2013
Driving wealth creation &
social development in
British
Columbia
2013 GEM
BRITISH COLUMBIA
Brian Wixted
Adam Holbrook
with assistance from
Kaily Furlot and Graeme Webb
GEM British
Report 2013
OntarioColumbia
Report 2013
Executive Summary ....................................................................................1
1.
CONTENTS
Innovation and clusters,
entrepreneurship and people .......................................................3
2. The context for entrepreneurship:
The British Columbia economy ...................................................5
2.1. The Labour Force ................................................................................5
2.2. Sectoral composition of the BC economy............................................8
3. Core GEM Entrepreneurship Indicators for
British Columbia ..............................................................................10
3.1. Entrepreneurship in GEM .................................................................10
3.2. The GEM Methodology in Brief ........................................................10
3.3. Different Entrepreneurial Structures ................................................11
3.4. The 2013 Canadian Global Entrepreneurship Monitor Survey ........13
4. British Columbia: Provincial Special Topics .......................20
4.1. Introduction ......................................................................................20
4.2. Entrepreneurship by economic activity ...........................................20
4.3. Immigrants ........................................................................................22
4.4. Demography (seniors / youth) .........................................................24
4.5. Discussion ..........................................................................................25
i
5. Entrepreneurship Framework Conditions...............................26
5.1. Analysis ..............................................................................................27
5.2. Discussion .........................................................................................30
6.Conclusions .........................................................................................31
6.1. BC’s Policy and Economic Context ....................................................31
6.2. Observations from the GEM British Columbia Survey 2013 ............31
GEM British Columbia Report 2013
CONTENTS
Appendix: The GEM Framework .......................................................33
Adult population survey (APS) ................................................................35
Expert survey (NES) ................................................................................36
References ....................................................................................................37
About the Authors ....................................................................................40
Sponsors ........................................................................................................41
GEM Canada Team ...................................................................................43
About THECIS ............................................................................................44
ii
GEM British Columbia Report 2013
Figure 1. Self-Employment Rates in Canada .....................................................6
LIST OF FIGURES
Figure 2. Types of Self-Employment in British Columbia ............................... 7
Figure 3. British Columbia Incorporations ..................................................... 8
Figure 4. Employee Entrepreneurial Activity and
Independent Entrepreneurial Activity .....................................................12
Figure 5. TEA in BC and Benchmark Innovation Driven Economies ........... 14
Figure 6. Overview of entrepreneurship across Canada ...................................15
Figure 7. Are there good opportunities near you ..............................................15
Figure 8. Do you have the skills to start a business ..........................................16
Figure 9. Intentions to start a business and TEA ..............................................17
Figure 10. Provincial TEA and 3yr economic growth average ..........................18
Figure 11. Established Businesses .....................................................................19
Figure 12. TEA by economic sector ..................................................................20
Figure 13. Competitive Analysis .......................................................................22
Figure 14. Immigrant Entrepreneurs ...............................................................23
Figure 15. TEA and established business rates by age group ...........................24
Figure 16. BC PES & Canadian NES .................................................................28
iii
Figure 17. BC PES and Canadian Provincial PES .............................................29
Figure 18. Education and Training -BC PES and Rest of Canada PES ............30
Figure 19. The GEM Model ...............................................................................34
Figure 20. The Entrepreneurship Process ........................................................35
Table1. Distribution of TEA initiatives over four sectors- G7 ..........................21
Table 2. New markets – few or no competitors ................................................22
LIST OF TABLES
GEM British Columbia Report 2013
EXECUTIVE SUMMARY
The Global Entrepreneurship Monitor (GEM - http://www.
gemconsortium.org/, www.gemcanada.org) has developed a rich
understanding of global entrepreneurship for about 15 years. It is the
largest survey of entrepreneurship in the world covering 70 countries
in 2013. Canada last participated in the survey year 2003. However,
after a 10 year lapse, not only did Canada participate at the national
level but fully seven provinces obtained funding from various sources
to conduct their own GEM surveys. This report presents an analysis of
the data gathered for British Columbia and develops comparisons with
other provinces, Canada and relevant nation–states where appropriate.
British Columbia (BC) ranks highly within Canada which ranks very
highly against comparable economies for entrepreneurial start-ups.
BC also performs strongly for the number of businesses that last longer
than 42 months.
This report provides comparisons of how BC residents view
opportunities for starting a new business, whether they have the
skills to start a business, whether they intend to start a new business
1
and the differences between males and females on some of these
indicators. We also report on the policy and framework conditions for
entrepreneurship in BC.
The GEM Methodology
The Global Entrepreneurship Monitor is an annual survey that takes
place in approximately 70 countries, with exactly the same core set
of questions in each. The data is processed centrally to ensure it
meets quality control standards. GEM requires a minimum of 2000
responses to its Adult Population Survey (APS) for each participating
country and 36 completed expert surveys. In 2013 GEM adult
population surveys in Canada were carried at the national level and in
seven of the ten provinces (British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec and Newfoundland and Labrador).
Participating provinces were oversampled in the APS to get statistically
meaningful results for that province. Alongside the population survey,
GEM includes a survey of the opinions of experts on the framework
conditions for entrepreneurship in a region. Separate expert surveys
were conducted for each province and Canada nationally to maximise
the richness of the dataset. More details can be found in chapters three
and five as well as the appendix to this report.
GEM British Columbia Report 2013
EXECUTIVE SUMMARY
Results for 2013 (Canada and BC)
The data indicates:
• BC is in the middle for Canadian provinces in the perception of
good business opportunities;
• BC is at the high end for intentions to start a new business;
• 1st generation immigrants to BC start a new business at about the
same rate as 1st generation non-immigrants, which is higher that
the BC Total early stage Entrepreneurial Activity (TEA) rate;
• BC has a higher percentage of its population owning businesses
established for more than 42 months than the rest of Canada; and
•
Canada and BC rank high in comparison with most developed
economies in terms of TEA. TEA is a measure of the degree of
entrepreneurship in an economy. The indicator is derived from a
number of variables collected through the APS.
TEA in BC and Benchmark Innovation Driven Economies
14.0
12.2
12.6 12.7
12.0
10.7
10.0
TEA % of 18-64 Pop
10.0
8.2
8.0
6.3
6.0
4.6
4.0
3.4
4.9
5.0
5.2
5.3
6.5
6.9
7.1
8.2
8.2
8.2
8.7
9.2
9.3
7.3
5.5
3.7
2.0
.0
GEM British Columbia Report 2013
2
EXECUTIVE SUMMARY
For BC the key “take home” messages from the Provincial Expert
Surveys were:
• Generally, expert opinion in BC on the factors affecting
entrepreneurship mirrors that of the rest of Canada;
• BC experts are more optimistic about the quality of education and
training compared to the rest of Canada;
• BC lags in terms of attention to finance and market openness; and
• Importantly, BC’s framework conditions deemed essential for
entrepreneurship are rated neither weak nor strong – just average
for Canada.
1. INNOVATION
AND CLUSTERS,
ENTREPRENEURSHIP
AND PEOPLE
In the early 1990s, innovation studies scholars (Chris Freeman1, BengtAke Lundvall2, Richard Nelson3 amongst others), seeking to explain
the international patterns of R&D expenditure, the development of
technology and broader topics of business innovation, suggested that
there were national institutional histories and trajectories influencing
3
behaviours. The National Innovation Systems concept started with the
notion that businesses did not compete solely on their own merits but
existed in a particular milieu (a concept that links well with Porter’s4
clusters as well), and that policy could possibly alter the trajectories of
national innovativeness and competitiveness. This insight spurred the
development of an extensive literature focussed on different geographic
scales of innovation activity.
Researchers in Canada, in view of its vast physical geography and
its considerable differences in economic geography and population,
determined that ‘regional systems’ and ‘clusters’ were the most
appropriate analytical lens for innovation studies. The Innovation
Systems Research Network5 existed in three funding formats between
1998 and 2012. The findings on the patterns of innovation systems
across Canada are as diverse as the regions and industry clusters
being examined. History, industrial context, geographic place6 and
local universities have all played significant roles in the evolution of
GEM British Columbia Report 2013
competitiveness. However, these studies focused either on conducting
interviews with business leaders about their firms or on economic
data from statistical agencies, for the purpose of aggregating upwards
to draw conclusions regarding the innovation dynamics of particular
1. INNOVATION
AND CLUSTERS,
ENTREPRENEURSHIP
AND PEOPLE
places.
