as public-private innovation partnerships is a rather new phenomenon. We therefore hypothesize that: Hypothesis 1. The probabilities that public enterprises collaborate within the public sector and that private enterprises collaborate within the private sector are higher than collaboration between the sectors. Next, we consider the collaborations that exist (and thus ignore the possible cases of collaboration that do not exist). At first we examine the content of collaboration (work areas). The content of collaboration: Does the content among the different combinations of collaborations vary? In the following we develop hypothesis concerning the content of collaboration. The content of collaboration refers to the activity that is in the collaboration, the work area that the collaboration is related to. More precisely we set out to explore whether the content varies among the different types of collaboration in relation to work areas such as 1) development of new products and services, 2) sales and delivery and 3) effectiveness. The first content of a collaborative relationship we consider is development of new products and services. An image is that public enterprises are not primarily concerned with developing services and products. Rather public enterprises have for years faced the challenge of meeting constrained budgetary demands, which leaves little room for development (Borins, 2002; Rowe et al., 2004; Kearney et al., 2008). On the contrary private enterprises have for years been faced with increasing demands of utilising new technologies or commercialise new products and services (Garvin and Levesque, 2006; Elfring, 2005). As such private enterprises are more encouraged to continuously develop new products and services. Moreover as public-private innovation partnerships often are engaged in the collaboration for the purpose of innovating we also anticipate that this type of collaboration are engaged in developing new products and services. This image can be stated as a hypothesis: Hypothesis 2. The probability that collaboration of public enterprises with the public sector focuses on development is lower than the other three probabilities. The second content of a collaboration we consider is sales and delivery. An image is that collaboration across sectors is not concerned with sales and delivery, because public-private innovation partnerships often are engaged in collaboration for the purpose of innovating. Furthermore, typically sales and delivery takes place between private/public enterprises and public/private sector when a formal contract exists. Moreover it is 66

68 more common for collaboration among private enterprises to be concerned with sales and delivery, than among public enterprises, as private enterprises are profit oriented, whereas public enterprises have multiple, intangible social and political objectives (Currie et al., 2008). The image can be stated as a hypothesis: Hypothesis 3. The probability that collaboration of private enterprises with the private sector focuses on sales and delivery is higher than the other three probabilities. A third content of collaboration is effectiveness, i.e. an enterprise may collaborate in order to be more effective. An image is that collaboration between public enterprises within the public sector often is concerned with effectiveness. Public enterprises often work together to use existing scarce resources effectively. This may also be the case for private enterprises, as private enterprises are profit oriented and therefore seek collaborations concerning effectiveness (Schmidt, 2008). However, this is not the same for collaboration across sectors, as public-private innovation partnerships often are engaged in collaboration for the purpose of innovating, even though innovation also includes effectiveness. This image can be stated as a hypothesis: Hypothesis 4. The probabilities that collaboration of public enterprises with private sector and collaboration of private enterprises with the public sector focus on effectiveness are lower than the other two probabilities. Next we consider the ease of collaboration. The ease of collaboration: Are the different combinations of collaboration considered easy or difficult? Ease of collaboration is another aspect of a collaboration that we examine. A collaborative relationship may be considered easy, whereas another collaborative relationship may be considered difficult. An image is that collaboration involving public enterprises is difficult, but that private enterprises easily collaborate with one another because both partners are focused on profit and have a history of collaboration compared to the history of public enterprises collaborating with other public enterprises. Moreover as public-private innovation partnerships still is a rather new phenomenon this type of collaboration is also considered to be relatively difficult compared to collaboration between private enterprises. This image can be stated as a hypothesis: Hypothesis 5. The probability that private enterprises consider their collaboration with the private sector as easy is higher than the other three probabilities. Next we consider the closeness between the technology in collaboration and the core technology in an enterprise. The degree of technology closeness: Do the closeness of technology vary among different types of collaborations? The collaboration of the enterprise is using a technology which is more or less tied to the core technology in the enterprise. The technology may be closely tied to the core technology in the enterprise, or it may be partly similar to the core technology, or again it may be different from the core technology in the enterprise. When closeness of technology to core technology is a matter of degree and measured on a scale, we do not consider probabilities or frequencies, but averages. For closeness between the technology in collaboration and the core technology in enterprises, we consider four averages or means. 67

69 An image is that closeness between the technology in collaboration and the core technology in an enterprise is low across sectors. New knowledge is exchanged across public-private innovation partnerships. Closeness between the technology and the core technology in an enterprise is higher within sectors. Existing knowledge is more often being exchanged. These images inspire formulation of the hypothesis: Hypothesis 6. Closeness of technology tends to be higher within sectors than between sectors. Finally we consider the innovativeness in collaborations. The degree of innovativeness: What degree of innovativeness is in combinations of collaboration? Innovation in collaboration is yet another aspect of collaboration we examine. Collaboration may be highly innovative, or may be medium, or may be low in innovation, or finally may be characterized by no innovation at all. When innovativeness is a matter of degree, and measured on a scale, we do not consider probabilities or frequencies but averages. An image is that innovation is low within the public sector and therefore that collaboration within this sector is low in innovativeness (Sadler, 2000; Kearney et al., 2008). Innovativeness in collaboration within the private sector may also be low, because private enterprises for years have been faced with increasing demands of utilising new technologies or commercialise new products and services. As such public enterprises are more encouraged to continuously innovative. Collaboration across sectors may be higher in innovativeness because the public-private innovation partnerships in their collaboration often are engaged for the purpose of innovating. This image inspires formulation of the hypothesis: Hypothesis 7. Innovativeness across sectors, both ways, tends to be higher than innovativeness within each sector. The seven hypotheses outlined in the above will now be tested. First we map out how frequently different types of partnering occur (Hypothesis 1), and if the tendency to form each type of collaborations is strong or weak. Furthermore we also sketch out what the content of the different types of partnering is (Hypothesis 2: developing new products or services, Hypothesis 3: sales and delivery, and Hypothesis 4: effectiveness) to see if the content vary among the different types of collaborations. Thereafter, we outline whether the different types of partnering is perceived as easy or difficult by public and private actors (Hypothesis 5), and if the tendencies that occur are strong or weak. Afterwards we sketch if the different combinations of collaboration are using a technology which is more or less tied to the core technology in the different collaborations (Hypothesis 6), and if the tendencies that occur are strong or weak. Finally, we look more closely at the degree of innovativeness that characterize the different combinations of collaboration, and if the tendency is strong or weak (Hypothesis 7). From this conclusions of the seven hypotheses are extracted. 68

70 Methods We consider collaboration of enterprises with sectors. The unit is a pair consisting of an enterprise and a sector. We consider public enterprises and private enterprises and consider the public sector and the private sector. So we consider four combinations or kinds of pairs: the pair consisting of a public enterprise and the public sector, the pair of a public enterprise and the private sector, the pair of a private enterprise and public sector, and the pair of a private enterprise and the private sector. A sample of each kind of pair is needed, so we need four samples. We use data from the interviews with 2015 adults in our Adult Population Survey in our Global Entrepreneurship Monitor project, where employees were identified and then asked to report on collaboration of their enterprise with a sector. Our samples of pairs thus derive from a sample of persons. The size of the samples of different types of pairs of an enterprise and a sector is cross-classified in Table Table 10.2 Samples of pairs of enterprises and possible collaborations Public enterprises Enterprise Private enterprises Possible collaboration Public sector 253 pairs 336 pairs Private sector 256 pairs 346 pairs In each pair we first measure whether collaboration is present or absent. If collaboration is present, then we ask about aspects of the collaboration, notably its focus, ease, technology and innovation. Analyses and results In the following we test each hypothesis that we formulated above. Testing Hypothesis 1: How frequently different combinations of partnering occur? Our hypothesis about presence versus absence of collaboration is that the probability that public and private enterprises collaborate among each other within the same sector is higher than the probability of collaboration between the sectors. Employees who were intrapreneurially active in public enterprises and private enterprises were asked: - In your involvement during the last three years in the development of new activities for your employer, has the enterprise collaborated with a public organization? Likewise, the employees were also asked -... has the enterprise collaborated with a private enterprise? Their responses enable us to calculate the proportion of the private enterprises that col- 69

71 laborate within the private sector, and likewise calculate the relative frequency of collaboration for each other combination. Thus the hypothesis is tested by calculating, for each of our four samples, the relative frequency or probability of collaboration. The four relative frequencies or probabilities are listed in Table Table 10.3 The frequency of collaboration in each combination Enterprise Public enterprise Private enterprise Possible collaboration Public sector Private sector The probability that private enterprises collaborate with the private sector is estimated to be.62 (i.e. 62% of the private enterprises reported to be collaborating within the private sector), and the probability that public enterprises collaborate with the public sector is estimated to be.67 (i.e. 67% of the public enterprises reported to be collaborating within the public sector). These.62 and.67 probabilities are much higher than the.28 probability that private enterprises collaborate with the public sector, in accordance with our hypothesis (this difference is statistically significant). These.62 and.67 probabilities are also much higher than the.42 probability that public enterprises collaborate with the private sector, also in accordance with out hypothesis (this difference is statistically significant). Summing up, our hypothesis 1 is supported. Testing Hypothesis 2, Hypothesis 3 and Hypothesis 4: Does the content among the different combinations of collaborations vary? The hypothesis about focus on development is that the probability that collaboration of public enterprises with the public sector focuses on development is lower than the other three probabilities. Employees in enterprises who reported collaboration were also asked about that collaboration: - Has the collaboration with the public sector [or private sector] been about developing something new, products or services? Their responses enable us to calculate the proportion of the cases of collaboration of public enterprises within the public sector which focused on development, and the proportion of the cases of collaboration in each other combination which focused on development. Thus the hypothesis is tested by calculating, for each of our four samples, the relative frequency or probability of collaboration being focused on development. The four probabilities are listed in Table

72 Table 10.4 The frequency of each combination of collaboration focusing on development Enterprise Public enterprise Private enterprise Collaboration Public sector Private sector The probability that cases of collaboration within the public sector focus on development is quite high, namely.86. The.86 probability is not lower than the other probabilities, contrary to our hypothesis. So our hypothesis 2 is not supported by the evidence. The differences are small (and not statistically significant; the p-value is.18 for the two-by-four cross-tabulation of frequencies). Our hypothesis about focus on distribution stated that the probability that collaboration of private enterprises with the private sector focuses on sales and delivery is higher than the other three probabilities. Employees who reported collaboration were also asked about that collaboration: - Has the collaboration with the public sector [or private sector] been about sales or delivery? Their responses enable us to calculate the proportion of the cases of collaboration of public enterprises within the public sector which focused on distribution, and the proportion of the cases of collaboration in each other combination which focused on distribution. Thus the hypothesis is tested by calculating, for each of our four samples, the relative frequency or probability of collaboration being focused on distribution. The four estimated probabilities are listed in Table Table 10.5 The frequency of each combination of collaboration focusing on sales and delivery Enterprise Public enterprise Private enterprise Collaboration Public sector Private sector The probability that cases of collaboration within the private sector focus on sales and delivery is quite high, namely.67. The.67 probability is higher than the other probabilities. The differences among the probabilities are quite large (and are statistically significant; the p-value is.0001 for the two-by-four cross-tabulation of frequencies). Thus the evidence supports our hypothesis. 71

73 Our hypothesis about focus on effectiveness states that the probability that collaboration between sectors among public/private enterprises and private/public sector focuses on effectiveness is lower than the other two probabilities. Employees who reported collaboration were also asked about that collaboration, - Has the collaboration with the public sector [or private sector] been about effectiveness? Their responses enable us to calculate the proportion of the cases of collaboration of public enterprises within the public sector which focused on effectiveness, and the proportion of the cases of collaboration in each other combination which focused on effectiveness. Thus the hypothesis is tested by calculating, for each of our four samples, the relative frequency or probability of collaboration being focused on effectiveness. The four estimated probabilities are listed in Table Table 10.6 The frequency of each combination of collaboration focusing on effectiveness Enterprise Public enterprise Private enterprise Collaboration Public sector Private sector The four probabilities are fairly similar. The differences among them are so small that the differences are not statistically significant (the p-value exceeds.05 for the four-bytwo cross-tabulation of frequencies). So the data do not support Hypothesis 4. Testing Hypothesis 5: Are the different combinations of partnering considered easy or difficult? Our hypothesis about ease of collaboration stated that the probability that private enterprises consider their collaboration with the private sector as easy is higher than the other three probabilities. Employees who reported collaboration were also asked about that collaboration: - Has the collaboration with the public sector [or private sector] been easy? Their responses enable us to calculate the proportion of the cases of collaboration of public enterprises within the public sector which were considered easy, and the proportion of the cases of collaboration in each other combination which were considered easy. Thus the hypothesis is tested by calculating, for each of our four samples, the relative frequency or probability of collaboration that were considered easy. The four estimated probabilities are listed Table

74 Table 10.7 The frequency of each combination of collaboration perceiving collaboration as difficult or easy Enterprise Public enterprise Private enterprise Collaboration Public sector Private sector The four probabilities are not all similar. There are considerable differences and they are statistically significant (the p-value is.01 in the four-by-two cross-tabulation of frequencies).however, our Hypothesis 5 is only partly supported as not only private enterprises perceive collaboration within the private sector as easy also public enterprises perceive collaboration with public and private sectors as easy. Testing Hypothesis 6: Does the closeness vary among different combinations of collaborations? Our hypothesis about closeness between technologies stated that closeness of technology tends to be higher within sectors than between sectors. Employees who reported collaboration were also asked about that collaboration: - To what extent is the technology of your new activity related to the core technologies of your employer? Is it closely related, partially related or not related? Not related is coded 0, partially related is coded.5 and closely related is coded 1. Closeness of technology in collaboration of public enterprises with the public sector can then be calculated as the average among the cases of this combination. Likewise, closeness of technology in each of the other combinations can be calculated as the average. The four means or averages of closeness are listed in Table Table 10.8 Mean closeness of collaboration in each combination of collaboration Enterprise Public enterprise Private enterprise Collaboration Public sector Private sector Closeness of technology is similar among the four combinations. The differences are small and not statistically significant (the p-value is.58 for the one-way anova model with four groups). So the data do not support Hypothesis 6. 73

