Informal Investment

Informal Investment

Informal Investment

Monday, April 16, 2020. Written By: The Global Entrepreneurship Monitor (GEM)

Informal Investment

Monday, April 16, 2020. Written By: The Global Entrepreneurship Monitor (GEM)

The act of starting a new business requires resources, including access to finance.

Many news sources, particularly in developed economies, characterize those starting new businesses as building smartphone applications using high technology in open-plan offices, presenting pitches to venture capitalists, in a world of high finance and initial public offerings. In practice, new businesses are more likely to be started with the entrepreneur’s savings, credit cards or overdrafts, or with loans from family and friends. Informal investment is when an individual provides funds for a new business started by someone else, and is typically from family, or friends and other acquaintances.

In its 2019 Adult Population Survey (APS), GEM asks individuals if they have invested in a new business started by someone else, and if so how much they invested, and what is the relationship to that person. Figure 6.1 shows the proportion of adults in each economy that, in 2019, have both invested in someone else’s new business at any time in the past three years and stated how much they provided.

The proportion of adults investing in someone else’s new business is less than 2% in 10 of the 50 economies, but more than 5% in 17 of those 50. Rates of informal investment are highest in Latin America & Caribbean (more than two in 10 in Chile; more than one in 10 adults in Guatemala), in the Middle East & Africa (around one in 10 or more in Qatar, Oman and Saudi Arabia), and in Europe (just under one in 10 in Switzerland). These figures show Chile as a dynamic entrepreneurial economy, both in the process of starting businesses (almost four in 10 adults), and in investing in other people’s enterprises (two in 10 adults) (READ MORE…).

Download Full ICSB Gazette.

A Tribute to Professor David Smallbone

A Tribute to Professor David Smallbone

A Tribute to Professor David Smallbone

Thursday, April 9, 2020

A Tribute to Professor David Smallbone

Thursday, April 9, 2020

A Tribute to Professor David Smallbone

Obituary; Professor David Smallbone

We are sad to announce that Professor David Smallbone passed away recently. He had a distinguished career in the field of entrepreneurship and small firms. David was an engaging and driven individual who marked his career with a number of significant achievements in his life journey and built up an inestimable portfolio of work throughout his career. David’s entry into academia was quite unconventional. Originally a geography school teacher, he entered higher education in the mid-1970s as a tutor for the Open University and lecturer at Middlesex Polytechnic, with a research interest in small firms in local and regional economic development.  David founded the Centre for Enterprise and Economic Development at Middlesex University (then Middlesex Polytechnic) with David North, and built up a strong reputation for research and consultancy, particularly in relation to policy intervention. It was during this time, that we both met David, as he received a grant as part of the ESRC’s Small Firms Initiative co-ordinated by David Storey, for a longitudinal study of small manufacturing firms examining survivors and non-survivors.  Such studies are rare in the research field and it is regarded as novel even by today’s standards.  In 2004, David moved to the Small Business Research Centre, Kingston University, adding significant weight to an already influential research team, providing the opportunity for him to accelerate his research activity and influence.

David’s expertise spanned a range of areas including business growth, innovation, ethnic minority enterprise, transition and developing economies but he was particularly interested in public policy.  He worked with a variety of academics, practitioners and policy makers, initially in the UK and then globally and in partnership with institutions across all continents, as David built up a brilliant network of colleagues and friends. He was for example, a team member of several OECD delegations which produced country reports on SMEs and SME policy for Poland 2010, Mexico 2013 and Italy 2014. These involved lengthy visits and interactions with national, regional and local policy makers as well as financial institutions and SMEs. He undertook research in the former Soviet Republics and transition economies from the early 1990s, at a time when it was neither fashionable or easy to pursue. This did not deter David. He built up long-lasting international relations with partners, for example, in Russia, Poland, Estonia, the Baltic States, China, Kenya, South Africa, the USA and Australasia. David also promulgated and managed a number of large-scale European projects, particularly with partners through the European Network for Social and Economic Research, most recently for the European Foundation for the Improvement of Living and Working Conditions leading an international team who analysed born-global manufacturing SMEs, employing an unusual research design that traced partners in global value chains and the role of SMEs.

David was very much a people-person and relished engaging with others, irrespective of position.  With colleagues, David regularly presented papers at ISBE’s (formerly ISBA and UKEMRA) annual research and policy conferences and contributed to the growth of the organisation through his executive positions, chairing of workshops, committees and doctoral workshops. From the mid-1990s his energy was then transferred to the European and international stage, collaborating with colleagues in their home countries. Hence, David helped to shape many careers, too numerous to mention by name but suffice to say that without his advice, counsel and drive to co-publish, many academics may have taken a different career path. He mentored younger researchers on local and international projects as well as undertook formal duties supervising and examining doctorates, thus influencing and encouraging many academics who have become today’s leading researchers.

