What are some different types of entrepreneurship?
Entrepreneurship is a global phenomenon, with individuals all
over the world at various stages of the process. While there are
many definitions of entrepreneurs and
entrepreneurship, we consider the scholarly field
as defined by Shane and Venkataraman that seeks to understand how
opportunities are discovered, created, and exploited; by whom; and
with what consequences. When most people think of entrepreneurship,
they may think of individuals such as Maria Rose Belding, as well
as Jeff Bezos (Amazon) and Elon Musk (Tesla and SpaceX). However,
there are many other types of entrepreneurship that we will explore
in this chapter. MEANS Database is an example of social
entrepreneurship—that is, creating innovative solutions to
immediate social and/or environment problems and mobilizing
resources to achieve social transformation. MEANS Database
illustrates how social entrepreneurs often solve problems more
effectively than the government. Entrepreneurs can also operate
inside existing organizations: corporate
entrepreneurship involves the creation of new products,
processes, and ventures within large organizations. Another
prevalent type is family entrepreneurship—that is,
when a business is owned and managed by multiple family members,
usually for more than one generation. Serial or habitual
entrepreneurship refers to individuals who start several
businesses, simultaneously or one after another. Entrepreneurship
can also be classified according to the desired goals—for example,
individuals who pursue lifestyle entrepreneurship
typically create a venture to suit a personal lifestyle and not for
the sole purpose of making profits. High-technology
entrepreneurship involves ventures in the information,
communication, and technology space, which typically have high
expectations for revenue growth. Entrepreneurs can also be
classified according to the stage of their venture development, as
outlined in the Global Entrepreneurship Monitor (GEM) research
program in the next section.
Global Entrepreneurship Prevalence
Each year, the Global Entrepreneurship Monitor
(GEM)2
study gathers data from 60+ countries to determine how many
individuals are engaged in various phases of entrepreneurship. The
first phase captures potential entrepreneurs who
believe that they have the capacity and knowledge to start a
venture and don’t fear failure. If you are reading this book and
believe that you are developing the skills necessary to someday
start your own company, and you believe that the risk-reward payoff
is promising, then you fit this definition of a potential
entrepreneur. The next GEM category is nascent
entrepreneurs who have set up or are in the process of
setting up a venture that they will own/co-own that is less than
three months old and has not yet generated wages/salaries.
New business owners operate a business for over
three months but less than three years. And finally,
established business owners actively run a
business that is over three and a half years old. GEM researchers
calculate a Total Entrepreneurial Activity (TEA) rate, which is the
percentage of the adult population (ages 18–64) who are either
nascent entrepreneurs or owner-managers of a new business. Figure
\(\PageIndex{1}\) provides an overview of the GEM model to measure
entrepreneurial activity in a given economy. As shown, GEM data
captures attributes of the individual entrepreneur, industry
sector, and expected impact in terms of potential business growth,
use of innovation, and share of international customers. Figure
\(\PageIndex{2}\) shows the most recently available rates of
entrepreneurial activities across geographic regions. These regions
are classified by their development status, with factor-driven
countries the least developed; these countries subsist primarily on
agriculture and extraction businesses, and rely heavily on
unskilled labor and natural resources. Efficiency-driven economies
are more competitive and utilize more advanced and efficient
production processes to provide better-quality products and
services. Innovation-driven economies are the most developed,
typically relying on knowledge-intensive industries and an expanded
service sector. As shown, entrepreneurial activity rates range from
nearly 20 percent of the adult population in Ecuador to lows of
less than 5 percent in several countries such as Bulgaria, Bosnia
& Herzegovina, Italy, and Japan. Entrepreneurship rates can be
extremely high in factor-driven countries as there are fewer
traditional businesses and entrepreneurship may be the only good
opportunity in the labor market. Among innovation-driven economies,
the U.S. has one of the highest TEA levels, perhaps due to the
American culture of individualism and the many organizations that
support entrepreneurship. Another key factor is societal value,
which we review in the next section.
Societal Value for Global
Entrepreneurship
The GEM research project also examines societal values for
entrepreneurship, which can help drive an abundance or lack of
entrepreneurs. In the 2017/2018 report, across 52 economies, there
was strong support for entrepreneurship as a good career choice.
The lowest levels were reported in innovation-driven economies,
perhaps because there are many good corporate career options. GEM
researchers identified that almost 70 percent of the adult
population believes that entrepreneurs enjoy high status within
their societies. There are slight differences, with factor-driven
countries reporting higher status levels as compared to innovation-
and efficiency-driven countries. Moreover, across 52 economies,
about 61 percent of adults believe that entrepreneurs garner
substantial media attention, with the higher levels in increasingly
developed economies. This data suggests that when entrepreneurs are
portrayed favorably in the media, individuals will be more likely
to consider entrepreneurship as a career.
Concept check
What are some different types of entrepreneurs?
How does entrepreneurship differ across countries?