ENTREPENEURSHIP TRENDS IN MALAYSIA:A National Five Year Longitudinal Study Using GEM Methodology

ENTREPENEURSHIP TRENDS IN MALAYSIA:

A National Five Year Longitudinal Study Using GEM Methodology

ENTREPENEURSHIP TRENDS IN MALAYSIA:

A National Five Year Longitudinal Study Using GEM Methodology

Siri Roland Xavier

Garry J. Clayton

Mohar Yusof

Leilanie Mohd Nor

Dewi Amat Sapuan

A very special thanks is extended to Datuk Seri Dr Md Zabid, President and Vice-Chancellor

of UNIRAZAK for his fervent belief and support for this project at the national, regional and

global levels. His guidance and inspiration has broken new grounds for Malaysia and

brought about impactful gains in the field of entrepreneurship.

We would also like to thank the GEM Data Team headed by Yana Litovsky and Rehanstat

Sdn Bhd, our Malaysian research surveyors, headed by Datin Dr Rehana Kassim and her

team. Thanks also goes to Alicia Coduras-Martínez for her contribution to assisting with the

SEA NES data.

Thanks is also extended to the Global Entrepreneurship Research Association for their

continued support under the leadership of Professor Mike Herrington.

Lastly the we the Malaysian GEM team members would also like to express our gratitude to

all participating GEM 2009-2013 national teams.

At the outset it should be noted that although GEM data were used in the preparation of

this report, their interpretation and use are the sole responsibility of the authors.

The usual disclaimer applies.

CONTENTS

Foreword

Executive Summary

CHAPTER 1: INTRODUCTION AND BACKGROUND

1.1 The Global Entrepreneurship Monitor (GEM) Research Project

1.2 The GEM Conceptual Model

1.3 GEM Methodology

CHAPTER 2: MAIN RESULTS OF MALAYSIA’S FIVE YEAR ENTREPRENEURSHIP RESEARCH

2.1 Entrepreneurial Attitudes and Perceptions

2.2 Entrepreneurial Intentions

2.3 National Attitudes: Career Choice, Status and Media Attention

2.4 Entrepreneurial Activities

2.5 Entrepreneurial Aspirations

2.6 Entrepreneurship and Well-Being

CHAPTER 3: ENTREPRENEURIAL FRAMEWORK CONDITIONS IN MALAYSIA

3.1 Introduction

3.2. The GEM National Experts Survey

3.3. An Overview of Entrepreneurship Institutions

CHAPTER 4: RECOMMENDATIONS FOR POLICY AND PRACTICE

REFERENCES

APPENDICES

AUTHOR AND MALAYSIAN GEM TEAM MEMBERS

LIST OF FIGURES

Figure 1.1 The Entrepreneurship Process and GEM Operational Definitions

Figure 1.2 The GEM Conceptual Framework

Figure 2.2 Entrepreneurial Perceptions and Attitudes: Averages by Phase of Economic

Development

Figure 2.3 Intentional Entrepreneurs

Figure 2.4 Early Stage Perceptions, 2009-2013

Figure 2.5 Nascent Entrepreneurs, 2009-2013

Figure 2.6 New Entrepreneurs, 2009-2013

Figure 2.7 Established Business Owners

Figure 2.8 Entrepreneurial Attitudes and Perceptions – 2009-2013

Figure 2.9 Total Early-Stage Entrepreneurial Activity (Tea) 2013, By Phase of Economic

Development

Figure 2.10 Malaysia’s Total Early-Stage Entrepreneurial Activity (TEA) – 2009-2013

Figure 2.11 Percentage of Entrepreneurs Motivated By Necessity and Opportunity, By Phase of

Economic Development, 2013

Figure 2.12 Entrepreneurial Activity – Malaysia 2009-2013

Figure 2.13 Entrepreneurial Employee Activity (EEA) In 2013 Participant Countries, By Phase of

Economic Development

Figure 2.14 Reasons for Business Discontinuance by Geographic Region

Figure 2.15 Reasons behind Business Discontinuation in Malaysia, 2009-2013

Figure 2.16 Male and Female Early-Stage Entrepreneurial Activity 2013, By Geographic Regions

Figure 2.17 Early-Stage Entrepreneurial Activity Rates within Age Groups, By Geographic Regions

Figure 2.18 Total Early Stage Entrepreneurial Activity by Gender and Age, 2009-2013

Figure 2.19 The Malaysian Male TEA, 2009-2013

Figure 2.20 The Malaysian Female TEA, 2009-2013

Figure 2.21 Malaysian Nascent Entrepreneurial Activity by Gender and Age, 2009-2013

Figure 2.22 Malaysian New Business Owner-Managers by Gender and Age, 2009-2013

Figure 2.23 Malaysian Established Business Owners-Managers by Gender and Age, 2009-2013

Figure 2.24 Perceptions by Gender, 2009-2013

Figure 2.25 Overall Malaysian Entrepreneurial Activity by Gender, 2009-2013

Figure 2.26 Overall Malaysian Male Entrepreneurial Activity, 2009-2013

Figure 2.27 Overall Malaysian Female Entrepreneurial Activity, 2009-2013

Figure 2.28 Overall Malaysian Male and Female Entrepreneurial Activity, 2009-2013

Figure 2.29 Female Male Entrepreneurship and Established Business Ownership Rates in

Malaysia, 2009-2013

Figure 2.30 Job Expectations for Early-Stage Entrepreneurs, By Geographic Regions

Figure 2.31 Malaysia’s Job Growth Expectations for Early-Stage Entrepreneurship Activity

Figure 2.32 Innovative Orientation of Early-Stage Entrepreneurs, By Geographic Regions

Figure 2.33 Innovative Orientation of Early Stage Entrepreneurs in Malaysia, 2009-2013

Figure 2.34 International Orientation of Early-Stage Entrepreneurs, By Geographic Regions

Figure 2.35 International Orientation of Early Stage Entrepreneurs in Malaysia, 2009-2013

Figure 2.36 Nascent Entrepreneurs by Education, 2009-2013

Figure 2.37 New Business Owners-Managers by Education, 2009-2013

Figure 2.38 Total Early Stage Entrepreneurial Activity (TEA) by Education, 2009-2013

Figure 2.39 Established Business Owners-Managers by Education, 2009-2013

Figure 2.40 Nascent Entrepreneurs by Area, 2009-2013

Figure 2.42 New Business Owners-Managers by Area, 2009-2013

Figure 2.44 Subjective Well-Being, By Phase of Entrepreneurship and Stages of Economic

Development

Figure 2.45 Subjective Well-Being and Entrepreneurship Motivations and Gender, Stages of

Figure 2.46 Malaysia’s Subjective Well-Being, 2013

Figure 3.1 Model of Entrepreneurial Processes Affecting National Economy Growth

Figure 3.2 Entrepreneurial Finance

Figure 3.3 Government Policy

Figure 3.4 Government Entrepreneurship Programs

Figure 3.5 Entrepreneurship Education

Figure 3.6 R&D Transfer

Figure 3.7 Commercial and Legal Infrastructure

Figure 3.8 Entry Regulation: Market Openness and Market Dynamics

Figure 3.9 Access to Physical Infrastructure

Figure 3.10 Cultural and Social Norms

Figure 3.11 Start Up Opportunities

Figure 3.12 Knowledge and Skills for Start Up

Figure 3.13 Social Image

Figure 3.14 Intellectual Property Rights Protection

Figure 3.15 Support for Women

Figure 3.16 Attention to High Growth

Figure 3.17 Interest in Innovation

Figure 3.18 Wellbeing Conditions

Figure 3.19 Youth Entrepreneurship (14-20)

Figure 3.20 Young Adults Entrepreneurship (21-34)

Figure 3.21 Overall Rating for Malaysia’s Entrepreneurial Framework Conditions

Figure 3.22 Composite Indicators on Entrepreneurship Institutions, By Stage of Development

Figure 3.24 Malaysia’s Composite Indicators on Entrepreneurship Institutions, By Stage of

Development (1/2)

Development (2/2)

Figure 3.26 Malaysia’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development

Figure 3.28 Vietnam’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development

Figure 3.29 The Philippines’s Overall Composite Indicators on Entrepreneurship Institutions, By

Stage of Development

Figure 3.30 Indonesia’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development – 2013

Figure 3.31 Thailand’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development

Figure 3.32 Singapore’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development

LIST OF TABLES

Table 1.1 The Role of Entrepreneurship in Different Phases of Economic Development

Table 2.1 Gem Economies by Geographic Region and Economic Development Level

Table 3.1 Gem’s Key Entrepreneurial Framework Conditions

Table 3.2 Entrepreneurial Framework Conditions in 5 South East Asian countries – 2013

Table 4.1 National Entrepreneurship Framework

Universiti Tun Abdul Razak (UNIRAZAK) was established on 18 December 1997 as one of the first

private universities in Malaysia. The University was named after Malaysia’s second Prime Minister,

the late YAB Tun Abdul Razak bin Dato’ Hussein, and was officially launched on 21 December 1998

by Tun Abdul Razak’s eldest son, YAB Dato’ Seri Mohd Najib bin Tun Abdul Razak, current Prime

Minister of Malaysia.

UNIRAZAK recognized the imperative for Malaysia’s future entrepreneurs to equip themselves with

the proper tools and expertise to survive and flourish in today’s modern competitive economic

climate.

Thus UNIRAZAK founded The Bank Rakyat School of Business and Entrepreneurship (BRSBE) a unique

school, dedicated to providing quality education in entrepreneurial and business leadership in

Malaysia. BRSBE was formed with the view that entrepreneurial activity is one of the pillars of a

strong and vibrant economy. Although big business is extremely vital for economic health and

prosperity, a strong cadre of SMIs and SMEs is also essential to ensure a diverse economy and to

provide the required support to big business companies and the community. In fact the dramatic

economic development in Asia over the past two decades highlights the importance of

understanding entrepreneurship in the region.

In this regard UNIRAZAK through BRSBE is ideally poised to play both a national and regional role in

developing entrepreneurship and meeting challenges unique to Asia.

For information visit www.unirazak.edu.my

FOREWORD

Universiti Tun Abdul Razak has conducted the national GEM research study for 5 years

consecutively. This longitudinal report represents a milestone that marks our commitment to

entrepreneurship research, not just for our university, but for Malaysia.

Ours is a nation that is both young and vibrant. It is precisely at this stage that we need good

guidance. Just as a sapling needs protection and nurture before it can become an oak that can

withstand the stormy winds of change. Guidance for a nation takes many forms including the

wisdom of our leaders both past and present. Guidance also comes from research studies and they

serve as an evidenced based yardstick.

This research study not only takes cognisance of entrepreneurship activities but also measures

aspirations and attitudes. These measures are important as they serve not just to inform what has

happened in the past based on entrepreneurial activities undertaken but also what is needed in the

future based on the future perceptions of our entrepreneurial rakyat. Simultaneously it also allows

us to benchmark globally against other advanced innovation-driven economies.

This report should serve to strike our imagination forward to what we can be by knowing who and

where we are. Our goal is to become an entrepreneurial nation built and sustained by innovation

composed of ideas galvanised through our rakyat. In that regard this learning paves the way for

recommendations that can impact and improve policy.

Entrepreneurship and Innovation are the cornerstones of our universities focus and we aspire to

continue our work to make them strategic pillars of growth for Malaysia.

To all our stakeholders I invite you to take advantage of our research initiatives. Our joint efforts can

only further the success of Malaysia as we strive to become an innovation-driven developed nation

by the year 2020. Lastly I thank the author and the GEM team for sharing and contributing to the

aspirations of our university.

Prof. Datuk Seri Dr. Md Zabid Haji Abdul Rashid

President & Vice Chancellor

Universiti Tun Abdul Razak

Executive Summary

The sampling in this GEM 2013 research study covered an estimated 75% of the world’s population

and 90% of the world’s total GDP. The research is done using the GEM APS and NES surveys.

Malaysia has participated every year since 2009 thus allowing for a longitudinal study. This

individual-level measurement goes to the root of business activity and allows for a more

comprehensive account of business activity as compared to measuring formally registered

businesses. It captures both formal and informal business activity measuring Malaysia’s aspirations,

attitudes and activities.

Malaysia is amongst the few economies in Asia Pacific and South Asia where finance and physical

infrastructure to support entrepreneurship is widely available. More importantly it has a forward

looking entrepreneur-friendly national policy. In this regard Malaysia leads the region where tertiary

enrolment rates are concerned when compared with the region. In fact within SEA, Malaysia and

Singapore’s education budgets are amongst the highest. A positive trend is the closing gap between

rural and urban new business owners between 2009 and 2013. This five year study reveals that for

nascent entrepreneurs1 the gaps have reduced considerably due the governments initiatives

targeting the rural sectors as much as the urban sectors. Malaysia has amongst the best start-up

funding provisions not just regionally but globally as well.

The attitudinal measures shows that proactive Malaysian government policies and evolving cultures2

may have played a role in reducing individuals fear of failure, increasing perceived capabilities and

increased perception of entrepreneurial opportunities. These attitudes tend to positively drive up

and sustain entrepreneurial businesses and greatly work to reduce the fear of failure whilst

increasing optimism for would be entrepreneurs.