75 Testing Hypothesis 7: What is the innovativeness in each combination of partnering? Our hypothesis about innovativeness stated that innovativeness across sectors, both ways, tends to be higher than innovativeness within each sector. Employees who reported collaboration were asked about innovativeness in that collaboration in the following two questions: - I now want to ask about the product or service that is created in this collaboration. Will all, some, or none of the customers consider this product or service new and unfamiliar?. Here none is coded 0, some is coded.5, and all is coded 1. - Right now, are there many, few, or no other businesses offering the same product or service to customers? Here many business competitors is coded 0, few business competitors is coded.5, and no business competitor is coded 1. For both questions, a reply with measure 0 indicates low innovativeness, a reply with a measure.5 indicates medium innovativeness, and a reply with a measure 1 indicates high innovativeness. Innovativeness can therefore be measured by an index that is the mean of the two measures. With this measure of innovativeness in collaboration we can calculate the average innovativeness in the cases of collaboration in each combination of enterprises and sectors. The four means or averages of innovativeness are listed in Table Table 10.9 Mean innovativeness in each combination of collaboration Enterprise Public enterprise Private enterprise Collaboration Public sector Private sector Innovativeness in collaboration of public enterprises is higher than innovativeness of private enterprises (differences are statistically significant; the probability-value is.02 for the comparison among the four means in a one-way ANOVA model). So the data do not support Hypothesis 7. Summing up As we stated in the beginning of this chapter we have investigated a rather new phenomenon called public-private innovation partnerships (PPIPS) compared to innovation performed in more traditional partnerships such as public-public partnerships and private-private partnerships. We have done this by creating several working hypothesis. These working hypotheses have to be looked upon as preliminary statements of expectations, which we hope inspire other researchers to develop tenable theories about PPIPs. As such we have been aware of the risk of developing hypothesis that ultimately fails. 74

76 Very few of the hypotheses that we argued for in the beginning of the paper based on literature about innovation created by public and private enterprises in the public or private sector and innovations taken place in collaborations across sectors (as publicprivate innovation partnerships) were supported. Only 2 out of 7 hypotheses are supported completely. This concerns Hypothesis 1 saying that the probability that public and private enterprises collaborate among each other in the same sector is higher than collaboration between the sectors. This is not a surprising result as public-private innovation partnerships is a rather new phenomenon compared to collaboration among public enterprises and collaboration among private enterprises: both can be said to have a track record in collaborating among each other. Further it concerns Hypothesis 3 saying that the probability that collaboration of private enterprises with the private sector focuses on sales and delivery is higher than the other three probabilities. This not a surprising result as the purpose with private enterprises is commercialization and thus sales and delivery of products and services. However, sales and delivery also seems to be a rather widespread activity in collaborations across sectors (in public-private innovation partnerships). Concerning Hypothesis 2 and Hypothesis 4 the differences among the four different types of collaborations are too small, and therefore no statistically significant results are obtained. We therefore cannot conclude that 1) the probability that collaboration of public enterprises within the public sector focuses on development is lower than the other types of collaboration. Further, we can also not conclude that 2) the probability that collaboration between sectors among public/private enterprises and private/public sector focuses on effectiveness is lower than the other two probabilities. What is interesting is that all combinations of collaborations seems to be just as involved in new product and service development and just as concerned with effectiveness. Looking at Hypothesis 5 we can only partly support the image that private enterprises perceive collaboration among private sector as easy. There are considerable differences among the different collaboration types and the differences are statistically significant also pointing out that not only private enterprises perceive collaboration among private sector as easy (what we hypothesized) also public enterprises perceive collaboration with public or private sector as easy. Only private enterprises look at collaboration with the public sector as difficult. The challenges concerning public-private innovation partnerships might be harder to overcome for private enterprises than for public enterprises, as private enterprises have a shorter time horizon favoring short term economic results and market guidance. Concerning Hypothesis 6 and Hypothesis 7 the data could not support any of the hypothesis presented. Whereas the differences are small and not statistically significant concerning closeness of technology, Hypothesis 7 presents another image than what we proposed as the results are statistically significant: the results points out that innovativeness in collaboration of public enterprises is higher than innovativeness of private enterprises. These findings are also interesting and typically contradictory to what the literature in general would state, which indeed gives the impression that the public sector might be more agile and innovative than ever. 75

77 Conclusion More and more political focus is directed towards the mutual form of public-private innovation partnerships (PPIPs), as a widespread belief about public-private innovation partnerships seems to be that they are better suited for creating welfare innovations than other types of collaborations. The potential in public-private innovation partnerships stems from the belief that different partner competences and experiences in synergy will increase productivity and efficiency in the public sector and create more flexible, user-centered services to citizens. Intersecting collaboration is thus in demand as traditional collaborations so far has not been able to come up with satisfying solutions. The purpose of this chapter was to investigate public-private innovation partnerships, which is a rather new phenomenon compared to more traditional partnerships such as public-public partnerships and private-private partnerships. We established a line of working hypotheses, so to speak preliminary statements of expectations, based on innovation theory about the public and private sector. Our hope is to inspire other researchers to develop tenable theories about public-private innovation partnerships, and to create ourselves a clearer picture of the phenomenon of public-private innovation partnerships. Especially our surprising results render further research. One of the surprising results our investigation through light on is that private enterprises look at collaboration with the public sector as difficult, whereas public enterprises seem to perceive these types of collaborations as fairly easy. We suggest that the challenges concerning public-private innovation partnerships might be harder to overcome for private enterprises than for public enterprises, as private enterprises have a shorter time horizon favoring short term economic results and market guidance. However more might be at risk for private enterprises, as the whole foundation for engaging in public-private innovation partnerships might be problematic especially for private enterprises: It is possible that the role that procurement rules play in public-private innovation partnership projects set some important boundaries for interaction between public and private enterprises (Munksgaard et al., forthcoming). Concerning tendering the private enterprises seem to be imposed the risk associated with being declared disqualified, and thus risks being unable to participate in a potential subsequent procurement procedure, when the public-private innovation partnership project is completed. On the other hand, the on-going publication of results in publicly funded development projects means that private enterprises cannot avoid other (possibly competing) firms also becoming aware of the output arising from the public-private innovation partnership projects. However, how procurement rules specifically affect public-private innovation partnership relationships requires further research beyond the scope and focus of this chapter. 76

78 Chapter 11 The changing level of independent entrepreneurship in Denmark and other societies What is the level of independent entrepreneurial activity in Denmark? More specifically, this chapter addresses the issues, - Is the trend in independent entrepreneurial activity upward, stable or downward? - How does the level in Denmark compare to the levels in other societies? Independent entrepreneurial activity is not a single circumscribed activity but is often seen as an activity with a lifecycle, that unfolds in phases as rather distinct activities (Schøtt, 2006a:16-17, 56-63, 2007a:22-24, 29-31, 2008:17, 2009, 2010, 2011). We distinguish six specialized activities: - prospecting or intending to start a new business in the foreseeable future. - starting a new business, actively, such as by looking for facilities and financing. - new business operation, paying salary or compensation, but not yet for long. - established business operation, paying salary or compensation for long. - discontinuing or closing the business. - investing in a business. The last activity, though, is not part of the lifecycle of entrepreneurship. These activities are performed by the independent entrepreneur. The six specialized activities entails a typology of six specialized independent entrepreneurs: - prospective starter - starter - owner-manager of a new business - owner-manager of an established business - ex-owner-manager - investor These specialized roles tend to be sequential, but may also overlap. To investigate independent entrepreneurial activity, we identify the independent entrepreneurs in the adult population by our GEM-survey (Chapter 1; Reynolds et al., 2005; Schøtt, 2006a:20-23; 2007a:24-28; 2008:17-19; 2009; 2010; 2011). The prospective starters in independent entrepreneurship are those who answer Yes to the following question, - Are you, alone or with others, expecting to start a new business, including any type of selfemployment, within the next three years? The starters in independent entrepreneurship are those answering Yes to either of the following two questions, - Are you, alone or with others, currently trying to start a new business, including any selfemployment or selling any goods or services to others? - Are you, alone or with others, currently trying to start a new business or a new venture for your employer an effort that is part of your normal work? 77

79 A starter, furthermore, is also required to report to be actively starting and to be an owner of the startup. The owner-managers in independent entrepreneurship are those answering Yes to the following question, - Are you, alone or with others, currently the owner of a company you help manage, selfemployed, or selling any goods or services to others? Owner-managers are also asked when salary or compensation was first paid to owners so as to distinguish between new and established businesses. The cutoff is set at 3½ years (year of the survey and three preceding years). The ex-owner-managers in independent entrepreneurship are those answering Yes to the following question, - Have you, in the past twelve months, shut down, discontinued or quit a business you owned and managed, any form of self-employed, or selling goods or services to anyone (not counting a business that was sold)? The investors are those answering Yes to the following question, - Have you, in the past three years, personally provided funds for a new business started by someone else (excluding any purchases of stocks or mutual funds)? A person may of course play more than one of the above six specialized roles. Here we focus on the early phases of independent entrepreneurship. We ignore discontinuations and investing (Schøtt, 2008). Data Data for measuring level of independent entrepreneurial activity in the population are from the Adult Population Survey (APS) conducted by our research-consortium Global Entrepreneurship Monitor around the world. Over the decade 2002 to 2011 we have in GEM conducted the Adult Population Survey in almost a hundred societies in one or more years. The dynamics differ between developed societies and less developed societies, so we here focus on the developed societies. Our data are from 42 developed societies, which, besides Denmark are: Australia, Austria, Belgium, Bosnia and Herzegovina, Canada, Croatia, Czech Republic, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Macedonia, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Romania, Russia, South Korea, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, United Kingdom and United States. These 42 developed societies are the same as those in which we in GEM have measured the framework conditions for independent entrepreneurial as reported in the next chapter. Denmark s level of independent entrepreneurial activity The level of each independent entrepreneurial activity in Denmark in a year can be estimated by the prevalence or rate of the so-identified independent entrepreneurs in our surveyed sample of the adult population, Table 11.1 (observations are weighted, thereby enhancing validity). An independent entrepreneur may of course be more than one 78

80 specialized kind of independent entrepreneur, and thus be included more than once in the counts, so the total rate of independent entrepreneurship of several kinds is somewhat less than the sum of the rates of the above specialized kinds of independent entrepreneurship. The rate of prospective starters was evidently at a low in during the economic crisis that began in 2008, Table Indeed the rate of prospective starters in 2009 was down to half of the rate two years earlier, and about a third of the rate five years earlier. The rate of prospective starters increased again in 2010 and again in 2011, a considerable increase, climbing up to a level like the level before the economic crisis. This indicator of people s intentions is a leading indicator, it is ahead of the actual event of starting new businesses, and this leading indicator entails a rather optimistic prediction. People s interesting in becoming independent entrepreneurs has thus regained momentum, but whether they turn their increased interest into actually starting will be seen in the next few years. The rate of starters actively trying to start was increasing up to 2006, but evidently declined during the economic crisis that began in In 2009 the rate of starters was down to about half of the rate three years earlier. The rate started to climb again in 2010 and has increased considerably in The rate of starters may well increase within the next few years because our leading indicator, the rate of prospective starters, began a substantial increase in 2010 and increased further in The rate of operating new businesses also declined during the economic crisis that began in In 2009 the rate of new-business owner-managers was down to two thirds of the rate two years earlier and has stayed low. This decline, which we documented earlier (Schøtt, 2009), was subsequently reconfirmed by counts of registrations of new businesses (Erhvervs- og Byggestyrelsen, 2010, 2011). The rate of operating new businesses may well increase in a few years because our leading indicator, the rate of prospective starters, began a substantial increase in 2010 and even more in An overall measure of independent entrepreneurial activity in the early phase is the so-called TEA-rate (Total Entrepreneurial Activity, albeit this is less than the totality) which is the rate of starters and new-business owner-managers (and thus a bit less than the sum of their two rates). This TEA-rate correlates highly with other measures of entrepreneurial activity, such as registrations of new businesses (Schøtt, 2005b). The TEA-rate shows that entrepreneurship in the early phase declined during the economic crisis that began in In 2009 the TEA-rate was down to two thirds of the TEA-rate two years earlier. The rate started to climb again in 2010, and increased considerably in The rate of independent entrepreneurial activity may well increase within the next few years because our leading indicator, the rate of prospective starters, began a substantial increase in 2010 and increased further in Another measure of independent entrepreneurial activity is the upstart-rate, the rate of new-business owner-managers relative to all owner-managers, i.e. the percentage of owner-managers who are new. This rate is similar to the measure of entrepreneurial activity based on registries, namely the percentage of firms that are newly founded (Erhvervs- og Byggestyrelsen, 2011). The upstart-rate seems to have been stable in the years up to 2008, when the crisis began, but then declined in 2009 and has since remained much lower than before the crisis. 79

81 In conclusion, by any of our several measures, the level of commercial entrepreneurial activity in Denmark declined during the economic crisis and the level in 2010 is less than the level was just a few years before. However, the leading indicator of interest in pursuing entrepreneurial activity, the rate of prospective starters, increased substantially in 2010 and increased further in 2011, and predicts, albeit with much uncertainty, an increase in rates of starting new businesses in the next few years. Table 11.1 Rates of independent entrepreneurship in Denmark. Annually 2002 to Prospective starters Starters New-business ownermanagers Starters and newbusiness ownermanagers New-business ownermanagers Percent of adults 9.0% 7.3% 9.9% 9.0% 8.2% 7.7% 7.4% 3.8% 7.5% 8.9% Percent of adults 3.6% 3.0% 2.5% 2.4% 2.9% 2.3% 2.3% 1.6% 1.8% 3.1% Percent of adults 3.1% 3.3% 2.8% 2.4% 2.8% 3.1% 2.3% 2.0% 2.2% 1.6% Percent of adults (TEA) 6.5% 5.9% 5.3% 4.8% 5.3% 5.4% 4.4% 3.6% 3.8% 4.6% Percent of owner-mgrs 36% 37% 36% 34% 34% 34% 34% 30% 28% 25% National level of independent entrepreneurship in developed societies Has independent entrepreneurial activity in other developed countries also declined since 2008? For this we consider the change in the rate of starters and new-business owner-managers (the commonly used TEA rate) in the various developed countries, Table 11.2 (showing the percentage change from the mean of TEA in 2006 and 2007 to mean of TEA in 2009, 2010 and 2011). The largest declines since 2008 in independent entrepreneurial activity have occurred in Hong Kong, Serbia, Portugal, Spain, Italy and Denmark. Conversely, there have actually been considerable increases in independent entrepreneurial activity in many other developed countries, despite the economic crisis. Evidently, the economic crisis in 2008 hit especially hard in Denmark. This decline in activity in Denmark was also felt by those who started or operated business around 2009, when we in 2009 asked them about their perceptions. Danish entrepreneurs reported in 2009 that the global economic crisis had made it harder to start, worsened business opportunities and reduced their growth-expectations. The Danish entrepreneurs experienced such hardships more often than entrepreneurs in other developed countries (Schøtt et al, 2010). 80

82 Table 11.2 Percentage change in rate of starters and new-business owner-managers (TEA) from to Countries with largest decline and countries with largest increase. Hong Kong -63% Serbia -43% Portugal -32% Spain -32% Italy -28% Denmark -25% Australia -23% Croatia -23% Ireland -10% USA -5% Finland -4% Slovenia -3% Czech Republic -3% Norway -1% Switzerland 3% Israel 8% Japan 8% Greece 9% Russia 10% Germany 10% United Kingdom 15% Hungary 17% Singapore 36% France 40% Sweden 41% Netherlands 42% Belgium 46% Romania 59% Latvia 94% Where does this bring Denmark in comparison to other developed countries in the level of independent entrepreneurial activity? The commonly used measure for comparisons is the TEA-rate, Table 11.3 ( , heavily weighted toward 2011). Independent entrepreneurial activity in Denmark is at a level that is a third of the level in New Zealand and half of the level in USA, and only slightly above the lowest countries such as Japan, Belgium and Austria. Indeed, Denmark is far below the middle among the developed countries, with only 22% of the other developed countries below Denmark. On every other measure of independent entrepreneurial activity, Denmark is also well below the middle. Denmark was hovering somewhere around the middle among the developed countries for several years before the economic crisis hit in 2008, but since 2008 Denmark has dropped far below the middle (Hancock et al, 2001, 2002, 2003, 2004; Schøtt, 2006a, 2007, 2008, 2009, 2010, 2011 ; Warhuus 2000). 81