GEM provides a completely different perspective on place. The APS
telephone interviews a statistically significant sample of individuals
and asks them about their personal experiences of (or not) starting
their own business. The expert survey (NES) asks a targeted group of
individuals to rank the framework conditions of a particular place for
entrepreneurship (Likert scale).
We see significant complementarity between the GEM and innovation
systems analytical perspectives.
The innovation systems approach helps us be aware of the broader
context but focusses on firms and geographies. Innovation in
firms, however, comes from its people. Further, the people who
start businesses (entrepreneurs) must be considered innovators.
4
Not all innovators are entrepreneurs but all entrepreneurs should
be understood as innovators – regardless of how technologically
sophisticated (or not) their product or service. GEM simply asks, as its
key indicator (TEA) “have you started a business and, if so, has it been
running for less than 42 months”. Doing something new at this level
we think qualifies as a most basic of Schumpeter’s ‘new combinations’7
(Schumpeter, 1934:65-6).
Knowing a little about individuals (their attitudes and behaviours)
is an invaluable resource for learning about the people who innovate
and the places in which they do it, quite apart from the corporate
structures so typically the focus of innovation studies. GEM informs us
of the innovative/entrepreneurial culture of places, but not about the
performance of firms in those places.
GEM British Columbia Report 2013
2. THE CONTEXT FOR
ENTREPRENEURSHIP:
THE BRITISH
COLUMBIA ECONOMY
British Columbia is a unique region in Canada, and needs to be
understood in the context of its economic, geographic and political
environment. It appears to share some attitudes and cultural values
towards freer markets with other Western Provinces (Manitoba,
Saskatchewan, and Alberta) but it is neither (currently) a large
agricultural or oil and gas producer. It does not have the manufacturing
base of Ontario and Quebec but its economy is more dynamic than the
Maritime Provinces. Bordered by the Pacific and the U.S., BC looks
west to Asia as much as it does east to the rest of Canada or south
to the U.S. markets. Metro-Vancouver, home to half the province’s
population, is also home to the fourth largest port in North America
(by tonnage). BC’s distinctiveness is reflected in both its labour force
and its sectoral composition, which includes a number of cultural and
digital industries (movies and new media etc.).
2.1. The Labour Force
The GEM data provide a range of demographic and geographic
information on persons establishing new enterprises. However,
5
the GEM data need an economic context. All regions are not alike
and policy makers and analysts need to understand the economic
environment. In the case of British Columbia this is particularly
important; Statistics Canada data suggest that there is a higher rate
of self-employment as a share of the employed workforce here than
in other GEM Canada comparator provinces and that this has been a
consistent pattern since the late 1990s.
GEM British Columbia Report 2013
Figure 1. Self-Employment Rates in Canada
30.0
25.0
20.0
Canada
Newfoundland and Labrador
Quebec
15.0
Ontario
Manitoba
10.0
Saskatchewan
Alberta
5.0
British Columbia
Sources: Statistics Canada8
0.0
Notes – percentage of total employed all classes of workers, all
industries, 15 and over – both sexes.
There are two notable features of Figure 1. First there is an observable
break, the point where BC separates from Saskatchewan in 2001,
in maintaining a high self-employment rate. While other provinces
cycle they do so in a slightly downward trajectory. The two obvious
2. THE CONTEXT FOR
ENTREPRENEURSHIP:
THE BRITISH
COLUMBIA ECONOMY
peaks in self-employment in BC during the 2000s have resulted
in self-employment rates that are quite similar across three peaks
and troughs. The late 1990s boom led to a fall in the rate of selfemployment. In the wake of the early 2000s bubble economy, while it
took some time to creep up, the downward trend in self-employment
stopped very quickly. The rate then slowly edged up to a peak in 20045. A return to a strong economy led to a decrease in self-employment,
which stopped again with the global financial crisis of 2008-09. As the
economy improved, the rate of self-employment fell again. The BC rate
of self-employment is very cyclical and suggests that entrepreneurship
policy must take account of this pattern. While there is a difference
between male and female rates of self-employment, the pattern for BC
is both genders engage in self-employment at a higher rate than the
Canadian average.
GEM British Columbia Report 2013
6
Figure 2. Types of Self-Employment in British Columbia
250
200
'000 employed
150
Self-employed incorporated, with paid help
Self-employed incorporated, no paid help
Self-employed unincorporated, with paid help
Self-employed unincorporated, no paid help
100
50
7
0
Sources: Statistics Canada9
2. THE CONTEXT FOR
ENTREPRENEURSHIP:
THE BRITISH
COLUMBIA ECONOMY
It is not surprising that the largest category for self-employment in BC
is micro businesses – those that are unincorporated with no paid help
(Figure 2).
The latest data for the very smallest of businesses10 suggest their share
of the business population is similar between BC, Alberta and Canada.
In the absence of firm formation data, there are ‘incorporation’ data
tracked by BC Stats. Figure 3 compares the number of incorporations
for BC as a whole alongside the number for the Vancouver (economic)
Regional District. Vancouver accounts for a high percentage of all
incorporations, as would be expected, but perhaps a little surprisingly,
the ratio between the two is essentially static at around 70 percent
(Vancouver v BC) for the period 1990-2012.
GEM British Columbia Report 2013
Figure 3. British Columbia Incorporations
40,000
35,000
30,000
25,000
20,000
British Columbia
Greater Vancouver RD
15,000
10,000
5,000
0
Data Source: BC Stats11
8
2.2. Sectoral composition of the BC economy
British Columbia has traditionally been understood as a resource
driven economy. While resources (forestry, mining etc.) are still
important, new clusters of activity in film and new media software have
2. THE CONTEXT FOR
ENTREPRENEURSHIP:
THE BRITISH
COLUMBIA ECONOMY
emerged in the last fifteen years. As with most other innovation driven
economies in North America and Europe, service sectors have become
important. However, what stands out in a comparison of the different
sectors shares of GDP between British Columbia and Canada is that in
BC, real estate and retail trade sectors account for more activity relative
to the size of economy than they do for Canada as a whole12.
The following economic sectors in BC are notable for being below the
Canadian benchmark:
• Manufacturing
• Mining, quarrying and oil and gas extraction
• Wholesale trade
GEM British Columbia Report 2013
2. THE CONTEXT FOR
ENTREPRENEURSHIP:
THE BRITISH
COLUMBIA ECONOMY
The following economic sectors in BC are notable for being above the
Canadian benchmark:
• Finance, insurance and real estate (almost entirely due to real
estate activities)
• Owner occupied dwellings
• Retail trade
• Transport and warehousing (Canada’s western ports)
• Accommodation and food services
Some of these outcomes could be considered as outcomes of a strong
tourism sector.
9
GEM British Columbia Report 2013
3.1. Entrepreneurship in GEM
Entrepreneurship is defined in the GEM context as:
…”any attempt at new business or new venture creation, such as
self-employment, a new business organisation, or the expansion of
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
an existing business, by an individual, a team of individuals, or an
established business”13.
Entrepreneurship comes in many shapes and sizes. The spectrum
ranges from persons who need income and go into self-employment,
to those with new products or services to offer that have significant
growth potential and everyone in between. Of course entrepreneurship
is not the only factor in a vibrant economy, but increasingly it is viewed
as significant for the long term dynamism of the economy of cities and
nations. Entrepreneurship in every case is about an innovation – a new
product or service, a new market etc. A particular person in a particular
geographic setting within a very specific market setting, not all will be
globally important, but each new venture is an individual innovating.
Too often we pay little attention to individuals.
10
The GEM data cannot identify the high growth business gazelles14,
which are the focus of policy analysis in some nations. GEM instead,
measures a huge variety of demographic characteristics of those in
the process of starting new businesses across the globe. Age, gender,
education, entrepreneurial intentions, success, failure, and owning an
existing business (to choose a few indicators) capture the population’s
view of entrepreneurship as well as the moment of entrepreneurial
activity. This is a rich and diverse dataset from which to develop an
understanding of who is being entrepreneurial.