However despite this Malaysia’s TEA3 is the second lowest within Asia Pacific and South Asia

surpassed only by Japan. Intentions for entrepreneurship and attitudes towards entrepreneurship

are also among the lowest within the region. Malaysia's lack of entrepreneurial education in primary

and secondary schools, national regulations4, R&D transfer and market openness represent gaps

that can impede entrepreneurial growth.

Malaysia’s TEA rate is 6.6% against an average of 12.4% across Asia Pacific and South Asia. The

nation reported an average GDP annual growth rate of 5.78% between 2010 and 2013.5 With

economic growth more institutions are created that offer up increasing and relatively lucrative

employment options. This is further predicated by the 3% unemployment level in December 2013.

Malaysia has successfully transformed itself from exporting of raw materials and basic

manufacturing to a more diversified economy which includes high end manufacturing and services

which also contributes to the moderately lower TEA rate at this stage of Malaysia’s development.

Over the last five years Malaysia’s overall trend appears to be a lowering of Necessity-Driven TEA

even as Improvement-Driven Opportunity TEA grows. Where opportunities are improvement driven

there is an innate tendency for entrepreneurs to select business opportunities rather than accept

just any business. This correlates with the reduction of Business Discontinuation over the last 5

years. Consequently the Established Business ownership rate sees an upward trend. It is noteworthy

1 i.e. individuals starting new enterprises and are less than three months old. 2 i.e. cultures embracing innovation and entrepreneurship 3 Total early stage entrepreneurial activity 4 Refers to taxes and bureaucracy. Here we note that despite being ranked 6th overall for World Banks Ease of Doing Business the individual ranking for starting a business is 16, paying taxes 36, enforcing contracts 30 and resolving insolvency 42. 5 Department of Statistics Malaysia – GDP Annual Growth Rate

that a prevalent reason (45% of responses) for business discontinuation is low profitability. Problems

with financing was comparatively less (10% of responses). The government initiatives to provide

funding for entrepreneurs through their agencies have been effective even by global standards.

Where EEA6 is concerned Malaysia is rated the lowest amongst the efficiency-driven economies.

Existing organisations in Malaysia still lack the propensity for new initiatives and opportunities by

their employees. It signals a lack of innovativeness when it comes to exploiting their human

potential.

Growth aspirations is the clearest manifestation of entrepreneurship that can directly be linked to

the number one objective of most governments which is to create more jobs. However new

businesses expectations to create more than 20 jobs in Malaysia is rated lowest in Asia Pacific and

South Asia at 0.1%. The highest were Singapore and Taiwan both rated at 2.5%. These numbers are

critical as they point to the quality and sustainability of new businesses in Malaysia. A further

indication is where Malaysia’s data displays a low level of international orientated entrepreneurs.

Over the five years more than 70% on average of TEA have no customers outside the country. The

growing of jobs is important but having businesses with an innovative orientation that will allow for

consistent renewal is crucial for the long run.

In measuring Malaysia’s well-being it is seen that established business owners have a higher level of

satisfaction with their work and personal life. Those who are in the early stage for opportunity are

also fairly satisfied based on their subjective well-being answers. Conversely those who are in the

early stage business activity out of necessity are least satisfied overall. Fortunately there are fewer

of them as Malaysia’s TEA is highly opportunity oriented.

Why does Malaysia have such low entrepreneurial growth both in terms of job creation and TEA and

what can we do about it? Firstly in Malaysia there is ample options for potential entrepreneurs. Our

overall economic growth becomes a double edged sword drawing human resources away from the

plunge into entrepreneurship. The solution would be to recalibrate our emphasis and make EEA

equally our focus as we do TEA.

Secondly we lack stringent evaluations of proposed businesses by nascent entrepreneurs. We tend

to take a less than Kirznerian view7 when what is needed is a Schumpeterian view.8 Currently the

approach is akin to steroidal entrepreneurship. It only serves to conjure a picture that meets data

statistics and government agencies KPI’s. When the waves of competition both regional and global

arrive those ‘me-too’ businesses will be the first to falter.

Thirdly we need to cure the pain points of our national entrepreneurship strategy. It needs to

spearhead the enhancement of education and training, facilitate R&D transfer, emphasize attention

to high growth business and inculcate both TEA and EEA as benchmarks for measurement. A further

sub condition will be to include entrepreneurship education within primary, secondary and

vocational schools and to have more inclusive government programs involving the private sector

with a view to enhance the abilities and skills for start-ups.

The global scenario has shown that the private sector, driven by expediency and urgency, is best

placed to achieve this. The government’s role will be as gate constructors and facilitators of an

entrepreneurial ecosystem. An ecosystem that facilitates private sector initiative. For sure much has

6 Entrepreneurial Employee Activity includes corporate entrepreneurship or intrapreneurship. 7 i.e. an incremental approach 8 i.e. a view that promotes significant innovation that changes small businesses into larger ones.

been done and so now is the time to hone those measures and prepare, develop and make

sustainable an innovation-driven economy.

Chapter 1: Introduction and Background

Entrepreneurship is well understood as a key mechanism that can alleviate poverty, create

employment, uplift women and engage the youth of a nation. And this is achieved in many

innovative ways. At its minimum Cantillon’s theory of entrepreneurship comes to mind. In Brown

and Thornton’s (2013) review of Cantillons work, entrepreneurship is, ‘anyone who invests (in the

sense of acquiring and employing resources) with the purpose of selling goods in the future at an

uncertain price’ and is, ‘therefore narrowly defined but broadly applicable’.

Today more than ever entrepreneurship is a necessity for economies. At its core it is the focus of the

a gearing for real innovation which results in self-fulfilment as entrepreneurs endeavour, sometimes

in baby steps and other time in leaps, towards improving and creating a prosperous economy; and in

tandem a better world.

However entrepreneurial idealism without the requisite actions will remain potential unexploited

and this is mostly the case with our potential entrepreneurs. And this is where the shortcomings of

an entrepreneurial mind set and foresight and an insufficient eco system structure needs to be

scrutinised.

Malaysia is amongst the few economies in Asia Pacific and South Asia where finance and physical

infrastructure to support entrepreneurship is widely available. However despite such positives

entrepreneurial activity in terms of total early stage entrepreneurial activity is the second lowest in

Asia Pacific and South Asia surpassed only by Japan. Intentions for entrepreneurship and attitudes

towards entrepreneurship are also among the lowest within the region. Job growth expectations is

relatively low at below 0.01%9 of new businesses expecting to hire more than 20 workers. Close to

84% (average over the last 5 years) see themselves creating less than 5 jobs.

The country has a forward looking entrepreneur friendly national policy. This is supplemented by

good finance opportunities and support, accelerated government programs, strong internal market

dynamics, commercial services and physical infrastructure. These conditions equal or exceed those

found in other efficiency and even some innovation driven economies. However Malaysia's lack of

entrepreneurial education in primary and secondary schools, national regulations-taxes and

bureaucracy, R&D transfer and market openness represent gaps that can impede entrepreneurial

growth.

This research study and trends analysis over 5 years as such looks to shed some light on our

entrepreneurial position. Who and where we are and how we can move forward to achieve greater

entrepreneurial success as we aspire to make entrepreneurship and innovation a key pillar of growth

for Malaysia.

1.1 The Global Entrepreneurship Monitor (GEM) Research Project

Entrepreneurship globally and particularly in South East Asia is reflected in many different ways and

certainly different languages. However the key denominator is that it has become an increasingly

fundamental and integral part of each economies growth. There is an upsurge in awareness over the

9 in 2013 compared against Asia Pacific and South Asia economies

last 10 years. This is apparent from evidence ranging from media coverage to government initiatives

in almost all 10 countries.

THE GEM RESEARCH INITIATIVE

The Global Entrepreneurship Monitor was conceived in September 1997 by Michael Hay of London

Business School (LBS) and Bill Bygrave of Babson College. LBS and Babson funded a prototype study

that year. In order to govern the interests of the GEM National Teams, the Global Entrepreneurship

Research Association (GERA) was formed in 2004 to serve as the oversight body for GEM. GERA is a

not-for-profit organization governed by representatives of the national teams, the two founding

institutions and sponsoring institutions.

Now, fifteen years later, GEM has measured entrepreneurship in 104 economies, and has gained

widespread recognition as the most authoritative longitudinal study of entrepreneurship in the

world. In 2013, more than 197,000 individuals have been surveyed and approximately 3,800 country

experts on entrepreneurship participated in the study across 70 economies, collectively representing

all regions of the world and a broad range of economic development levels. The samples in the GEM

study covered an estimated 75% of the world’s population and 90% of the world’s total GDP. In

addition to its annual measures of entrepreneurial attitudes and activity, GEM analysed well-being

as a special topic focus in 2013.

GERA’s mission is to contribute to global economic development through entrepreneurship. To

achieve this, GERA seeks to increase worldwide knowledge about entrepreneurship by conducting

and disseminating world class research that:

1. Uncovers and measures factors impacting the level of entrepreneurial dynamics among

economies,

2. Aids in identifying policies that may lead to appropriate levels of entrepreneurial activity, and

3. Increases the influence of education in supporting successful entrepreneurship.10

GEMs core role of assessing the contribution of entrepreneurship to economies is thus most

opportune. SEA as a region displays a wide spectrum of economies that does not easily fit into any

one category of description. GEM has both a conceptual and methodological approach that

measures realities from the ground up. Both the “Kirznerian” and “Schumpeterian” views are

encompassed. And this fits well with SEA's diversity and dynamism. An entrepreneurship that

galvanizes ambition, forces competition and spurs structural changes in economies, which leads to

job creation and national competitiveness.

The GEM research project makes it contribution by focussing on;

The different types and roles of entrepreneurship within economies being studied.11

How and to what extent individuals show relevant attitudes and perceptions towards

entrepreneurship.

Involvement in entrepreneurial activity compared between countries as well as regionally.

The environment or external conditions that entrepreneurs find themselves in.

The impact of these factors upon entrepreneurs over time.

10 GEM Global Report 2013 11 The type of entrepreneurship does not find a definitional consensus in literature. It ranges from self-employment, start-ups, small business activity and contrasted between innovative and replicated enterprises (Henrekson and Sanandaji, 2013)

As a result, GEM was established with the following objectives:

• To allow for comparisons with regard to the level and characteristics of entrepreneurial activity

among different economies;

• To determine the extent to which entrepreneurial activity influences economic growth within

individual economies;

• To identify factors which encourage and/or hinder entrepreneurial activity; and

• To guide the formulation of effective and targeted policies aimed at stimulating entrepreneurship

GEM provides a comprehensive view of entrepreneurship across the globe by measuring the

attitudes of a population, and the activities and characteristics of individuals involved in various

phases and types of entrepreneurial activity.

Research teams in each participating economy administer an Adult Population Survey (APS) of at

least 2,000 adults annually. Complementing the APS is a National Expert Survey (NES), which

provides in-depth opinions from selected national experts on the factors that impact the nature and

level of entrepreneurship in each economy.12

GEM defines entrepreneurship as “any attempt at new business or new venture creation, such as

self-employment, a new business organization, or the expansion of an existing business, by an

individual, a team of individuals, or an established business” (Bosma, Wennekers and Amorós, 2012,

pg. 9).

Effectively GEM takes into consideration the multiple phases of the entrepreneurial process (Figure

1.1). By measuring individual participation keen insights may be observed within each stage of the

process. Each stage within societies that have different rates of development will undergo varying

levels of participation. Every stage of the process essentially leads into the next phase and GEM

looks to measuring the key phases within this broad spectrum. The key phases measured are as

follows;

Potential entrepreneurs – those who see opportunities in their environments, have the

capabilities to start businesses and are undeterred by fear of failure.

Intentional entrepreneurs – those who intend to start in the future (within the next three

years).

Nascent entrepreneurs – those who have taken steps to start a new business, but have not

yet paid salaries or wages for more than three months.

New entrepreneurs – those who are running new businesses that have been in operation

between three and 42 months and are paying salaries.

Established business owners – those who are running a mature business and have been

operating for more than 42 months.

Discontinued entrepreneurs – those who, for whatever reason, have exited from running a

business in the past year.

This individual-level measurement goes to the root of business activity and allows for a more

comprehensive account of business activity as compared to measuring formally registered

businesses. Thus GEMs design allows for the capture of both formal and informal business activity

across countries where, in some economies, the latter is equally impactful. In a broader sense

societal attitudes towards entrepreneurship get measured. Understanding the views of society

GEM Global Report, 2013.

towards entrepreneurship allows for better assessment for policy makers. Realistic and meaningful

evidence will provide greater clarity for engagement and the uplifting of society.

Figure 1.1 The Entrepreneurship Process and GEM Operational Definitions

GEM surveys have now been conducted in over 90 economies, amongst the main contributions of

GEM include:

Measurement of entrepreneurial activity using original and broad indicators that can be

adjusted to meet different key theoretical approaches, from broad to narrow ones.

Use of a consistent conceptual structure linking national contexts to individual-level

characteristics of entrepreneurship, resulting in different national entrepreneurial profiles

that have distinctive impacts on economic development.

Generating a stable source of information for use by governments and society, that allows

observing the trends in entrepreneurial activity and their associated key indicators.

