10 February 2006
Global Entrepreneurship Monitor 2005 - Singapore Study
NUS study shows that Singapore’s environment is more pro-enterprise than OECD countries; individuals with tertiary education are most likely to start business
The latest Global Entrepreneurship Monitor (GEM) 2005 study on Singapore conducted by the National University of Singapore (NUS) shows that entrepreneurial activities are on the rise, with a greater interest among those with tertiary education to start a business.
In the GEM study, which benchmarks entrepreneurial developments of leading economies of the world, Singapore was ranked 8th among 24 OECD countries, compared to 11th last year. Experts also ranked Singapore 's environment No. 1 in three areas - low regulation and taxation burden, government policy support and government programme effectiveness. The global study also revealed that attitudes towards entrepreneurship in Singapore , although have improved over the years, remained less favourable compared to 24 OECD countries that participated in the study.
GEM is an international comparative research project that seeks to benchmark the level of entrepreneurial activities across countries and to understand the relationship of entrepreneurship to economic dynamism and the key national environmental factors affecting entrepreneurship. A total of 34 countries participated in GEM 2005 and Singapore is participating in this study for the sixth year since 1999. The GEM 2005 study on Singapore was jointly funded by NUS and the Action Community for Entrepreneurship.
The GEM study assesses the level of entrepreneurial activities using six benchmarks:
- Total Entrepreneurial Activities (TEA)
- Other entrepreneurial indicators
- Financing for new business
- Attitudes and perceptions of entrepreneurship
- Social-cultural indicators for entrepreneurship
- National environment for entrepreneurial activities
Specific indicators for each benchmark are presented in Annex 1.
Total Entrepreneurial Activities (TEA): Overall increase in early-stage start-up activities
According to the GEM 2005 study on Singapore , TEA increased from 5.7% in 2004 to 7.2% in 2005. This indicates that there is an overall increase in new business start-up activities in 2005 compared to previous years. For the first time, Singapore breaks into the top 10 OECD countries in terms of overall entrepreneurial activity, ranking 8th among the 24 OECD countries that participated in the 2005 study. Last year, Singapore was ranked 11th. The rate of increase in Singapore 's TEA rate has also outpaced that of the developed OECD countries such as Japan , Belgium and Sweden . The increase in TEA is broad-based, across gender and educational qualification.
Associate Professor Wong Poh Kam , Director of NUS Entrepreneurship Centre and Principal Researcher of the GEM 2005 Singapore study, explained, “A possible factor for the rise in Singapore 's TEA in 2005 may be an increase in informal investments in start-ups. Informal investment in start-ups, for instance, improved in 2005.”
In particular, total entrepreneurial activities among those with tertiary education (i.e. university and polytechnic) is highest compared to those with JC or secondary education. This represents a continued improvement since 2003. Prior to 2003, those without university degrees or polytechnic diplomas are most likely to start a business.
Entrepreneurial propensity has also increased for both male and females. The prevalence of male entrepreneurship rose from 8.2% in 2004 to 9.6% in 2005, while the prevalence of female entrepreneurship increased from 3.4% to 5% in 2005. The gender gap in entrepreneurship has also narrowed in 2005 with a ratio of 2 male entrepreneurs to 1 female entrepreneur, compared to a ratio of 3 male entrepreneurs to 1 female entrepreneur in 2004.
Associate Professor Wong added, “The overall increase in the level of entrepreneurial activities is evident in NUS. Over the last 2 years, 15 new ventures were founded by NUS students using seed funding from the Fund for University Student Entrepreneurs (FUSE) administered by NUS Venture Support. There has also been an increase in student participation in entrepreneurship programmes run by NUS Enterprise , such as the Start-Up @ Singapore business plan competition.”
"It is heartening to note that Singapore 's entrepreneurship scene is increasingly more active. Going forward, we will need to continue to engage the younger generation and nurture their entrepreneurial talent to fuel the spirit of enterprise. This needs to be done via collaborative efforts between the private sector, government and academia," said INSEAD Professor Patrick Turner, Member of Culture Action Crucible, Action Community for Entrepreneurship.
Other Entrepreneurship Indicators: Entrepreneurial activities improved significantly
The GEM 2005 study provides evidence that entrepreneurial activity in Singapore has significantly improved in 2005, with increased interest in starting new ventures among Singaporeans, and only marginal increase in the rate of business discontinuance.