3.2. The GEM Methodology in Brief
GEM is divided into two components – the Adult Population Survey
(APS) and the National Expert Survey (NES + Provincial Expert
Surveys in Canada). The expert survey is discussed in Chapter five
(below). For each country, at least 2000 respondents are required for
the APS who must meet both statistical standards of gender and age
demographic (18-64). In Canada we sampled 18-99 year olds to explore
senior entrepreneurship in future research. More information on the
GEM framework is in the appendix at the back of this report.
GEM British Columbia Report 2013
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
The APS is identical in every country in which it is conducted. In
innovation-driven economies experienced telephone polling / research
companies are engaged while, in comparison, for the factor-driven
economies (the least developed cohort of countries) researchers
conduct the survey in person. In Canada, we employed the services of
Opinion Search which is the same organisation that has carried out
the USA’s surveys for a number of years. For the provincial data, we
oversampled to obtain roughly 400 valid responses (an error of + or
– 5 per cent). The oversampling collection standards were loosened a
little in comparison to the national data as collection costs per valid
response rise steeply. Nevertheless, the quality of the BC data is very
good both for male/female balances and indeed, by good fortune, on a
geographic basis of the Lower Mainland vs. the rest of BC.
3.3. Different Entrepreneurial Structures
It is easy to fall into the trap with indexes such as GEM, that
entrepreneurship is a contest where the highest number ‘wins’. This
of course would be a mistake, Baumol15 as one example of many,
11
has characterised different types of entrepreneurship; productive,
unproductive and destructive. Productive entrepreneurship yields
growth and quality of life benefit as well as jobs. Unproductive
entrepreneurship simply reshuffles the locus of accumulation
of money. Still, net employment may increase. Destructive
entrepreneurship, such as criminal inventiveness, is outside the scope
of GEM study, but may result in negative economic outcomes. Beyond
such useful taxonomies, it is becoming clearer that entire economies
are arranged differently – their core structural properties of innovation
and entrepreneurship have diverse operating systems. For example,
recent work by GEM scholars on entrepreneurial employee activity
(EEA)16 survey results indicates differing levels among groups of
economies. The survey results on EEA, which could also be called
intrapreneurship because it occurs within existing organisations, reveal
that societies can foster innovation and entrepreneurship in quite
different and distinct styles. This is even without the third dimension of
social entrepreneurship (which was not surveyed).
GEM British Columbia Report 2013
Figure 4. Employee Entrepreneurial Activity and Independent Entrepreneurial Activity
10
Sweden
9
Entrepreneurial Employee Activity With Medium-High Job Expectations
8
7
6
Denmark
Belgium
5
Finland
4
Netherlands
United States
3
12
Australia
Ireland
UK
France
Slovenia
2
Japan
Germany
Singapore
Korea
Czech
Republic
Switzerland
Spain
Taiwan
Portugal
1
UAE
Greece
0
0
1
2
3
4
5
6
7
Independent Entrepreneurial Activity With Medium-High Job Expectations
Note: these data do not reflect all TEA as it had been reduced to those
with ‘medium-high job expectations’.
The four quadrants in Figure 4, breakdown into interesting patterns.
• Q1 – Top Left. 3 Scandinavian countries have high EEA but
below average high-expectation independent entrepreneurial
activity, suggesting that entrepreneurship is encouraged but
operates within the structures of established and probably large
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
corporations;
GEM British Columbia Report 2013
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
• Q2 – Top Right. Some countries have above average EEA and
above average independent entrepreneurial activity – suggesting
mixed economies. In this quadrant are economies such as the USA
and Australia;
• Q3 – Bottom left – Instantly recognisable is that this quadrant
is the location for European economies plus Japan (with Korea
only marginally outside). Three of these economies (Germany,
Japan and Korea) are heavily focused on engineering and
manufacturing. For the others, explanations may vary from
European traditions to particular specialisation of countries
(business services (UK) – admittedly at the high end of the
group) or pharmaceuticals or other research-intensive activities in
Switzerland. It is worth noting that two centroids in this group
Japan and Germany were the early archetypes of ‘innovation
systemness’ – perhaps this has something to teach us about the
actual con-cept of innovation systems; and
• Q4 – Bottom right. Low EEA and high independent
13
entrepreneurship. If we exclude the marginal case of Korea,
curiously, three of four economies in this quadrant are very small
geographically – one being an old-fashioned city state.
This begins to highlight how different economies can be
entrepreneurial in different ways and why the data on TEA that
follows is not the complete picture. If it had been surveyed at that
time, we would expect Canada as a whole be located in Quadrant
2, alongside Australia and the USA. If Ontario and Quebec have
low EEA, then Canada will be somewhere in Quadrant 4. British
Columbia would probably be in Quadrant 4,having a high TEA, but
due to a lack of larger f irms (particularly manufacturing) in the
province it is unlikely to have a high EEA.
3.4. The 2013 Canadian Global Entrepreneurship
Monitor Survey
British Columbia has a TEA rate just less than the USA and greater
than that for Canada (Figure 5). TEA is a calculation based on those
who have started a business or who are running a business that has
been in existence for less than 42 months.
GEM British Columbia Report 2013
Figure 5. TEA in BC and Benchmark Innovation Driven Economies
14.0
12.2
12.6 12.7
12.0
10.7
10.0
TEA % of 18-64 Pop
10.0
8.2
8.0
6.3
6.0
4.6
4.0
3.4
4.9
5.0
5.2
5.3
6.5
6.9
7.1
8.2
8.2
8.2
8.7
9.2
9.3
7.3
5.5
3.7
2.0
.0
Notes: These are selected ‘innovation driven countries’ as defined by the
World Economic Forum, a classification used by GEM. Population = 18-64.
Within Canada, British Columbia’s TEA rate is not higher than any
of the prairie provinces (Manitoba, Saskatchewan, and Alberta).
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
Figure 6 shows a series of key indicators of entrepreneurial activity.
The indicators compared here are: business angels (those that have
invested in a new enterprise), nascent businesses (have not made
payments to staff or the owners), baby business (enterprises that
have paid staff or the owners but less than 42 months old) and TEA
(nascent +new) by male and female. The Prairie provinces, where
growth rates are presently perceived as high, are also high in early
stage entrepreneurship. The data reveals that Alberta, which has the
strongest TEA in Canada, specialised in nascent businesses – it’s baby
business numbers are not particular high when compared with other
provinces. Alberta is very strong in male and female entrepreneurship,
while Manitoba is only strong in male entrepreneurship. BC and
Saskatchewan have the lowest difference between male and female
TEA.
GEM British Columbia Report 2013
14
Figure 6. Overview of Entrepreneurship Across Canada
25
20
% 18-64 Population
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
15
Business Angels
10
Nascent Businesses
Baby Businesses
5
TEA Male
BRITISH COLUMBIA
ALBERTA
SASKATCHEWAN
MANITOBA
ONTARIO
QUEBEC
0
NEWFOUNDLAND
AND LABRADOR
TEA Female
When asked whether there would be good opportunities for starting
a business in the area where they live in the next 6 months, the 18-64
population across Canada responded quite positively (Figure 7).
15
Figure 7. Good Opportunities
for Starting a Business
Figure 7 here.
80.0
70.0
% 18-64 population
60.0
50.0
40.0
30.0
20.0
GEM British Columbia Report 2013
BRITISH COLUMBIA
ALBERTA
SASKATCHEWAN
MANITOBA
ONTARIO
QUEBEC
0.0
NEWFOUNDLAND
AND LABRADOR
10.0
Allowing for the statistical uncertainty in these analyses, perceptions
in British Columbia of ‘good opportunities’ is on par with three other
provinces. Residents of Saskatchewan have the highest perceived
opportunities and Ontario the lowest.
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
It is a logical thought process for a potential entrepreneur to ask
whether there are good opportunities and then ask whether he/she has
the necessary skills. Figure 8 reveals the high level of self-belief in their
knowledge, skill, and experience required to start a new business that
exists within the Canadian population.