Demonstrating vast differences in entrepreneurship across general stages of economic

development and global regions.

Assessment of the main conditions of the environment for entrepreneurship in each

participating country.

Contribution to the entrepreneurial impulse in the participating countries and raising public

awareness about its economic and social importance in many different areas.

Providing new information on specific topics such as Entrepreneurship and Gender;

Entrepreneurship Financing Process; High Growth Entrepreneurship, Education and Training

Entrepreneurship, Social Entrepreneurship, Entrepreneurial Employee Activity and most

recently Well Being.13

Adapted from Niels Bosma, Alicia Coduras, Yana Litovsky and Jeff Seaman, 2012, GEM Manual: A report on the design, data and quality control of the Global Entrepreneurship Monitor

1.2 The GEM Conceptual Model

There is wide agreement on the importance of entrepreneurship for economic development.14

Business entrepreneurs drive and shape innovation, they speed up structural changes in the

economy, and they introduce new competition, thereby contributing to productivity. Social

entrepreneurs perform a similar function in the social economy, filling gaps in social needs that are

left unfilled or poorly addressed by both business and governments.

While important, the contribution of entrepreneurs to an economy also varies according to its phase

of economic development. This report is framed around a model, introduced in the GEM 2008

report. It includes a distinction among phases of economic development in line with Porter’s

typology of “factor-driven economies,” “efficiency-driven economies” and “innovation-driven

economies”.15 As previous GEM reports have shown, necessity-driven self-employment activity

tends to be higher in less developed economies. Such economies are unable to keep pace with the

demand for jobs in high-productivity sectors, and so many people must create their own economic

activity. As an economy develops, the level of necessity-driven entrepreneurial activity gradually

declines as productive sectors grow and supply more employment opportunities. At the same time,

opportunity driven entrepreneurial activity tends to pick up with improvements in wealth and

infrastructure, introducing a qualitative change in overall entrepreneurial activity. Further details on

the role of entrepreneurship in different phases of economic development are provided in Table 1.1.

Evidence is documented by e.g. Carree and Thurik (2003), Acs (2006), Audretsch (2007). 15

Porter, Sachs and McArthur, 2002

Table 1.1 - The Role of Entrepreneurship in Different Phases of Economic Development

Entrepreneurship in

Factor-Driven Economies

Economic development consists of changes in the quantity and character of economic value added (Lewis, 1954). These changes result in greater productivity and rising per Capita incomes, and they often coincide with migration of labour across different economic sectors in the society, for example from primary and extractive sectors to the manufacturing sector, and eventually, services (Gries and Naude, 2008). Countries with low levels of economic development typically have a large agricultural sector, which provides subsistence for the majority of population who mostly still live in the countryside. This situation changes as industrial activity starts to develop, often around the extraction of natural resources. As extractive industry starts to develop, this triggers economic growth, prompting surplus population from agriculture to migrate toward extractive and emergent scale-intensive sectors, which are often located in specific regions. The resulting oversupply of labour feeds subsistence entrepreneurship in regional agglomerations, as surplus workers seek to create self-employment opportunities in order to make a living.

Entrepreneurship in Efficiency-Driven Economies

As the industrial sector develops further, institutions start to emerge to support further industrialization and the build-up of scale in the pursuit of higher productivity through economies of scale. Typically, national economic policies in scale intensive economies shape their emerging economic and financial institutions to favour large national businesses. As increasing economic productivity contributes to financial capital formation, niches may open in industrial supply chains that service these national incumbents. This, combined with the opening up of independent supplies of financial capital from the emerging banking sector, would spur opportunities for the development of small-scale and medium-sized manufacturing sectors. Thus, in a scale-intensive economy, one would expect necessity-driven industrial activity to gradually fall and give way to an emerging small-scale manufacturing sector.

Entrepreneurship in Innovation-Driven Economies

As an economy matures and its wealth increases, one may expect the emphasis in industrial activity to gradually shift toward an expanding service sector that caters to the needs of an increasingly affluent population and supplies the services normally expected of a high-income society. The industrial sector evolves and experiences improvements in variety and sophistication. Such a development would be typically associated with increasing research & development and knowledge intensity, as knowledge-generating institutions in the economy gain momentum. This development opens the way for the development of innovative, opportunity-seeking entrepreneurial activity that is not afraid to challenge established incumbents in the economy. Often, small and innovative entrepreneurial firms enjoy an innovation productivity advantage over large incumbents, enabling them to operate as ‘agents of creative destruction.’ To the extent that the economic and financial institutions created during the scale-intensive phase of the economy are able to accommodate and support opportunity-seeking entrepreneurial activity, innovative entrepreneurial firms may emerge as significant drivers of economic growth and wealth creation.

GEM takes a comprehensive socio-economic approach and considers the degree of involvement in

entrepreneurial activity within a country, identifying different types and phases of

entrepreneurship16. This approach, and especially the focus on the individual as the embodiment of

entrepreneurship, differentiates GEM measures from other data sets that measure new business

registrations17. Figure 1 visualizes the model that drives GEM research. The GEM model documents

how entrepreneurship is affected by national conditions. It also shows that GEM considers three

major components of entrepreneurship: attitudes, activity and aspirations. GEM monitors

entrepreneurial framework conditions in each country through harmonized surveys of experts in the

field of entrepreneurship18.

The GEM model incorporates an understanding of how economies change as they develop, and the

changing nature and contribution of entrepreneurship in this development. For factor-driven

economies, economic development is primarily driven by basic requirements: development of

institutions, infrastructure, macroeconomic stability and health and primary education. In efficiency-

driven economies, government focus is (or should be) on ensuring smooth mechanisms such as a

proper functioning of the market; higher education systems, goods and lab or markets and

technological readiness. Even though these conditions are not directly related to entrepreneurship

in the Schumpeterian sense of “creative destruction”, they are indirectly related since the

development of markets will also attract and enable more entrepreneurship. Finally, for countries

whose economic development is primarily innovation-driven, entrepreneurial framework conditions

become more important as levers of economic development than basic requirements or efficiency

enhancers. The outcome of the model is national economic growth through, as an example, job

creation and technical innovation. The GEM data collection efforts allow for an exploration of the

role of entrepreneurship in national economic development. GEM’s ability to map this territory

grows with each annual cycle as combined sample sizes grow and as trends over time become

apparent.19

16 See e.g. Shane (2009) for the importance of identifying differences in types and phases of entrepreneurship. 17 For an explanation about these differences see Bosma et al., 2009 p. 12 “Main distinctions between GEM Adult population Survey Data and Business Registration Data” 18 The National Experts Survey provides qualitative and subjective information on the state of several framework conditions whose evaluation is not measured by objective and quantitative variables. For the rest of contextual variables, GEM collects each year, objective information from the most reputed sources offering it: World Bank, United Nations, OECD, World Economic Forum and many others. 19 Source: GEM Global Report 2013.

1.3 GEM Methodology20

In line with its objectives, GEM takes a broad view of entrepreneurship and focuses on the role

played by individuals in the entrepreneurial process. Unlike most entrepreneurship data sets that

measure newer and smaller firms, GEM studies the behaviour of individuals with respect to starting

and managing a business. This differentiates GEM data from other data sets, most of which record

firm-level data on (new) firm registrations, as highlighted in the GEM 2008 Global Executive Report

(see Bosma et al., 2009, p. 12). New firms are, most often, started by individuals. Even in established

organizations, entrepreneurial attitudes, activities, and aspirations differ in each individual. Another

guiding principle of GEM research is that entrepreneurship is a process. Therefore GEM observes the

actions of entrepreneurs who are at different stages of the process of creating and sustaining a

business.

Every year each national team is responsible for conducting a survey of at least 2000 people within

its adult population. The Adult Population Survey is a survey of attitudes towards entrepreneurship

in the general population but it also asks people whether or not they are engaged in start-up activity

or own or run a business.

GEM Global 2013

The individual national team surveys are all collected in exactly the same way and at exactly the

same time of year to ensure the quality of the data. The individual national team surveys are

harmonized into one master dataset that allows users to investigate entrepreneurial activity at

various stages of the entrepreneurial process, as well as to study a variety of factors characterizing

both entrepreneurs and their businesses in each participating nation and across countries.

Adult Population Survey (APS)

Each participating economy conducts a survey of a random representative sample of at least 2,000

adults (over 18 years old). Surveys are conducted at the same time of year (generally between April

and June), using a standardized questionnaire developed by the GEM consortium. The APS is

generally conducted by an independent survey vendor, chosen by each economy’s GEM team. The

vendor submits a proposal for the GEM data collection, which is reviewed by the GEM coordination

team on various criteria. The raw data is sent directly to the GEM data team for review, quality check

and uniform statistical calculations before being made available to the participating economies.21

The most up-to-date information on data collection methodology is available in the GEM Data

Manual, available on www.gemconsortium.org.

National Expert Survey (NES)

The National Experts Survey provides insights into the entrepreneurial start-up environment in each

economy with regard to the nine entrepreneurial framework conditions:

• Financing

• Governmental policies

• Governmental programs

• Education and training

• Research and development transfer

• Commercial infrastructure

• Internal market openness

• Physical infrastructure

• Cultural and social norms

Entrepreneurial Framework Conditions (EFCs) reflect major features of a country’s socio-economic

milieu that are expected to have a significant impact on the entrepreneurial sector. The GEM model

maintains that, at the national level, different framework conditions apply to established business

activity and to new business activity. The relevant national conditions for factor-driven economic

activity and efficiency-driven economic activity are adopted from the Global Competitiveness Report

(GCR) 2013-2014.

With respect to innovation-driven economic activity, the GEM model contributes to the GCR

perspective on economic development by identifying framework conditions that are specific to

innovation and entrepreneurship (see Levie and Autio, 2008 for a theoretical underpinning). As Acs

Adapted from GEM Global Report 2013

and Armington (2006), among others, proposes, it is the entrepreneurial mechanism that turns

innovation into economic output. A lack of entrepreneurship can therefore be seen as a bottleneck

for innovation-driven countries in achieving their growth ambitions.

It is important to recognize that all three principal types of economic activity: factor-driven,

efficiency-driven, and innovation-driven, are present in all national economies. But their relative

prevalence and their contribution to economic development varies. The GCR proposition is that each

phase of economic development has a different optimal combination of these three activities. The

three phases are labelled according to the activity that is most significant for that phase. Thus, the

relative importance of entrepreneurial framework conditions to a country’s advancement in

economic development may vary by phase of economic development.

The NES sample comprises a minimum of 36 respondents, with four experts drawn from each of the

entrepreneurial framework condition categories. Out of this sample, a minimum of 25% must be

entrepreneurs or business owners, and 50% must be professionals. Additional aspects such as

geographic distribution, gender, the public versus private sector, and level of experience are also

taken into account in selecting the sample. Manual, available on www.gemconsortium.org.22

Adapted from GEM Global Report 2013

Chapter 2: Main Results of Malaysia Entrepreneurship Research Study

The importance of entrepreneurship and its contribution to economic theory by Brown and

Thornton (2013)23 lends description to entrepreneurship in South East Asia. Their evidence from

Cantillon’s theory of entrepreneurship suggest pointedly that entrepreneurship ‘is not merely an

isolated brick in his system of economics, but in fact is better understood as the tool used to build a

brick wall’. This would appear to describe how entrepreneurship plays a key role in Malaysia. A

gradual building up of capacity.

Malaysia has now participated in 5 years of consecutive GEM research from 2009 to 2013. This

marks a major milestone as it is the first time we have undertaken a research survey across all

Malaysian states consistently. In order to provide a better insight GEM frames the economies into a

competitiveness classification using the World Economic Forum’s Global Competitiveness Report

classification and GEMs regional groupings. By using both groupings, we can compare economies

across similar development levels and geographic locations. Table 2.1 below shows the countries

involved in the GEM 2013 assessment by these two dimensions.

Table 2.1 GEM ECONOMIES BY GEOGRAPHIC REGION AND ECONOMIC DEVELOPMENT LEVEL24

Factor- Driven Economies Efficiency-Driven Economies Innovation-driven Economies

Latin America & Caribbean

Argentina2), Brazil

2), Chile

2), Colombia,

Ecuador, Guatemala, Jamaica, Mexico

2), Panama

2), Peru, Suriname,

Uruguay2)

Trinidad and Tobago

Middle East & North Africa

Algeria1), Iran

1), Libya

1) Israel

Sub-Saharan Africa

Angola1), Botswana

1), Ghana,

Malawi, Nigeria, Uganda, Zambia

South Africa

Asia Pacific & South Asia

India, Philippines1), Vietnam China, Indonesia, Malaysia

2), Thailand

Japan, Korea, Singapore,

Taiwan

Europe – EU28

Croatia2), Estonia

2), Hungary

2), Latvia

Lithuania2), Poland

2), Romania, Slovak

Republic2)

Belgium, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovenia, Spain, Sweden, United Kingdom

Europe – Non EU28

Bosnia and Herzegovina, Macedonia,

Russian Federation2) Norway, Switzerland

North America

Canada, Puerto Rico*, United

States

1) In transition phase between Factor-Driven and Efficiency-Driven

2) In transition phase between Efficiency-Driven and Innovation-Driven

* Puerto Rico is considered to be a part of North America for its status as an associate state to

the United States, even though this economy shares many characteristics of Latin American and

Caribbean countries.