As well as his myriad publications, David’s recognition and expertise is reflected in his numerous awards and honours. He was Visiting Professor of Entrepreneurship at the China University of Geosciences in Wuhan, Associate Editor of the Journal of Small Business Management, member of the Editorial Board of the International Small Business Journal, President (2005-07) and Fellow of the European Council for Small Firms and Entrepreneurship, President of the International Council for Small Business and Entrepreneurship (2010-11) and Wilfred White Fellow of ICSB. David was an accomplished traveller, reaching the four corners of the world, for example in 2008, spending three months at the University of Canterbury in New Zealand, as a Visiting Erskine Scholar. In 2005 David was proud to receive an Honorary Doctorate from the University of Lodz, in recognition of his contribution to the study of entrepreneurship in transition economies.  David’s travelling would have exhausted even the fittest individual but his zest for life and intellectual curiosity continued to take him overseas, most recently to Brazil in 2019 and India, for a Global Challenges Research Fund project, just a few weeks before he died.

Those who have had the privilege to work with David, as we both have, will have been touched by his dedication and passion on his subject, always tinged with a sense of humour and humanity. According to one friend, as President of ICSB David was never very outspoken but when he did speak everyone would listen, even the Americans! David was a keen Arsenal fan, holding a season ticket and pointed out that one of the advantages of having a mobility problem was that his seat was ‘close the action’. His birthday parties at his home in St Albans are now legendary, with a traditional jazz band providing entertainment and where on occasion David managed a dance with his wife. Most recently, David’s ill-health was beginning to hamper his mobility but his indefatigable spirit led him to continue to work and with support from his wife and family, his helper and close colleagues, he took on new projects and produced numerous research outputs adding to his extensive life’s work.  He insisted on going into the office to meet staff and students right to the end. Resolutely cheerful, never complaining and always planning the next project. Even at the end, David was working on an edited book with colleagues across the globe. It was this display of courage, tenacity and dedication that brought an incredible display of respect amongst his peers; over a hundred sending in messages of condolences on hearing of his passing. David will be dearly missed by the academic community and policy makers across the globe.  He leaves behind his loving wife, Margaret and family.

David John Smallbone 13th, 1946 – 19th March 2020

Robert Blackburn and David Storey

World Business Report: 25% of US small businesses could close

World Business Report: 25% of US small businesses could close

World Business Report: 25% of US small businesses could close

Tuesday April, 7, 2020 by BBC World Report

World Business Report: 25% of US small businesses could close

Tuesday April, 7, 2020 by BBC World Report

Blind Optimism for the Unforeseeable Future

The BBC World Business Report released a broadcast that described a wide array of perspectives on the financial and social consequences of COVID-19. After interviewing Neil Bradley, we understand that about one in ten businesses are less than a month away from shutting down completely, and despite federal and state spending, some businesses will not be able to come back from their current deficit. Following Bradley’s statement, Dr. Ayman El Tarabishy of the International Council for Small Business describes our collective movement towards a new normality. He comments on our current situation by enlightening the audience to the hurt of small businesses. Enterprises, housing only four to five employees, are those that often survive financially on a month-to-month basis. Additionally, El Tarabishy comments on how even large businesses who have invested in the upcoming spring season will feel this crisis. Throughout this moment, the unknown of time is the most important variable. Dr. El Tarabishy indicates that companies would have an easier time adjusting to this moment of loss, if they were able to define an end date and work backwards in adjusting their income structure. However, definitive time is not a luxury for which our current crisis allows. As about two trillion dollars are coming from the government, most businesses, who without aid would be severely suffering, are feeling grateful to stay open and be able to pay their employees properly. However, what will happen when it is time to pay the April paychecks? This conversation must also include a monetary percentage, therefore if businesses are able to pay their employees with the help of the government this month, they will have to replay this scene again next month. Luckily, according to Dr. El Tarabishy, small businesses are known to try to first take care of their employees. 

The presenter then asks Dr. El Tarabishy if this shut down is too large a price to pay for the pandemic, to which El Tarabishy immediately responds “no.” He states that small businesses are based in humane entrepreneurship, and while there are those who will see this virus in a negative light, there are others that will note how their enterprise’s sacrifice was made for humanity. It is this change in the narrative that will shift the way that the next generations view this moment in history. Small businesses are resilient, and that resilience shines brightest in moments of crisis, like that of today. That spirit will hopefully work concurrently with a long term plan set forth by the government. As it seems impossible to predict the future, especially as we find ourselves in such a volatile state, only the evolution of time will determine if large spending during this period will be worth it. Dr. El Tarabishy notes that if people are willing to sacrifice in the short term for their long term survival, they often need to know how long that short term period will last. This uncertainty leaves us individuals with a choice. One in which we can choose to wait for the worst or another in which we can show our true resilient humanity. (Listen to the report here)

Reference broadcast: 25% of US small businesses could close 

-BBC World Report

Demography is Not Destiny: Age, Gender and Entrepreneurial Activity

Demography is Not Destiny: Age, Gender and Entrepreneurial Activity

Demography is Not Destiny: Age, Gender and Entrepreneurial Activity

Monday, April, 6, 2020

Demography is Not Destiny: Age, Gender and Entrepreneurial Activity

Monday, April, 6, 2020

The effects of Gender on Entrepreneurial Activity

In each of the economies participating in the GEM research, the sample of adults interviewed in the Adult Population Survey (APS) is carefully structured to reflect the age, gender and locational distribution of the overall population of the specific economy, so that the sample is as representative as possible.