83 Table 11.3 Rates of entrepreneurship in developed societies. Countries with highest rates, countries with lowest rates, USA and Denmark , weighted toward Prospective starters Percent of adults 41% Montenegro 36% Macedonia 31% Serbia 28% Taiwan Starters Percent of adults 12% Montenegro 9% Slovakia 9% New Zealand 8% Iceland New-business ownermanagers Percent of adults 8% New Zealand 5% Slovakia 5% South Korea 5% Macedonia Starters and new-business owner-managers (TEA) Percent of adults 15% New Zealand 15% Montenegro 14% Slovakia 11% Iceland New-business ownermanagers Percent of ownermanagers 48% Russia 45% Singapore 44% Lithuania 44% New Zealand 13% USA 7% USA 4% USA 10% USA 37% USA 8% Denmark 17 percentile 2% Denmark 41 percentile 2% Denmark 29 percentile 5% Denmark 22 percentile 31% Denmark 39 percentile 7% Austria 7% Netherlands 2% Austria 2% Russia 2% Puerto Rico 2% Austria 4% Belgium 4% Austria 24% Finland 23% Austria 5% Russia 2% Japan 1% Belgium 4% Japan 20% Greece 5% Japan 2% Puerto Rico 1% France 3% Puerto Rico 19% Japan 82

84 The gloomy rates are consistent with the official report Iværksætterindeks 2011 (Erhvervs- og Byggestyrelsen, 2011). However, the official report is based mainly on trends in the past in numbers of registrations of businesses, and is thus most similar to our rates of new-business owner-managers as percent of owner-managers, and both their counts of registrations and our survey counting new-business owner-managers as a population rate or as a rate of owner-managers are showing a decline in recent years. The past trends shown in the official report thus reconfirm the trends that were already revealed and documented by our GEM-surveys in recent years (Schøtt, 2006a, 2007, 2008, 2009, 2010, 2011). But, going beyond the counts based on historical registries, our ongoing GEM survey offer a leading indicator the prospective starters which can better reveal current changes, and this entails a more optimistic prediction. 83

85 Chapter 12 National conditions for independent entrepreneurship: Trends in Denmark and comparisons with other societies How are the national conditions for independent entrepreneurship in Denmark? More specifically, this chapter answers the questions, - Are cultural and institutional conditions in Denmark improving or deteriorating, or are they stable during the economic recession? - How does the framework in Denmark compare to the framework in other societies? Entrepreneurship does not exist in a vacuum. Entrepreneurship is an activity that is organized in society and is shaped by conditions prevailing in the society. Entrepreneurial activity in society flourishes under some conditions and vanishes under other conditions (Morrison 2000; Shane 1992, 1993). The conditions in society shaping independent entrepreneurship are denoted the framework conditions in the society. The framework conditions are subject to intervention by the authorities in society, indeed, in recent decades they have become a focus for policy-making (Schøtt and Jensen 2008). Some framework conditions are in the culture of society, notably in its values and knowledge. Other framework conditions are in the social institutions of society, notably in its supportive arrangements, mobilization and allocation of resources, and regulation of the market. The framework conditions in society are numerous and only partly discerned, and their effects are even less known. Here we examine 14 framework conditions in society, namely 4 cultural conditions and 10 institutional conditions, Figure

86 Figure 12.1 Framework of culture and institutions in society. CULTURE Education in entrepreneurship during schooling Skills in entrepreneurship in the population Individualism as a value in culture Esteem of vocation as independent entrepreneur INDEPENDENT ENTREPRENEURSHIP INSTITUTIONS Financial resources for entrepreneurship Government policies for entrepreneurship Public programs for entrepreneurship Technology transfer to entrepreneurship Commercial and legal infrastructure Internal market openness to new firms Physical infrastructure for new firms Intellectual property rights Support for growth- entrepreneurship Opportunities for business Data: The National Expert Survey in Global Entrepreneurship Monitor These framework conditions are measured in each country participating in the researchconsortium Global Entrepreneurship Monitor. In GEM we conduct the National Expert Survey in each country in almost every year. A national panel of experts on commercial entrepreneurship in the country is surveyed and assesses each condition on a scale from a low of 1 to a high of 5 (Chapter 2; Schøtt, 2006a:20-21, 64-95; 2007:33-49; 2008:21-32; 85

87 2009; 2010; 2011). Almost annual assessments of conditions in Denmark and other countries enable us to track changes over time in Denmark and to compare Denmark to other countries (the framework conditions in Denmark were measured annually in the years up to 2009, but were not measured in 2010 and 2011). The measures of framework conditions, in so far as they affect future independent entrepreneurship, are actually leading indicators of independent entrepreneurial activity. Over the decade 2002 to 2011 we have in GEM conducted the National Expert Survey in almost a hundred societies in one or more years. The dynamics differ between developed societies and less developed societies, so we here focus on the developed societies. Our data are from 42 developed societies, which, besides Denmark are: Australia, Austria, Belgium, Bosnia and Herzegovina, Canada, Croatia, Czech Republic, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Macedonia, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Romania, Russia, South Korea, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, United Kingdom and United States. These 42 developed societies are the same as those in which we in GEM have measured the level of independent entrepreneurial as reported in the preceding chapter. In this chapter, we examine each condition, track its changes in Denmark and compare Denmark to other developed countries, and then, in the next chapter, we shall estimate effects of the conditions upon independent entrepreneurial activity. Education for independent entrepreneurship as a cultural framework condition Education here refers to the formal instruction, all the way up through higher education, which provides knowledge and skills for performing the role of independent entrepreneur (Schøtt 2006a:68; 2007a:35; 2008:29; 2009; 2010; 2011). This kind of education for independent entrepreneurship in Denmark is assessed almost annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, teaching in primary and secondary education encourages creativity, self-sufficiency, and personal initiative. - In Denmark, teaching in primary and secondary education provides adequate instruction in market economic principles. - In Denmark, teaching in primary and secondary education provides adequate attention to entrepreneurship and new firm creation. - In Denmark, colleges and universities provide good and adequate preparation for starting up and growing new firms. - In Denmark, the level of business and management education provide good and adequate preparation for starting up and growing new firms. - In Denmark, the vocational, professional, and continuing education systems provide good and adequate preparation for starting up and growing new firms. Each expert ascertains truthfulness of each statement in terms of Completely false, Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the six statements for a measure for the year. 86

88 With measurement taken in recent years we can track recent changes in the extent of education for entrepreneurship. The extent of entrepreneurial education in Denmark has changed, Table The conveyance of entrepreneurial knowledge and skills has tended to increase over the years (for specific educational initiatives, see Erhvervs- og Byggestyrelsen 2008: 69-71). Table 12.1 Education for entrepreneurship in Denmark. Annually from 2002 to Where does this entrepreneurial education bring Denmark in comparison to other countries? The entrepreneurial content in education is likewise assessed in the other countries participating in GEM. In the years from 2002 to 2011, the framework conditions have been assessed in 41 other developed countries listed in Chapter 1. A summary measure that reduces year-to-year fluctuations as well as emphasizes the most recent time is a weighted average, weighing the second year (2003) of measurement twice as much as the first year (2002), the third year (2004) three times as much as the first year, and so on up to the most recent year (2011), that is weighted ten times as much as the first year. This weighted average is used for comparing the framework conditions among the developed countries, Table 12.2 (and similar tables in the rest of this chapter). Entrepreneurial education is more extensive in several developed countries, notably Singapore, Switzerland, Taiwan and Latvia. Among the developed countries, Denmark is a little below the middle, 54% of the other developed countries are above and 46% of the others are below. Table 12.2 Education for entrepreneurship. The countries with most education, the countries with least, and Denmark , weighted toward Singapore 2.9 Switzerland 2.8 Taiwan 2.8 Latvia 2.8 Denmark percentile rank 87

89 Bosnia 2.2 Spain 2.2 Greece 2.2 Japan 1.9 In short, although the entrepreneurial content in education in Denmark has been expanding considerably, it is still less than typical for the developed countries. Skills for the entrepreneurial vocation as a cultural framework condition Skills refer to the skills of the entrepreneurial vocation, which prevail in the population, and encompass techniques for starting and organizing a firm, understanding markets and managing growth (Schøtt, 2006a:70, 2007a:36, 2008:30, 2009, 2010, 2011; Schøtt and Ottósson 2009). Skills are acquired not only through formal education, but also through experience, training and networking (Bager and Nielsen, 2009; Schøtt 2006b, 2007e, 2008a, 2008b, 2009, 2010, 2011; Schøtt and Christensen 2005; Schøtt and Klyver 2006). Moreover, skills are transferred from existing firms when entrepreneurs move to start new firms (Schøtt 2005d, Schøtt and Jensen 2007). The skills of the population in Denmark are assessed by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, many people know how to start and manage a high-growth business. - In Denmark, many people know how to start and manage a small business. - In Denmark, many people have experience in starting a new business. - In Denmark, many people can react quickly to good opportunities for a new business. - In Denmark, many people have the ability to organize the resources required for a new business. Each expert ascertains truthfulness of each statement in terms of Completely false, Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the five statements for a measure for the year. With measurement taken in recent years, we can track recent changes in entrepreneurial skills in the population. The skills in the population in Denmark have changed, Table The skills have tended to increase steadily and considerably over time. Table 12.3 Skills for the entrepreneurial vocation in Denmark. Annually from 2002 to

90 Where does this level of skills bring Denmark in comparison to other countries? Skills are assessed likewise in other countries. Skills are more extensive in many societies, notably in Iceland, Hong Kong, Israel and Taiwan, Table Among the developed countries, Denmark is well above the middle, with 27% of the others above and 73% of the others below. Table 12.4 Skills for the entrepreneurial vocation. The countries with most skills, the countries with least, and Denmark , weighted toward Iceland 3.6 Hong Kong 3.4 Israel 3.1 Taiwan 3.0 Denmark percentile rank Sweden 2.0 France 1.8 Japan 1.6 In short, entrepreneurial skills have increased in the population in Denmark, and they are now above the typical for the developed countries. Individualism as a value in culture Values refer to what is appreciated in society, what is considered good (Schøtt, 2006a:64, 2007a:33, 2008:28, 2009, 2010, 2011). Our culture of modernity values the individual as an actor that is not only capable of taking action, and acting alone, by own effort, but also taking responsibility for acting alone and finding ways to act and to gain by acting (Weber, 1930; Inglehart and Welzel 2005). Modernity thus has a value that we briefly can call individualism, in contrast to collectivism, valuing the collectivity and the collective good (Mueller and Thomas 2000; Nakata and Sivakumar 1996; Thomas and Mueller 2000; Tiessen 1997). Denmark is in many ways a highly modern society but is actually also rather collectively oriented. The value attached to individualism in Denmark is assessed annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, the national culture is highly supportive of individual success achieved through own personal efforts. - In Denmark, the national culture emphasizes self-sufficiency, autonomy, and personal initiative. 89

91 - In Denmark, the national culture encourages entrepreneurial risk-taking. - In Denmark, the national culture encourages creativity and innovativeness. - In Denmark, the national culture emphasizes the responsibility that the individual (rather than the collective) has in managing his or her own life. Each expert ascertains truthfulness of each statement in terms of Completely false, Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the five statements for a measure for the year. With measurement taken in recent years, we can track recent changes in the value attached to individualism. The value attached to individualism in Denmark has changed, Table Individualism has tended to become more highly valued over time. Table 12.5 Cultural value of individualism in Denmark. Annually from 2002 to How does the value attached to individualism in Denmark compare to its value in other countries? Individualism is assessed likewise in other countries. Several societies are highly individualistic, notably USA, Israel, Hong Kong and Iceland, Table Among the developed countries, Denmark is a little above the middle, 41% of the others are more individualistic, and 59% of the others are less individualistic. Table 12.6 Cultural value of individualism. The countries with most individualistic values, the countries with least individualistic values, and Denmark , weighted toward USA 4.1 Israel 4.0 Hong Kong 4.0 Iceland 4.0 Denmark percentile rank Bosnia

92 Slovenia 2.2 Japan 2.2 Portugal 2.0 In short, there has been a considerable increase in the cultural value attached to individualism in Denmark over time. Denmark has become more individualistic than is typical among the developed countries. Cultural esteem of the vocation as independent entrepreneur Esteem refers to the cultural prestige of the vocation or role of the independent entrepreneur among the vocations in society, as this prestige motivates people to pursue this vocation rather than other occupations (Schøtt, 2006a:66, 2007a:34, 2008:28-29, 2009, 2010, 2011). Esteem of the entrepreneurial vocation in Denmark is assessed by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, the creation of new ventures is considered an appropriate way to become rich. - In Denmark, most people consider becoming an entrepreneur as a desirable career choice. - In Denmark, successful entrepreneurs have a high level of status and respect. - In Denmark, you will often see stories in the public media about successful entrepreneurs. - In Denmark, most people think of entrepreneurs as competent, resourceful individuals. Each expert ascertains truthfulness of each statement in terms of Completely false, Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the five statements for a measure for the year. With measurement taken in recent years, we can track changes in the cultural esteem of the entrepreneurial vocation. The esteem of the entrepreneurial vocation in Denmark has been changing, Table The esteem has increased considerably over time. Table 12.7 Esteem in Denmark. Annually from 2002 to Where does this esteem bring Denmark in comparison to other countries? Esteem is assessed similarly in the other countries participating in GEM. Esteem of the entrepreneurial vocation is much higher in several other developed societies, notably in Israel, USA, Taiwan and Hong Kong, Table Among the developed countries, Denmark is at the middle, 49% of the others are above and 51% of the others are below. 91

93 Table 12.8 Esteem accorded the entrepreneurial vocation. The countries with highest esteem, the countries with lowest, and Denmark , weighted toward Israel 4.4 USA 4.2 Taiwan 4.2 Hong Kong 4.1 Denmark percentile rank Slovenia 2.9 Japan 2.9 Slovakia 2.8 Czech Republic 2.7 In short, the esteem of the entrepreneurial vocation has been increasing much in Denmark, and Denmark now esteems the entrepreneurial vocation like is typical among the developed countries. Cultural framework In the above, we examined four specific cultural framework conditions: education offered for independent entrepreneurship, skills of the population, individualism as a cultural value, and esteem of the vocation of independent entrepreneur. These four cultural framework conditions all tended to increase, so the cultural framework has improved overall. The cultural framework can be indicated by an index computed as the mean of the four specific measures, Table The index of the cultural framework has increased considerably, that is, the cultural framework has improved over the years and entrepreneurial culture has become pervasive in Denmark. Table 12.9 Entrepreneurial culture in Denmark (mean of four specific conditions). Annually from 2002 to