Figure 8. Self-Assessment of Skills to Start Business
Figure 8 here.
80
% 18-64 Pop
70
60
50
40
30
20
10
Skills - pop
Skills Male
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
16
Newfoundland
and Labrador
0
Skills Female
The BC population stands out as being very confident of their skills.
Although females are a little less confident than the male population,
only the female population of Alberta is more confident.
The next step from a population perspective is to know the difference
between those that intend to start a business and those that actually do
start one. GEM allows for a wide temporal window (3 years) as well for
a wide conceptual space of intention / expectation to start a business.
Therefore, we compare intentions with actual TEA.
GEM British Columbia Report 2013
Figure9.9.Intend
Intend to
TEATEA
Indicator
Figure
to Start
Starta aBusiness
Indicator
Figure
9Business
here. andand
20
20
18
18
16
16
14
12
% 18-64 Pop
% 18-64 Pop
14
12
10
10
8
8
6
6
4
2
4
0
2
ENT Intentions (next 3 yrs)
TEA 2013
17
0
ENT Intentions (next 3 yrs)
Newfoundland
and Labrador
13.33
10.9
Newfoundland
and Labrador
13.33
TEA 2013
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
10.9
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
13.48
4.97
15.67
16.69
15.67
17.04
9.6
11.9
13.7
14.0
18.6
12.6
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
13.48
4.97
15.67
16.69
15.67
17.04
9.6
11.9
13.7
14.0
18.6
12.6
BC is at the high end for the intentions to start a new business (Figure
9), yet the actual rate of establishing a new business is more moderate.
This would be the expected relationship – intentions exceeding
behaviour. However, in both Alberta and Ontario the percentage of
the population that has established a business (less that 42 months)
strongly exceeds the percentage of the population expecting to start a
business in the next three years (ENT).
The significantly different rates of TEA across Canadian provinces
suggests the obvious question of why. One speculation arising from the
TEA profile is whether the perception that the western provinces have
been performing better economically, perhaps from those industries
associated with, or supplying services to, resource-based industries,
translates into start-ups.
GEM British Columbia Report 2013
Figure
10 hereTEA and 3yr Economic Growth Average
Figure
10. Provincial
20
TEA 5 of 18-64 Pop & #yr growth av
18
16
14
12
10
8
6
4
2
0
Newfoundland
Quebec
and Labrador
TEA
2013
10.9
9.6
Original Data: GEM Consortium
(3yr growth)
1.4
1.9
Ontario
Manitoba
and11.9
Statistics
2.4
18
13.7
Canada
.
2.3
14.0
18.6
British
Columbia
12.6
3.8
4.7
2.5
Saskatchewan
Alberta
Thus, Figure 10 compares 3 year average growth rates across 20102011-2012 and the TEA which covers businesses created approximately
between January 2010 and June 2013. The 3 year growth average, on
the face of it appears to have little correspondence to the TEA rates.
Canada
12.2
2.6
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
Such a relationship, if it did exist would, however, have been difficult
to explain because it would have been somewhat at odds with the
Statistics Canada data (Figure 1) that indicate that down cycles lead to
an increase in self-employment rates.
This then circles back to a fundamental point; to what extent does
entrepreneurial activity lead to sustained businesses. Earlier, we noted
(Fig 1) BC’s high rate of self-employment. GEM data (Figure 11) bear
this out as well.
GEM British Columbia Report 2013
18
3. CORE GEM
ENTREPRENEURSHIP
INDICATORS FOR
BRITISH COLUMBIA
Figure 11.
11. Established
Established Businesses
Figure
Businesses
Figure 11:
12 12
% 18-64 Pop
% 18-64 Pop
10 10
8
6
4
8
6
4
2
BRITISH
COLUMBIA
BRITISH
COLUMBIA
ALBERTA
ALBERTA
SASKATCHEWAN
SASKATCHEWAN
MANITOBA
MANITOBA
ONTARIO
ONTARIO
QUEBEC
QUEBEC
0
AND LABRADOR
0
NEWFOUNDLAND
ANDNEWFOUNDLAND
LABRADOR
2
19
Notes: Percentage of all respondents (18-64): involved in established
firms as owner and manager for which salaries or wages have
been paid for more than 42 months. [GEM - Established Business
Prevalence Rate]
While BC’s TEA may not be particularly high in Canadian terms, its
businesses survive to a much greater extent than in other provinces.
This result, which reinforces results from Statistics Canada surveys,
lends significant credibility to the GEM survey methodology and the
results for 2013.
GEM British Columbia Report 2013
4. BRITISH COLUMBIA:
PROVINCIAL
SPECIAL TOPICS
4.1. Introduction
Beyond the core GEM comparisons reported in Chapter 3, there are
a number of topics, which because of the economic and demographic
structure of the province appear to be particularly relevant for closer
study. The three topics chosen for this report are:
• the economic sectors of the new businesses;
• the role of immigrant entrepreneurs; and
• demography of entrepreneurship;
4.2. Entrepreneurship by economic activity
GEM collects data in a number of ways on the area of economic activity
of the nascent and baby businesses (TEA). The most useful is the foursector approach that categorises businesses as:
• Extractive (agriculture, mining, forestry etc.);
• Transformative (equivalent to manufacturing in some form);
• Businesses serving business markets; and
• Businesses serving consumer markets.
20
i gu ruer 1e2 .1T2EFigure
. ATbEyAE12
FFi g
cbo y
n oE
mc
i coSneoc m
t o ri c
here
Sector
100100
0
23.0
3.4
18.4
9.2
3.3
7.1
4.7
0.0
45.1
30.1
0.0
21.0
TEA Consumer Services
26.6
21.0
6.1
18.4
4.7
32.9
45.1
45.7
36.8
27.8
MANITOBA
10
3.4
21.0
44.6
20.9
32.9
43.2
26.6
ONTARIO
20
0
23.0
35.7
20.9
45.7
36.8
ONTARIO
30 10
39.3
44.6
QUEBEC
30
40 20
35.7
QUEBEC
40
N E W F O U N DN L
A FNODU N D L A N D
EW
A N D L A B R AA D
N DOLRA B R A D O R
50
39.3
29.3
43.2
27.8
21.0
6.1
9.2
14.9
30.1
TEA Business Services
TEA
Consumer
TEA - Transforming
Sector
TEA - ExtractiveTEA
sectorBusiness
14.9
3.3
7.1
BRITISH COLUMBIA
70 60
60 50
29.3
32.2
BRITISH COLUMBIA
43.3
32.2
ALBERTA
34.4
43.3
S A S K A T C H E W A NA L B E R T A
80 70
34.4
MANS
I TA O
BA
SKATCHEWAN
80
% of TEA Businesses
% of TEA Businesses
90 90
Services
Services
TEA - Transforming Sector
TEA - Extractive sector
GEM British Columbia Report 2013
4. BRITISH COLUMBIA:
PROVINCIAL
SPECIAL TOPICS
While the western Provinces of Manitoba, Saskatchewan, Alberta
and British Columbia are collectively thought of as natural resource
based, new enterprises are not started in these sectors directly (see
Figure 12). Indeed only a small percentage of firms are engaged in
extractive operations. BC is high nationally, but lower than might
have been expected without these data. In contrast, as other data
suggests (see discussion in section 2.2), few firms are established in the
transformative / manufacturing sector in British Columbia.
All the Canadian provinces have a high start-up (TEA) rate for
businesses oriented towards serving other businesses – 45% in BC,
Alberta and Ontario. The core national sample (2000 respondents) for
Canada also reports a high rate of business services of 42.6 per cent
(Table 1). This is quite high by international standards (G7 economies).
Table1: Distribution of TEA initiatives over four sectors- G7
21
Sector/%TEA
Canada US UKGermanyFrance Italy Japan
Extractive
4.0 3.40.3 0.1
7.012.81.2
Transformative
20.2 16.618.5 15.9
17.730.116.5
Business oriented services
42.6
27.0
35.8
30.1
30.1
24.6
23.5
Consumer oriented services
35.2
53.0
45.3
54.0
45.2
32.5
41.9
The lack of ‘pure’ extraction-oriented businesses is not an indication
that natural resource industries are not important. It is entirely
possible that many business-oriented services could be supplying the
larger and more established businesses that dominate the mining and
forestry sectors in particular. The innovation studies literature has
recently emphasized the role of knowledge-intensive business services,
KIBS19. Such KIBS have increasingly been associated with the flow of
knowledge in the economy.
