Life Cycle Of Entrepreneurs: Regional Features

Research Results

This article presents the models developed by the authors that describe the distribution by countries of the values of indicators characterizing the various stages of entrepreneurial activity. The development of these models was based on information collected during the survey on the Global Entrepreneurship Monitoring Project in 2018 (Bosma & Kelley, 2019). Models are, as indicated earlier, density functions of the normal distribution. Such functions () that describe the proportion of citizens at different stages of involvement in entrepreneurship (, %) to the total adult population for each country are given below:

The share of early entrepreneurs;

$y_{\mathrm{1}}\left(x_{\mathrm{1}}\right)=\frac{\mathrm{205.71}}{\mathrm{6.09}\times \sqrt{\mathrm{2}\mathrm{\pi }}}\cdot e^{\frac{-(x_{\mathrm{1}}-\mathrm{12.09}{)}^{\mathrm{2}}}{\mathrm{2}\times \mathrm{6.09}\times \mathrm{6.09}}}$;(1)

The share of established entrepreneurs;

$y_{\mathrm{2}}\left(x_{\mathrm{2}}\right)=\frac{\mathrm{192.02}}{\mathrm{4.98}\times \sqrt{\mathrm{2}\mathrm{\pi }}}\cdot e^{\frac{-(x_{\mathrm{2}}-\mathrm{8.54}{)}^{\mathrm{2}}}{\mathrm{2}\times \mathrm{4.98}\times \mathrm{4.98}}}$;(2)

The share of entrepreneurs who have ceased operations.

$y_{\mathrm{3}}\left(x_{\mathrm{3}}\right)=\frac{\mathrm{96.20}}{\mathrm{2.27}\times \sqrt{\mathrm{2}\mathrm{\pi }}}\cdot e^{\frac{-(x_{\mathrm{3}}-\mathrm{4.34}{)}^{\mathrm{2}}}{\mathrm{2}\times \mathrm{2.27}\times \mathrm{2.27}}}$.(3)

In addition, normal distribution functions () that describe the ratios of prevailing indicators of entrepreneurial activity () in each country were developed. They are listed below:

The ratio of the number of established entrepreneurs to the number of new entrepreneurs;

$y_{\mathrm{4}}\left(x_{\mathrm{4}}\right)=\frac{\mathrm{37.71}}{\mathrm{0.88}\times \sqrt{\mathrm{2}\mathrm{\pi }}}\cdot e^{\frac{-(x_{\mathrm{4}}-\mathrm{1.62}{)}^{\mathrm{2}}}{\mathrm{2}\times \mathrm{0.88}\times \mathrm{0.88}}}$;(4)

The ratio of the number of new entrepreneurs to the number of entrepreneurs who have ceased operations;

$y_{\mathrm{5}}\left(x_{\mathrm{5}}\right)=\frac{\mathrm{44.57}}{\mathrm{1.06}\times \sqrt{\mathrm{2}\mathrm{\pi }}}\cdot e^{-\frac{(x_{\mathrm{5}}-\mathrm{2.85}{)}^{\mathrm{2}}}{\mathrm{2}\times ,\mathrm{1.06}\times \mathrm{1.06}}}$;(5)

The ratio of the number of established entrepreneurs to the number of entrepreneurs who have ceased operations.

$y_{\mathrm{6}}\left(x_{\mathrm{6}}\right)=\frac{\mathrm{68.57}}{\mathrm{1.77}\times \sqrt{\mathrm{2}\mathrm{\pi }}}\cdot e^{\frac{-(x_{\mathrm{6}}-\mathrm{2.38}{)}^{\mathrm{2}}}{\mathrm{2}\times \mathrm{1.77}\times \mathrm{1.77}}}$.(6)

The quality of the developed models was evaluated using three tests. A computational experiment showed that the calculated values of the statistics for Kolmogorov-Smirnov test are in the range from 0.010 to 0.106 and less than the tabulated value, which at a significance level of 0.05 is 0.152. The calculated values for Pearson test are from 0.063 to 4.610, that is less than the tabulated value of 9.49. All calculated values of the test statistics are larger than the tabulated value that is equal to 0.93 at a significance level of 0.01. Besides, a logical analysis of the developed models was carried out, which showed that they well approximate the initial data over the entire range of their changes. Therefore, all developed functions are of high quality.

