19, November 2018 – Blog #17
Youth Entrepreneurship in Canada.
Highly educated entrepreneurs see it as a good career choice.
The recently released Global Entrepreneurship Monitor report on Youth Entrepreneurship shows that youth entrepreneurship is alive and well in Canada. The Global Entrepreneurship Monitor (GEM) is the largest study of entrepreneurship in the world.
Highlights from the report include:
- Canadian Youth see entrepreneurship as good career choice and associate it with high status. Over 60% of Canadian youth saw entrepreneurship as a good career choice, and having high status, and three quarters saw it as having high status. Most also saw it portrayed positively in the media.
- They feel confident that they have the skills and experience needed to start a business. More than half felt they had the skills and experience need to start a business, although around 40% expressed a fear of failure. However this is about 10% less than expressed by the 18-64 age group. However, we found in other GEM reports than the experts are quite skeptical of these views.
- They want greater independence. There has been a pronounced shift in the last 4 years to increase the fraction of youth entrepreneurs who seek greater independence, rather than to increase income. More than twice as many of the youth entrepreneurs we interviewed valued independence more than increased income.
- They are highly educated. Over 60% of youth entrepreneurs have a post-secondary degree, while among the youngest youth entrepreneurs (ages 18-24) 16% have post graduate experience. This compares with 54% of the 18-64 age group in Canada who have a post-secondary qualification.
- Consumer services form the largest share of youth entrepreneur’s ventures. It is typical of most reports on entrepreneurship that consumer services are the largest single business category. There are low barriers to entry and frequently a relatively low need for capital to get started. 45% of youth entrepreneurs’ ventures are for consumer services, 32% for business services and 20% for manufacturing.
- Personal savings is the primary source of funding. 58% of youth entrepreneurs funded their ventures with personal savings, 19% by bank loans and 9% from family. The median value of the investment to start their business was $268,214.
- There is a gender gap, as female youth exhibit less confidence and a higher fear of failure than their male counterparts.
- The overall entrepreneurship rate for youth is slightly lower than the Canadian population. In 2016 14.1 % of youth were involved in entrepreneurial activity, compared with 16.7% of the total 18-64 population. This is perhaps not surprising as generally people need to accumulate money and experience before starting a business.
- An increasing number of Youth are running established businesses. In GEM, an established business is one that has been around for 3.5 years. The number of these headed by Youth has risen quite rapidly in the last four years.
- Ontario and Alberta are hubs of youth entrepreneurship. The rate of youth entrepreneurship varies quite a bit across Canada. Highest rates are found in Ontario, Alberta and Quebec, while lower rates are found in Newfoundland, New Brunswick and PEI.
The full report is available at www.gemcanada.org – look under 2017 (when the data was collected).
7, June 2018 – Blog #16
Measuring Entrepreneurship – Lies, damn lies and statistics.
British Prime Minister Benjamin Disraeli is reputed to have said that there were “three kinds of lies – lies, damn lies and statistics” as a sort of tongue in cheek way of advising caution when interpreting numbers. A case in point is entrepreneurship statistics.
Entrepreneurship is falling
There have been a series of reports in Canada (and around the industrialized world) deploring the decline of entrepreneurship. A recent one from the Fraser Institute compares the rate of entrepreneurship in a number of countries in the periods 2001-2007 and 2008-2014. For Canada the decline was 8.5%, for the US 18.6%, for Britain 7.5% and or Australia 20.3%. A long article in Forbes Magazine has the title ”Why US Entrepreneurship is dying.” It quotes reports from the National Bureau of Economic Research showing that start up activity has been slowing down in the US for three decades. A recent article in Aspire Canada has the title “ Is Canadian Entrepreneurship Vanishing?”
Various explanations for this decline have been put forward. The Forbes article places the blame on large student loans, making potential entrepreneurs more risk averse. A recent article in the Globe and Mail believes that demographics is to blame – the aging of the population and decline of the number of potential entrepreneurs in the prime age group of late 20’s to early 40’s. Another explanation is the lack of equity funding compared with the US.