94 Where does this culture of independent entrepreneurship bring Denmark in comparison to other countries? Entrepreneurial culture is assessed similarly in the other countries participating in GEM, also as the mean of the four measures of specific cultural conditions. Entrepreneurial culture is more prevalent in several other developed societies, notably in Hong Kong, Israel, Iceland, Taiwan and USA, Table Among the developed countries, Denmark is well above the middle, 37% of the others are above and 63% of the others are below. Table Entrepreneurial culture. The countries with most pervasive entrepreneurial culture, the countries with least, and Denmark , weighted toward Hong Kong 3.5 Israel 3.5 Iceland 3.5 Taiwan 3.5 USA 3.5 Denmark percentile rank Bosnia 2.4 France 2.4 Portugal 2.4 Czech Republic 2.4 Japan 2.2 In short, the cultural framework in Denmark has improved considerably over the years, also in recent years despite the economic crisis, entrepreneurial culture is now pervasive in Denmark, and Denmark now has more of an entrepreneurial culture than most other developed countries. Having examined the cultural framework, we turn to examine a series of institutional framework conditions. 93

95 Institutional framework conditions: Financial resources for entrepreneurship Financial resources refer to the availability of funding for independent entrepreneurship (Schøtt, 2006:76, 2007:39, 2008:22, 2009, 2010, 2011). Most years, in Denmark, the financial resources are assessed by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, there is sufficient equity funding available for new and growing firms - In Denmark, there is sufficient debt funding available for new and growing firms - In Denmark, there are sufficient government subsidies available for new and growing firms - In Denmark, there is sufficient funding available from private individuals (other than founders) for new and growing firms - In Denmark, there is sufficient venture capitalist funding available for new and growing firms - In Denmark, there is sufficient funding available through initial public offerings (IPOs) for new and growing firms Each expert ascertains truthfulness of each statement in terms of Completely false, Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the six statements for a measure for the year. With measurement taken in recent years we can track recent changes in financial resources for entrepreneurship. The availability of funding in Denmark has fluctuated over the years, Table Resources seem to have been declining in recent years, from 2007 to 2009, that is, since the economic recession began Table Financial resources in Denmark. Annually from 2002 to Where does this availability of resources for independent entrepreneurship bring Denmark compared to other countries? Availability is also measured in the other countries participating in GEM, Table Among the developed countries, Canada, Taiwan, Israel and Belgium have greatest availability. Denmark is around the middle, with 63% of the others below. 94

96 Table Financial resources. The countries with most financial resources, the countries with least financial resources, and Denmark , weighted toward Canada 3.3 Taiwan 3.2 Israel 3.2 Belgium 3.2 Denmark percentile rank Czech Republic 2.2 Macedonia 2.1 Slovakia 2.1 Russia 2.1 In short, availability of resources has been decreasing in the most recent years. Denmark is around the middle among the developed countries. Government policies toward independent entrepreneurship Government policies toward entrepreneurship refer to the policies that the national government and more local public authorities decide and implement (Schøtt, 2006a:78, 2007a:40, 2008:23, 2009, 2010, 2011). Government policies in Denmark are measured almost annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, Government policies (e.g., public procurement) consistently favor new firms. - In Denmark, the support for new and growing firms is a high priority for policy at the national government level. - In Denmark, the support for new and growing firms is a high priority for policy at the local government level. - In Denmark, new firms can get most of the required permits and licenses in about a week. - In Denmark, the amount of taxes is NOT a burden for new and growing firms. - In Denmark, taxes and other government regulations are applied to new and growing firms in a predictable and consistent way. - In Denmark, coping with government bureaucracy, regulations, and licensing requirements it is not unduly difficult for new and growing firms. Government policies in Denmark have been changing, Table During the decade, policies have become more favorable. 95

97 Table Government policies in Denmark. Annually from 2002 to Where do these favorable policies bring Denmark compared to other countries? Government policies have been measured also in the other countries participating in GEM, Table Among the developed countries, government policies are more favorable especially in Singapore, Iceland, Finland and Switzerland. Denmark is near the top, with 85% of the other countries having less favorable policies. Table Government policies. The countries with most favorable government policies, the countries with least supportive policies, and Denmark , weighted toward Singapore 3.7 Iceland 3.3 Finland 3.2 Switzerland 3.2 Denmark percentile rank Italy 1.9 Bosnia 1.8 Hungary 1.8 In short, government policies in Denmark have become more supportive, and Denmark is among the countries with most favorable policies. 96

98 Public programs for independent entrepreneurship Public program refer to the programs that are publicly available, and mostly supported by funds from the public, channeled through national and more local administrations (Schøtt, 2006a:80, 2007a:41, 2008:23-24, 2009, 2010). The adequacy of the public programs in Denmark are assessed annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, a wide range of government assistance for new and growing firms can be obtained through contact with a single agency. - In Denmark, science parks and business incubators provide effective support for new and growing firms. - In Denmark, there are an adequate number of government programs for new and growing businesses. - In Denmark, the people working for government agencies are competent and effective in supporting new and growing firms. - In Denmark, almost anyone who needs help from a government program for a new or growing business can find what they need. - In Denmark, government programs aimed at supporting new and growing firms are effective. Adequacy of public programs in Denmark has been changing a little, Table Ade quacy of the public programs has apparently been increasing most recently. Table Public programs for independent entrepreneurship in Denmark. Annually from 2002 to Where is Denmark positioned compared to other countries in terms of supportive public programs? Public programs are likewise assessed in other countries, Table Among the developed countries, public programs are more supportive in some countries, notably Germany, Austria, Singapore and Switzerland. Denmark has very supportive programs, only 15% of the other countries have more supportive programs, whereas 85% of the others have less supportive programs. That Denmark has very supportive public programs is hardly surprising, as Denmark is still a welfare society, with welfare extending to public support for private business. 97

99 Table Public programs for entrepreneurship. The countries with most supportive public programs, the countries with least, and Denmark , weighted toward Germany 3.5 Austria 3.5 Singapore 3.4 Switzerland 3.3 Denmark percentile rank Hungary 2.1 Russia 2.1 Slovakia 2.0 Bosnia 2.0 In short, the supportiveness of public programs in Denmark has been increasing most recently, and public programs are more supportive than in by far most countries. Technology transfer to independent entrepreneurship Technology transfer denotes the movement of technological knowledge from public research institutions to entrepreneurship (Schøtt, 2006a:82, 2007a:42, 2008:24, 2009, 2010, 2011). The extent of technology transfer in Denmark is assessed almost annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, new technology, science, and other knowledge are efficiently transferred from universities and public research centers to new and growing firms. - In Denmark, new and growing firms have just as much access to new research and technology as large, established firms. - In Denmark, new and growing firms can afford the latest technology. - In Denmark, there are adequate government subsidies for new and growing firms to acquire new technology. - In Denmark, the science and technology base efficiently supports the creation of world-class new technology-based ventures in at least one area. - In Denmark, there is good support available for engineers and scientists to have their ideas commercialized through new and growing firms. Technology transfer in Denmark has been changing over the years, Table Technology transfer has steadily increased over time. 98

100 Table Technology transfer in Denmark. Annually from 2002 to Where does the increase bring Denmark, in comparison to other countries? Technology is measured likewise in many other countries, Table Among the developed countries, technology transfer is especially extensive in Switzerland, Taiwan, Belgium and Canada. Denmark is well above the middle, with 68% of the other countries below Denmark in technology transfer. Table Technology transfer. The countries with most technology transfer, the countries with least, and Denmark , weighted toward Switzerland 3.4 Taiwan 3.1 Belgium 3.0 Canada 3.0 Denmark percentile rank Macedonia 2.1 Russia 2.0 Bosnia 1.9 Slovakia 1.8 In short, technology transfer has been increasing in Denmark, and Denmark is well above the middle among the developed countries in the extent of technology transfer. Commercial and legal infrastructure for independent entrepreneurship Commercial and legal infrastructure refers to the availability and affordability of high quality services of commercial, legal and professional kinds (Schøtt, 2006a:84, 2007a:43, 2008:24-25, 2009, 2010, 2011). The infrastructure in Denmark is measured almost an- 99

101 nually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, there are enough subcontractors, suppliers, and consultants to support new and growing firms. - In Denmark, new and growing firms can afford the cost of using subcontractors, suppliers, and consultants. - In Denmark, it is easy for new and growing firms to get good subcontractors, suppliers, and consultants. - In Denmark, it is easy for new and growing firms to get good, professional legal and accounting services. - In Denmark, it is easy for new and growing firms to get good banking services (checking accounts, foreign exchange transactions, letters of credit, and the like). The infrastructure in Denmark has changed over the years, Table The availability increased up to 2006, but since 2006 availability of infrastructure has been decreasing. Table Commercial and legal infrastructure in Denmark. Annually from 2002 to How does Denmark compare to other countries? The infrastructure is also measured in the other countries participating in GEM, Table The availability is higher in several countries, notably in Canada, Israel, Switzerland and Belgium. Among the developed countries, Denmark is far above the middle, with 76% of the others below. Table Commercial and legal infrastructure. The countries with most commercial and legal infrastructure, the countries with least, and Denmark , weighted toward Canada 3.7 Israel 3.7 Switzerland 3.6 Belgium 3.6 Denmark percentile rank 100

102 Bosnia 2.8 Italy 2.8 South Korea 2.4 Japan 2.2 In short, availability of commercial and legal services in Denmark has been decreasing in the most recent years, and Denmark is far above the middle of the developed countries. Internal market openness Openness of the internal market refers to the ease of entry into the market for new firms (Schøtt, 2006a:86, 2007a:44, 2008:25, 2009, 2009, 2010, 2011). The openness of the internal market in Denmark is assessed almost annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, the markets for consumer goods and services change dramatically from year to year. - In Denmark, the markets for business-to-business goods and services change dramatically from year to year. - In Denmark, new and growing firms can easily enter new markets. - In Denmark, the new and growing firms can afford the cost of market entry. - In Denmark, new and growing firms can enter markets without being unfairly blocked by established firms. - In Denmark, the anti-trust legislation is effective and well enforced. The openness in Denmark has changed over the years, Table Over the decade, the internal market has become a little more open. Table Internal market openness in Denmark. Annually from 2002 to How open is the internal market in Denmark in comparison to other countries? The openness is assessed in the other countries participating in GEM, Table Many countries are far more open, notably Taiwan, Poland, South Korea and Iceland. Among the developed countries, Denmark is notably below the middle, with 39% of the other societies less open. 101

103 Table Internal market openness. The countries with widest internal market openness, the countries with narrowest, and Denmark , weighted toward Taiwan 3.5 Poland 3.3 South Korea 3.2 Iceland 3.2 Denmark percentile rank Portugal 2.5 France 2.5 Israel 2.5 Spain 2.5 In short, although the internal market in Denmark has become a little more open over the years, it remains notably below the middle compared to other developed countries. Physical infrastructure for entrepreneurship Physical infrastructure encompasses facilities for transportation and communication, their availability and affordability and speed of obtaining them (Schøtt, 2006a:88, 2007a:45, 2008:25-26, 2009, 2010, 2011). Physical infrastructure in Denmark is assessed almost annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, the physical infrastructure (roads, utilities, communications, waste disposal) provides good support for new and growing firms. - In Denmark, it is not too expensive for a new or growing firm to get good access to communications (phone, Internet, etc.). - In Denmark, a new or growing firm can get good access to communications (telephone, internet, etc.) in about a week. - In Denmark, new and growing firms can afford the cost of basic utilities (gas, water, electricity, sewer). - In Denmark, new or growing firms can get good access to utilities (gas, water, electricity, sewer) in about a month. The physical infrastructure in Denmark has changed over the years, Table The physical infrastructure improved up to 2006, but since 2006 the physical infrastructure has apparently been declining a little. 102

104 Table Physical infrastructure in Denmark. Annually from 2002 to How is the physical infrastructure in Denmark compared to other countries? The physical infrastructure is assessed likewise in the other countries participating in GEM, Table The physical infrastructure is better in some societies, notably Hong Kong, Singapore, Switzerland and Iceland. Among the developed countries, Denmark is far above the middle, with 80% of the others below. Table Physical infrastructure. The countries with most physical infrastructure, the countries with least, and Denmark , weighted toward Hong Kong 4.7 Singapore 4.6 Switzerland 4.5 Iceland 4.4 Denmark percentile rank Romania 3.2 Serbia 3.0 Puerto Rico 3.0 Italy 2.9 In short, the physical infrastructure in Denmark has apparently been declining in most recent years, but Denmark remains far above the middle among the developed countries. Intellectual property rights Intellectual property rights refer to the establishment of private ownership of knowledge (Schøtt, 2006a:90, 2007a:46, 2008:26, 2009, 2010, 2011). This property right in 103

105 Denmark is assessed almost annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, the Intellectual Property Rights (IPR) legislation is comprehensive - In Denmark, the Intellectual Property Rights (IPR) legislation is efficiently enforced. - In Denmark, the illegal sales of pirated software, videos, CDs, and other copyrighted or trademarked products is not extensive. - In Denmark, new and growing firms can trust that their patents, copyrights, and trademarks will be respected. - In Denmark, it is widely recognized that inventors rights for their inventions should be respected. The rights in Denmark have been changing over the years, Table The rights expanded considerably up to 2007, but since 2007 the rights have apparently been declining. Table Intellectual property rights in Denmark. Annually from 2002 to Where do these intellectual property rights bring Denmark in comparison to other countries? Rights are assessed likewise in the other countries participating in GEM. Rights are more extensive in Switzerland, Australia and Singapore, Table Denmark is among the developed countries with very extensive rights, as 84% of the other countries have less comprehensive rights. Table Intellectual property rights. The countries with most protective intellectual property rights, the countries with least, and Denmark , weighted toward Switzerland 4.2 Singapore 4.2 Australia 4.1 Austria 4.0 Denmark percentile rank 104

106 Greece 2.5 Serbia 2.3 Russia 2.0 Bosnia 2.0 In short, the intellectual property rights in Denmark have apparently been declining in the most recent years, but Denmark remains among the developed countries with the most extensive rights. Support for growth-entrepreneurship National support for growth-entrepreneurship refers to policies and programs specifically designed to support high-growth firms (Schøtt, 2006a, 2007b, 2008:21-22, 2009, 2010, 2011). The institutional support for growth-entrepreneurship in Denmark is assessed by asking experts to ascertain truthfulness of each of the following statements, - In Denmark, there are many support initiatives that are specially tailored for highgrowth entrepreneurial activity. - In Denmark, policy-makers are aware of the importance of high-growth entrepreneurial activity. - In Denmark, people working in entrepreneurship-support-initiatives have sufficient skills and competence to support high-growth firms. - In Denmark, potential for rapid growth is often used as a selection criterion when choosing recipients of entrepreneurship support. - In Denmark, supporting rapid firm-growth is a high priority in entrepreneurship policy. Each expert ascertains truthfulness of each statement in terms of Completely false, Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the five statements for a measure for the year. With measurement taken in recent years we can track recent changes in support for growth-entrepreneurship. Support for growth-entrepreneurship in Denmark has been increasing over the years, Table This assessment is consistent with the changes in entrepreneurship policy and implementations, such as the establishment of advisory services specifically tailored for growth-oriented firms (Erhvervs- og Byggestyrelsen, 2007). Table Support for growth-entrepreneurship in Denmark. Annually 2005 to