The GEM questionnaire also asks questions on technology usage, new
products, and perceptions of competitors. This latter topic provides a
valuable window into the individual’s perceptions of innovativeness at
the population level. The indicator is TEA firms focussed on markets
with few or no competitors. Canada’s performance is healthy, similar to
that of the US. The percentage of TEAs reporting that they operate in
such markets for the G7 countries appear in Table 2.
GEM British Columbia Report 2013
Table2: New markets – few or no competitors
Canada
US
UK GermanyFrance
Italy
Japan
32.4%34.2%27.9%26.0%27.6%19.0%22.4%
4. BRITISH COLUMBIA:
PROVINCIAL
SPECIAL TOPICS
TEA by province are interesting. Figure 13 indicates that across
Canadian around 60 percent of new business owners have the
perception that they face few or no competitors for their products or
services. BC ranks in the middle for Canada. Saskatchewan is at the low
end at around 50 per cent and Alberta at a high of nearly 70 percent.
Figure 13. Figure
Competitive
13 here.Analysis
80
70
% OF TEA
60
50
40
30
22
TEA reporting no competitors
20
TEA reporting few competitors
BRITISH COLUMBIA
ALBERTA
SASKATCHEWAN
MANITOBA
ONTARIO
QUEBEC
0
NEWFOUNDLAND
AND LABRADOR
10
4.3. Immigrants
Foreign-born persons represented 27.5 per cent of BC’s resident
population in 200620. Across Canada nearly 20% of the population
is foreign born. Therefore, the issue of immigrant entrepreneurship is
more important to BC as compared to Canada. GEM has two categories
of immigrants. First-generation immigrants are defined as those who
were born outside the relevant country (Canada) and then later moved.
Second-generation immigrants are people born in Canada, but with at
least one parent who was born abroad.
GEM British Columbia Report 2013
Figure 14. Immigrant
Entrepreneurs
Figure 14 here.
35
30
% OF TEA
25
20
TEA-1ST GEN IMMIGRANTS
15
TEA-2ND GEN IMMIGRANTS
10
BRITISH COLUMBIA
ALBERTA
SASKATCHEWAN
MANITOBA
TEA 2ST GEN NONIMMIGRANTS
ONTARIO
0
QUEBEC
TEA 1ST GEN NONIMMIGRANTS
NEWFOUNDLAND
AND LABRADOR
5
Note: this data is based on a small survey sample.
23
4. BRITISH COLUMBIA:
PROVINCIAL
SPECIAL TOPICS
One of the key features of the data (Figure 14) for Canada is the
remarkable similarities among provinces for the first generation
immigrants (around 15 per cent in Quebec, Ontario, Alberta and
British Columbia). Another interesting measure is the low rate at which
2nd generation immigrants are starting businesses in BC, but across
Canada there is little pattern to the data. Curiously, there is also little
pattern to the non-immigrant TEA rates.
Labour market outcomes for 2nd generation immigrants is complex
(Statistics Canada21) with ethnic background and geography being
particularly important. There is no clear evidence on the drivers
of entrepreneurship, whether second generation are more likely to
entire the traditional labour market or join the family business. One
possibility for BC is that the boom in immigration during the 1990s
is simply too recent to see an impact on statistics for 2nd generation
immigrants.
GEM British Columbia Report 2013
4. BRITISH COLUMBIA:
PROVINCIAL
SPECIAL TOPICS
4.4. Demography (seniors / youth)
The final piece of analysis that we wish to highlight in this report is the
age profile of those with either TEA activities or established business
activities. Figure 16 compares the provinces for the age brackets used
in GEM. With a little over 40 respondents for TEA in BC, breaking
them down into 5 age brackets as we have done obviously increases the
likelihood that if the survey was run again there could be significant
shifts in the results.
Figure
TEA
and
EstablishedBusiness
BusinessRates
Ratesby
byAge
Age Group
Group
Figure
15.15.
TEA
and
Established
35.00
30.00
25.00
20.00
Figure 15 here.
35.00
30.00
25.00
20.00
15.00
15.00
24
10.00
10.00
5.00
5.00
0.00
TEA 18-24
Newfoundland
0.00
10.81 Est
and Labrador TEA 18-24
Newfoundland
Quebec
10.8111.18
and Labrador
Ontario
8.53
Quebec
11.18
Manitoba
21.12
Ontario
8.53
Saskatchewan
16.52
Manitoba
21.12
Alberta
12.13
Saskatchewan
British Columbia 16.52 4.86
Alberta
12.13
British Columbia
4.86
Est Bus 18-24
4.20
Bus 18-24
4.20
0.98
0.98
2.43
2.43
TEA 25-34
13.71
TEA 25-34
13.25
13.71
20.89
13.25
17.98
20.89
17.30
17.98
32.04
17.30
14.58
Est Bus 25-34
Est Bus 25-34
1.96
2.16
32.04
1.96
2.02
2.16
3.87
2.02
5.39
3.87
12.83
5.39
14.58
12.83
TEA 35-44
TEA 45-54
Est Bus 45-54
5.20
Est Bus
35-44
TEA6.09
45-54
7.1845-54
Est Bus
8.07
12.76
12.41
8.07
19.97
12.41
18.28
19.97
20.35
18.28
16.67
7.82
5.20
7.84
7.82
7.42
7.84
13.90
7.42
8.73
13.90
12.64
15.10
6.09
10.77
15.10
7.67
10.77
11.27
7.67
15.84
11.27
13.42
12.09
7.18
14.35
12.09
14.42
14.35
8.53
14.42
14.75
8.53
13.41
4.02
6.27
7.71
4.02
7.19
7.71
10.72
8.56
17.56
13.26
13.09
17.56
10.24
13.09
12.12
16.67
12.64
13.42
13.41
10.72
12.12
TEA 12.76
35-44
20.35
Est Bus 35-44
8.73
15.84
14.75
TEA 55-64
12.15
TEA
55-64
Est Bus 55-64
Est3.37
Bus 55-64
12.15
8.56
3.37
6.27
13.26
7.19
10.24
GEM British Columbia Report 2013
4. BRITISH COLUMBIA:
PROVINCIAL
SPECIAL TOPICS
As already highlighted, the TEA for Alberta is very high for both men
and women. Building an age profile of TEA is very helpful in that it
reveals that Alberta’s TEA for 25-34 year olds is very high (Figure 15).
BC’s TEA peaks in the age group 35-44. Curiously, however, the only
bracket that BC does really well relative to the other provinces is that of
55-64. But TEA rate is not the whole story, as this report has repeatedly
emphasised. Figure 15 also shows that BC’s established business rate
starts to have a different profile even in the youth age bracket 18-24. It
is the highest in 25-34s, strong in 35-44s, similar to that of the other
provinces.
4.5. Discussion
There is a wealth of other data in the GEM dataset which provides
indicators on interesting questions. For example, it was agreed among
the three GEM teams of USA, Mexico and Canada that each would
each run a small number of questions related to the North American
Free Trade Agreement (NAFTA). The results indicate while in essence
there is some Canada-U.S. activity, there is barely any evidence of
25
Canada-Mexico activity in either direction, possibly due to the way
entrepreneurs understand these trade flows through the US. The
results simply indicate that at the individual level most start-ups are
not focussed on trade relationships in the North American context.
GEM British Columbia Report 2013
Since its inception, the GEM project has proposed that entrepreneurial
activity is shaped by a distinct set of factors called Entrepreneurial
Framework Conditions (EFCs). These EFCs are “the necessary oxygen
5. ENTREPRENEURSHIP
FRAMEWORK
CONDITIONS
of resources, incentives, markets, and supporting institutions to the
growth of new firms”. These EFCs could be also be called the ‘rules
of the game’ that determine to what extent entrepreneurial activity
in a given society is productive. Hence, it is expected that different
countries and regions have different EFCs or different ‘rules of the
game’22, and that these affect the inputs and outputs of entrepreneurial
activity. The original and revised GEM models established a clear
relationship between the EFCs, entrepreneurship dynamics and
economic growth.