Entrepreneurship is rising
On the other hand, data from the Global Entrepreneurship Monitor – the world’s largest study of entrepreneurship, tells a different story. In Canada, for example, the rate of entrepreneurship (measured as the TEA Index of total early stage entrepreneurship activity) has increased from an average of 8.6 (for 2002-2006) to 15.1 (for 2013-2017), almost doubling. In the US the numbers have gone from 11.2 (average of 2002-2006) to 12.9 (average of 2013-2017). That’s not such a big increase as Canada, but it’s definitely not a decline. Australia shows a similar increase from 11.9 (average for 2003-2006) to 13.2 (average for 2014-2017).
What’s going on?
The first thing to note is that the two groups are looking at different sources for their data. The “falling” group looks at company registrations, where a new company has been formed. The “rising” group look at actual activities, what percentages of the adult population are actually involved in entrepreneurial activity, whether the activity is part of a registered company or not.
But what could be behind this? A very likely explanation is the gig economy. A report by Randstat Canada (the largest staffing company in Canada) says that 30% of the Canadian workforce is already in “non-traditional” jobs, including part time work, temporary work, contract work, and freelance work, self-employed or unpaid work. This number has increased significantly in recent years, and is expected to rise to 45% by 2020 according to Intuit Canada. A report from Ryerson University found that over 50% of all new Canadian jobs involve “non-standard” work arrangements. Very similar numbers are predicted for the US.
One of the problems with dealing with this issue is the lack of an accepted terminology. Many almost similar terms are used, including gig economy, sharing economy, digital platform economy, and others. The Organization of Economic Cooperation and Development (OECD) has resorted by defining non-traditional work arrangements by what it is NOT – “It is not full time, dependable employment with a contract of indefinite duration.”
There is a theoretical underpinning to this change. Ronald Coase won the Nobel Prize in economics by explaining that firms exist to minimize transaction costs. It was cheaper for General Motors (for example) to assemble all the materials to make a car than to contract with others to do the same thing. That was then. Now the computer revolution has made it much easier and cheaper for firms to do work by contracting with freelancers, and outsourcing significant parts of their activities. Also, it is easier for people to find work using apps such as Uber, Airbnb, Handy and TaskRabbit that trying to find full time employment. And perhaps they value the flexibility as well.
It looks very likely that we will see further increase in entrepreneurial activity in Canada. It remains to be seen how much of this is done through registered companies and how much of it is done on a freelance or sole proprietorship basis.
25, April 2018 – Blog #15
Dr. Cooper Langford
Most of you know that Dr. Cooper Langford passed away on March 11th, 2018. His Celebration of Life will be at the Best Western Village Park Inn, 1806 Crowchild Trail, Calgary, T2M 3Y7, on April 30th from 2:00-5:00.
We dedicate this blog to him, a review of his huge contribution to THECIS over the years by looking at some of the projects he contributed to.
Cooper was co-founder of THECIS in 2001, and was a Board member and active Fellow right up to the end. He made many contributions to THECIS. This is just a brief summary of some of his project involvement.
Global Entrepreneurship Monitor (GEM) 2013- February 2018
Since 2013 Cooper authored numerous GEM reports, including the Canada 2013, 2014, 2015 and 2016 reports. At the time of his passing he was working on the GEM Canada 2017 report. He also wrote the GEM Alberta reports for 2013-2016. His work on these reports set the standard for the other GEM reports that were written in Canada since 2013. Cooper also attended the GEM Annual meeting in Monterey, Mexico in 2014.
InnoWest 2004, 2005, 2006, 2007, 2009 and 2010
InnoWest is the western Canadian Innovation Conference. THECIS has organised this event since 2004, and it has become an annual event, with steadily increasing attendance from across western Canada and beyond. Cooper was a mainstay at organizing these events.
Science to Society Workshop 2004, 2005, 2006, 2007, 2008, 2009 and 2010
This event is organised to provide business information to 50- 70 graduate students in science, engineering ICT, health and agriculture. It takes place at a weekend on October in Banff. Support has come from iCORE, Alberta Ingenuity, AHFMR, the Alberta Agricultural Research Institute, NSERC Prairies and the governments of Alberta, Saskatchewan and Manitoba. Cooper attended all the workshops and led many of the sessions.