107 Where does this bring Denmark compared to other countries? Support for growthentrepreneurship is also assessed in the other countries participating in GEM by the same questions to a national panel of experts there, Table Ireland, Singapore and Taiwan are more supportive of growth-entrepreneurship. Denmark is near the top, with 93% of the other countries below. Table Support for growth-entrepreneurship. The countries with most support, the countries with least support, and Denmark , weighted toward Ireland 4.0 Singapore 3.7 Taiwan 3.7 Denmark percentile rank Greece 2.5 Slovakia 2.4 Bosnia 2.3 Czech Republic 2.3 In short, support for growth-entrepreneurship has been increasing considerably in Denmark, and Denmark is near the top among the developed countries with most support for growth-entrepreneurship. Opportunities for entrepreneurship Opportunities refer to the opportunities that people in the society have for exploiting business ideas by starting, running and expanding businesses (Schøtt, 2006a:74, 2007b:38, 2008:27, 2009, 2010, 2011). Opportunities are thus a broad framework condition that encompasses the more specific institutional framework conditions considered above. Opportunities in Denmark are assessed annually by asking a panel of experts to ascertain truthfulness of each of the following statements, - In Denmark, there are plenty of good opportunities for the creation of new firms. - In Denmark, there are more good opportunities for the creation of new firms than there are people able to take advantage of them. - In Denmark, good opportunities for new firms have considerably increased in the past five years. - In Denmark, individuals can easily pursue entrepreneurial opportunities. - In Denmark, there are plenty of good opportunities to create truly high growth firms. Each expert ascertains truthfulness of each statement in terms of Completely false, 106

108 Somewhat false, Neither true nor false, Somewhat true and Completely true. The assessment is quantified on a scale from 1 to 5. The assessments are then averaged across the experts and averaged across the five statements for a measure for the year. With measurement taken in recent years we can track changes in opportunities for entrepreneurship. Opportunities have been changing, Table Opportunities in Denmark were expanding up to , but opportunities have been contracting since 2007, i.e. during the crisis. Table Opportunities in Denmark. Annually from 2002 to Where does this expansion of opportunities bring Denmark now, in comparison to other countries? Opportunities are assessed in the other countries participating in GEM, Table Opportunities are greater in several countries, notably USA, Australia, New Zealand and the Netherlands. Among the developed countries, Denmark is considerably above the middle, with 73% of the others below. Table Opportunities for starting. The countries with greatest opportunities, the countries with least, and Denmark , weighted toward USA 3.8 Australia 3.7 New Zealand 3.6 Netherlands 3.6 Denmark percentile rank Japan 2.7 Hungary 2.7 Greece 2.6 Italy

109 In short, opportunities in Denmark may have been declining in recent years, but Denmark remains much above the middle among the developed countries. Institutional framework In the above, we examined ten specific institutional conditions, Financial resources for entrepreneurship, Government policies for entrepreneurship, Public programs for entrepreneurship, Technology transfer to entrepreneurship, Commercial and legal infrastructure, Internal market openness to new firms, Physical infrastructure for new firms, Intellectual property rights, Support for growth-entrepreneurship, and Opportunities for business. These specific conditions tend to go hand in hand. Therefore it is sensible to consider how they vary overall. Overall, have the institutional conditions been improving or declining, or are they stable, specifically during the economic recession in recent years? For this, we compute the mean of the above measures of specific institutional conditions, Table The institutional framework improved up to , but has apparently been declining slightly since 2007, during the economic crisis. This recent decline in institutional framework contrasts with the substantial, steady and continual improvement in the cultural framework examined earlier (and summarized in Table 12.9). Table Institutional framework, as mean of specific institutional conditions, in Denmark. Annually from 2002 to Where does this institutional framework bring Denmark in comparison to other countries? The institutional framework is assessed similarly in the other countries participating in GEM, here as the mean of the specific conditions. The institutional framework is more supportive in several other developed societies, notably in Singapore and Switzerland, Table Among the developed countries, Denmark is much above the middle, 24% of the others are above and 76% of the others are below. 108

110 Table Institutional framework. The countries with most supportive institutional framework, the countries with least, and Denmark , weighted toward Singapore 3.6 Switzerland 3.5 Taiwan 3.4 Austria 3.3 Canada 3.3 Denmark percentile rank Greece 2.6 Hungary 2.5 Italy 2.5 Russia 2.4 Bosnia 2.3 Denmark is thus placed well above the middle among the developed countries in both its institutional framework and cultural framework. Next we shall examine the overall framework for independent entrepreneurship, combining both institutional and cultural conditions. The framework overall The framework for independent entrepreneurship has now been examined in terms of four cultural conditions and ten institutional conditions. Several of these conditions have changed over the years, and Denmark is more or less like other developed societies. Overall, how has the framework changed in Denmark? How does the framework in Denmark, overall, compare to the framework elsewhere? To examine the trend in the overall framework, we can average the assessments of the 14 conditions examined above. The framework in Denmark, overall, has changed over the years, Table The framework improved up to about 2006 and seems to have been stable since then. 109

111 Table Mean of national framework conditions in Denmark. Annually from 2002 to The framework is each other society can be ascertained by the average across the 14 conditions, Table The framework, overall, is best in Taiwan, secondly in Singapore, Hong Kong, Switzerland and United States. Denmark has a framework that, overall, is considerably better than the typical framework in the developed countries, with 71% of the developed countries having a framework less good than the framework in Denmark. Table Mean of national framework conditions. Societies with best framework, societies with weakest framework, and Denmark , weighted toward Taiwan 3.4 Singapore 3.4 Hong Kong 3.4 Switzerland 3.4 USA 3.3 Denmark percentile rank Italy 2.6 Russia 2.6 Hungary 2.5 Japan 2.5 Bosnia 2.4 Several conclusions can be drawn from the above analyses of framework conditions, their changes in Denmark, and their favorableness in Denmark in comparison to other developed countries. Over the years several of the Danish framework conditions have become more favorable and are more favorable today than some years ago, notably the cultural framework 110

112 conditions. Several Danish framework conditions, however, have also been declining in recent years, during the economic crisis, notably several institutional framework conditions. Where does this improvement bring Denmark compared to other countries? Most of the Danish framework conditions are rather close to the typical situation for developed countries, and rank around the middle among the developed countries. Several conditions are much more favorable in Denmark than typical among the developed countries. Conversely, a few conditions are less favorable in Denmark than typical among the developed countries. So, overall, the framework in Denmark is notably better than is typical for the developed countries. How the framework conditions affect independent entrepreneurship will be examined next. 111

113 Chapter 13 Effects of framework conditions upon level of independent entrepreneurship What are the national dynamics of independent entrepreneurship? More specifically, this chapter addresses the questions, - How are the cultural conditions affecting one another? - How are the institutional conditions interrelated? - How are the cultural and institutional conditions affecting independent entrepreneurship? The cultural and institutional conditions are a framework for independent entrepreneurship in society. A favorable framework enhances independent entrepreneurship whereas an unfavorable framework hampers performance in the society. The framework is favorable in some societies and less favorable in other societies, and this shapes the level of independent entrepreneurial activity, so the level differs from one society to another. Is independent entrepreneurial activity in the various countries tightly coupled with its framework conditions? Whether entrepreneurial activity goes hand-in-hand with a framework condition, in the various countries, is ascertained by the correlation between the activity and the condition, computed across the countries. The dynamics differ between developed societies and less developed societies, so we here focus on the developed societies. Our data are from 42 developed societies, which, besides Denmark are: Australia, Austria, Belgium, Bosnia and Herzegovina, Canada, Croatia, Czech Republic, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Macedonia, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Romania, Russia, South Korea, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, United Kingdom and United States. Independent entrepreneurial activity in a country is measured by the TEA-rate (Chapter 11), and each of 14 framework conditions was measured (Chapter 12). The 14 correlations between entrepreneurship and the 14 framework-conditions are all between.0 and.5 (each variable is averaged across years up through 2011, and then the correlation between variables is computed across the 42 developed countries). For the developing countries, however, entrepreneurship is far less coupled with its framework conditions (Schøtt and Jensen 2009). The framework conditions are related to each other. We shall examine how the institutional conditions are interrelated and how the cultural conditions are interrelated. Then we shall examine how the institutional conditions and the cultural conditions jointly affect entrepreneurship. Institutional conditions creating opportunities Opportunities for exploiting business ideas is a condition for independent entrepreneurship, but it is not a institutional condition like the nine others examined earlier

114 financial resources, government policies, public programs, technology transfer, commercial and legal infrastructure, internal market openness, physical infrastructure, intellectual property rights, and support for growth-entrepreneurship. Opportunities should rather be considered as the condition emerging as a combination of the nine more basic institutional conditions. The institutional conditions are related in the way that opportunities can be considered a consequence emerging as a combination of the institutional conditions, not as a straightforward sum of these conditions, but in the way that each condition has a positive effect on opportunities. Indeed, opportunities is positively correlated with each of these nine basic institutional conditions, Table 13.1 (based on 42 developed countries; each correlation is statistically highly significant). A positive correlation of opportunities with an institutional condition means that, typically, a country with a favorable institutional condition provides ample opportunity (and, typically, a country with an unfavorable condition offers few opportunities). Thus, specifically, a country with abundant financial resources provides great opportunities, typically (and a country with poor financial resources offers few opportunities, typically). A country with supportive policies typically has great opportunities (and a country with unsupportive policies typically offers few opportunities). The multiple correlation is the correlation of opportunities with an optimal combination of institutional conditions. Countries with a combination of several favorable institutional conditions tend to have especially great opportunities, and this tendency is quite strong (and those with a combination of several unfavorable institutional conditions tend to have especially few opportunities). Table 13.1 Correlation of opportunities with each institutional condition. Based on 42 developed societies. Financial resources.5 Government policies.6 Public programs.6 Technology transfer.5 Commercial and legal infrastructure.6 Internal market openness.3 Physical infrastructure.6 Intellectual property rights.7 Growth-entrepreneurship.6 Multiple correlation with all nine.8 113

115 Opportunities, as a condition, is seen in Table 13.1 to be positively correlated with each of the nine basic institutional conditions, and is highly correlated with a combination of basic institutional conditions (the multiple correlation is much higher than any of the nine correlations). How opportunities are the consequence of a combination of the basic institutional conditions can be ascertained by a regression of opportunities on the conditions. In this regression we keep only those conditions that seem substantively significant. By this modeling, six of the eight conditions seem to matter. Commercial and legal infrastructure has a large effect, a country with extensive commercial and legal infrastructure facilitates opportunities, typically. Internal market openness also matters much, a country with wide openness provides many opportunities, typically. Intellectual property rights seemingly also expand opportunities. Government policies also create opportunities. Physical infrastructure also appears to enhance opportunities. Support for growth-entrepreneurship also seems to create greater opportunities. But these various framework conditions go hand in hand with one another, so much that it is hard to disentangle their effects and to estimate the separate effect of each framework condition on opportunities. These estimated effects are shown in Figure 13.1 (statistical details are in the Appendix in Table A13.1). The other institutional conditions have no separately discernible effects, meaning that the data on only 42 developed countries are insufficient to discern their effects, separate from the six discerned effects. The magnitude of an effect is indicated by the thickness of the arrow. 114

116 Figure Figure Estimated effects upon opportunities from institutional conditions. Estimated effects upon opportunities from institutional conditions. Government policies Commercial and legal infrastructure Internal market openness Opportunities for independent entrepreneurship Physical infrastructure Intellectual property rights Growth- entrepreneurship policy Having examined how the institutional conditions are interrelated, we shall now examine effects among the cultural conditions. Cultural foundation for education and skills Having examined how the institutional conditions are interrelated, we shall now examine effects among The four cultural conditions education, skills, individualism and esteem which were the examined cultural in conditions. Chapter 12, are likely to be related as causes and effects. The cultural value

117 How these cultural conditions, jointly with opportunities, shape independent entrepreneurship will b a society attaches to individualism is likely to enhance the esteem of the vocation of independent entrepreneur in the society. Education for the entrepreneurial vocation in the society is likely to be affected by the esteem of the vocation in the society and also by the individualism in society. The education, in turn, expectedly affects the skillfulness of the people in the society. This sequence of effects among cultural conditions will then promote independent entrepreneurship, we would hypothesize. The effects among cultural conditions can be estimated, like the effects among the institutional conditions were estimated, by regression analysis. The effect upon esteem from individualism is estimated to be huge (statistical details are in the Appendix in Table A13.2). A society that values individualism also attaches high esteem to the entrepreneurial vocation, typically. The effect upon education for entrepreneurship from individualism is also estimated to be big. A society that values individualism also offers much education in entrepreneurship, typically. Esteem of the entrepreneurial vocation in society also has a separate effect upon the education in entrepreneurship provided by the society. Skills are promoted mainly by individualism. A society that values individualism also has a population with extensive entrepreneurial skills, typically. Education also promotes skills, also when controlling for individualism, but this effect is weaker than the effect of individualism. Esteem of the entrepreneurial vocation has no discernible separate effect upon skills of the population (statistical details are in the Appendix in Table A13.4). These effects among the cultural conditions are shown in Figure 13.2, where the thickness of an arrow represents the magnitude of the effect. Figure 13.2 Estimated Figure 13.2 effects among cultural conditions. Estimated effects among cultural conditions. Esteem Education Individualism Skills 116

118 How these cultural conditions, jointly with opportunities, shape independent entrepreneurship will be examined next. Effects upon entrepreneurship from cultural and institutional conditions The cultural conditions and the opportunities in a society are a framework for commercial entrepreneurship in the society, and their effects upon entrepreneurial activity can be estimated. The level of independent entrepreneurial activity in a society is here measured by the TEA-index, the rate of early-phase entrepreneurs in the population, as was examined in Chapter 11. First, the association of each condition with entrepreneurial activity is indicated by their correlation, Table Each condition has a correlation with entrepreneurial activity that is positive. Entrepreneurship is even higher correlated with a combination of the five conditions (the multiple correlation is higher than any of the five). Table 13.2 Correlation of national independent entrepreneurial activity (TEA) with opportunities and each cultural condition. Based on 42 developed societies. Opportunities.3 Individualism.3 Esteem.1 Education.3 Skills.2 Multiple correlation with all five.4 The effect upon entrepreneurship from each condition, while holding the other conditions constant, is estimated by a regression (statistical details are in the Appendix in Table A13.5). Opportunities have a big effect upon entrepreneurial activity. A society that provides abundant opportunities will also have a high level of entrepreneurial activity, typically, whereas a society with few opportunities will have little entrepreneurial activity. Individualism also has a large effect on entrepreneurial activity, but here I examine only its effect through the other cultural conditions that are promoted by individualism, namely esteem of the vocation of independent entrepreneur, the entrepreneurial education, and the entrepreneurial skills in society. A society that values individualism will also esteem the vocation, provide education, and promote skills, typically, whereas a society that devalues individualism will devalue the vocation, provide less education and hamper skills. Esteem of the vocation promotes education, and education promotes skills and also promotes entrepreneurship directly, and skills also promote entrepreneurship. These effects are shown in Figure e