Consistent with previous years' findings, Singapore fared better in terms of start-ups that have higher employment growth potential. About 1 in 5 start-ups in Singapore indicated that they will employ more than 20 people in 5 years. On this indicator, Singapore ranks 2 nd out of the 24 OECD countries. Overall, across the 34 countries that participated in the study, the overwhelming majority of new start-ups did not expect to employ more than 20 people in 5 years.
Singapore also fares well on entrepreneurial intention rate (ranked 4 th among 24 OECD countries). More adult Singaporeans who have not engaged in any start-ups or new business expect to start a new business in the next 3 years (from 13.5% in 2004 to 17% in 2005).
Intensity of Investment in Start-up: Better environment for raising capital
Overall, there is an improvement in Singapore 's environment for raising capital for entrepreneurial ventures compared to previous years. Singapore 's informal investor prevalence rate for 2005 is 3.5%, higher than 2.7% in 2004 and 1.6% in 2003. This is also higher than the average informal investor prevalence rate for 24 OECD countries in 2005, which is 3.2%.
National Environment for Entrepreneurial Activities: Singapore 's environment more pro-enterprise than OECD countries
The 36 expert informants comprising entrepreneurs, policy makers, investors and venture capitalists who were interviewed rated Singapore 's environment for entrepreneurship to be generally favourable in 2005.
Singapore 's environment for entrepreneurship was rated above average on all dimensions, compared to the GEM and OECD averages (except for business services effectiveness , which was on par with the OECD average). Overall, the ratings of Singapore 's environment for entrepreneurship were consistent with the ratings in 2004. The three dimensions where ratings were highest among 34 participating countries were - Low Regulation and Taxation Burden, Government Policy support and Government Programme Effectiveness.
These observations indicate that Singapore 's environment is more pro-enterprise than the average of all GEM countries and the average of the OECD countries in 2005.
However, a survey of attitudes and perceptions of 3,876 adult Singaporeans surfaced indicators that are less favourable. Only 29% (compared to GEM average of 45.6% and OECD average of 42.4%) of adult Singaporeans perceived that they have the skills to start a business in Singapore . In addition, only 17.5% (compared to a GEM average of 38% and OECD average of 36.6%) perceived good start-up opportunities in the next 6 months.
While a portion of 36 country informants rated the environment for entrepreneurship in Singapore as favourable, the general adult population still lacks the confidence to start their own businesses.
Entrepreneurial Cultural Support: Social and cultural barriers an issue of concern
In the GEM 2005 study, Singapore 's ranking in terms of entrepreneurial culture rose from a ranking of 17th in 2004 to a ranking of 11th among 24 OECD countries.
However, social and cultural barriers remain an issue of concern in Singapore . The proportion of Singaporeans who personally know an entrepreneur (31.3% compared to 40% globally and 38.7% in OECD) and who indicated fear of failure is not a deterrent (61.5% compared to 64.3% globally and 64.4% in OECD) are both below the GEM global and OECD averages.
In addition, cultural attitudes towards entrepreneurship are less favorable in Singapore . Only 46.8% of adult Singaporeans felt that starting a business is a good career choice, compared to an average of 55.4% in the OECD countries. This ranked Singapore a lowly 18 out of 24 countries. Furthermore, 57.8% believe that new business success is accorded with high status in this country, compared to an average of 66.2% in the OECD countries, ranking Singapore 21 st out of 24 countries.
GEM Research Methodology & Data Sources
- Adult population survey : This is a telephone survey conducted by a polling organisation in each country of a minimum of 2,000 respondents. This year, a total of 106,495 individuals in 34 countries and 3,876 adult Singaporeans were surveyed by GEM.
- Country expert interviews : This comprises in-depth interviews with at least 18 experts in each country from finance, policy, government programmes, education and training, technology transfer, support infrastructure and wider society/culture. It is supplemented by an expert questionnaire survey of at least 32 people and grouped into the same seven areas. This year, a total of 36 experts from Singapore participated in the study.
- Collection of secondary national social-economic data for each country, including international benchmark social-economic data from World Bank, World Competitiveness Report; and national sources of data on venture capital investment and firm formation.
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