2.1 Entrepreneurial Attitudes and Perceptions

23 Brown, C. and Thornton, M., 2013, How Entrepreneurship Theory Created Economics, The Quarterly Journal of Austrian Economics, Vol. 16, No. 4, 401–420. 24 GEM Global 2013

A unique feature of this study is the capturing of attitudes and perceptions towards

entrepreneurship in Malaysia. Perceptions relate to individual assessments that relate to

perceptions of opportunities, self-efficacy, fear of failure and acquaintance with entrepreneurship

through others in the personal network. Attitudes, on the other hand, capture assessments by the

individual respondent, on what the national beliefs are with respect to some items associated with

entrepreneurship. These national beliefs are also assessed in the GEM National Expert Surveys (NES).

Table A1 in the Appendix displays the results for such an assessment by participating countries by

phase of economic development.

Individuals’ Perceptions: Opportunities, Capabilities and Fear of Failure

The perception of entrepreneurial opportunities measured in Appendices Table A1 reflects the

percentage of individuals who believe there are opportunities to start a business in the area they live

in. Malaysians as a percentage of population (18-64) rates entrepreneurial opportunities at 41%.

Within the Asia Pacific and South Asia region with an average entrepreneurial opportunity

perception of 34% this is fairly high. Indonesia is highest at 47%. The countries with the lowest

opportunity perception are Japan (8%) and Korea (13%).

Perceived capabilities reflect the percentages of individuals who believe they have the required

skills, knowledge and experience to start a new business. Malaysians rate their capabilities at 28%

against the average for the region at 40%. Indonesia and the Philippines are highest at 62% and 68%

respectively. The lowest for the region is Japan at 13%. This marked disparity may be explained by

the levels of skills, knowledge and experience required based on the phase and innovation

development levels of each economy. A highly developed economy will call for higher skills due to

automation and requirements for R&D development as compared to lower basic skills requirement

to start and manage businesses in less developed economies. This would directly affect the

perceptions of capabilities of individuals.

The measure of fear of failure (when it comes to starting your own business) applies to those who

perceive opportunities only.25 In this measure, within the Asia Pacific and South Asia region,

Malaysia has the lowest fear of failure amongst those who see opportunities at 33% against the

regional average of 41%. Malaysia is closely followed by China (34%) and Indonesia (35%). Vietnam

ranks highest at 57%. Proactive Malaysian government policies and evolving cultures (embracing

innovation and entrepreneurship) have played a role in causing such perceptions amongst those

who anticipate opportunities for entrepreneurship.

Figure 2.2 below provides an overview of entrepreneurial perceptions across phases of economic

development.

GEM Global Report 2013.

Figure 2.2 Entrepreneurial Perceptions and Attitudes: Averages by Phase of Economic Development

2.2 Entrepreneurial Intentions

The next stage in the entrepreneurship process takes place when a potential entrepreneur expresses

the intention to start a new business in the foreseeable future. Entrepreneurial intentions, defined

by the percentage of individuals who expect to start a business within the next three years (those

who are currently already entrepreneurially active are excluded from this measure presented in

Table A1 in the Appendix) also differ widely across the economies in each stage of economic

development. On average they tend to be highest in factor-driven economies where fewer good job

alternatives are available and more necessity-based entrepreneurship can be expected. In efficiency-

driven economies and especially in innovation-driven economies, entrepreneurial intentions are

typically lower as is show on Figure 2.2 above. For many of these countries, it should be noted that

economic disparities are high and that the entrepreneurial intentions cover a wide range from

substantial amounts of local, necessity-based self-employment to relatively scarce high aspiration

and internationally oriented entrepreneurship26

Malaysia’s entrepreneurial intentions rank at 12% against an average of 21% for the Asia pacific and

South Asian region. Korea is ranked the same as Malaysia. Philippines has the highest

GEM Global Report 2013

Factor-Driven Efficency-Driven Innovation-Driven

entrepreneurial intention at 44% whilst Japan is lowest at 4%. Figure 2.3 and Figure 2.4 provides a

five year trend of intentional entrepreneurs in Malaysia.

Figure 2.3 Intentional Entrepreneurs (those who intend to start in the future, within the next 3

years)

Figure 2.4 Early Stage Perceptions, 2009-2013

Nascent entrepreneurs are those who have taken steps to start a new business, but have not yet

paid salaries or wages for more than 3 months. Malaysia’s overall 5 year trend where nascent

entrepreneurs are concerned shows a staggered upward trend where knowing an entrepreneur,

38.1 77.4 65.4 75.9 73

76.2 69.2

70.1 65.2 33.3

76.9 82.7

82.8 77.5

25.5 35.6

2009 2010 2011 2012 2013

Fear of failure would preventfrom starting a business

Has the required knowledges,skills, and experience to start abusiness

Sees good start-up opportunitiesin the six months in his/her area

Personally knows anentrepreneur who started abusiness in the past 2 years

80 75.9

68.2 71.4

43.1 46.4

2009 2010 2011 2012 2013

Personally knows an entrepreneur who started a business in the past 2 years

Sees good start-up opportunities in the six months in his/her area

Has the required knowledges, skills, and experience to start a business

Fear of failure would prevent from starting a business

opportunities optimism, and skills and abilities are concerned. Fear of failure on the other hand

shows a reducing trend. This dichotomous relationship has played out one against the other;

networking, experience and skills improving thus naturally causing a reduction in fears in

entrepreneurship. This is illustrated in Figure 2.5 below.

Figure 2.5 Nascent Entrepreneurs, 2009-2013

New entrepreneurs measured are those who are running new businesses that have been in

operation between 3 and 42 months and are paying salaries. Here we see that new Malaysian

entrepreneurs have an overall higher networking approach, envision good opportunities and

consistently see themselves as having the requisite knowledge and skills to start a business. This

difference between nascent and new entrepreneurs is significant as it highlights key aspects that

should be emphasized in training and support for nascent entrepreneurs if they are to continue their

entrepreneurial endeavours. Their fear of failure overall is also trending lower over the last 5 years.

Figure 2.6 illustrates the state over 5 years for new entrepreneurs in Malaysia.

Figure 2.6 New Entrepreneurs, 2009-2013

Established business owners are those who are running a mature business and have been operating

for more than 42 months. The overall trend over 5 years is pronounced and indicative of the

2009 2010 2011 2012 2013

Sees good start-upopportunities in the sixmonths in his/her area

Has the required knowledges,skills, and experience to starta business

2009 2010 2011 2012 2013

importance of networking, industry awareness and the requirement for knowledge, skills and

entrepreneurial experience. Intuitively we also see that fear of failure drops drastically. Thus

confidence levels are higher for established business owners (figure 2.7).

Figure 2.7 Established Business Owners

The above attitudinal measures about entrepreneurship indicates to an extent the importance of

having the requisite skills and abilities and the right mentorship. These attitudes tend to positively

drive up and sustain entrepreneurial businesses and greatly work to reduce the fear of failure whilst

increasing optimism for would be entrepreneurs.

2.3 National Attitudes: Career Choice, Status and Media Attention

When asked about their judgment of the degree to which entrepreneurship is accepted as a good career choice, individuals around the globe tend to be overwhelmingly positive, but on average, the percentage of positive assessments is lower in innovation-driven economies than in the other two groups. With the exception of relative high-income economies like Netherlands and United Kingdom and some other factor-driven economies like Philippines and India more than half of the inhabitants believe that entrepreneurship is considered to be a good career choice. When we consider the status of successful entrepreneurs, the average judgment appears to be similar in efficiency-driven economies and innovation-driven economies, while it is higher in factor-driven economies. Malaysia rates career choice at 42% against an average of 61% across the Asia pacific and South Asian region. The Philippines rates career choice the highest at 85% and Japan the lowest at 31%. Globally this is in tandem with the contrasting perceptions between factor driven and innovation driven economies. Finally about attitudes, media attention for entrepreneurship is assessed by asking the individuals whether they believe that there are plenty of reports of new and growing firms in the news and in other communication media. Economies from several global regions and covering all three economic phases score high on this item, including Brazil, Uganda, Taiwan, Finland and Canada. The lowest scores are observed for Greece, Hungary, Luxemburg and Libya, where only around one-third of responses were affirmative.27

GEM Global Report 2013.

2009 2010 2011 2012 2013

In Malaysia media attention for entrepreneurship is rated at 62% compared against the Asia Pacific

and South Asia average of 73%. Taiwan scores highest at 87% and japan lowest at 58%. Media

attention does positively impact attitudes in entrepreneurship where success stories impact

motivations for entrepreneurship. However over the last five years it would appear that Media

attention, High status and career choice for entrepreneurship in Malaysia has generally been lower

(Figure 2.8). There may be various reason attributed to this including employment opportunities and

with gradual up skilling a greater awareness of entrepreneurial challenges. This follows the trend of

innovation driven and high income economies.

Figure 2.8 Entrepreneurial Attitudes and Perceptions – 2009-2013

2.4 Entrepreneurial Activities

There are many indicators related to entrepreneurial activity included in the GEM data base. The measure that is most used is Total early-stage Entrepreneurial Activity (TEA). Other important measures include nascent entrepreneurship, prevalence rates of owner-managers in new firms as well as in established firms, and rates of individuals discontinuing their business. GEM conceptualizes entrepreneurship as a continuous process that includes nascent entrepreneurs involved in setting up a business, entrepreneurs who own and manage a new business and entrepreneurs who own and manage an established business. As a result, indicators on several phases of the entrepreneurial process are available. Table A2 (Appendix) follows these entrepreneurial activity prevalence rates by geographic region. Taken together, these prevalence rates form a first glance of entrepreneurial dynamics for each of the economies.

0 20 40 60 80 100

Perceived Opportunities

Perceived Capabilities

Fear of Failure

Entrepreneurial Intentions

Entrepreneurship as a Good Career Choice

High Status to Successful Entrepreneurs

Media Attention for Entrepreneurship

2013 2012 2011 2010 2009

The most popular measure of GEM, the Total Early-Stage Entrepreneurial Activity (TEA) rate, which consists of the percentage of individuals aged 18–64 in an economy who are in the process of starting or are already running new businesses. GEM has focused on the phase that combines the stage in advance of the start of a new firm (nascent entrepreneurship) and the stage directly after the start of a new firm (owning-managing a new firm). Taken together this phase is denoted as “early-stage entrepreneurial activity” (TEA).28 This is the phase that is crucial for most entrepreneurs. At the macro level, most dynamism, future job creation and innovation can be expected from this group of entrepreneurs.29

TOTAL EARLY-STAGE ENTREPRENEURIAL ACTIVITY

An economy’s Total Early-stage Entrepreneurial Activity (TEA) rate is defined as the prevalence rate

of individuals in the working age population who are actively involved in business start-ups, either in

the phase in advance of the birth of the firm (nascent entrepreneurs), or the phase spanning 42

months after the birth of the firm (owner-managers of new firms). As such, GEM takes the payment

of any wages for more than three months as the “birth event” of the firm. Several other definitions

for what constitutes the birth of a firm have been put forward in the entrepreneurship literature,

using different perspectives. The payment of wages proved to be the best approach for making

international comparisons. Individuals who are actively committing resources to start a business

(that they expect to own or co-own) but for whom the business has not yet yielded wages or salaries

are labelled nascent entrepreneurs. The individuals who did pass this “birth event” but are

operational for less than 42 months are labelled as owner-managers in new firms. The cut-off point

of 42 months has been made on a combination of theoretical and practical considerations.30

Figure 2.9 shows the point estimates of the TEA rates for each of the 67 economies in 2013 by phase

of economic development. The confidence intervals facilitate in interpreting differences between

countries. They constitute the range within which the average value of 95 out of 100 replications of

the survey would be expected to lie.31 Malaysia’s TEA rate at 6.6% is closest to Korea at 6.9% against

an average of 12.4% across Asia Pacific and South Asia. Within this region Indonesia ranks the

highest at 25.5% whereas Japan the lowest at 3.7%. Within efficiency driven economies Malaysia

ranks only higher than Suriname and Russia. This does indicate the options available to Malaysians

where many have the option of employment within both large and small organisations. It is also

predicated on the fact that unemployment levels were at 3% in December 2013.32

28 GEM Manual 2012 29 GEM Global Report 2013 30 See also Reynolds et al. (2005). 31 GEM Global Report 2013 32 Department of Statistics Malaysia – Malaysian Unemployment Rate

FIGURE 2.9 TOTAL EARLY-STAGE ENTREPRENEURIAL ACTIVITY (TEA) 2013, BY PHASE OF ECONOMIC

DEVELOPMENT

Figure 2.9 illustrates economic growth is not dependent on TEA rates or does not positively correlate

to an economy achieving higher economic development. Rather it is the context and profile of

entrepreneurship that matters.33 In fact where GDP per capita increases it more the norm that TEA

rates tend to fall (see Kelley et al., 2011a). As mentioned above the job availabilities tend to increase

as an economy grows. With economic growth more institutions are created that offer up increasing

and relatively lucrative employment options. This is the case for Malaysia which reported an average

GDP annual growth rate of 5.78% between 2010 and 2013.34 Malaysia has successfully transformed

itself from exporting of raw materials and basic manufacturing to a more diversified economy which

includes high end manufacturing and services. Thus employment opportunities have been

consistently available. This to a large extent accounts for the moderately lower TEA rate at this stage

of Malaysia’s development as shown in Figure 2.10 below.