119 The effect of the framework upon entrepreneurship can be graphed by plotting the countries according to Cultural conditions promote entrepreneurship through several sequences of positive effects. The cultural value attached to individualism promotes all the other three cultural conditions: esteem of the entrepreneurial vocation, the education in entrepreneurship and the entrepreneurial skillfulness of the population. Education promotes skills, so there is an indirect effect of education upon entrepreneurship in the manner that education promotes skills which in turn promote entrepreneurship. Figure Figure Estimated effects upon developed nations entrepreneurship from their cultural and institutional Estimated effects upon developed nations entrepreneurship from their cultural and institutional conditions. conditions. Esteem Education Individualism Skills Opportunities Entrepreneurshi p The effect of the framework upon entrepreneurship can be graphed by plotting the countries according to their entrepreneurship and to the optimal combination of framework conditions, Figure 13.4, in which an asterix marks a country. The association between the framework conditions and the level of entrepreneurship is obvious, a country with an extensive framework will also have a high level of entrepreneurship, typically, whereas a society with a meager framework will have little entrepreneurial activity. The USA, marked U on Figure 13.4, illustrates the effect. The framework conditions in the USA are extremely extensive, and the overall framework in the USA has been better than in any other country (on average across the years). This framework places 118

120 the USA at the better end of the horizontal axis in Figure The level of entrepreneurship in the USA is among the highest among the developed countries, this entrepreneurship places the USA very high up on the vertical axis. Denmark, marked D in Figure 13.4, is around in the middle in its framework and is also almost around the middle in its entrepreneurial activity. Figure 13.4 Plot of developed societies according to their combined framework conditions (horizontal axis) and their entrepreneurship (TEA, vertical axis) U 5 D In conclusion, in developed societies, both the cultural and the institutional framework conditions greatly promote independent entrepreneurial activity in discernible ways, cultural conditions enhance the entrepreneurial skills of the population and basic institutional conditions create opportunities for the population to bring their skills into entrepreneurship. 119

121 This tight coupling between framework and independent entrepreneurship in developed societies is illustrated by the USA. The American framework has apparently been better than in the other countries (on the whole during the last decade), and consequently the level of entrepreneurship in the USA has also been among the highest among the developed countries. Denmark also displays this tight coupling between framework and level of independent entrepreneurship. Denmark has a level of entrepreneurship that has been rather close to typical for the developed countries (Chapter 11; on the whole during the last decade), and Denmark has a framework that is about typical (Chapter 12). This is easily understood. When the country has a framework that is about typical, then we also predict the resulting level of activity to be about typical. 120

122 Chapter 14 Entrepreneurial work by employees and independent entrepreneurs: Understanding Nordic, Anglo- Saxon and Continental countries Torben Bager and Thomas Schøtt Earlier in this book, Chapter 3, the level or amount of entrepreneurial work by employees was ascertained in Denmark and other countries around the world. No explanation was offered. Also earlier in this book, Chapter 11, the level of entrepreneurial work by independent entrepreneurs was ascertained around the world (also in Bosma et al., 2012). To better understand the entrepreneurial work by both employees and independent entrepreneurs, this chapter compares several countries, namely Nordic, Anglo-Saxon and Continental countries. The questions are now, - What explains why the Nordic countries Denmark and Sweden have the highest level of entrepreneurial work by employees in the world? And what explains why they also have some of the lowest levels of entrepreneurial work by independent entrepreneurs in the world? Data The data for this chapter are mainly our GEM survey of the adult population in Denmark, where 2015 adults were interviewed in 2011, and the GEM survey of the adult population in many other countries, using the same questionnaire. The questionnaire asked the respondents if they are employees, and then asks the employees whether they are leading entrepreneurial work, as detailed earlier, Chapter 3. The questionnaire also asked the respondents if they are independent entrepreneurs in the sense of owning and managing a new or existing business, which is used for estimating the level of independent entrepreneurship in the adult population in the country. Moreover, the independent entrepreneurs were asked about their motivation for their independent entrepreneurship, whether they are pulled by seeing a business-opportunity or pushed by necessity for earning an income, by being an independent entrepreneur rather than being an employee or making a living in some other way. We thereby distinguish between two forms of independent entrepreneurship, opportunity-driven entrepreneurship and necessity-driven entrepreneurship. National level of various forms of entrepreneurship The Nordic countries are at extreme positions along several dimensions of entrepreneurial work. Notably, the Danish entrepreneurial activity is characterized by having: 121

123 - a very low level of early-stage independent entrepreneurial activity (2nd lowest in the TEA-index among 23 innovation driven countries); - a very low level of independent entrepreneurial activity motivated by necessity (3rd lowest among 23 innovation driven countries), i.e. typically motivated by business opportunity; - a very high level of entrepreneurial work by employees (2nd highest among 22 innovation driven countries). These extremes are also found in other Nordic countries, particularly in Sweden (Bosma et al., 2012). These societies are all highly developed with a relatively large public sector, a high level for welfare services in the social and health sectors and wide access to unemployment benefits. In highly developed Anglo-Saxon countries like the USA and Australia, the pattern is rather different. Here the level of independent entrepreneurship and in particular necessity-driven entrepreneurial activity is significantly higher while the level of entrepreneurial work by employees is lower. An important explanatory factor is the liberal welfare state model in these countries with a relatively small public sector and low levels of public supported health, social and unemployment benefits. This liberal welfare state model contributes to push unemployed or marginalized people into self-employment and other forms of entrepreneurial activity, nurturing a high level of early stage independent entrepreneurial activity. Conservative continental countries like Germany and Switzerland are characterized by a relatively low level of entrepreneurial work by employees combined with moderate level of independent entrepreneurship. The relatively low level of entrepreneurial work by employees might be a consequence of relatively autocratic-conservative management structures and traditions. Table 14.1 shows average numbers for six selected countries which can be regarded as typical for the three overall welfare state models discerned by Esping-Andersen (1991): - Anglo-Saxon/Liberal: USA, Australia - Nordic/Social Democratic: Denmark, Sweden - Continental/Conservative: Germany, Switzerland 122

124 Table 14.1 Forms of entrepreneurial work in selected countries in 2011 Anglo-Saxon countries 4.5% Australia 4.7% USA 4.3% Nordic countries 2.0% Sweden 2.3% Denmark 1.6% 6.8% Sweden 6.0% Denmark 7.5% 11.4% Sweden 13.5% Denmark 9.2% Continental countries 2.7% Switzerland 2.9% Germany 2.4% Independent entrepreneurship (Share of adult population, who own and manage a new business, max 3½ years old) Necessity-driven entrepreneurship (Share of entrepreneurs, who are necessity-motivated rather than opportunity-motivated) Entrepreneurial work by employees (Share of adult population, who are leading employee entrepreneurial work) 18.0% Australia 15.0% USA 21.0% 15.0% Switzerland 11.0% Germany 19.0% 5.2% Australia 5.0% USA 5.3% 3.4% Switzerland 3.3% Germany 3.5% While entrepreneurial work by employees and by independent entrepreneurs by their definition are separate and not overlapping, necessity-driven entrepreneurship is a component of independent entrepreneurship, so the low level of autonomous entrepreneurship in Nordic countries is partly explained by the very low pressure of necessity in these societies, and, conversely, the high level of independent entrepreneurship in Anglo-Saxon countries is partly explained by the high push of necessity in these societies. In short, for the three versions of welfare societies, we see the following patterns: - the level of early stage independent entrepreneurship is high in Anglo-Saxon countries, low in Nordic countries and moderate in Continental countries; - the level of necessity-driven entrepreneurship is high in Anglo-Saxon countries, very low in Nordic countries and moderate in Continental countries; - the level of entrepreneurial work by employees is very high in Nordic countries, moderate in Anglo-Saxon countries and low in Continental countries. If societies with more mixed welfare models are included in the comparison, this overall pattern seems to hold, although variation between the country groups becomes blurred. In the Nordic countries Norway shares the same pattern as Sweden and Denmark concerning a low level of early stage start-up activity and necessity-driven entrepreneurial activity, but no 2011 data are available for entrepreneurial work by employees in Norway. Finland has, like Denmark and Sweden, a high level of entrepreneurial work by employees, but also a relatively high level of independent entrepreneurship and also of necessity-driven entrepreneurship. Among Anglo-Saxon countries, the United Kingdom seems to be close to the Continental pattern while Ireland is closer to the Anglo- 123

125 Saxon. Among Continental countries Belgium and the Netherlands are close to the Nordic pattern in some respects. The overall pattern can also be observed in GEM data from earlier years although comprehensive data on entrepreneurial work by employees are only available for However, data for entrepreneurial work by employees, counted as persons who are in the process of starting a new venture activity in collaboration with their employers, are available for all years since the inception of the GEM study in 1999 and these data also suggest that entrepreneurial work by employees is particularly important in Northern European countries like Denmark and Sweden. Possible explanations of the levels of forms of entrepreneurial work As indicated above, a number of intertwined factors might influence the observed pattern such as welfare state models, national cultures, managerial traditions and job-autonomy. By drawing on several comparative cross-national studies we may disentangle these factors. Welfare state models The achieved results underpin theory which suggest that institutions at the national level have a significant bearing on the choice entrepreneurially inclined people make between different forms of entrepreneurial activity (Baumol 1990), mediated both through soft cultural institutions such as cultural values and work and management traditions and hard social institutions such as access to social and health benefits and also unemployment benefits. According to Baumol s theory, these institutional factors lead to significant variation in the prevalence of different forms of entrepreneurship in different countries while the total entrepreneurial activity level tends to be at the same level. The GEM results seem to a high degree to support Baumol s variation view. For Nordic countries the institutional context seems conducive for entrepreneurial work by employees rather than independent start-up activity. Moreover, the low level of necessity driven entrepreneurship in Nordic countries is likely to be closely related to the social democratic welfare state model which to a higher degree than other welfare state models provides income for unemployed and people with social and health problems. On the other hand GEM results do not support Baumol s thesis of constant entrepreneurial activity when all investigated GEM countries are compared. Some countries have much higher overall levels than others. One should take into consideration, though, that the GEM data only deals with productive forms of entrepreneurship while Baumol in his theory also includes unproductive and destructive forms of entrepreneurship. The welfare model theory of Esping-Andersen (1991), suggesting the existence of three overall welfare models, has had significant impact on subsequent welfare research and received some support in empirical investigations on social and labor market factors (Arts & Gelissen 2002; Asberger 2011). A discussion has unfolded among scholars about the number of welfare models which suggest that generalizing about countries and groups of countries is difficult. In this paper we have chosen to stick to Esping- Andersen s original formulation of three distinct welfare models. 124

126 Variation in national cultures As demonstrated by G. Hofstede (1991), cultural variation across countries is significant. His theory and work is disseminated widely and in spite of some criticism, particularly on methodological issues, his theory is generally regarded as a valuable theoretical construct with reasonable empirical backing. In his early works he distinguished among four major dimensions of culture: - Power distance, defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. - Individualism, with high level of individualism referring to social life with loose ties among people and high level of collectivity referring to social life with close ties among people. - Masculinity, with masculine society characterized by achievement and performance values and feminine society characterized by social and nurturing values. - Uncertainty avoidance, defined as the extent to which people try to avoid uncertainty related to the future. The Nordic, Anglo-Saxon and Continental welfare models seem to correlate quite strongly with these cultural dimensions. The pattern is reflected in Table 14.2 (Hofstede 1991; dimensions). Table 14.2 Levels of Power distance, individualism, masculinity and uncertainty avoidance in Nordic, Anglo-Saxon and Continental countries (measurement in parenthesis). Anglo-Saxon countries (mean US, AU) Nordic countries (mean DK, SE) Continental countries (mean GE, SW) Power distance Low (38) Very low (25) Low (35) Individualism Very high (91) High (73) High (68) Masculinity High (62) Very low (11) High (68) Uncertainty avoidance Low (44) Very low (26) High (62) These cultural factors contribute to explain the entrepreneurship pattern found in the liberal Anglo-Saxon countries where individualism and acceptance of uncertainty seem to facilitate independent entrepreneurial activity, combined with a liberal welfare state model which leads to a relatively high level of necessity-driven entrepreneurial activity. Similarly, they contribute to explain why the egalitarian and collaborative, and yet individualistic and risk-oriented Nordic cultures experience a high level of entrepreneurial work by employees. Other studies of national cultures also support the Hofstede based results. The world values survey by Inglehart and colleagues (1998), building on survey-questions about 125

127 six major human concerns, found that Norway, Denmark and Sweden form a compact cluster (Inglehart et al. 1998, page 17). Autocratic versus participatory managerial traditions In order to understand the entrepreneurship pattern in Nordic, Anglo-Saxon and Continental countries, factors at the macro-level of society such as welfare state models and national cultures cannot stand alone. They need to be supplemented with factors at the level of organization such as management traditions and work place cultures. Some companies and organizations practice autocratic and hierarchical forms of management while others practice participatory and democratic forms, and although all countries have significant variation in the management methods practiced across organizations inside the country, variation across countries can also be observed. According to Perletz & Seger (2004), the variation in management forms across groups of countries is closely connected to the variation in national cultures. They end up suggesting five groups of countries with different cultures, including the Anglo-Saxon culture, Nordic culture and Germanic culture. Management forms vary significantly across these groups in a number of respects such the level of autocratic management, the level of consensus seeking behavior and stakeholder approaches. The Nordic culture, and particularly in the three Scandinavian countries, again appear to be quite unique internationally with dominance of an egalitarian, participatory and collaborative form of management. Perlitz & Seger argue that the Nordic management style is very decentralized and democratic. The business organizational chart is generally horizontally structured. There are almost three times fewer hierarchical echelons than in France, and the Power Distance between people is very low (Perlitz & Seger 2004, p. 11). These observations and arguments are well aligned with theory about so-called Scandinavian Management. Thus Grennes argues, while writing about the concept of Scandinavian Management based on qualitative interviews with Scandinavian managers, that management in the three Scandinavian countries does not differ significantly from one another, but differ from that of non-scandinavian countries (Grenness 2003, page 9). The values shared by Scandinavian managers are cooperation, consensus, participation and power-sharing (Grennes 2003, page 18). Work place cultures Forms of management are closely related to work place culture, and work place culture seems to have a significant bearing on the level of entrepreneurial work by employees. The Nordic management form invites employees to participate, think independently and take initiatives beyond their normal duties while the more autocratic and hierarchical forms reduce employee incentives for employees to participate and take initiative. Therefore the Nordic management form and participatory work culture is likely to be conducive to entrepreneurial work by employees. Variation in work place cultures from one country to another may be difficult to measure. What can be successfully examined are some dimensions of work place culture such as work engagement and job-autonomy. As some degree of work engagement and job-autonomy is needed for work to be entrepreneurial, the prevalence of these charac- 126