Discussion

The density functions of the normal distribution (1) - (6) make it possible to identify a number of significant patterns characterizing the stages of entrepreneurial activity in the economies of different countries in modern conditions. Table 01 presents the main indicators of functions (1) - (6), as well as the average values (column 2) and the change intervals for most (68%) countries (column 3). It is known that the boundaries of these intervals are calculated as follows: the root-mean-square deviations are respectively added and subtracted to the average values given in column 2.

The data in column 2 of Table 01 shows that during the period under review, the countries’ average share of early entrepreneurs is about 12%. That is, in 48 countries under consideration, on average, every eighth adult citizen was involved in the creation of a new business in 2018. In most countries, the share of early entrepreneurs ranges from 6% to 18%. The value, exceeding the upper limit of the interval given in column 3 of Table 01 , was observed in Angola, Chile, Guatemala, Lebanon, Peru, Sudan, Colombia, Madagascar. These countries are developing countries with relatively low per capita income. They are located in Latin America (4 countries), Africa (3 countries) and Asia (1 country). Low values (less than 6 %) took place in Russia, Japan, Poland, Germany, Italy and Cyprus. Low values of the indicator in question is due to the fact that profitability of entrepreneurial activity is not higher than of wage labor in most of these countries. At the same time, both labor costs and the risk assumed by the entrepreneur are significantly greater than that of the employee.

The average share of established (mature) entrepreneurs in the countries under review is 8.54%. Accordingly, every twelfth adult (aged 18 to 64 years) in these countries had his own business, functioning for more than 3.5 years in 2018. In most countries, the share of established entrepreneurs is in the range from 3.5% to 13.5%. A significant differentiation of this indicator is due to the social, economic, demographic, historical features of the development of specific countries. The values, exceeding the upper limit of the interval given in column 3 of Table 01 occurred in 2018 in such developing countries as Madagascar, Lebanon, Brazil, Thailand, Angola, and Taiwan. Low values of the share of established entrepreneurs (from 3.4% to 1.9%) were observed in Luxembourg, China, Saudi Arabia, the United Arab Emirates, France and Puerto Rico.

The average share of entrepreneurs who have ceased operations in 48 countries in the total adult population is 4.34%. At the same time, for most countries this indicator ranges from 2.1% to 6.6%. The share value above the upper limit of this range was noted in Canada, Peru, Angola, Morocco, Sudan, Saudi Arabia, Thailand and Lebanon. Contrariwise, Bulgaria, Japan, Spain, Germany, Italy, Russia, Indonesia showed low values (less than 2.1%). It is interesting to note that in countries such as Russia, Japan, Germany, and Italy, low share values of early entrepreneurship and of entrepreneurs who ceased operations were simultaneously observed.

The number of established entrepreneurs in all the countries under consideration was, on average, 1.6 times more than the number of new entrepreneurs. The trend of exceeding established entrepreneurs was observed in 36 countries. In 12 countries only, the number of new entrepreneurs exceeded the number of established entrepreneurs. These in 2018 included Panama, Luxembourg, Canada, Chile, Sudan, Angola, Egypt, Guatemala, Puerto Rico, UAE, China, Saudi Arabia. A significant increase in the number of new entrepreneurs (more than 2.5 times) was in Poland, Greece, Italy, Switzerland, Germany, Japan and India.

The ratio of the number of those involved in early entrepreneurial activity to the number of entrepreneurs who ceased operations reached an average of 2.85. For most countries, this indicator ranged from 1.8 to 3.9. In 2018 Indonesia, Korea, the Netherlands, Madagascar, Colombia, Brazil, China and Panama demonstrated values greater than 4.0. While lower values (from 1.7 to 1.2) were recorded in countries such as Cyprus, Angola, Iran, Saudi Arabia, Egypt, Sudan, Morocco.

The average ratio of the number of established entrepreneurs to the number of entrepreneurs who ceased operations in 48 countries was 2.38. The trend of exceeding the number of established entrepreneurs was observed in 37 countries. The number of entrepreneurs who ceased operations exceeded the number of established entrepreneurs only in 11 countries: Luxembourg, Canada, France, Uruguay, Puerto Rico, Angola, Egypt, Sudan, UAE, Morocco, Saudi Arabia. At the same time Indonesia, Switzerland, Poland, Madagascar, Korea, the Netherlands, Brazil, Germany and Bulgaria showed the highest value of the above ratio (more than 4.15).