This chapter considers two key characteristics of any given population that may have a significant influence on the level of entrepreneurial activity: gender and age. This chapter will show that, in most economies, the oldest age group (55–64) has the lowest levels of Total early-stage Entrepreneurial Activity (TEA). But there are five economies where the youngest age group (18–24) has the lowest levels of TEA, as well as four economies where this youngest age group has the highest level of TEA. Overall, in many economies the propensity to be involved in starting or running a new business first increases and then decreases with age.

While men have traditionally been more likely than women to start new businesses, increasing female participation in entrepreneurship is an important policy objective in many countries. Examples include the adoption of policies to support women entrepreneurs in Canada, and a focused women’s entrepreneurship initiative in Germany. In Ireland, the OECD review of SME and Entrepreneurship Policy noted the untapped potential of women entrepreneurs, while the government in North Macedonia has recently adopted the Strategy and Action Plan for Women Entrepreneurs 2019–2023. Madagascar has a new gender-based policy to support women entrepreneurs (the Fiharianna Policy Initiative) (Read more…).

Salute to Health Care Providers

Salute to Health Care Providers

A Salute to Health Care Providers 

Friday, April 3, 2020

A Salute to Health Care Providers

Friday, April 3, 2020

Dear Health Care Providers,

Thank you.

Of all the words I could think of to start this letter to you, those had to be the first. Yet those words seem so pale and ordinary, weak words to express appreciation for strong deeds. Like many of the pioneering doctors, nurses, medical assistants, and others in the healthcare field before you, you have a long history of striving to dramatically improve the care of sick patients. It’s not different today; it’s no different in your case.

We know that your job goes beyond a single duty. You not only continuously care for those of us who are sick, injured, disabled, or dying, but you take on the responsibility of encouraging good health among families and communities, even when people close their ears to your sound advice. We know you are also busily involved in health care research, management, policy deliberations, and patient advocacy. It’s a full plate. Yet you’re not done there. Along with your job, you also juggle family life and higher education schooling. It’s truly impressive and not for the weak-willed.

But now the crisis has struck, and you are being asked to add even more to your plate. You are our first defense and our frontline–the place only the bravest dared to fight–in the battle against COVID-19. You are asked to go up against an unseen enemy, even asked to do so without adequate protection and amidst dwindling supplies. You’ve already made so many sacrifices, and yet you are being asked to make more, even at risk to your health, at the risk of losing sleep and rest, at the cost of being with your families.

As a Deputy Chair of the Department of Management at The George Washington School of Business and Executive Director of ICSB, I have always stressed the importance of cultivating empathy and humanity—a human touch when it comes to dealing with others—but you already had it. It’s why you are a healthcare provider in the first place. It’s your vocation and your passion. You carry that empathy and humanity through your exhaustion, under often difficult circumstances, and somehow find the emotional strength to comfort the sick, the dying, and their loved ones. How can anyone call all this less than heroic?

So, to all the brave health care providers—women and men—the moms, the dads, the sons, the daughters, the heroes, the fighters, the leaders, for your sacrifices. We can only end this letter with the sincerest and most grateful, thank you!

We ask all the ICSB and GW Family to do a Local Salute to all on the front lines of the coronavirus fight every evening by applauding them from your balconies or patios.

 Please check what time it is conducted in your Neighborhood. If not, please start it!

Article written by:

Dr. Ayman El Tarabishy
ICSB Executive Director
Deputy Chair of Department of Management at George Washington University School of Business

Academic enterprise and regional economic growth Towards an enterprising university

Academic enterprise and regional economic growth Towards an enterprising university

Academic enterprise and
regional economic growth Towards an enterprising university

Monday, March, 30, 2020

Academic enterprise and
regional economic growth Towards an enterprising university

Monday, March, 30, 2020

The role of Universities and Economic Development

In this paper we investigate the attempt by a large, post-1992 UK university to influence regional economic development by becoming a more enterprising institution. The pivotal role that universities play in the knowledge economy results from the changing economic and political environment (O’Shea et al,2004; Slaughter and Leslie, 1997). Increasing globalization and the emergence of a knowledge-based economy, together with the growing significance of innovative city-regions, are the main drivers in the transformation of UK universities (Hagen, 2002; Sizer, 2001). Policy makers now see universities as key players in delivering economic growth: this is evident from the range of government initiatives that have been proposed and/or subsequently introduced (DfES, 2003; DTI, 1998, 2000; HMT et al, 2004; Lambert, 2003; Leitch, 2006). Similar developments are apparent in both developed and developing countries (Ahola, 2005; Gomes et al, 2005; Jacob et al, 2003; Van Vught, 1999; Zhao, 2004). Governments around the world now see universities as key players in developing innovation systems and, thereby, contributing to economic growth (Bercovitz and Feldman, 2006; Etzkowitz et al, 2000) (Read more…).