Methodology: In Canada, the expert survey was completed by
43 respondents at the national level. In addition there were seven
Provincial Experts Surveys (PES): Alberta, BC, Manitoba, Ontario,
Quebec, Newfoundland and Labrador, and Saskatchewan). In BC 40
experts responded to the 2013 PES. In total, across the rest of Canada
(excluding BC, provinces plus the NES) we had 287 respondents in
26
total.
Experts were selected to fit a profile of four experts in each of nine
categories – 36 being necessary for a full complement for each region.
The questionnaire was conducted online with opinions registered on a
108 questions spread across 19 topics with a 5 point Likert scale.
The questions topics were:
Finance (6 qs)
Government policies (7 qs)
Governmental programs (6 qs)
Education and Training (6 qs)
R&D Transfer (6 qs)
Commercial and services infrastructure (5 qs)
Market openness (6 qs)
Physical infrastructure (5 qs)
Cultural and social norms (5 qs)
Opportunities to start up (5 qs)
Abilities and knowledge to start up (5 qs)
GEM British Columbia Report 2013
5. ENTREPRENEURSHIP
FRAMEWORK
CONDITIONS
Entrepreneur social image (5 qs)
Intellectual property rights (5 qs)
Women’s support to start-up (5 qs)
Attention to high growth (5 qs)
Interest in innovation (6qs)
Wellbeing (4 qs)
Youth (8 qs)
Young adults (8 qs)
The Likert scales used in the survey of experts were:
• Completely True (5)
• Somewhat True (4)
• Neither True Nor False (3)
• Somewhat False (2)
• Completely False (1)
Opinions differ on how to analyse Likert scale data. Most argue that
averages are completely inappropriate, although GEM uses averages in
its Global Report. Most statisticians only use mode and median counts
27
as useful measures. Depending upon whether median (a numerical
value separating the upper half of a data sample from the lower half)
or the mode (the value that appears most often in a data set) is chosen
there will be slightly different results. The following analysis was
constructed using the mode score for each individual question and then
a mean was developed to be able to meaningfully compare the topics.
5.1. Analysis
In the first analysis of the BC data we compare BC Provincial Expert
Survey (PES) results with the Canadian National Expert Survey (NES).
Figure 16 highlights not only the averages for the different topics but
also the high scores for BC and Canada. We have organised the data so
the lowest average questions are on the left and the highest are on the
right.
GEM British Columbia Report 2013
Figure 16. BC PES & Canadian NES
5.0
4.0
Mode scores
3.0
BC PES Average
2.0
BC PES Hi
Cdn NES Hi
Cdn NES Average
1.0
0.0
28
If we start first with the highs analysis, it is readily apparent that in
only one category (attention to high growth) does BC score a mode
result for any topic that is higher than the Canadian NES. In the cases
5. ENTREPRENEURSHIP
FRAMEWORK
CONDITIONS
of, market openness and entrepreneur social image BC’s highest
result is lower than that for Canada. In terms of the topic averages
however, in: government policies, education and training, commercial
infrastructure, cultural and social norms, attention to high growth,
interest in innovation, wellbeing, and physical infrastructure BC scores
better than Canada. Market openness and support for women’s startups were both below the NES average.
GEM British Columbia Report 2013
5. ENTREPRENEURSHIP
FRAMEWORK
CONDITIONS
Figure 17 compares BC’s PES with the total PES of the other six
provinces in the 2013 study (Figure 17).
Figure
Figure 17. BC PES and Canadian Provincial
PES
17.
5.0
4.0
3.0
BC Average
2.0
BC Hi
Cdn PES Hi
Cdn PES Average
1.0
0.0
29
For high mode scores, BC only outperforms the other provinces for
the topic ‘education and training’. In the topics of finance and market
openness the rest of Canada had a better high mode score for the topic.
The BC mode averages and the other provinces mode averages are
strikingly similar except in education and training (in BC’s favour) and
women’s start-up support (against BC). The other small differences
include R&D transfer, commercial infrastructure, attention to high
growth, interest in innovation and physical infrastructure in BC
Favour. BC is behind, by again a small margin, in finance, market
openness and government programs.
GEM British Columbia Report 2013
5.2. Discussion
BC’s strength is clearly its education and training sector (Figures 16
and 17). Looking more closely (Figure 18), we can show that experts
5. ENTREPRENEURSHIP
FRAMEWORK
CONDITIONS
viewed BC as basically better across the board. Only in one of the six
questions did BC not outperform the other provinces.
Figure
18. 18
Education
Figure
here. and Training - BC PES and Rest of Canada PES
The vocational, professional, and continuing education systems provide
good and adequate preparation for starting up and growing new firms.
The level of business and management education provide good and
ade-quate preparation for starting up and growing new firms.
Colleges and universities provide good and adequate preparation for
starting up and growing new firms.
BC PES
Rest of Canada PES
Teaching in primary and secondary education provides adequate
attention to entrepreneurship and new firm creation.
30
Teaching in primary and secondary education provides adequate
instruction in market economic principles.
Teaching in primary and secondary education encourages creativity,
self-sufficiency, and personal initiative.
0
0.5
1
1.5
2
2.5
3
3.5
Mode Scores for the Individual Qs
4
4.5
5
From the analysis, however, although it cannot be said that BC does
poorly in any area (except perhaps market openness which seems
to deserve closer investigation, particularly in the natural resources
sector). It is true to say that there are only a few areas that BC stands
out as doing particularly well. It is on doing better that average such as
the education system where there are competitive strengths.
GEM British Columbia Report 2013
6. CONCLUSIONS
6.1. BC Policy and Economic Context
For any government intervening in an area of economic life there
is a requirement for a rationale, a basis for the intervention and a
framework for the levels of expenditure or regulatory involvement. This
requires knowledge of particular economic, market or system failures.
The GEM APS methodology starts from a different premise. Its primary
question is: what is the degree to which the population of a region
engage with entrepreneurship across a number of indicators including
the number of people who start new businesses? On this basis we can
say that BC, within the North American, context appears to have a
strong entrepreneurial culture.
The alternate picture of the entrepreneurial climate possible through
GEM is provided by the expert survey data. On these measures BC is
the middle of the road – scoring about average for all topics. While this
is not bad, it is not a particularly favourable position either. BC rarely
scores highly for any topic.
No doubt when the APS and NES -PES are compared there can be
31
interesting results such as the poor perception of BC conditions
for women entrepreneurs versus the actual number engaging in
entrepreneurship. This indicates that there are important perceptual
biases at work in the minds of Canadians and BC residents in
particular.
6.2. Observations from the GEM British Columbia
Survey 2013
1. BC compared to the rest of Canada has a solid but not a super
high level of business start-ups. Compared to other innovation
driven economies, however, BC is at the high end of
entrepreneurship. Against, the group of selected economies BC
is second to the USA for TEA. The variability across geographies,
is not easily explained but we are increasingly aware that there are
a large range of factors that influence economic and innovation
geography.
GEM British Columbia Report 2013
2. Males and females are both strongly engaged in entrepreneurship
in BC. The expert survey results indicate that BC could do better
supporting women entrepreneurs, which given the APS results,
may actually exist because there is a strong female entrepreneurial
culture. It is worth noting also that BC’s entrepreneurial
population is skewed a little to the older population compared to
other provinces.
3. The older demographic may influence perhaps the most
interesting result; BC has a very strong rate of established
enterprises. BC seems to convert start-ups into long lived
6. CONCLUSIONS
businesses.
4. Within the framework conditions BC’s strength is its education
and training system (inclusive of primary, secondary and post-
secondary), perceived to be very successful nationally. That is a
powerful strength and one that is easier to maintain than build up.
5. However, abilities to start-up, finance and market openness are
all could do better categories for BC. While BC does not perform
poorly anywhere, compared to the other provinces, it does not
perform well either.
