Wednesday, March 16, 2011

Developing Entrepreneurs: What’s Working, What’s Not

After watching the ongoing drama and tragedy in Japan this past week, it’s hard to focus on purely local concerns. It’s fairly obvious there’s been an enormous amount of damage to the country and the human toll is likely to be horrific. There’s also going to be a lot of repercussions around the region, not least with respect to disaster recovery and the future of nuclear energy.

But the Japanese are a resilient and industrious people, and I’m confident they’ll overcome this crisis, as they have many another in the past. Japan in the post-Meiji restoration era is a case in point: making the transformation from an isolationist, largely agrarian economy into a full-fledged industrial world power in under two generations is an incredible national achievement.

Which provides me a sideways segue into today’s topic – entrepreneurship. We’ve got a lot of programs here in Malaysia to help entrepreneurs, from financial to marketing to educational assistance. There’s no shortage of government programs or money being thrown at developing entrepreneurs – yet we’re hardly known as a hotbed of entrepreneurial activity. So the question is: what’s holding back entrepreneurial development in Malaysia?

And the answer is…well actually the first step is to measure the the many dimensions that make up a successful entrepreneur. Without an accurate view of what’s available against what’s needed, there’s no basis for remedial action.

That’s what a new entrepreneur development index, released last year and launched just two weeks ago, promises to give. The Global Entrepreneurship and Development Index (GEDI) combines other measures of entrepreneurship into a comprehensive overview of efforts in developing entrepreneurs (abstract):

The Global Entrepreneurship and Development Index (GEDI)
Zoltán J. Ács & László Szerb

Abstract: This paper constructs a Global Entrepreneurship and Development Index (GEDI) that captures the contextual feature of entrepreneurship across countries. We find the relationship between entrepreneurship and economic development to be mildly S-shaped not U-shaped or L- shaped. We find that the stages of development are more varied at the innovation driven stage than at either the factor driven stage or the efficiency driven stage. Implications for public policy suggest that institutions need to be strengthened before entrepreneurial resource can be fully deployed.

You can find a shorter version of the paper here.

The theoretical and empirical findings are interesting in and of themselves, but the practical pointers are just as valuable:



Global Entrepreneurial and Development Index




Entrepreneurial Attitudes Index




Entrepreneurial Activity Index




Entrepreneurial Aspirations Index




Out of the 71 countries which are measured, we’re a little above the middle of the pack in aggregate terms. But looking at the breakdown of the Aspirations index, it’s really obvious where the weaknesses lie:



Entrepreneurial Aspirations Index


New Products


New Tech


High Growth




Risk Capital


Innovation, anyone?

One last point – looking at the individual components of the other indexes reveals a few more areas that could do with improvement:

  • Startup Skills (0.294)
  • Technology Sector (0.379)
  • Quality of Human Resource (0.370)

None of the above come as great surprises, though the really poor numbers in the Aspirations index do give pause for thought. But it’s always nice to have some confirmation of the received wisdom, and better yet, a way to measure and monitor progress.

Technical Notes:

Zoltán J. Ács & László Szerb, “The Global Entrepreneurship and Development Index (GEDI)”, Conference Paper, June 2010 (warning: pdf link)

1 comment:

  1. Thanks for the headsup.

    I was thinking of how Konosuke Matsushita had started. But his success was a product of his time which was receptive to his invention, the multiple electric socket.

    It's the ecosystem. These days of plenty make it hard to invent new things or services whose time has come.

    So we need to plough even more into education and crawl to the cutting edge.

    But which of the plethora of local universities that we have at the moment can provide the research linchpin of the triangular cluster configuration that had catalyzed entrepreneurial success elsewhere?

    What can be done as a second step is to put analytical refinements like GEDI aside for a while and just ask all those entrepreneurs who had shown promising ideas and products before to sit together and honestly answer where they are today. Some inventions, for instance, were made by academicians in UTM Skudai and USM Penang. What has happened since then and if nothing has happened, why? Candid answers will then put some flesh into the indices so that others can identify with the experiences and all can put heads together to find more fulsome solutions.

    Right now it is this group today and that group tomorrow but all saying the same thing. Something's not right somewhere.

    Why has there been no remarkable indigenous success? Is it for want of next-step knowhow, marketing channels, communication skills, serious funding, exciting ideas, anti-obsolescence developments, patent protection...what?

    If we continue the way we are, come 2020 when another batch of hishamh, walla, etc starts debating this topic again, they will refer to this place and say, "hey, haven't we seen this before?"