Ireland – Rise of the TINAEs

Recently the Global Entrepreneurship Monitor launched its 2012 data. Speaking at the launch  the minister for jobs stated

” 19,000 people started new businesses in Ireland in 2012, and highlights the findings that new business start ups are increasingly innovative and that the majority expect to find customers in export markets”.

Further, Enterprise Ireland the government domestic focused entrep agency stated that the minister noted

“Two thirds of all new jobs are created by start-ups in the first five years of existence. That is why we have placed entrepreneurship at the centre of our plans for jobs and growth. Through the Action Plan for Jobs, we have put in place a series of measures to support greater levels of start-up activity across the economy including a range of new credit measures and world-class supports for small business through the Local Enterprise Offices. Now we are taking advice from world experts and taking views from the public on the next phase of our plan to support more entrepreneurs and start-ups, and ultimately create the jobs we need”

All good yes? Well, lets see. People start new businesses for one of two reasons : they want to or they have to. Want is good. Have, less so.  See the two charts below on the % of those starting businesses because they have to.  We can call those the “There Is No Alternative to Entrepeneurship”- TINAEs

the first looks at the UK USA and Germany vs this fair land. Note that in two cases, 2007 Germany and 2009 Ireland the data were not available and to avoid gaps in the series I interprolated by average. Note especially Germany where there is a noticable rise in the percentage of those involved in setting up businesses as a TINAE after the 2001-3 wave of Hartz reforms, reforms the Irish Government is now eyeing as exemplars.

TINAE
Note the massive rise in 2007-8 in Ireland. As the economy crashed, TINAEs rose…

But maybe this is not a problem? Maybe in reality its the big countries that are outliers, and smaller/poorer states such as we are becoming are better benchmarks. Lets see. The chart below shows this data averaged across the last three survey periods (2012-11-10) for all countries which participate. The median rate of TINAE is 26%. Ireland is at 29%. The only other EU states above Ireland are Romania, Slovakia and Croatia.

TINAE2

Bottom line : Entrepreneurship is good. But not, I submit, if its forced. And we seem to be increasingly forcing this. Entrepreneurs are not rhubarb stalks to be forced by being fed bull. They should be organic and emergent and carefully nurtured.

 

About the GEM

The Global Entrepreneurship Monitor (GEM) provides an annual assessment of the entrepreneurial activity, aspirations and attitudes of individuals across a wide range of countries. GEM is the largest on-going study of entrepreneurial dynamics in the world. Initiated in 1999 as a partnership between London Business School and Babson College, the first study covered 10 countries. In 2012, 69 countries participated in the research. One of the unique features of GEM is the facility which it provides to compare countries with each other across a range of variables pertinent to entrepreneurship. This is made possible as the research is carried out in exactly the same way in each country and is coordinated by the Global Entrepreneurship Research Association (GERA) based in Babson College in the United States.

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4 thoughts on “Ireland – Rise of the TINAEs

  1. PR Guy

    I would imagine a good number of those TINAE’s are people who have to set up limited companies once they’ ve lost their job… to allow them to go contracting aka ‘consultancy’ work. Contract agenices in Ireland and the UK won’t touch you if you aren’t a one man (or woman) limited company.

    Reply
  2. joehas2013

    What´s important is not how many companies start up but how many get big.

    Wonks out there will know this as Schramm’s Law: “The single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within 20 years.”

    In Ireland we are not as good as we think in this regard. True organic startups? Ryanair, Primark, FexCo, Glen Dimplex, Iona. Add then Kerry Group, CRH and others who were buildups.

    There is also the who what is a startup? and what is an entrepreneur? Steve Blank in Why Governments Don’t Get Startups is worth reading on this http://steveblank.com/2011/09/01/why-governments-don%E2%80%99t-get-startups/

    More and more, the thing to emphasise is that Entrepreneurship is not a hero/maverick thing. See Robert B. Reich in HBR

    “To the extent that we continue to celebrate the traditional myth of the entrepreneurial hero, we will slow the progress of change and adaptation that is essential to our economic success”
    http://hbr.org/1987/05/entrepreneurship-reconsidered-the-team-as-hero/ar/1

    Forcing people to start is just vanity metrics … instead create the supportive economic conditions so that the organic ones grow big.

    NATIONAL ASSET MANAGEMENT AGENCY ACT 2009
    The purposes of this Act are:
    to address the compelling need —
    (i) to facilitate the availability of credit in the economy of the State
    http://www.irishstatutebook.ie/pdf/2009/en.act.2009.0034.pdf

    Reply
  3. Pingback: Universities are not Innovation Bootcamps | Brian M. Lucey

  4. Pingback: Ten Thoughts on the Irish Economy for 2014 | Brian M. Lucey

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