32
GEM British Columbia Report 2013
APPENDIX: THE GEM
FRAMEWORK
GEM is an annual assessment of the entrepreneurial activity,
aspirations and attitudes of individuals across the globe. Initiated in
1999 as a partnership between London Business School and Babson
College, the first study covered 10 countries; since then nearly 100
‘National Teams’ from every part of the world have participated in
the project, which continues to grow annually. The Monitor has an
estimated global budget of nearly USD $9 million; the 2013 survey
covers nations representing 75% of world population and 89% of world
GDP. GEM explores the role of entrepreneurship in national economic
growth, unveiling detailed national features and characteristics
associated with entrepreneurial activity through constructing an
understanding of individuals. The data are collected in innovationdriven economies by commercial telephone opinion and research
companies. The data are ‘harmonized’ by a central team of experts,
guaranteeing its quality and facilitating cross-national comparisons.
GEM has three main objectives:
• to measure differences in the level of entrepreneurial activity
33
between countries
• to uncover factors leading to appropriate levels of
entrepreneurship
• to suggest policies that may enhance the national level of
entrepreneurial activity.
GEM is unique because, unlike other entrepreneurship data sets
that measure newer and/or small firms, GEM studies focus on the
behaviour and attitudes of individuals with respect to starting and
managing a business. This approach provides a more detailed picture
of entrepreneurial activity than is found in official national business
registry data sets.
Entrepreneurship - the GEM model
The GEM project regards entrepreneurship as a process in a complex
ecosystem and examines individual entrepreneurs and ventures in
this context. The GEM model is shown in Figure 19. At the top left we
see four basic requirements and six efficiency enhancing factors that
must be appraised from available studies, (e.g. reports from Statistics
Canada). At the centre left, the model recognizes the importance of
GEM British Columbia Report 2013
the social, cultural and political context. Nine factors shaping the
innovation and entrepreneurship framework complete the left column.
APPENDIX: THE GEM
FRAMEWORK
These are appraised by the GEM survey of expert opinion (NES). At
the centre of the diagram, the link between the established firms and
independent entrepreneurs is recognized. This takes large firms beyond
their commonly incremental innovations to the role of knowledge
‘reservoirs’ for ‘spillover’ and as demanding customers for a wide
range of goods and services. Finally, on the right the overall outcome:
achievement of jobs, innovation and social value.
Figure 19. The GEM Model
National
Framework
Conditions
Basic
Requirements
Social,
Cultural,
Political
Context
Efficiency
Enhancers
Existing Economic
Activity
(Primary Economy)
Spillover
Outcome/Impact
(socio-economic
development)
Entrepreneurial Output
(new jobs, new value added)
+
_
Nine
Entrepreneurial
Framework
Conditions
+
_
Personal Values
and Background
+
_
34
Entrepreneurship
Activity
Attitudes
Aspirations
GEM uses a taxonomy of economies; factor driven, efficiency driven,
and innovation driven are developed by the World Economic Forum
(WEF) and published in the Global Competitiveness Index. Canada is
in the innovation driven economy classification, exhibiting sufficient
reliance on business sophistication and innovation. Businesses in
an innovation driven economy are more knowledge intensive and
the service sector figures more prominently in the economy. While
entrepreneurship engaged in by the population generally scores more
highly in factor and efficiency driven economies, it is nevertheless
important for innovation driven economies.
GEM British Columbia Report 2013
APPENDIX: THE GEM
FRAMEWORK
Beyond the structural aspects, The GEM model also views
entrepreneurship as a process occurring over different phases from
intentions to start, to just starting, to running new or established
enterprises, and even to discontinuance. Given variable contexts and
conditions, it is not inevitable that one phase leads to the next. Figure
3 shows the phases of entrepreneurship. In exploring the early phases,
the GEM project assembles data not available from business statistics.
Figure 20. The Entrepreneurship process
Entrepreneurship Phases
Total early-stage
Entrepreneurial Activity
(TEA)
Potential
Entrepreneurs:
Beliefs and Attitudes
Intentions
Nascent
35
Source: GEM Global Report 2011
New
Discontinuance
Established
New Owners
Adult population survey (APS)
Using a telephone survey, an independent polling firm randomly
selected adults between the ages of 18 and 99. Their responses to a
series of detailed questions phrased in everyday language that are
used throughout the GEM international entrepreneurship project
were collected. These are used to determine entrepreneurial attitudes,
activities, and aspirations of the national population. They provide
a profile of a representative cross section of the Canadian adult
populations, balanced for age and gender distribution. With the
common survey instrument in global use, it is possible to compare
Canadian entrepreneurship internationally. As the GEM standard is
ages 18-64 this was the basis of the comparisons in this report.
GEM British Columbia Report 2013
National Expert survey (NES)
The experts come from different professional perspectives where they
APPENDIX: THE GEM
FRAMEWORK
gain considerable knowledge of entrepreneurial activities. Nine areas of
expertise are specified by GEM: finance, policy, government programs,
education and training, technology transfer, support infrastructure,
and wider society/culture fields. The questionnaire presented a series
of statements reflecting the GEM perspective on conditions supporting
entre-preneurship. The experts are asked to estimate the degree to
which each is true for Canada. The final section solicits open-ended
responses which are coded to nine categories.
36
GEM British Columbia Report 2013
REFERENCES
1 Freeman, C. (1987) Technology policy and economic performance:
lessons from Japan. Frances Pinter, London.
2 Lundvall B-A (ed.) (1992a) National systems of innovation:
towards a theory of innovation and interactive learning. Pinter,
London.
3 Nelson RR (ed.) (1993a) National innovation systems: a
comparative analysis. Oxford University Press, New York.
4 Porter ME (1990) The competitive advantage of nations.
MacMillan, New York.
5 Holbrook, J.A.D. and Wolfe, D.A. (2005) “The Innovation
Systems Research Network (ISRN): A Canadian Experiment in
Knowledge Management”, Science and Public Policy, Vol. 32(2) 109119.
6 Wixted, B. and Holbrook, J.A.D. (2014) ‘Living on the Edge:
Knowledge Interdependencies of Human Capital Intensive Clusters
in Vancouver’ chapter 4 in Wolfe, D. (ed.) Innovating in Urban
37
Economies: Economic Transformation in Canadian City-Regions,
University of Toronto Press, Toronto.
7 Schumpeter, J.A. (1934) The Theory of Economic Development,
Harvard University Press, Cambridge, MA.
8 Statistics Canada. Table 282-0012 - Labour force survey estimates
(LFS), employment by class of worker, North American Industry
Classification System (NAICS) and sex, annual (persons) (accessed:
November 28, 2013).
9 Statistics Canada ibid.
10 Statistics Canada (2013e) Statistics Canada. Table 551-0004 Canadian business patterns, location counts, employment size and
North American Industry (accessed: December 12, 2013).
11 BC Stats British Columbia Incorporations by Development Region,
Regional District and Municipality. http://www.bcstats.gov.bc.ca/
StatisticsBySubject/Economy/BusinessFormationsandFailures.aspx
Accessed Dec 3 2013,
GEM British Columbia Report 2013
12 The data used in the analysis came from Statistics Canada.
Table 384-0038 - Real gross domestic product, expenditure-based, by
REFERENCES
province and territory http://www.statcan.gc.ca/tables-tableaux/sumsom/l01/cst01/econ50-eng.htm (accessed: 5 June, 2014).
13 Bosma, N., Wennekers, S., Amorós, J.E. (2012). Global
Entrepreneurship Monitor 2011 Extended Report; Global
Entrepreneurship Research Association www.gemconsortium.org p9.
14 Nightingale, P. and Coad, A. (2014) ‘Muppets and gazelles:
political and methodological biases in entrepreneurship research’
Industrial and Corporate Change (2014) Vol 23(1): 113-143
doi:10.1093/icc/dtt057. MUPPETS “marginal undersized poor
performance enterprises v high performance/high growth “gazelles”.
15 Baumol, W., (1996) Entrepreneurship: Productive, unproductive,
and destructive Journal of Business Venturing 11(1), 3-22.