Figure 2.10 Malaysia’s Total Early-Stage Entrepreneurial Activity (TEA) – 2009-2013

33 See Bosma et al. (2009) and Acs and Szerb (2011) for a more extensive assessment on the relation between entrepreneurship and stages

of economic development. 34 Department of Statistics Malaysia – GDP Annual Growth Rate

INDIVIDUAL DRIVERS: MOTIVATIONS TO START BUSINESSES AND ESTABLISHED BUSINESS RATES

Motivations to start businesses differ vastly across the globe. Individual drivers are traditionally

captured within the GEM framework with a simple contrast between necessity-driven motives and

opportunity-driven motives. A necessity-driven entrepreneur is one who indicates in the GEM Adult

Population Survey that s/he started the business because there were no better options for work,

rather than because s/he saw the start-up as an opportunity. For those who did see the start-up as

an opportunity (rather than no other options for work), a further assessment was made on the

nature of this opportunity. Improvement-driven opportunity (IDO) entrepreneurs are defined as

those opportunity-driven entrepreneurs who sought to either earn more money or be more

independent, as opposed to maintain income. As Figure 2.11 shows, entrepreneurs in factor-driven

economies tend to have more entrepreneurs by necessity. With higher economic development

levels, necessity gradually falls off as a motivator, while IDO motives increase.35

Figure 2.11 Percentage of Entrepreneurs Motivated By Necessity and Opportunity, By Phase of

Economic Development, 2013

35 GEM Global 2013

2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5 2013 2013.5

30% 29%

46% 42%

Factor-Driven Efficency-Driven Innovation-Driven

Necessity-driven Improvement-driven opportunity

Necessity motives can be impacted by economic conditions. For example, people in early

development stage economies may start businesses because there is an insufficient supply of jobs

and a low level of social security entitlements, and they are pushed into creating a source of income.

As economies develop, the supply of jobs generally increases, so fewer people are pushed into

entrepreneurship.

Improvement-driven opportunity motives may be less dependent on the economic environment and

of more intrinsic nature, as the individual opts for pursuing an opportunity that is believed to

increase income and/or independence. One could question whether this can be stimulated by, for

example, greater exposure to entrepreneurial opportunities in one’s environment. On average,

improvement-driven opportunity motives tend to be more prevalent among early-stage

entrepreneurs as the economy develops. The GEM 2010 Global Report (Kelley et al., 2011) highlights

a number of factors which can have a marked impact on the level of improvement-driven

opportunity motivation within an economy.

There are substantial regional differences in established business ownership rates, particularly when

compared with TEA rates. TEA rates tend to be high in emerging economies, but established

business activity is often low. The opposite pattern tends to dominate the innovation-driven

economies. Two factors may contribute to this result. First, as mentioned previously, there are more

employment alternatives in societies where industrialization and institutionalization have taken

hold; more people may choose employment over starting businesses in the more developed

economies, accounting for lower TEA rates. Second, where there are sophisticated ecosystems for

business, people that do start businesses are more able to sustain them because of more favourable

conditions, such as access to finance, a highly educated workforce, rule of law and so on.36

In concordance with the low TEA rate and the explanation above we can see that over the last five

years Malaysia’s Improvement-Driven Opportunity is much higher than Necessity-Driven

entrepreneurship. The overall trend appears to be a lowering of Necessity-Driven entrepreneurship

even as Improvement-Driven Opportunity trends upwards. Where opportunities are improvement

driven there is an innate tendency for entrepreneurs to select business opportunities rather than

accept just any business. This generally correlates with the reduction of business discontinuation and

is borne out for Malaysia over the last 5 years. Consequently the Established Business ownership

rate also enjoys an upward trend. It is conceivable that these trends will continue as one variable

feeds off the other due to their correlations. Figure 2.12 which highlights the breakdowns of

entrepreneurial activity bears this out.

GEM Global 2013

Figure 2.12 Entrepreneurial Activity – Malaysia 2009-2013

ENTREPRENEURIAL EMPLOYEE ACTIVITY

A major distinction in the entrepreneurship domain exists between “independent entrepreneurship”

and “entrepreneurship within an existing organization.” Both fields are large research areas,

employing a wide range of definitions and perspectives. Entrepreneurial employee activity (EEA) is

increasingly as accepted as a relevant type of entrepreneurship in the sense that it aims at new

venture creation and the introduction of new products and services. It also shares many behavioural

characteristics with the overall concept of entrepreneurship, such as taking initiative, pursuit of

opportunities and innovativeness. GEM operationalizes entrepreneurial employee activity as

“employees developing new activities for their main employer, such as developing or launching new

goods or services, or setting up a new business unit, a new establishment or subsidiary” (Bosma et

al., 2012). This definition is wider than new organization creation, but it excludes employee

initiatives that mainly aim at optimizing internal work processes.

Some countries continue to measure EEA rates according to the prevalence of entrepreneurial

employee activity and according to employees who, in the past three years, were actively involved in

and had a leading role in at least one of these phases (i.e., “idea development for a new activity”

and/or “preparation and implementation of a new activity”).37 Figure 2.13 shows the 2013 countries

by phase of economic development which measured the EEA also in 2013. The rates shown refer to

the percentage population (18-64 years old) involved in EEA. The confidence intervals constitute the

range within which the average value of 95 out of 100 replications of the survey would be expected

to lie.38 On average the incidence of entrepreneurial employee activity in the employed adult

population is by either definition substantially lower than that of total early-stage entrepreneurial

activity. In some, the factor-driven and efficiency-driven economies entrepreneurial employee

activity is extremely scarce, while early-stage self-employment is abundant. In some cases,

differences are smaller, but early-stage entrepreneurial activity is still several times as prevalent as

37 There is also a narrow definition that refers to the entrepreneurial employees who are currently involved in the development of such new activities. 38 GEM Global Report 2013

0 10 20 30 40 50 60 70 80

Nascent Entrepreneuriaship Rate

New Business Ownership

Early-stage Entrepreneurial Activity (TEA)

Established Business Ownership Rate

Discontinuation of Businesses

Necessity-Driven (% of TEA)

Improvement-Driven Opportunity (% of TEA)

2013 2012 2011 2010 2009

entrepreneurial employee activity. Only in the innovation-driven economies, the incidence of

entrepreneurial employee activity in the adult population is in the same order of magnitude as that

of total early-stage entrepreneurial activity.39 Malaysia is rated the lowest amongst the efficiency-

driven economies. This implies that existing organisations in Malaysia still lack the propensity for

new initiatives and opportunities by their employees. It signals an overall lack of incentives and

innovativeness when it comes to exploiting their human potential.

Figure 2.13 Entrepreneurial Employee Activity (EEA) In 2013 Participant Countries, By Phase of

BUSINESS DISCONTINUATIONS

Every businesses will go through a business life cycle. Some may be shorter and others longer. Those

individuals selling or closing their businesses may once again benefit their societies by re-entering

the entrepreneurship process. Recognizing the importance of this measure, GEM tracks the number

of individuals who have discontinued a business in the last 12 months. Discontinuance may be

considered along with TEA and established businesses as a component of entrepreneurial dynamism

in an economy. GEM Survey respondents who had discontinued a business in the previous 12

months were asked to give the main reason for doing so.40 Table A2 (Appendix) shows the

prevalence rates of business discontinuation, and Figure 2.14 below summarize these reasons by

geographic regions.

The rate of business discontinuance generally declines as economic development increases. Factor-

driven economies have higher levels of entrepreneurship activity, so it would make sense that this

39 GEM Global Report 2013 40 GEM Global Report 2013 – Business discontinuations

Factor-driven economies Efficiency-driven economies Innovation-driveneconomies

would be accompanied by more discontinuance. However, when the TEA rate is taken into account,

there is still a higher discontinuance rate per entrepreneur in the factor-driven economies. In Sub-

Saharan Africa, which shows the highest regional TEA rates, there are high rates of discontinuance

relative to TEA. However, in some developed economies that have had economic crises like Spain

and Greece, the business discontinuation rate is higher than TEA.

In Asia Pacific and South Asia generally the TEA is higher than business discontinuation. Indonesia

has the biggest difference between the two with a TEA of 25.5% and business discontinuation of

2.4%. A reflection of the entrepreneurial dynamism in Indonesia’s economy contributed largely by

their micro and small businesses. Malaysia’s business discontinuation rate at 1.5% (TEA 6.6%) is the

same as India (TEA 9.9%) and Japan (TEA 3.7%) which is the lowest for the region.

FIGURE 2.14 REASONS FOR BUSINESS DISCONTINUANCE BY GEOGRAPHIC REGION

33 34 34 32 34 29

20.7 13.4

11.7 18.6 13.5 16.4

19.0 26.8 31.9

22.9 19.7 30.5

6.7 7.1

10.4 9.3

11.4 7.5

7.5 2.6

4.9 4.2

3.9 9.0

6.4 4.4

3.4 3.9

2.1 3.7 2.9

3.0 5.7

3.4 2.8

4.1 2.1 2.3

1.3 2.2 0.4 2.1 7.0 4.9 5.9

Business not profitable Problems getting finance

Personal reasons Another job or business opportunity

An incident Opportunity to sell

Exit was planned in advance Retirement

There are a number of reasons for discontinuing a business; the most prevalent among all

geographic regions relate to the business not being profitable and problems obtaining financing.

Compared to other regions, problems with financing was less an issue in North America. However, it

was identified as the key issue in business stops in Sub-Saharan Africa. In Europe and North America,

individuals cited other jobs or business opportunities as a reason for business discontinuance more

often than those in other regions thus it makes clear that not all business discontinuances by

individuals are caused by ‘negative’ factors, some are actually quite positive.

In Malaysia we see that a rising and prevalent reason for business discontinuation is due to the lack

of profitability of a business. This reason accounted for 45% of all those responses in 2013. Problems

with financing was comparatively less an issue when compared to previous years. It accounted for

10% of all responses in 2013. The government initiatives to provide funding for entrepreneurs

through their agencies have been relatively effective. However oftentimes respondents were

reluctant to reveal the actual causes for discontinuing their businesses as it was considered a social

stigma and so they did not want to share the reasons. Figure 2.15 illustrates this.

Figure 2.15 Reasons behind Business Discontinuation in Malaysia, 2009-2013

WOMEN’S ENTREPRENEURIAL ACTIVITY WITHIN OVERALL DEMOGRAPHICS

Women’s involvement in early-stage entrepreneurship varies greatly across the globe. These differences reflect distinctions in culture and customs regarding women’s participation in the economy, for example, societal views about women’s role in the lab or force and in business more specifically. Women enter entrepreneurship for many of the same reasons as men, such as to

0 5 10 15 20 25 30 35 40 45 50

Planned exit

Personal reasons

Problem getting finance

The business was not profitable

Another job or business opportunity

Retirement

An opportunity to sell the business

An incident

Others

2013 2012 2011 2010 2009

support themselves and their families, to enrich their lives with careers as well as to attain financial independence. As can be seen in Figure 2.16, Sub-Saharan African rates of female early-stage entrepreneurship are

comparable to their male equivalents. The lowest relative rates of involvement in entrepreneurship

by women can be found in several MENA countries and some European countries, where less than

50% of the early-stage entrepreneurs are women.

FIGURE 2.16 MALE AND FEMALE EARLY-STAGE ENTREPRENEURIAL ACTIVITY 2013, BY GEOGRAPHIC

REGIONS

An analysis of opportunity and necessity motives shows that men in Latin America and Sub-Saharan Africa are more likely opportunity-motivated, while women have higher necessity motives. Even though these regions show limited differences in TEA rates by gender, relatively more women are driven by necessity. In contrast, women in the MENA region are proportionately more likely to be opportunity-motivated. Together with the observed low TEA rates among women in this region, it suggests that entrepreneurial activity may be a difficult challenge for women with limited resources and access to the lab or market.

Figure 2.17 shows that the distribution of early-stage entrepreneurship is roughly similar for all

regions, with highest prevalence rates in the 25-34 and 35-44 age groups. Again, some differences

between countries should be noted. For example, younger early-stage entrepreneurs (18-24 year

olds) were often observed in EU and North America. The oldest ages (55-64) are observed in Sub-

Saharan Africa.

Latin America& Caribbean

Middle East &North Africa

Sub-SaharanAfrica

Asia Pacific &South Asia

EuropeanUnion

Non-EuropeanUnion

North America

Male (%TEA) Female (%TEA)

FIGURE 2.17 EARLY-STAGE ENTREPRENEURIAL ACTIVITY RATES WITHIN AGE GROUPS, BY

GEOGRAPHIC REGIONS

In Malaysia entrepreneurial activity at the early stages is mainly within the 25-54 years age group.

Measuring over five years in total the 25-34 years made up 45% of early stage entrepreneurs whilst

the 35-44 years comprised 58% on average. The 45-54 years averaged 51%. The 18-24 years age

bracket made up only 17% followed by the 55-64 years with 29%. Thus overall it appears that

individuals between 25-54 years, who would have amassed some experience and skills would tend

to start new businesses. This is reflected in Figure 2.17 below. Figure 2.18 and 2.19 provides the

breakdown over 5 years for both male and female TEA rates in Malaysia.