128 teristics in a country is likely to influence the national level of entrepreneurial work by employees. Several empirical studies also support the finding that the Nordic countries have higher degrees of work engagement and job-autonomy than other countries. According to a comparative study of eight European countries, including Sweden, Germany and United Kingdom, the average degree of work engagement varies significantly between the countries, with Sweden topping the ranking on job-autonomy and social support. According to this study Sweden serves as a Nordic country in which employees have better opportunities to participate in decision making (Taipali 2011, page 499). The authors also conclude that job demands often decrease work engagement while job-autonomy and social support increase employees engagement in their work. This result accords well with an earlier study by Dobbin and Boychuk (1999). In a large-scale empirical study of job-autonomy in different countries, they found systematic considerable differences in job-autonomy between Nordic countries and Anglo- Saxon countries (Australia, Canada and USA), with the Nordic countries at a significantly higher job-autonomy than the Anglo-Saxon countries. The major reason, according to these authors, was that national employment systems carry different logics, institutionalized in management, training, bargaining and employment practices. The United States, Canada and Australia represent one such logic, with rule-oriented practices that limit autonomy. The Nordic countries represent another, with skill-oriented practices that expand autonomy. (Dobbin & Boychuk 1999, page 258). This relationship between work-place culture and entrepreneurial work by employees is also found in our analysis earlier in this book, Chapter 5, of the cultural mindset of entrepreneurially working employees, routinely working employees and independent entrepreneurs. Entrepreneurial employees consider their work meaningful and autonomous more often than routine employees, although less meaningful and autonomous than independent entrepreneurs. Conclusions Our new focus in GEM 2011 on entrepreneurial work by employees has enabled a better understanding of factors influencing the prevalence of entrepreneurial work by employees and by independent entrepreneurs at the national level. Our cross-country analyses of our GEM data demonstrate, not only that the overall level of entrepreneurial activity varies significantly from one country to another, but also that the prevalence of different forms of entrepreneurship varies significantly. This includes significant variation among countries in their level of entrepreneurial work by employees. In order to understand factors influencing variation in the prevalence of entrepreneurial forms, a grouping of developed countries according to their welfare state model seems appropriate as a point of departure. Nordic countries, characterized by high taxation level, universal access to social benefits/health care and wide access to unemployment benefits, have low levels of independent entrepreneurship, particularly entrepreneurial activity driven by necessity, combined with a very high level of entrepreneurial work by employees. Anglo-Saxon countries such as USA and Australia have strong individualistic and free market values which enhance independent entrepreneurship and 127

129 also a high level of necessity-driven entrepreneurship because of the relatively low level of social security and unemployment benefits. Continental countries tend to be in a middle position, except in entrepreneurial work by employees, where conservative workplace and management traditions seem to result in a low level. At least four factors seem to influence this entrepreneurship pattern between the three groups of countries: - Overall welfare state models - National cultures - Management traditions - Work-place cultures All of these four factors seem to influence the level of entrepreneurial work by employees, and they seem closely intertwined. However, it is rather unclear how they are intertwined and how they impact the level of entrepreneurial work by employees. National cultures and welfare state models seem to be aligned and probably the soft culture and probably the soft culture and hard welfare system factors are mutually reinforcing. Furthermore, hard welfare system factors are mutually reinforcing. Furthermore, national cultures national and cultures work place and work cultures place are cultures closely are intertwined, closely intertwined, with national with national culture forming culture forming the the broader broader context context for work for work culture. culture. At the At level the level of organization, of organization, work work cultures cultures and management and management intertwined, forms are also almost closely as two intertwined, sides of the almost same as coin. two sides So, the of four the same factors coin. are So, closely the intertwined forms are also closely and probably four factors each are of closely them contributes intertwined to and explaining probably the each prevalence of them contributes of different to forms explaining of entrepreneursh the prevalence of different forms of entrepreneurship in nations, including the level of in nations, entrepreneurial including the work level by employees. of entrepreneurial Welfare work state by models employees. and national Welfare cultures state models are contextual are contextual factors helping factors us understand helping us understand the structural the room structural for people room to for pursue people differ- to pursue different and national cultures forms ent of forms entrepreneurship of entrepreneurship and the soft and macro- drivers the soft macro-drivers of entrepreneurial of entrepreneurial activity. Organization activity. level facto such Organization as work place level culture factors and such management as work place tradition culture have and a more management direct influence tradition on have entrepreneurial a more direct influence on entrepreneurial work by employees, as illustrated by Figure work 14.1 by employees, as illustrated by Figure 14.1 Figure 14.1 Factors influencing national level of entrepreneurial work by employees Figure 14.1 Factors influencing national level of entrepreneurial work by employees Welfare state model National culture Work culture Management tradition Prevalence of forms of entrepreneurship Level of entrepreneurial work by employees Understanding these factors and relationships help us understand the specific entrepreneurship characteristics of Denmark. Being a Nordic country Entrepreneurial applying a Work social- democratic by Employees in welfare Enterprises state model 128 reduces the incentives of people to start new independent enterprises compared to the liberal countries. This structural factor is complemented by a national culture which can be characterized as egalitarian and

130 Understanding these factors and relationships help us understand the specific entrepreneurship characteristics of Denmark. Being a Nordic country applying a social-democratic welfare state model reduces the incentives of people to start new independent enterprises compared to the liberal countries. This structural factor is complemented by a national culture which can be characterized as egalitarian and collaborative, but also as individualistic and change oriented. So, the Danish national culture enhances entrepreneurial activity and the welfare state channels the bulk of this entrepreneurial drive into entrepreneurial work by employees. At the level of organization these society-level structural and cultural factors are conducive for participatory forms of management combined with an engaging work culture and a high-level of job-autonomy which again are conducive for entrepreneurial work by employees in the Danish enterprises. 129

131 APPENDIX with technical specifications. Chapters 11, 12 and 13 examine the national level of independent entrepreneurship, its national framework conditions, and effects of framework conditions on the level of independent entrepreneurship. The unit of analysis is a developed society. The analyses are on the developed societies, 42 developed societies, including Denmark. The 42 developed societies are actually a fairly large sample of developed societies, the sample is nearly a census of all the developed societies in the world (the developed societies that have not yet participated in GEM are mainly new states in Eastern Europe such as Estonia, Ukraine and Belarus). The 42 developed societies are those that have participated in GEM during some or all of the years Figure 13.1 in Chapter 13 is based on the regression shown here in Table A13.1. The thicknesses of the arrows are given by the standardized regression coefficients. Table A13.1 Opportunities shaped by six institutional conditions (the other institutional conditions had no separate discernible effects). Linear regression. R2 =.63 N = 42 developed societies Standardized regression coefficient P-value (one-sided) Government policies Commercial and legal infrastructure Internal market openness Physical infrastructure Intellectual property rights Support for growth-entrepreneurship Figure 13.2 in Chapter 13 draws the essential results from a structural equations model which includes the three linear models shown here in Tables A13.2, A13.3 and A13.4. The unit of analysis is a developed society. Data are available on all 42 developed societies participating in GEM during some or all of the years Table A13.2. Esteem, as affected by individualism. Standardized coefficient Probability-value (one-sided) Individualism

132 Table A13.3. Education, as affected by individualism and esteem. Standardized coefficient Probability-value (one-sided) Individualism Esteem Table A13.4. Skills, as affected by education and individualism. Standardized coefficient Probability-value (one-sided) Education Individualism Figure 13.3 in Chapter 13 draws the essential results from a structural equations model which includes the above three linear models (with slightly different estimates) as well as the following linear model shown here in Table A13.5. Entrepreneurial activity is measured by TEA (Chapter 11), with each country s mean across the years Opportunities (and also individualism, skills and education) is measured as the country s mean across the years Table A13.5. Entrepreneurship level, as affected by opportunities, education, skills and esteem. Coefficient Standardized coefficient Probability-value (one-tailed) Opportunities Education Skills Esteem Constant Figure 13.4 in Chapter 13 plots the developed nations according to the predicted TEA, predicted from the coefficients in Table A13.5, and the TEA. More precisely, the vertical axis refers to entrepreneurial activity, as measured by TEA (each country s mean across the years ). The horizontal axis refers to the level of TEA predicted by the regression, with the coefficients in Table A13.5, using the expression, Predicted TEA = Opportunities Education +.31 Skills +.07 Esteem 131

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142 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Algeria CREAD Abedou Abderrahamne Bouyacoub Ahmed Kherbachi Hamid Cherrad Salah Eddine Setti Zakia German Development Cooperation (Deutsche Gesellschaft fuer Internationale Zusammenarbeit, GIZ) Argentina IAE - Business School Silvia Torres Carbonell Aranzazu Echezarreta Juan Martin Rodriguez Hector Rocha Banco Santander Rio Buenos Aires City Government MORI Argentina [email protected] Australia Queensland University of Technology Per Davidsson Paul Steffens Michael Stuetzer Q&A Market Research [email protected] Bangladesh International Islamic University Chittagong Mohammed Shamsul Karim Shamim Uddin Khan Abul Kalam Azad Abbas Ali Khan Sirajuddowla Shaheen Syed Md. Ather S.M. Shafiqul Islam A. J. M. Nuruddin Chowhdury ANM Meshquat Uddin M. Tahlil Azim Jerry Nicholson Md. Musharrof Hossain Md. Moazzam Husain Mark Hart USAID (United States Agency International Development) Aston University Org-Quest Research Limited [email protected] ; [email protected] Barbados The Cave Hill School of Business, The University of the West Indies Marjorie Wharton Donley Carrington, PhD Jeannine Comma, PhD Paul Pounder, PhD International Development Research Centre (IDRC) Systems Consulting Ltd. [email protected] Belgium Vlerick Leuven Gent Management School Jan Lepoutre Mathias Cobben Jacob Vermeire STOIO (Flemish Research Organisation for Entrepreneurship and International Entrepreneurship) EWI (Department of Economy, Science and Innovation) Dedicated Research [email protected] 141

143 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Bosnia & Herzegovina Center for Entrepreneurship Development Tuzla (in partnership with University of Tuzla) Bahrija Umihanić Rasim Tulumović Mirela Arifović Slađana Simić Aziz Šunje Slobodan Marković Zdenko Klepić Selma Poljić Federal Ministry of Development, Entrepreneurship and Crafts Ministry of Development and Entrepreneurship of Tuzla Canton Municipality of Tuzla IPSOS d.o.o. Sarajevo Brazil Instituto Brasileiro da Qualidade e Produtividade (IBQP) Escola de Administração de Empresas de São Paulo da Fundação Getulio Vargas FGV-EAESP Simara Maria de Souza Siveira Greco César Rissete Eduardo Camargo Righi Eliane Cordeiro de Vasconcellos Garcia Duarte Gilberto Sarfati Joana Paula Machado Júlio César Felix Laura Pansarella Marcelo Aidar Mario Tamada Neto Rene Rodrigues Fernandes Romeu Herbert Friedlaender Jr. Tales Andreassi Serviço Brasileiro de Apoio às Micro e Pequenas Empresas - Sebrae Serviço Social da Indústria - SESI- Departamento Regional do Paraná Universidade Federal do Paraná - UFPR Instituto de Tecnologia do Paraná - Tecpar Escola de Administração de Empresas de São Paulo da Fundação Getulio Vargas FGV-EAESP Bonilha Comunicação e Marketing S/C Ltda. Bonilha Pesquisa [email protected] Chile Universidad del Desarrollo José Ernesto Amorós Carlos Poblete Carlos Albornoz Gianni Romani InnovaChile Corfo SOFOFA (Federation of Chilean Industry) Endeavor Chile Opina S.A. [email protected] China Tsinghua University Gao Jian Qin Lan Jiang Yanfu Cheng Yuan Li Xibao School of Economics and Management,Tsinghua University SINOTRUST International Information & Consulting (Beijing) Co., Ltd. [email protected] 142

144 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Colombia Pontificia Universidad Javeriana Cali Universidad del Norte Universidad Icesi Universidad de los Andes Fernando Pereira Fabian Osorio Alberto Arias Liyis Gómez Núñez Ph.D Piedad Martínez Carazo Ph.D César Figueroa Socarrás Rodrigo Varela Villegas Ph.D Luis Miguel Álvarez Vanegas Juan David Soler Libreros Raúl Fernando Quiroga Marín Rafael Augusto Vesga Fajardo Diana Carolina Vesga Centro Nacional de Consultoría Croatia J.J. Strossmayer University Osijek, Faculty of Economics Slavica Singer Natasa Sarlija Sanja Pfeifer Suncica Oberman Peterka Djula Borozan Ministry of Economy, Labour and Entrepreneurship J.J. Strossmayer University Osijek, Faculty of Economics CEPOR - SMEs and Entrepreneurship Policy Center, Zagreb Puls d.o.o., Zagreb [email protected] Czech Republic University of Economics, Prague Martin Lukes Martina Jakl Ministry of Industry and Trade Factum Invenio [email protected] [email protected] Denmark University of Southern Denmark Thomas Schøtt Torben Bager Poul Rind Christensen Kim Klyver Ann H. Clarke Majbritt Rostgård Evald Kent Wickstrøm Jensen Jesper Pihl Kristin B. Munksgård Heidi R. Nielsen Mette S. Nielsen Pia S. Nielsen Mahdokht Sedaghat Mohammad Reza Zali Jonathan Levie Mick Hancock Shahamak Rezai Industriens Fond, Danish Industry Foundation Capacent Epinion [email protected] Finland Turku School of Economics, University of Turku Anne Kovalainen Jarna Heinonen Tommi Pukkinen Pekka Stenholm Ministry of Employment and the Economy Turku School of Economics Taloustutkimus Oy [email protected] 143

145 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact France EMLYON Business School Alain Fayolle Danielle Rousson Caisse des Depots CSA Germany Leibniz Universität Hannover Institute for Employment Research (IAB) of the German Federal Employment Agency (BA) Rolf Sternberg Udo Brixy Arne Vorderwülbecke Institut für Arbeitsmarkt- und Berufsforschung (IAB) Institut für Wirtschafts- und Kulturgeographie, Leibniz Universität Hannover Zentrum fuer Evaluation und Methoden (ZEM), Bonn Greece Foundation for Economic & Industrial Research (IOBE) Stavros Ioannides Aggelos Tsakanikas Stelina Chatzichristou National Bank of Greece Datapower SA Guatemala Universidad Francisco Marroquin Hugo Maúl Jaime Diaz Irene Flores David Casasola Mónica de Zelaya Lisardo Bolaños Universidad Francisco Marroquin Khanti, S.A. Hungary University of Pécs Faculty of Business and Economics László Szerb József Ulbert Attila Varga Gábor Márkus Attila Petheő Dietrich Péter, Zoltán J. Ács Terjesen Siri Saul Estrin Ruta Aidis OTKA Research Foundation Theme number K Regional Studies PhD Programme, University of Pécs Faculty of Busines and Economics Business Administration PhD Programme, University of Pécs Faculty of Busines and Economics Management and Business Administration PhD Programme of the Corvinus University of Budapest Start Tőkegarancia Zrt Szocio-Gráf Piac-és Közvélemény-kutató Intézet [email protected] Iran University of Tehran Abbas Bazargan Nezameddin Faghieh Ali.Akbar Moosavi-Movahedi Leyla Sarafraz Asadolah kordrnaeij Jahangir Yadollahi Farsi Mahmod Ahamadpour Daryani S. Mostafa Razavi Mohammad Reza Zali Mohammad Reza Sepehri Ali Rezaean Iran s Ministry of Labour and Social Affairs, Iran s Labour and Social Security Institute (LSSI) [email protected] 144