16 Bosma, N., Wennekers, S., Guerrero, M. Amorós, J.E.,
Martiarena, A. and Singer, S. (2013) Global Entrepreneurship
Monitor: Special Report on Entrepreneurial Employee Activity, Global
38
Entrepreneurship Research Association. www.gemconsortium.org
17 ibid. p59
18 Statistics Canada (2013) Gross domestic product, expenditurebased, by province and territory expenditure based CANSIM, table
384-0038 http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/
cst01/econ15-eng.htm re-accessed 23 May 2014.
19 Muller, E. Zenker, A. (2001). Business services as actors of
knowledge transformation: the role of KIBS in regional and national
innovation systems, Research Policy, 30(9) 1501 – 1516.
20 BC Stats (2008) Birthplace: Birthplace of Immigrants 2006
Census. http://www.bcstats.gov.bc.ca/Files/6b234160-1fdb-47228a70-bb87a39a4d76/Census2006-TopicTables-ImmigrantBirthplaceO
rderbyPercentofPopulation.xls accessed 03 April 2014. No immigrant
data for the 2011 Census have been released.
GEM British Columbia Report 2013
REFERENCES
21 Picot, G. and Hou, F. (2011) ‘Seeking success in Canada and the
United States: The determinants of labour market outcomes among
the children of immigrants’ Analytical Studies Research Paper Series
Statistics Canada Catalogue no. 11F0019M, no. 331. 2014 http://www.
statcan.gc.ca/pub/11f0019m/2011331/part-partie1-eng.htm accessed
26 May 2014.
22 Bosma, N., Wennekers, S., Amorós, Op. cit. p43.
39
GEM British Columbia Report 2013
Brian Wixted
Brian Wixted has nearly 25 years experience in science, technology
ABOUT THE AUTHORS
and innovation policy and research. He has worked for the
Australian government, a university research centre and conducted
numerous consulting projects for a range of governments and public
organisations. His academic work is specialized in innovation and
economic activity across regions, industries, nations and the globe.
His consulting work has specialised in science policy and science and
research system evaluations.
http://www.sfu.ca/cprost/?page_id=9
J. Adam Holbrook
Adam Holbrook is an adjunct professor and Associate Director of the
Centre for Policy Research on Science and Technology (CPROST),
at Simon Fraser University in Vancouver, BC. He was trained as a
physicist and electrical engineer, and is a registered professional
engineer in BC. He started his career as a satellite engineer at Telesat,
after which he spent twenty years in the federal public service in
40
several S&T policy positions. At CPROST his research, consulting
and teaching activities centre on the analysis and impact of science,
technology and innovation in the public sector and private sector, both
in Canada and abroad.
http://www.sfu.ca/cprost/?page_id=9
The authors would like to thank Kaily Furlot and Graeme Webb
for research assistance and Sarah Lubik (lecturer, Beedie School
of Business) and Emeritus Professor Bruce Clayman for editorial
comments. All errors and omissions remain those of the authors.
GEM British Columbia Report 2013
SPONSORS
GEM BC Team at CPROST
The GEM BC team is based at the Centre for Policy Research on
Science and Technology (CPROST) at Simon Fraser University.
CPROST gratefully acknowledges funding from the British Columbia
Innovation Council which made possible the extension of the GEM
Canada project to British Columbia. We also extend our thanks to all
the partner organisations across Canada which contributed funding to
the project.
We acknowledge that this report has benefited greatly from our
tremendous collaborators in the GEM Canada team, but all errors and
omissions remain those of the authors.
CPROST was created in 1988 as a space for research expertise on
what would later be called science, technology and innovation studies.
CPROST has been involved in many large studies of the Canadian
innovation environment. One such project that ran for more than
a decade was the Innovation Systems Research Network funded by
SSHRC and other partners.
41
CPROST has the particular interest in GEM surveys of
entrepreneurship for the possibility of linkages to innovation
measures. Innovation studies emerged with a specific focus on science
policy and then later moved into business innovation and latterly
the geographically defined ‘innovation systems’. Most recently,
entrepreneurship has been of growing interest to innovation scholars,
although this generally has analytically focussed on technology
start-ups and university spinoffs. Research on science, technology
and innovation systems has almost always been limited to institutions
and industrial structures, comparing the performance of one region
or nation against that of another. Individuals are rarely if ever present
in this work. The opportunity to be involved with the GEM offers us
the opportunity to gain insight into a particular group of innovators –
individuals who start new ventures – technology-based or otherwise.
This is an entirely different perspective to the firm based surveys of
innovation (i.e. new product etc) creations and adoptions.
GEM British Columbia Report 2013
The 2013 GEM Canada Consortium
The costs of the national study were funded by a consortium of
SPONSORS
funders. The seven participating provinces each funded their respective
provincial surveys through various provincial organizations. The
Centre for Innovation Studies (THECIS) is the coordinator at the
national level and is responsible for preparing the Canadian national
GEM report (see <thecis.ca>). We encourage readers of this report to
also seek out the Canada-wide report which focusses on international
comparisons. The other provincial reports will make interesting
reading, as, they focus on different issues. The 2013 GEM Canada
report was published in April 2014 see http://www.thecis.ca/index.
php?catID=22&itemID=657 . Individual provincial reports for Alberta,
Saskatchewan, Ontario, Quebec and Newfoundland and Labrador
will emerge during 2014. The BC report would not have been possible
without IDRC and the British Columbia Innovation Council.
42
GEM British Columbia Report 2013
GEM CANADA TEAM
Name Organization
Gary Gorman
Memorial University of
Newfoundland
Dennis Hanlon
Memorial University of
Newfoundland
Blair Winsor
Memorial University of
Newfoundland
Étienne St-Jean
UQTR, Trois Rivières
Diane-Gabrielle Tremblay
UQAM, Montreal
Charles Davis
Ryerson University, Toronto
Neil Wolff
Ryerson University, Toronto
Howard Lin
Ryerson University, Toronto
Dave Valliere
Ryerson University, Toronto
Nathan Greidanus
Asper School of Business,
University of Manitoba, Winnipeg
Cami Ryan
University of Saskatchewan,
Saskatoon
43
GEM British Columbia Report 2013
Chris Street
University of Regina
Cooper Langford
University of Calgary
Peter Josty
THECiS, Calgary
Chad Saunders
Haskayne School,
University of Calgary
Ted Heidrick
University of Alberta, Edmonton
Alex Bruton
Mount Royal University
Adam Holbrook
CPROST, Simon Fraser University
Brian Wixted
CPROST, Simon Fraser University
THECIS (The Centre for Innovation Studies) is a not for profit
organization devoted to study and promotion of innovation. Based
in Calgary, Alberta, and Incorporated in 2001, it operates through a
network of 35-40 THECIS Fellows.
THECIS has three core functions – research, networking and
education.
• Research. Creating new knowledge and building insights into
how the innovation systems functions and policies that can
improve it.
• Networking. Providing opportunities for exchange of ideas
through breakfast meetings, workshops and conferences.
• Education. Dissemination of information through Newsletters,
events and other informal education activities, particularly for
graduate students.
For more information about THECIS go to www.thecis.ca
The Centre for Innovation Studies (THECIS)
#125, Alastair Ross Technology Centre
3553 31 Street NW
Calgary, Alberta, Canada T2L 2K7
44
More information
For information on the GEM Canada 2013 report, please contact
Peter Josty, p.josty@thecis.ca
For information on the GEM global reports and on GEM,
please contact the GEM Executive Director, Mike Herrington, at
MHerrington@gemconsortium.org
The 2013 GEM Canada report is available at www.gemcanada.org
The 2013 GEM Global report is available at
www.gemconsortium.org
Although GEM data were used in the preparation of this report, their
interpretation and use are the sole responsibility of the authors and the
GEM Canada team.
GEM British Columbia Report 2013
Global Entrepreneurship
Research Association
London Business School
Regents Park, London NW1 4SA, UK.
+44 796 690 81 71
info@gemconsortium.org
www.gemconsortium.org
The Centre for
Innovation Studies (THECIS)
#125, Alastair Ross Technology Centre
3553 31 Street NW
Calgary, Alberta, Canada T2L 2K7
www.thecis.ca
GEM British Columbia Report 2013