Latin America &Caribbean

Middle East & NorthAfrica

Sub-Saharan Africa Asia Pacific & SouthAsia

European Union Non-European Union North America

18 - 24 years 25 - 35 years

35 - 44 years 45 - 54 years

55 - 64 years

Figure 2.18 Total Early Stage Entrepreneurial Activity by Gender and Age, 2009-2013

Figure 2.19 The Malaysian Male TEA, 2009-2013

M A L E F E M A L E M A L E F E M A L E M A L E F E M A L E M A L E F E M A L E M A L E F E M A L E

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

5.7% 13.0%

18.8% 14.5%

9.8% 14.6% 13.8%

18.4% 9.8%

29.3% 23.7%

15.9% 37.9%

32.9% 36.6%

17.4% 24.5%

17.7% 24.4% 18.3%

14.5% 19.5%

15.7% 13.0% 12.2%

11.3% 9.8% 14.6%

3.4% 10.5%

18-24 25-34 35-44 45-54 55-64

Male Male Male Male Male

2009 2010 2011 2012 2013

18-24 25-34 35-44 45-54 55-64

Figure 2.20 The Malaysian Female TEA, 2009-2013

Figure 2.21 Malaysian Nascent Entrepreneurial Activity by Gender and Age, 2009-2013

Female Female Female Female Female

2009 2010 2011 2012 2013

18-24 25-34 35-44 45-54 55-64

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Y E A R

25.0% 15.4% 12.0% 16.1%

9.1% 11.8%

19.2% 16.0%

32.3% 36.4%

16.1% 31.8%

24.0% 12.9%

0.0% 3.8% 12.0%

18-24 25-34 35-44 45-54 55-64

Figure 2.22 Malaysian New Business Owner-Managers by Gender and Age, 2009-2013

Figure 2.23 Malaysian Established Business Owners-Managers by Gender and Age, 2009-2013

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Y E A R

3.1% 6.7% 3.8% 12.5% 15.4% 20.0%

13.7% 16.7% 20.3% 13.3%

28.1% 26.7% 30.8%

39.2% 25.0% 18.6% 33.3%

34.4% 26.7% 30.8%

15.7% 41.7%

16.7% 6.3%

20.0% 7.7%

0.0% 9.8%

2.8% 13.6%

18-24 25-34 35-44 45-54 55-64

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Y E A R

1.1% 5.7%

1.1% 1.6% 0.0% 2.2% 2.0% 4.2% 2.9% 7.6%

8.6% 8.0% 9.1%

34.0% 20.0% 26.5%

28.4% 33.3%

39.4% 27.9%

22.8% 17.1%

23.9% 18.2% 19.7%

14.6% 12.0% 18.9%

18-24 25-34 35-44 45-54 55-64

Figure 2.24 Perceptions by Gender, 2009-2013

Figure 2.25 Overall Malaysian Entrepreneurial Activity by Gender, 2009-2013

2009 2010 2011 2012 2013

Sees good start-up opportunitiesin the six months in his/her area

Has the required knowledges,skills, and experience to start abusiness

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Y E A R

3.1% 8.6%

2.9% 6.1% 15.4% 17.3%

7.9% 8.0% 10.5% 6.7%

23.4% 22.8% 30.3% 32.1%

21.6% 28.0%

23.3% 25.2% 21.9%

32.7% 20.2% 19.6% 25.8%

19.8% 15.5% 19.7% 12.2%

17.8% 15.2% 14.0% 7.1%

15.2% 8.0%

18-24 25-34 35-44 45-54 55-64

Figure 2.26 Overall Malaysian Male Entrepreneurial Activity, 2009-2013

Figure 2.27 Overall Malaysian Female Entrepreneurial Activity, 2009-2013

Figure 2.28 Overall Malaysian Male and Female Entrepreneurial Activity, 2009-2013

1 8 - 2 4 2 5 - 3 4 3 5 - 4 4 4 5 - 5 4 5 5 - 6 4

2009 2010 2011 2012 2013

1 8 - 2 4 2 5 - 3 4 3 5 - 4 4 4 5 - 5 4 5 5 - 6 4

2009 2010 2011 2012 2013

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

18-24 25-34 35-44 45-54 55-64

Figure 2.29 Female Male Entrepreneurship and Established Business Ownership Rates in

Malaysia, 2009-2013

2.5 Entrepreneurial Aspirations

GEM measures the job (growth) expectation, innovation and internationalization profiles of

entrepreneurs. These forms of entrepreneurial aspirations have been positively associated with

economic development (see e.g. Wong et al. 2005; Wennekers et al., 2010; Bosma, 2011). In this

section, these impact profiles are assessed for early-stage entrepreneurs.

GROWTH ORIENTATION

Growth aspirations constitute a key dimension of the impact profiles by early-stage entrepreneurs. It is the clearest manifestation of entrepreneurship that can directly be linked to the number one objective of most governments: to create more jobs. The typical GEM-based measures in the domain of growth aspirations deal with job (growth) expectations. By tracking growth perceptions, GEM enhances the TEA measure of the prevalence of entrepreneurship with an indication of the differential impact entrepreneurs can have on their economies. Second, growth expectations relate to job creation potential, which is an important policy concern for nearly every government.

GEM asks early-stage entrepreneurs how many employees (other than the owners) they currently have and expect to have in the next five years. This measure relates to the entrepreneurs’ expectations about the potential for their businesses, but in most cases this is also reflecting their ambitions to grow their ventures. Stated differently, entrepreneurs may either have solid reasons to believe that their business has high growth potential or they simply

0 1 2 3 4 5 6 7 8 9 10

TEA Male

EB Male

TEA Female

EB Female

endeavour to pursue growth. It should therefore be acknowledged that early-stage entrepreneurs may be optimistic in their expectations and that expectations for job creation certainly does not always lead to realizations. At the same time, it is also well established that growth realization is seldom achieved without having expectations or ambitions for growth (Stam et al., 2012). Thus, building on these findings, country variations in the degree of (high) job expectations can be assumed to approximate variations in realized job creation. 41

Figure 2.29 shows job expectations as a percentage of TEA for each geographic region. Results for individual economies can be found in the Appendix, Table A3. Three levels of growth are shown here: the proportion of entrepreneurs projecting low (0–5 new employees in five years), medium (6–19 new employees), or high (20+ new employees) growth in their businesses.

FIGURE 2.30 JOB EXPECTATIONS FOR EARLY-STAGE ENTREPRENEURS, BY GEOGRAPHIC

REGIONS

The results show that Sub-Saharan Africa generally exhibits limited growth aspirations, with more than 80% of the entrepreneurs indicating they expect to add less than five employees within the next five years and only 4% projecting 20 or more new jobs. Analysing the “growth expectation composition” of TEA rates is important, given that there is a high number of entrepreneurs in Africa, and illustrating that a simple count of entrepreneurs does not tell the whole story. In other words, Sub-Saharan African entrepreneurs create a lot of employment based on entrepreneurial new businesses, but the owner-managers of these enterprises have, provided even that they can get the business started and sustained, little prospect for growth.

In contrast, the EU and North American countries, despite their relative low TEA rates, have more than 10% of the entrepreneurs projecting growth of 20 or more employees. With relatively few individuals with low growth projections entering entrepreneurship, perhaps there are conditions or

41 Amoros, J.E., et al, 2013

Job expectations 20or more jobs

Job expectations 5 -19 jobs

Job expectations 0 -5 jobs

attitudes that make this activity more worthwhile when there is growth potential or ambitions – or less worthwhile if one will not, or cannot, pursue growth. 42

In Malaysia the expectations to add 5 employees or less is at 5.6% against the average in Asia Pacific

and south Asia of 7.4%. The Philippines is highest at 15.2% whereas Japan the lowest at 1.7% for this

range. 0.9% of Malaysian early stage businesses expect to hire 6-19 employees from an average of

1.5% in the region. Singapore’s expectations are highest at 2.9% whereas Japan is lowest at 0.6%. In

the highest range of growth expectations i.e. equal to or more than 20 employees Malaysia’s

expectations are lowest at 0.1% along with India. The highest is Singapore and Taiwan at 2.5%. These

numbers are critical as to some extent they point to the quality and sustainability of new businesses.

Additionally as an instrument for job creation and economic growth it highlights the limitations for

economies when growth expectations are stunted due to the inadequacy and lack of robustness of

business proposals and innovative ideas.

Figure 2.31 Malaysia’s Job Growth Expectations for Early-Stage Entrepreneurship Activity

42 GEM Global Report 2013

% of Adult Population

0-5 5.60%

6-19 0.90%

20 or more 0.10%

0-5 6-19 20 or more

INNOVATIVE ORIENTATION

Innovation is seen as products in new combinations which to a large extent obliterates older out of

date products and services and engages the cutting edge; this is the Schumpeterian view

(Schumpeter, 1942). It represents the perceived extent to which an entrepreneur’s product or

service is new to some or all customers and where few or no other businesses offer the same

product. When comparing countries, it must be kept in mind that what may seem new to customers

in one economy may already be familiar to customers in another. Nevertheless, a high degree of

innovative orientation in the former economy is still expected to have a positive impact on economic

development. Innovative orientation as measured in the GEM framework is therefore a context-

dependent measure.43

Figure 2.31 shows the percentage of early-stage entrepreneurs with innovative orientations. We use

two measures: the percentage of TEA that declare they have a product or service that is a novelty

(new) for all or some or their consumers, and the percentage of TEA that declare they are new in the

market with few or no other businesses that offer the same product or service. The average level of

innovation in each regional group increases with the level of economic development. North America

and European Union exhibit the largest proportion in both indicators. Asia Pacific and South Asia,

with countries that are now characterized for their high degree of innovative products like Japan,

Korea or China, show the largest proportion of new products. In contrast, Sub-Saharan countries

exhibit lower proportions of new product with the Non-EU countries. Interestingly, growing

emergent economies like Colombia, Chile, Taiwan and South Africa have high rates of new products

(over 70%) but also high proportions in new markets (over 50%).

43 Amoros, et al (2013)

Figure ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT..32 Innovative Orientation of Early-Stage

Entrepreneurs, By Geographic Regions

Malaysia’s early stage entrepreneurs the percentage of TEA that declare they have a product or

service that is a novelty (new) for all or some or their consumers is comparatively lower than most

Asia Pacific and South Asia countries. The percentage of TEA that declare they are new in the market

with few or no other businesses that offer the same product or service conversely is higher (see

Figure 2.32).

% within TEA:product is newto all or somecustomers

% within TEA:new market(few/nobusinessesoffer the sameproduct)

Figure 2.33 Innovative Orientation of Early Stage Entrepreneurs in Malaysia, 2009-2013

INTERNATIONAL ORIENTATION

An international orientation contributes to global trade. Today global trade takes on a faster pace as

more companies exploit opportunities on the web. Having an international orientation becomes all

the more crucial when countries have smaller populations. This is because they very quickly run out

of the advantage of a demographic dividend. A dividend that is enjoyed by the BRIC countries and

others with large populations. A specific GEM measure assesses the extent to which entrepreneurs

sell to customers outside their economies. Figure 2.33 shows four categories of early-stage

entrepreneurs related to the degree of internationalization, from 0% of their customers living

outside the origin country, to high degrees of internationalization with 75-100% of the customers

living outside the country. As was expected, EU countries, with a large tradition of international

commerce and their geographic proximity, exhibit a high proportion of entrepreneurs with at least

25% of their customers living outside of the country. In contrast, Latin American and Sub-Saharan

countries show a lower proportion of high international oriented entrepreneurs.

2009 2010 2011 2012 2013

PRODUCT IS NEW TO ALL ORSOME CUSTOMERS

NEW MARKET (FEW/NOBUSINESSES OFFER THE SAMEPRODUCT)

Figure ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT..34 International Orientation of Early-

Stage Entrepreneurs, By Geographic Regions

Malaysia’s data displays a low level of international orientated entrepreneurs. Over the five years

more than 70% on average of TEA have no customers outside the country. An average of 24% have

1-25% of customers outside Malaysia. Those with 25-75% of customers outside only amount to

3.38% on average and lower still for those with 75-100% of customers outside Malaysia at 1.28%

averaged over 5 years. This is low when compared with countries like Singapore, Luxemburg and

Israel. These countries of course have very low populations and so must internationalize to survive.

% within TEA:Export: 75-100%of customersoutside country

% within TEA:Export: 25-75%of customersoutside country

% within TEA:Export: 1-25% ofcustomersoutside country

% within TEA: Nocustomersoutside country

The outcome of such internationalisation is that they have to provide innovative services and

products into their overseas customer markets. Malaysia thus has to improve on its innovative

products and services if its international orientation is to grow. Their offerings must meet regional

and global standards whilst being competitive enough to meet more exacting customer demands

(Figure 2.34).

Figure 2.35 International Orientation of Early Stage Entrepreneurs in Malaysia, 2009-2013

Level of Entrepreneurial Activity by Education Nascent entrepreneurs are individuals starting new enterprises and are less than three months old.