Ingenuity 601 [Graduate Innovation Course], 2007, 2008, 2009 and 2010
This project, carried out for Alberta Ingenuity, was to develop and deliver a learning experience to graduate students in Alberta to acquaint them with the basics of business concepts and give them experience working on a business related project in a multidisciplinary environment. Cooper led many of these sessions.
Health Research Translation Project, 2009
This course is modelled on Ingenuity 601 but targeted at graduate students in medical, health and biosciences and related fields such as medicine, nursing, rehabilitation, life sciences and biomedical engineering. Cooper designed and delivered the courses, and Anne Tyrie facilitated the sessions.
Second Banff Innovation Summit, 2008.
The theme of the second Banff Innovation Summit was “The resource industries as engines of economic diversification”. The Summit took place in September, with about 30 senior individuals from industry, government and university from the four western provinces. The Summit was supported by Western Economic Diversification, the Alberta government, iCORE and NSERC Prairies. Cooper actively participated in the planning and execution of this Summit.
Pathways Project, 2008
Industry Canada asked us to review the various pathways that knowledge travels from university to business in Canada, and provide examples of each type of pathway identified. Cooper led the project team and wrote the final report.
International Comparison Review, 2008.
This project developed an analysis of the policies being pursued in different countries to encourage industry-university collaboration; assessed the various strengths and weaknesses of various national approached; provided a critical assessment of the organizational structures of universities that underpin university-industry collaboration; and identified best practices and principles. This was for Industry Canada. The project team consisted of Cooper and Richard Hawkins.
ICT Sector Performance in Alberta, 2007/8
This project, supported by Alberta Advanced Education and Technology, is a follow on from the Alberta Innovation Scorecard project. It aims to answer two questions: How is the ICT sector performing in Alberta? How is the government doing supporting the sector? Cooper organized the workshop, along with Jeremy Hall.
Foresight Scoping Workshop, 2007
This was a foresight exercise to identify applications that may emerge from the convergence of nano-technology, biotechnology and ICT. It is initiated by the Office of the National Science Advisor and supported by Agriculture and Agri-Food Canada, the Canadian Biotechnology Secretariat and CMC Microsystems. Cooper was a mainstay of the project team, along with Richard Hawkins, Peter Josty, Ted Heidrick, and Jeremy Hall.
University Business Collaboration, 2007
This project is a critical review of the literature on how university researchers collaborate with industrial firms, and how those relationships can result in commercial products. Supported by Industry Canada. Cooper wrote this report.
First Banff Innovation Summit 2006
The goal of turning Western Canada into a dynamic, diversified and internationally competitive knowledge-based economy must be supported with policies and strategies that take account of both leading-edge ideas and local knowledge about how to assess and improve innovation performance.
The Banff Innovation Summit brought together 30-40 carefully selected industry, policy and academic stakeholders in economic diversification and innovation will interact with an elite international group of experts who are producing leading-edge ideas and knowledge concerning innovation policy and strategy. A speaker from the OECD in Paris provides the keynote address. The Summit was funded by a number of organizations, including the Governments of Canada, Saskatchewan, Alberta, and BC, and the University of Calgary. Cooper actively participated in the planning and execution of this Summit.
University Research Park Vision and Conceptual Masterplan, 2005.
THECIS worked with a consortium of firms of architects to develop a Vision and Conceptual master plan for the rejuvenation of the University Research Park. This was done for Calgary Technologies, the University of Calgary and Alberta Infrastructure. Cooper was a mainstay of this project.
Health Innovation 2005, 2006, 2007
This project was funded by a private Calgary based Foundation. It was a year long study of the health industry in Alberta, to identify the main characteristics of the industry and celebrate its successes. The results of this work were disseminated across Alberta by a series of workshops in major centres organised by THECIS. Cooper was Principal Investigator on this project.
Innovation System data Initiative 2005/6
Policy makers often need better and more timely information than is currently available from Statistics Canada. This project – supported by Alberta Innovation and Science, Western Economic Diversification and NRC-IRAP – addressed this need by sending a graduate student to Ottawa and supervising him to obtain information of value to the project sponsors. Cooper supervised the student who went to Ottawa for this project.
Return to Community – the Impact of the University of Calgary on its Community. 2004
The University of Calgary asked THECIS to prepare a report showing the impact the University has on the community. This report was subsequently used in discussions at the university Senate and by other bodies.