146 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Ireland Fitzsimons Consulting Dublin City University Business School Paula Fitzsimons Colm O Gorman Enterprise Ireland Forfas IFF [email protected] Jamaica University of Technology, Jamaica Girjanauth Boodraj, Ph.D. Patrice Farquharson Mauvalyn Bowen, Ph.D. Vanetta Skeete Reginald Nugent Horace Williams, D.B.A. Joan Lawla Orville Reid IDRC (International Development Research Centre) University of Technology, Jamaica KOCI Market Research and Data Mining Services [email protected] Japan Keio University Takehiko Isobe Social Survey Research Information Co.,Ltd (SSRI) [email protected] Korea Gyeongnam National University of Science and Technology (GnTech) Sung-sik Bahn Sanggu Seo Kyung-Mo Song Dong- hwan Cho Jong-hae Park Min-Seok Cha Small and Medium Business Administration(SMBA) Kumwoo Industrial Machinery, Co. Hanaro Tech Co., Ltd. Korea Aerospace Industries, Ltd (KAI) Taewan Co., Ltd. Hankook Research Co [email protected] Latvia The TeliaSonera Institute at the Stockholm School of Economics in Riga Olga Rastrigina Marija Krumina Vyacheslav Dombrovsky Anders Paalzow Alf Vanags TeliaSonera AB SKDS [email protected] Lithuania International Business School at Vilnius University Mindaugas Lauzikas Erika Vaiginiene Aiste Miliute Vikinta Rosinaite Skaiste Batuleviciute International business school at Vilnius university Enterprise Lithuania Lithuanian Ministry of Economy [email protected] Malaysia Universiti Tun Abdul Razak Siri Roland Xavier Leilanie BT Mohd Nor Mohar Bin Yusof Dewi Amat Sapuan Noorseha Binti Ayob Mohd Hanif bin Mohd Helmi. Universiti Tun Abdul Razak Rehanstat [email protected]; [email protected] 145

147 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Mexico Tecnológico de Monterrey Mario Adrián Flores Marcia Campos Elvira Naranjo Natzin López Tecnológico de Monterrey Campus León Rectoría de Escuelas Nacionales de Posgrado EGADE Business School y EGAP Alduncin y Asociados [email protected] Netherlands EIM Business & Policy Research Jolanda Hessels Peter van der Zwan Sander Wennekers André van Stel Roy Thurik Philipp Koellinger Ingrid Verheul Niels Bosma Ministry of Economic Affairs, Agriculture and Innovation Stratus [email protected] Nigeria TOMEB Foundation for Sustainability & Youth Development Business School Netherlands Nigeria Rilwan Aderinto Tunde Popoola Luqman Olatokunbo Obileye Abubakar Sadiq Kasum Lere Baale USAID (United States Agency International Development) TOMEB Foundation for Sustainability & Youth Development MarketSight Consultancy Limited Business School Netherlands Nigeria [email protected] Norway Bodø Graduate School of Business Erlend Bullvåg Lars Kolvereid Bjørn Willy Åmo Eirik Pedersen Innovation Norway Ministry of Industry and Trade Bodø Innovation Center Bodø Graduate School of Business Polarfakta [email protected] Pakistan Center for Entrepreneurial Development, IBA, Karachi Sarfraz A. Mian Zafar A. Siddiqui M. Shahid Qureshi Shahid R. Mir Moeid Sultan Institute of Business Administration (IBA), Karachi US Agency for International Development Oasis International [email protected] Palestine MAS Institute Samir Abdullah Yousef Daoud Tareq Sadeq Alaa Tartir Muhanad Hamed Ibrahim Shikaki International Development Research Centre- IDRC The Arab Fund for Economic & Social Development (AFESD) The Palestine Central Bureau of Statistics (PCBS) [email protected]; [email protected] 146

148 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Panama Instituto de Estudios Superiores de Administración (IESA) Panama and City of Knowledge Foundation Federico Fernández Dupouy Manuel Lorenzo Andrés León Manuel Arrocha The Authority of the Micro, Small and Medium Enterprises IPSOS IPSOS Peru Universidad ESAN Jaime Serida Oswaldo Morales Keiko Nakamatsu Universidad ESAN s Center for Entrepreneurship Imasen [email protected] Poland University of Economics in Katowice Przemysław Zbierowski Anna Tarnawa Paulina Zadura-Lichota Dorota Węcławska Mariusz Bratnicki Wojciech Dyduch Bartłomiej J. Gabryś Rafał Kozłowski Izabella Kozłowska Joanna Pach Iwona Karaś Polish Agency for Enterprise Development University of Economics in Katowice [email protected] [email protected] Portugal Sociedade Portuguesa e Inovação (SPI) ISCTE - Instituto Universitário de Lisboa (ISCTE-IUL) Augusto Medina Luís Reto António Caetano Nelson Ramalho Douglas Thompson Rui Monteiro João Rodrigues Nuno Gonçalves Ana Ribeiro ISCTE - Instituto Universitário de Lisboa (ISCTE-IUL) GfKMetris (Metris Métodos de Recolha e Investigação Social, S.A.) [email protected] Romania Babeș-Bolyai University, Faculty of Economics and Business Administration Tünde Petra Petru Annamária Benyovszki Ágnes Nagy István Pete Lehel Györfy Dumitru Matiș Levente Szász Eugenia Matiș Babeș-Bolyai University of Cluj-Napoca OTP Bank Romania Asociașia Pro Oeconomica Metro Media Transilvania [email protected]; [email protected] 147

149 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Russia State University - Higher School of Economics Saint Petersburg University - Graduate School of Management Chepurenko Alexander Obraztsova Olga Alimova Tatiana Gabelko Maria Murzacheva Ekaterina Popovskaya Ekaterina Verkhovskaya Olga Dorokhina Maria Shirokova Galina State University - Higher School of Economics Saint Petersburg University - Graduate School of Management Levada-Center [email protected] Singapore Nanyang Technological University Ho Moon-Ho Ringo Olexander Chernyshenko Chan Kim Yin Alex Lin Rosa Kang LAI Yoke Yong Olwen Bedford Jonathan Phan Nanyang Technological University NTU Ventures Pte Ltd [email protected] Slovakia Comenius University in Bratislava, Faculty of Management Anna Pilkova Zuzana Kovacicova Maria Bohdalova Marian Holienka Jan Rehak Jozef Komornik Peter Starchon Comenius University in Bratislava, Faculty of Management National Agency for Development of Small and Medium Enterprises Central European Foundation Ipsos Tambor SR, spol. s r. o. [email protected] Slovenia University of Maribor, Faculty of Economics and Business Miroslav Rebernik Polona Tominc Katja Crnogaj Ministry of Economy Slovenian Research Agency Finance - Slovenian Business Daily RM PLUS [email protected] South Africa The UCT Centre for Innovation and Entrepreneurship, Graduate School of Business, University of Cape Town Mike Herrington Jacqui Kew Miranda Simrie Swiss South African Cooperation Initiative (SSACI) South African Breweries (SAB) Small Enterprise development Agency (SEDA) Nielsen South Africa [email protected] 148

150 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Spain Fundación Xavier de Salas Universidad de Extremadura Universidad Autónoma de Madrid Universidad Autónoma de Barcelona Universidad Miguel Hernández Instituto Vasco de Competitividad Orkestra Universidad de Murcia Confederación de Empresarios de Galicia Universidad de Cantabria Universidad de Navarra/ Servicio Navarro de Empleo Universidad de Zaragoza Universidad de Las Palmas de Gran Canaria Alicia Coduras Ricardo Hernández Juan Carlos Díaz Isidro de Pablo Yancy Vaillant José Mª Gómez Iñaki Peña Antonio Aragón Araceli de Lucas F. Javier Martínez Martín Larraza Lucio Fuentelsaz Rosa Mª Batista Fundación Xavier de Salas GEM España Instituto Opinòmetre S.L. Sweden Swedish Entrepreneurship Forum Pontus Braunerhjelm Per Thulin Kristina Nyström Carin Holmquist Ulrika Stuart Hamilton Vinnova Confederation of Swedish Enterprise DEMOSKOP Switzerland School of Business Administration (HEG-FR) Fribourg Rico Baldegger Andreas Brülhart Philipp Bubenzer Sabine Frischknecht Thomas Straub Fredrik Hacklin Alberton Siegfried Pascal Wild Kommission für Technologie und Innovation KTI / CTI HEG Haute Ecole de Gestion Fribourg (HEG-FR) gfs Bern [email protected] Taiwan National Chengchi University China Youth Career Development Association Headquartere (CYCDA) Chao-Tung Wen Chang-Yung Liu Su-Lee Tsai Yu-Ting Cheng Yi-Wen Chen Ru-Mei Hsieh Chung-Min Lo Shih-Feng Chou Small and Medium Enterprise Administration, Ministry of Economic Affairs NCCU Survey Center [email protected] 149

151 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact Thailand Bangkok University (CEDI - Creative Entrepreneurship Development Institute) Pichit Akrathit Koson Sapprasert Navaphol Viriyakunkit Vichate Tantiwanich Luckxawan Pimsawadi Veerapong Malai Yupana Wiwattanakantang Sarn Aksaranugraha Bangkok University TNS Research International Thailand [email protected] [email protected] Trinidad and Tobago Arthur Lok Jack Graduate School of Business, University of the West Indies Miguel Carrillo Colin McDonald Abhijit Bhattacharya Jan Joseph International Development Research Centre (IDRC) [email protected] Turkey Yeditepe University Small and Medium Development Organization (KOSGEB) Esra Karadeniz Yeditepe University Small and Medium Development Organization (KOSGEB) Akademetre [email protected] UAE Institute for Social & Economic Research - Zayed University Mouawiya Al Awad Constance Van Horne Victor Huang Khalfa Fund for Enterprise Development - Abu Dhabi - UAE [email protected] United Kingdom Aston Business School Mark Hart Jonathan Levie Michael Anyadike-Danes Yasser Ahmad Bhatti Aloña Martiarena Arrizabalaga Mohammed Karim Erkko Autio Liz Blackford Mohammed Shamsul Karim Department for Business, Innovation and Skills PRIME (The Prince s Initiative for Mature Enterprise) Welsh Assembly Goverment Invest Northern Ireland Hunter Centre for Entrepreneurship, Strathclyde University Enterprise UK Birmingham City Council IFF Research Ltd [email protected] 150

152 National teams in Global Entrepreneurship Monitor in 2011 Team Institution National Team Members Financial Sponsors APS Vendor Contact United States Babson College Donna Kelley Abdul Ali Candida Brush Marcia Cole Gang Hu Mehdi Majbouri Diana Hechavarria Moriah Meyskens Peter Fleming Monica Dean Thomas S. Lyons Joseph Onochie Albert Suhu Ivory Phinisee Edward Rogoff Babson College Baruch College OpinionSearch Inc. Uruguay University of Montevideo Leonardo Veiga Pablo Regent Fernando Borraz Alvaro Cristiani Cecilia Gomeza Santiago Ramos Lucila Arboleya University of Montevideo Banco Santander Uruguay Equipos Mori Venezuela Instituto de Estudios Superiores de Administración (IESA) Nunzia Auletta Rebeca Vidal Aramís Rodríguez Edwin Ojeda 151

153 152

154 Entrepreneurial work consists of discovering opportunities and exploiting opportunities. Entrepreneurial work is done in new businesses and in entrepreneurial work by employees in enterprises. Here we first focus on entrepreneurial work by employees. How is entrepreneurial work by employees organized in time into an idea-phase and an implementationphase, and organized in social roles of leader and supporter of entrepreneurial work? What is the volume of entrepreneurial work in various countries around the world, and is Denmark at the top or at the bottom? What characteristics of an employee gender, age, education make an employee go into entrepreneurial work rather than routine work? Do entrepreneurially working employees differ from routinely working employees and independent entrepreneurs in their competencies and work-qualities? Does industry differ from other sectors in entrepreneurial work by employees? Do industrial business relations promote innovation, exporting and growth-expectations? Do partnerships among public and private enterprises promote innovation? Then we focus on entrepreneurial work by independent entrepreneurs who start or run their own businesses. Has the level of independent entrepreneurial activity in Denmark declined during the economic recession, and is the Danish level higher or lower than in other societies? Are the cultural and institutional framework conditions in Denmark deteriorating or stable despite the recession, and are Danish conditions better or worse than in other societies? How do the framework conditions shape independent entrepreneurship, and what are the effects of culture and institutions? These questions are addressed by analyzing data from our surveys in 2011 and preceding years in Denmark and many other countries, gathered mainly in our research program Global Entrepreneurship Monitor, GEM, and this year also by a survey of industrial and other firms in Denmark, generously financed by a grant from the Danish Industry Foundation, Industriens Fond. Our up-to-date surveys and analyses provide leading indicators of current changes in entrepreneurship.

155 Thomas Schøtt studied at the University of Aarhus (cand.scient.), Columbia University (M.A. in statistics, and Ph.D. in sociology) and Yale University (postdoc in organizational research), was Assistant Professor and Associate Professor at the University of Pittsburgh, is Professor in the Department of Entrepreneurship and Relationship Management at the University of Southern Denmark, and is also Professor (adjunct) in the Faculty of Entrepreneurship at University of Tehran. As the National Team Leader of the Danish GEM-team, he directs the Danish research program affiliated with the Global Entrepreneurship Monitor, where he is a member of the Research Committee and leads the research groups on entrepreneurs advice networks and on enterprises businessrelations. He teaches entrepreneurship, organizations, methodology and networks among people and organizations. He consults to agencies and international organizations on entrepreneurship, intervention, organizations, clusters and development in local and global regions. He researches entrepreneurship, innovation and network organization, and he has published numerous articles in international journals and several books, including the seven research monographs, Entrepreneurship in Denmark 2005; Entrepreneurship in the Regions in Denmark 2006; Growth-Entrepreneurship in Denmark 2007; Education, Training and Networking for Entrepreneurship in Denmark 2008; Social and Commercial Entrepreneurship in Denmark 2009; Training and Network Organization in Entrepreneurship in Denmark 2010; and now Entrepreneurial Work by Employees in Enterprises in Denmark 2011.