Malaysians who start new enterprises appear to be mostly with a secondary and lower secondary

education followed by those with a post-secondary non-tertiary education. Those with tertiary and

second stage tertiary appear less likely to venture and start a new enterprise. It is likely the case that

those with higher tertiary education have more options. And with a good job market they can seek

and gain employment. Alternatively those with lesser qualifications will overwhelmingly opt for

starting new businesses to improve their incomes albeit in mostly ‘me-too’ businesses as the earlier

discussions indicate. Thus it is an imperative that entrepreneurship education be introduced at the

61.00 %

70.60% 77.00% 74.10% 75.20%

31.70%

23.50% 18.00% 20.90%

24.80%

3.70% 4.90% 4.00% 4.30%

0.00% 3.70% 1.00% 1.00% 0.70% 0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

2009 2010 2011 2012 2013

None 1%-25% 25%-75% 75%-100%

earliest possible stages of learning. It will inculcate an entrepreneurial spirit and be invaluable to

those who eventually venture out on their own. This is so that they may appreciate better the

challenges of new businesses whilst at the same time look to enhancing the quality and

sustainability of those businesses. This is illustrated in Figures 2.35 to 2.38 below.

Figure 2.36 Nascent Entrepreneurs by Education, 2009-2013

Figure 2.37 New Business Owners-Managers by Education, 2009-2013

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

No Formal Education Primary School Lower Secondary

Upper Secondary Post secondary non-tertiary First stage of tertiary

Second stage of tertiary

Figure 2.38 Total Early Stage Entrepreneurial Activity (TEA) by Education, 2009-2013

Figure 2.39 Established Business Owners-Managers by Education, 2009-2013

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

2.7 Entrepreneurial Activity by Area

In Malaysia there has always been the challenge to reduce the socio-economic gaps between the

urban and rural sectors. This five year study reveals that for nascent entrepreneurs i.e. individuals

starting new enterprises and are less than three months old, the gaps have reduced considerably.

The initiatives put in place by government are showing positive results as nascent entrepreneurs

begin to equal urban nascent entrepreneurs. This is seen in figures 2.39 and 2.40.

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Where new business owners-managers are concerned in Malaysia there is still a gap as measured

over 5 years. However it does appear that the gap may be closing. Though this will likely take a

longer period subject to the growth of rural enterprises. This is highlighted in figures 2.41 and 2.42.

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Urban Rural

2009 2010 2011 2012 2013

Nacsent Entrepreneurs by Area, 2009-2013

2.6 Entrepreneurship and Well-Being44

Development for nations today has many aspects. The measure of economic development has

always been measured using strictly finance oriented indicators like GDP per capita. However, this

material component of economic development represents only one dimension. As economics is a

44 Information for this section was mainly sourced and adapted from Amoros, J.E. et al. (2013) GEM Global Report 2013

2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

Urban Rural

2009 2010 2011 2012 2013

Urban 63.8% 64.7% 66.7% 70.1% 66.3%

Rural 36.2% 35.3% 33.3% 29.9% 33.7%

63.8% 64.7% 66.7% 70.1%

36.2% 35.3% 33.3% 29.9%

Urban Rural

social science, it is quite surprising that the social component has, until recently, not been regarded

as a key indicator for scholars and policy makers. It is exemplary that a different term is being used

for this: well-being.45 The topic of well-being has been gaining presence rapidly in social sciences and

economics. The promotion of factors that could increase well-being of the population—for example,

how people are satisfied with their lives and their jobs—is progressively seen as essential objectives

of policy. Since the Kingdom of Bhutan introduced the notion of “gross national happiness,” many

measures have been developed to provide additional elements to the traditional economic-oriented

measures of development (Angner, 2010). Stiglitz, Sen and Fitoussi (2009) suggest exploring the use

of indicators of well-being to develop better policies: “The time is ripe for our measurement system

to shift emphasis from measuring economic production to measuring people’s well-being.”46

“Happiness” can now be wisely compared across countries. Some recent examples are the World

Happiness Report (Helliwell et al., 2013), edited under the endorsement of the United Nations, or

the OECD measures of subjective well-being (OECD, 2013).

Considering GEM’s objectives, some questions that emerge intuitively from this topic are the

following. Do entrepreneurs (self-employed) experience more personal well-being than employees?

Is personal well-being a driver to be an entrepreneur? Are opportunity-driven entrepreneurs

experiencing higher levels of well-being than necessity-driven entrepreneurs? And what about

ambitious versus non-ambitious entrepreneurs? And to what extent are differences, if any,

contingent on the regional or national context? Surprisingly, there is not much literature and

empirical evidence about the relationship between well-being (happiness or satisfaction) and

entrepreneurial activities on an individual level (Cooper and Artz, 1995; Carree and Verheul, 2012).

Specifically, there is a lack of evidence to consider whether and how entrepreneurship may matter

for happiness and how happiness may matter for entrepreneurship (Naude et al., 2011). As GEM

data shows, in Malaysia up to 7% and in several countries, between 10% and 30% of a country’s lab

or force could be considered early-stage entrepreneurs or business owners (see Chapter 2 in this

report). If entrepreneurs generally experience higher levels of well-being, they can significantly raise

aggregate well-being scores. Moreover, there is now a robust body of evidence that entrepreneurs

do indeed experience higher levels of job satisfaction than employees. Empirical research suggests

that this is because they value the independence and lifestyle flexibility of running their own

business (Benz and Frey, 2004; Blanchflower, 2004; Lange, 2012; Moskowitz and Vissing-Jorgensen,

2002; Ajayi-Obe and Parker, 2005; Taylor, 2004). Furthermore, entrepreneurs experience

“procedural utility,” that the process of being an entrepreneur provides enjoyment over and above

the material success of being an entrepreneur (Block and Koellinger, 2009). However, this initial

evidence is still based on samples in a limited set of economies.

The main objective of this special topic is to measure different aspects of well-being of the

individuals that participate in the GEM Project and to correlate these measures with

entrepreneurship dynamics across countries. Following the scope and methodology of the GEM

project, this special topic has produced relevant information at the country level as well as primary

data from individuals about their own perception of well-being and entrepreneurial activities. This

approach with large samples is unique and one of the first attempts to study the relationship

between well-being and entrepreneurship at individual level.

45 GEM was not an exception in this. Even though the social context has always played a critical role in the GEM conceptual framework as an input factor, the social component as an output was only introduced in the GEM 2009 assessment (Bosma and Levie, 2010) 46 The Commission on the Measurement of Economic Performance and Social Progress (Stiglitz et al., 2009).

In 2013, the GEM surveys (APS and NES) included a special set of questions that provided evidence

of the entrepreneurial activities and motivations in relation to well-being measures from the 2013

participant economies. One set of APS questions and NES questions related to Subjective Well-being

were compulsory. The rest of the questions were optional. The general analysis contrasts the well-

being indicators of the different stages of entrepreneurial activity with the population not involved

in entrepreneurship. The motivation to become entrepreneurs was also analysed.

Definitions and Operationalization

Subjective Well-Being

Subjective well-being is related to the manner in which people experience the quality of their lives,

and it comprises both emotional reactions and cognitive judgments (Diener, 1984). To measure

subjective well-being, the Satisfaction with Life Scale SWLS (Pavot and Diener, 2008), a five-item

instrument designed to measure global cognitive judgments of satisfaction with one's life, was

adopted.47 The scale is in the public domain (not copyrighted). Credit is given to the authors of the

scale: Ed Diener, Robert A. Emmons, Randy J. Larsen and Sharon Griffin as noted in the 1985 article

in the Journal of Personality Assessment. These are the questions using five-point Likert scales, from

1 “Strongly Disagree” to 5 “Strong Agree”:

1. In most ways, my life is close to my ideal.

2. The conditions of my life are excellent.

3. I am satisfied with my life.

4. So far I have obtained the important things I want in life.

5. If I could live my life again, I would not change anything.

These questions were posed to all employed and self-employed individuals in every country. Single

indicators for each participant economies were calculated using similar procedures as described in

Chapter 3 to calculate summarized variables for NES constructs.

WORK CONDITIONS AND WORK-LIFE BALANCE

An additional set of questions that relates to work conditions and work-life balance was included as

an optional section, and included by 54 economies. Work conditions questions were designed to

identify similarities and differences in current working conditions among employees and the self-

employed, including self-determination and meaning, which are important elements of

empowerment (Spreitzer et al., 1997), and stress at work.48 The latter is an important component to

measure psychological well-being (Blustein, 2008). Satisfaction with the work-life balance is defined

as “an overall level of contentment resulting from an assessment of one’s degree of success at

meeting work and family role demands” (Valcour 2007). By focusing on overall satisfaction with the

way work and personal life are managed, the fact that the significance of work or family life differs

47 For example, UNDP adopted this scale to measure life satisfaction in some countries. The Coca-Cola Happiness Institute (created in Spain in 2008 to provide credible scientific information to support the link between happiness and wellness) also uses the SWLS. 48 These questions were adapted from the additional set of questions required by the EU Commission to the GEM project since 2011.

These questions also have a five-point Likert scale: (1) I can decide on my own how I go about doing my work; (2) The work I do is

meaningful to me; (3) At my work, I am not exposed to excessive stress; (4) I am satisfied with my current work; (5) I am satisfied with my

current income from work. Income includes both salary and non-salary income such as payments in kind and other benefits.

between individuals and that private life encompasses more than the family role alone is taken into

account (Abendroth & den Dulk, 2011).49

ENTREPRENEURSHIP FRAMEWORK CONDITIONS AND WELL-BEING

To corroborate the opinions provided by the adult population, NES included four questions that

inquire whether the national (or regional) conditions help the work-life balance of individuals and

measure the perception that entrepreneurs have, in general, more work and life satisfaction:

1. In my country, the general conditions (economic, social, political, and cultural) allow people

to perfectly harmonize personal and working (professional/labor) life.

2. In my country, existing regulations allow people to perfectly harmonize personal and

working (professional/labor) life.

3. In my country, entrepreneurs are more satisfied with their working (professional/labor) life

than non-entrepreneurs.

4. In my country, entrepreneurs are more satisfied with their personal life than non-

entrepreneurs.

This report provides an initial assessment based mainly on compulsory indicators of subjective well-

being. These indicators will be related to early-stage entrepreneurial activity (TEA) and established

business owners (see Table A5 in appendix).

One first observation is that the prevalence of subjective well-being indicators varies widely across

world regions. Sub-Saharan African economies exhibit the lowest rates, whereas Latin and North

Americans have the highest rates. Single country analysis shows that the “traditional” welfare states

like Nordic countries and well-developed countries like Netherlands, Switzerland and Singapore also

exhibit high rates of subjective well-being, confirming the results of other studies adopting similar

studies (Helliwell et al., 2013; OECD, 2013). These differences suggest that in each country and in

world regions with close common heritage, framework conditions such as economic, political,

institutional and cultural contexts have singular influence on the population perception about their

well-being and by consequences that shape the indicators of entrepreneurship activities.

Figure 2.43 shows the differences by phase of economic development. Less-developed countries, mainly in Sub-Saharan Africa, have the lowest rates of subjective well-being. Efficiency-driven and innovation-driven economies do not differ substantially related to TEA population. Established entrepreneurs exhibit the highest rates of subjective well-being on the three development stages. Even though these results are exploratory in nature and need to be treated in this manner, they show initial evidence that involvement in entrepreneurial activities, both in the early-stage and established phases, is related to personal evaluation of higher subjective well-being50.

49 We adapted Valcour (2007) original scale to three items, using the five-point Likert scale: (1) I am satisfied with the way my time is

divided between work and private life; (2) I am satisfied with my ability to balance the needs of my work with those of my personal or

family life; (3) I am satisfied with the opportunity to perform well at work and to substantially contribute to home-related responsibilities

at the same time.

50 For example, it should be noted that the category ‘employees’ includes those individuals who can be identified as ‘entrepreneurial employees’. Therefore, if these would have been singled out a better comparison between entrepreneurial active individuals in the labor force and their counterparts would be achieved and differences may actually be more pronounced for economies exhibiting a large number of entrepreneurial employees (for example in Scandinavia, see Bosma et al. 2013).

Figure 2.44 Subjective Well-Being, By Phase of Entrepreneurship and Stages of Economic

Development

An analysis of opportunity-based versus necessity-motivated entrepreneurship, confirms that necessity-based entrepreneurs across the three development stages have considerably lower rates of subjective well-being (Figure 2.44). Figure 2.44 also shows the well-being indicators for early-stage entrepreneurs by gender. Interestingly, female entrepreneurs in innovation-driven economies exhibit on average a higher degree of subjective well-being (0.25). It should be stressed that this is not a cause-effect conclusion, and further analyses will be required inferring causality. For example, women in many developed countries have been increasing their education, have more egalitarian environments and by consequence have more active participation not only in the lab or force but also in other spheres such as politics and social issues. This situation could support the well-being of women that could also shape women entrepreneurs.