His presence will be missed for a long time to come at the THECIS office, on our board and future projects.
12, December, 2017 – Blog #14
Women’s entrepreneurship in Canada
Women’s entrepreneurship continues to attract a great deal of attention and interest around the globe, given growing evidence of its economic and social impact. Initiatives such as the World Bank’s Women’s Entrepreneurship Financing Initiative (WE-FI), and Goldman Sachs’ 10,000 Women Program , are just two examples of a growing range of initiatives aimed at supporting and encouraging women-led business. Within this global context, Canada has emerged as a leader in women’s entrepreneurship, with the highest levels of early-stage activity (TEA), and the fifth highest established business ownership (EBO), amongst innovation-based economies.
The GEM Canada Report on Women’s Entrepreneurship highlights the strength of women’s entrepreneurship in Canada. Some highlights from the report:
- In 2016, 13.3% of Canadian women engaged in some form of early stage business activity, involving a business that was 3.5 years old or younger. This was up from 10.0% in 2014, and marked the highest rate of women’s TEA in 2016 amongst comparable innovation-based countries.
- Comparing Canada to other G7 countries—such as the U.K. (5.6%), Germany (3.1%), France (3.4%), and Italy (3.3%)—helps to underline the striking and high level of Canadian women’s participation in early-stage business.
- 6% of Canadian women were engaged in established businesses – those more than 3.5 years old – the fifth highest rate among comparable countries.
- Canadian women entrepreneurs are found across all age groups, though start-up rates are highest among women aged 25-44, while the majority of established business owners fall between 55-64 years of age.
- Women entrepreneurs are highly educated, with 12% having a graduate degree and 53.8% having a college or university degree.
- 82% of women indicated they were motivated to start a new business by opportunities, up notably from 70% in 2014, while only 14.5 % were motivated by necessity.
- Early stage women entrepreneurs are heavily involved in consumer services (54.4%), followed by business services (28.2%) and manufacturing (14.6%)
- For established businesses, the pattern is different and much more evenly distributed between consumer services (41.2%) and business services (41.2%). This greater presence in business services is important and encouraging, given that business services is typically a much more profitable sector, one that is increasingly recognized as driving innovation and business growth according to research on the ‘knowledge-intensive business service’ sector (KIBS). 19.2%)
The Global Entrepreneurship Monitor (GEM) is the world’s largest study of entrepreneurship, and typically covers 60-70 countries each year with a standardized methodology allowing ‘apples to apples’ comparison between countries. In Canada GEM reports are carried out by the Centre for Innovation Studies (THECIS) based in Calgary. This report was written by Karen Hughes a Professor at the Alberta School of Business and the Department of Sociology at the University of Alberta. The full report is available at https://tinyurl.com/y94gxqpn
26, September, 2017 – Blog #11
Entrepreneurship in Alberta
Entrepreneurship is alive and well in Alberta, according to the latest GEM (Global Entrepreneurship Monitor) report, just issued by THECIS. Over 17% of the adult population is engaged in early stage entrepreneurship, a higher rate than in the US, Australia and all other advanced countries. Women are very active in early stage entrepreneurship, at 80% of the men’s rate, also higher than the US.
Consumer services is the most popular field, with just more than 50% of ventures, followed by business oriented services at 30% and manufacturing at 20%. Age is an important determinant of entrepreneurial activity, with higher rates in the 18-24 and 25-34 age groups. Overall, however, about half of new ventures are led by people aged 18-34, and half by those aged 35-64. Above age 65 the rate drops off, but still 4% of older Albertans are active as entrepreneurs.
Education is also a key determinant of entrepreneurship. As people acquire more education they become more entrepreneurial. The highest rate of entrepreneurship is found among those with post graduate education.
The Alberta population is very supportive of entrepreneurship, with 60%–70% of respondents believe that entrepreneurship is a good career choice that successful entrepreneurs have high social status, and that media provide favorable coverage of entrepreneurship.
About 15% of startups are highly innovative, having no direct competitors. About 40% of startups are in sectors with many competitors.
