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Investment in UK entrepreneurship declines

Entrepreneur


25 March 2010

A report by Aston University and University of Strathclyde researchers, to be launched this week, shows that fewer people have started or invested in new businesses in the UK over the past four years.

The report has been generated by The Global Entrepreneurship Monitor (GEM), an international research consortium responsible for the largest single study of entrepreneurship activity in the world. GEM’s UK team is co-directed by Aston Business School’s (part of Aston University)  Professor Mark Hart and findings from the UK report will be officially launched at GEM’s annual conference on Tuesday 30 March – ‘Global Economic Downturn and Entrepreneurial Behaviour’ – to be held at Aston Business School.

The report found similar trends in other leading G7 economies (excluding Canada, which was not included in the study). However, the number of previously established entrepreneurs has remained largely unchanged in the UK over the past four years, unlike the US and most other G7 countries where it has declined.  The study of 54 countries is based on more than 180,000 detailed interviews with working age adults, 30,003 from the UK alone.

At the height of the recession in mid-2009, a significant minority of UK entrepreneurs believed the global economic slowdown had generated more opportunities for their business. Young male entrepreneurs and those who were export-oriented were most likely to expect to create jobs over the next five years.

Commenting on the results, Professor Mark Hart, Aston Business School researcher and co-director of GEM UK, said:
"The number of entrepreneurs in the UK has held up well in the past four years, particularly in comparison to the US and other G7 countries. However, fewer people are thinking about starting their own business and the number of actual start-up attempts has declined  We don't yet know if this will feed through to lower numbers of new businesses being established. What we may be seeing is a reduction in the number of start-up attempts by individuals who are not the most determined, as the UK entered recession."
Places are still available for GEM’s annual conference on 30 March at a price of £65 per person. Visit the Aston University website for further information.

ENDS

For further press information, please contact Laura Plotnek, Aston Business School press officer on l.plotnek@aston.ac.uk or 0121 204 4540.

Find out more

  • Further research findings - UK and global

Notes to the editor

GEM’s annual conference on Tuesday 30 March, 9am – 5pm can be attended by members of the press  – contact Laura Plotnek (see above) for further information.
  • About GEM - The Global Entrepreneurship Monitor (GEM), which was started in 1998 by researchers at Babson College and the London Business School, has become the world’s most comprehensive research consortium dedicated to understanding the relationship between entrepreneurship and national economic development. Find out more >>
  • About the 2009 GEM survey - based on a sample of 30,003 working age adults in the UK, and weighted so that it is representative of the UK adult population by age, gender, ethnicity, and region. The full UK report, written by Dr Jonathan Levie (University of Strathclyde) and Professor Mark Hart (Aston Business School), will be released by Aston Business School and the University of Strathclyde in early April 2010.
  • About Prof Mark Hart - Mark is a Professor of Small Business and Entrepreneurship in the Economics and Strategy Group, Aston Business School.  He has worked and published extensively in entrepreneurship, enterprise and small business development. He jointly manages the GEM consortium and advises a number of Government Departments including BERR, UKTI, HMT and HMRC on enterprise issues. He recently completed a project for NESTA (National Endowment for Science, Technology and the Arts on the economic impact of high growth firms in the UK.

Further research findings

Interest in entrepreneurship declines in UK:

  • Informal investment: The number of people of working age (18-64) making investments in other peoples’ new businesses fell by 21% in relative terms in the UK between 2008 and 2009 – from 1.4% to 1.1% and 28% between 2006 and 2009.
  • Start-up expectation: In the UK the number of people who expect to start a business within the next three years has fallen by 10% since 2008, and 23% since 2006, to 6.1% of the working age population.

Existing entrepreneurship activity:

  • Active attempts to start a business – During 2009, 2.7% of the adult population in the UK were actively trying to start a business, compared with 5% in the US and 2.8% in the G7. The longer term trend in start-up attempts in the UK appears to be stable compared to the US, where estimates have declined each year since 2005.
  • Established business owners - In the UK the proportion of the adult population who owned and managed a business older than 42 months (established businesses) was 6.1% – essentially unchanged on the previous year’s estimate of 6.0%One in five UK individuals see an opportunity for entrepreneurship in the recession: essentially unchanged on the previous year’s estimate of 6.0%.
  • 17% of UK working age adults who were not entrepreneurs thought there would be good opportunities for starting a local business in the second half of 2009. This compares with 25% in 2006 and 2007, before the recession began.
  • 67% of UK non-entrepreneurs thought there would not be good opportunities for starting a business, compared with 55% in 2006 and 2007.
  • In 2009, 20% of early-stage entrepreneurs and 14% of established business owner-managers thought there were more opportunities for their business as a result of the global slowdown.
  • 51% of UK early-stage entrepreneurs and 53% of established UK business owner-managers thought they faced fewer opportunities as a result of the global slowdown.

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