Experts were asked to evaluate the Alberta ecosystem by rating nine relevant factors. The five with the best scores were: physical infrastructure, commercial infrastructure, social and cultural norms, government programs, and government policy at neutral. The lower five in decreasing order were post-secondary education at neutral, R&D transfer (to small and growing firms), internal market dynamics, finance, and primary and secondary education. The experts were also asked to rate to biggest constraints and fostering factors. The most mentioned constraints were finance as the top priority with capacity for entrepreneurship and government policy as next areas of priority.
The most mentioned fostering factors were cultural and social norms as highest priority with the economic climate and, surprisingly, the low rated question of education and training as second and third areas of priority.
The report had five recommendations:
- Creative government programs are needed to support entrepreneurship that has promise to create new directions. This needs to involve all departments of governments, not only those with responsibility for small business.
- School systems need to examine the opportunities to promote entrepreneurial thinking in the context of education aimed at encouraging independence and creativity.
- Despite the evidence that entrepreneurship by women in Alberta is stronger than in other parts of the country or in other developed countries, a gap remains and attitude and motivation data indicate that women still have less confidence in skills and knowledge and women entrepreneurs have more complex motivations. Information programs and mentorship for women remain a priority.
- With the low rate of seniors’ entrepreneurship and the expected increase in size of this demographic in better health in the future, consider targeting entrepreneurship programs at older Albertans.
- Data show rates of entrepreneurship rise with increase of educational experience. Education for entrepreneurial thinking should be promoted across all types of secondary and post-secondary programs.
The full report is available at www.gemcanada.org
25, June, 2017 – Blog #9
GEM Canada Report 2016
GEM (Global Entrepreneurship Monitor) is the largest study of entrepreneurship in the world. THECIS manages the GEM project in Canada. The latest GEM report for Canada has just been issued. It is available at http://thecis.ca/index.php/gem-2016/ It shows that there is a very strong entrepreneurship culture in Canada, and the rate of early stage entrepreneurship (TEA -Total Early stage Activity) is the highest in the developed world. GEM data is widely used as evidence for evidence based policy by such groups as the UN, OECD, World Bank and World Economic Forum.
Some of the highlights from the report are:
- Almost 60% of the adult population see good opportunities to start a business in the next six months;
- Over 50% also have confidence in their skills and knowledge to start a business;
- No more than 44% are inhibited by fear of failure.
- 7% of the adult population is involved in early stage entrepreneurship, the highest rate in the developed world, ahead of Australia and the US.
- 8% of the adult population in Canada is involved in an established business (one more than 42 months old), a lower rate than in Australia or the US.
- In terms of intrapreneurship (entrepreneurship in large organizations) Canada’s rate is 6.5%, that ranks us 12th among developed countries.
- A significant number of startups have major growth plans. Twenty percent expect to create 20 or more jobs within five years.
- In common with most other developed countries, the largest sector for entrepreneurship (48%) is consumer services, closely followed by business services.
- A significant minority of startups export. 20% of them project from 25% to 75% of revenue from export, and 13% anticipate more than 75% of revenue from export.
- A significant minority of startups offer innovative products or services (9%-14% depending upon the questions asked.
- 17% of startups use technology available only in the least year, an indicator of innovativeness.
- The age group with the highest TEA was the 25 – 34 age group, at 22.3%.
- The rates decline sequentially for the 35 – 44 group, the 45 – 54 group, and the 55 – 64 age group. The TEA rates decline reaches 10.7% among the 55 – 64 cohort.
- Approximately 50% of total startup activity is in the 18-40 age group.
- The rate of women’s entrepreneurship is about two-thirds the male rate, which is comparable to other comparison countries.
- The rate of entrepreneurship increase steadily with education, being highest among those with some post graduate experience.
- The rate of entrepreneurship increases across Canada from east to central Canada, and is similar across the west.
- The strongest aspect of the Canadian ecosystem is physical infrastructure, commercial infrastructure, and the relevant social and cultural norms.
- The weakest aspects are the lack of education for entrepreneurship at primary and secondary levels, and availability of finance.
The report made the following recommendations:
- Provide more targeted assistance to young and growing firms.
- Provide more education and mentoring to potential women entrepreneurs.
- Expand entrepreneurship training in entrepreneurship in post-secondary institutions.
- Provide targeted resources for senior entrepreneurs.
- Support entrepreneurs who want to export.
- Encourage firms to develop strategy utilizing more intrapreneurship.