-0.60 -0.40 -0.20 0.00 0.20 0.40

18-64 population

Early-stage entrepreneurial activity (TEA)

Established business ownership

Non TEA or Established

Innovation-Driven Economies Efficiency-Driven Economies

Figure 2.45 Subjective Well-Being and Entrepreneurship Motivations and Gender, Stages of

In Malaysia the population between 18-64 years showed a positive well-being at 0.04 over the Asia

Pacific and South Asia region average of -0.11. Malaysia ranked 4th out of 11 countries surveyed in

this region. India was highest (0.27) and Korea lowest (-0.42). At the TEA levels Malaysia was also

rated 4th of the 11 countries with a rate of -0.01 against an average of -0.10. Singapore was highest

(0.25) and Korea lowest (-0.42).

Established business owners subjective well-being in Malaysia was higher and put Malaysia at 2nd in

the region (0.31/average 0.06). India was highest (0.52) and Korea lowest (-0.47). The Non TEA

population was almost similar in rating to the overall population. Malaysia ranked 4/11 (0.04/region

average 0.11). India was highest (0.26) and Korea was lowest (-0.42) and China second lowest (-

0.32).

Where TEA Opportunity and subjective well-being was rated Malaysia rated relatively high at 0.15

within a regional average of -0.05. This placed it 2nd highest within the region. Singapore was highest

(0.25) and Korea lowest (-0.27). Contrastingly where TEA Necessity respondents were rated

Malaysia’s subjective well-being was lowest in the region (-0.70/region average -0.27). Korea was

second lowest (-0.69). Singapore rated highest (0.26). Malaysia was thus at the bottom of the 11

countries compared.

Malaysia’s TEA Male’s subjective well-being was ranked 5th within the region (0.11/region average

0.18). Singapore was highest (0.17) and Japan lowest (-0.55). Malaysia’s TEA Female’s subjective

well-being was slightly better and ranked 3rd within the region (0.15/region average 0.02). Singapore

was highest (0.39) and China lowest (-0.32).

-0.60 -0.40 -0.20 0.00 0.20 0.40

TEA Opportunity

TEA Necessity

TEA male

TEA female

Innovation-Driven Economies

Efficiency-Driven Economies

This data shows that overall in Malaysia established business owners have a higher level of

satisfaction with their work and personal life. Those who are in the early stage for opportunity are

also fairly satisfied based on their subjective well-being answers. Conversely those who are in the

early stage business activity out of necessity are least satisfied overall.

Where gender is concerned the early stage male entrepreneur’s subjective well-being rates were

negative as compared with female early stage entrepreneurs. This could well be because the early

stage female entrepreneur is more of an opportunistic entrepreneur and less a necessity driven

entrepreneur.

Thus one may infer that the Malaysian male early stage necessity entrepreneur would have the

lowest sense of well-being. Figure 2.45 illustrates this discussion.

Figure 2.46 Malaysia’s Subjective Well-Being, 2013

CHAPTER 3: ENTREPRENEURIAL FRAMEWORK CONDITIONS IN MALAYSIA

3.1 Introduction

Entrepreneurial Framework Conditions (EFCs) captures a set of factors that shape entrepreneurial

activity. This is different for each country’s as their context is necessarily nuanced differently with

unique consequences. The original GEM conceptual framework therefore established a clear

relationship between the EFCs, entrepreneurship dynamics and economic growth (see Figure 3.1).

Even though the GEM conceptual framework has been revised in due course, it still captures the

essence of the relationships described in Figure 3.1 very clearly.51 The method used is the National

Experts Survey.

Figure 3.1 Model of Entrepreneurial Processes Affecting National Economy Growth

Source: Reynolds, Hay and Camp (1999)

3.2. The GEM National Experts Survey

The National Experts Survey (NES) is important and was initiated due to a lack of nationally

harmonized measures that could be utilized as indices of specific EFCs (Reynolds et al., 2005). The

NES was carefully designed and refined to capture informed judgments of national, and in some

cases regional, key informants regarding the status of EFCs in their own countries and/or regions.

National and regional experts are selected on the basis of reputation and experience (a convenience

sample approach). The NES is similar to other surveys that capture expert judgments to evaluate

specific national conditions.52

National Expert Survey Methodology

The NES questionnaire extracts the views of experts on a wide range of items, each of which was

designed to capture a different dimension of a specific EFC.

Table3.1 summarizes the main nine EFCs. Each year at least 36 experts are personally interviewed or

surveyed in each GEM economy and asked to complete the NES self-administered questionnaire.

These experts are selected following a strict protocol: National and/or Regional GEM Teams are

instructed to select at least four experts considered particularly knowledgeable in each of the

general EFCs (9 EFCs x 4 experts = 36 respondents)—at least one entrepreneur, at least two

“suppliers” of the EFC (for example, policymakers involved in shaping the EFCs) and at least one

GEM Global Report 2013 – NES and EFCs. 52

GEM Global 2013

Social, Cultural,

Political, Context

Entrepreneurial

Framework Conditions

Entrepreneurial Capacity

and Preferences

National Economic

Growth (GDP, Jobs)

Entrepreneurial

Opportunities

Business Dynamics

observer, such as an academic with specific expertise in the area. The typical rotation is around 25%

of new experts each year.

TABLE 3.1 GEM’S KEY ENTREPRENEURIAL FRAMEWORK CONDITIONS.

1. Entrepreneurial Finance. The availability of financial resources—equity and debt—for small and medium enterprises (SMEs) (including grants and subsidies).

2. Government Policy. The extent to which public policies give support to entrepreneurship. This EFC has two components: 2a. Entrepreneurship as a relevant economic issue and 2b. Taxes or regulations are either size-neutral or encourage new and SMEs.

3. Government Entrepreneurship Programs. The presence and quality of programs directly assisting SMEs at all levels of government (national, regional, municipal).

4. Entrepreneurship Education. The extent to which training in creating or managing SMEs is incorporated within the education and training system at all levels. This EFC has two components: 4a. Entrepreneurship Education at basic school (primary and secondary)m and 4b. Entrepreneurship Education at post-secondary levels (higher education such as vocational,

college, business schools, etc.). 5. R&D Transfer. The extent to which national research and development will lead to new

commercial opportunities and is available to SMEs. 6. Commercial and Legal Infrastructure. The presence of property rights, commercial,

accounting and other legal and assessment services and institutions that support or promote SMEs.

7. Entry Regulation. Contains two components:

7a. Market Dynamics: the level of change in markets from year to year, and 7b. Market Openness: the extent to which new firms are free to enter existing markets.

8. Physical Infrastructure. Ease of access to physical resources—communication, utilities, transportation, land or space—at a price that does not discriminate against SMEs.

9. Cultural and Social Norms. The extent to which social and cultural norms encourage or allow actions leading to new business methods or activities that can potentially increase personal wealth and income.

10. Start Up Opportunities. 11. Knowledge and Skills for Start Up. 12. Social Image. 13. Intellectual Property Rights Protection. 14. Support for Women. 15. Attention to High Growth. 16. Interest in Innovation. 17. Wellbeing Conditions. 18. Youth Entrepreneurship (14-20) 19. Young Adults Entrepreneurship (21-34)

Malaysia’s Entrepreneurial Framework Conditions Assessment

Malaysia’s EFC outcomes are outlined below along with the questions posed for each framework

assessed.

Figure 3.2 Entrepreneurial Finance

A01 There is sufficient equity funding available for new and growing firms.

A02 There is sufficient debt funding available for new and growing firms.

A03 There are sufficient government subsidies available for new and growing firms.

A04 There is sufficient funding available from private individuals (other than founders) for new

and growing firms.

A05 There is sufficient venture capitalist funding available for new and growing firms.

A06 There is sufficient funding available through initial public offerings (IPOs) for new and

growing firms.

Figure 3.3 Government Policy

0.59 0.52 0.61

0.42 0.42 0.58

-0.18 -0.21 -0.21 -0.36 -0.36

A01 A02 A03 A04 A05 A06

Financial Support for New and Growing Firms

Agreement Disagreement

0.55 0.42

0.29 0.29 0.17

-0.27 -0.32

-0.64 -0.59

B01 B02 B03 B04 B05 B06 B07

Government Policies for Entrepreneurship

B01 Government policies (e.g., public procurement) consistently favour new firms.

B02 The support for new and growing firms is a high priority for policy at the national

government level.

B03 The support for new and growing firms is a high priority for policy at the local government

level.

B04 New firms can get most of the required permits and licenses in about a week.

B05 The amount of taxes is NOT a burden for new and growing firms.

B06 Taxes and other government regulations are applied to new and growing firms in a

predictable and consistent way.

B07 Coping with government bureaucracy, regulations, and licensing requirements it is not

unduly difficult for new and growing firms.

Figure 3.4 Government Entrepreneurship Programs

C01 A wide range of government assistance for new and growing firms can be obtained through

contact with a single agency.

C02 Science parks and business incubators provide effective support for new and growing firms.

C03 There are an adequate number of government programs for new and growing businesses.

C04 The people working for government agencies are competent and effective in supporting new

and growing firms.

C05 Almost anyone who needs help from a government program for a new or growing business

can find what they need.

C06 Government programs aimed at supporting new and growing firms are effective.

0.44 0.47

0.29 0.17 0.18

-0.12 -0.18

-0.34 -0.40

C01 C02 C03 C04 C05 C06

Government Programmes for Assisting New and Growing Firms

Figure 3.5 Entrepreneurship Education

D01 Teaching in primary and secondary education encourages creativity, self-sufficiency, and

personal initiative.

D02 Teaching in primary and secondary education provides adequate instruction in market

economic principles.

D03 Teaching in primary and secondary education provides adequate attention to

entrepreneurship and new firm creation.

D04 Colleges and universities provide good and adequate preparation for starting up and

growing new firms.

D05 The level of business and management education provide good and adequate preparation

for starting up and growing new firms.

D06 The vocational, professional, and continuing education systems provide good and adequate

preparation for starting up and growing new firms.

Figure 3.6 R&D Transfer

0.20 0.09 0.06

0.25 0.26 0.43

-0.54 -0.54 -0.63

-0.44 -0.29 -0.23

D01 D02 D03 D04 D05 D06

Education & Training for Entrepreneurship

0.32 0.29 0.17

0.40 0.25

-0.29 -0.46

-0.26 -0.28 -0.36

E01 E02 E03 E04 E05 E06

Research and Development Transfer

E01 New technology, science, and other knowledge are efficiently transferred from universities

and public research centres to new and growing firms.

E02 New and growing firms have just as much access to new research and technology as large,

established firms.

E03 New and growing firms can afford the latest technology.

E04 There are adequate government subsidies for new and growing firms to acquire new

technology.

E05 The science and technology base efficiently supports the creation of world-class new

technology-based ventures in at least one area.

E06 There is good support available for engineers and scientists to have their ideas

commercialized through new and growing firms.

Figure 3.7 Commercial and Legal Infrastructure

F01 There are enough subcontractors, suppliers, and consultants to support new and growing

firms.

F02 New and growing firms can afford the cost of using subcontractors, suppliers, and

consultants.

F03 It is easy for new and growing firms to get good subcontractors, suppliers, and consultants.

F04 It is easy for new and growing firms to get good, professional legal and accounting services.

F05 It is easy for new and growing firms to get good banking services (checking accounts, foreign

exchange transactions, letters of credit, and the like).

0.28 0.31

0.50 0.54

-0.33 -0.47

-0.33 -0.17

F01 F02 F03 F04 F05

Commercial and Professional Infrastructure for Entrepreneurship

Figure 3.8 Entry Regulation: Market Openness and Market Dynamics

G01 The markets for consumer goods and services change dramatically from year to year.

G02 The markets for business-to-business goods and services change dramatically from year to

G03 New and growing firms can easily enter new markets.

G04 The new and growing firms can afford the cost of market entry.

G05 New and growing firms can enter markets without being unfairly blocked by established

firms.

G06 The anti-trust legislation is effective and well enforced.

Figure 3.9 Access to Physical Infrastructure

0.44 0.42 0.26 0.32 0.29

-0.21 -0.21

-0.51 -0.44 -0.43

G01 G02 G03 G04 G05 G06

Market Openness / Barriers to Entry as an Issue for Entrepreneurship

0.94 0.86 0.91

0.78 0.82

-0.03 -0.03 -0.03 -0.06

H01 H02 H03 H04 H05

Access to Physical Infrastructure

H01 The physical infrastructure (roads, utilities, communications, and water disposal) provides

good support for new and growing firms.

H02 It is not too expensive for a new or growing firm to get good access to communications

(phone, Internet, etc.).

H03 A new or growing firm can get good access to communications (telephone, internet, etc.) in

about a week.

H04 New and growing firms can afford the cost of basic utilities (gas, water, electricity, and

sewer).

H05 New or growing firms can get good access to utilities (gas, water, electricity, and sewer) in

about a month.

Figure 3.10 Cultural and Social Norms

I01 The national culture is highly supportive of individual success achieved through own

personal efforts.

I02 The national culture emphasizes self-sufficiency, autonomy, and personal initiative.

I03 The national culture encourages entrepreneurial risk-taking.

I04 The national culture encourages creativity and innovativeness.

I05 The national culture emphasizes the responsibility that the individual (rather than the

collective) has in managing his or her own life.

0.47 0.39

0.31 0.39 0.36

-0.19 -0.31 -0.33

-0.25 -0.22

I01 I02 I03 I04 I05

Cultural and Social Norms

Figure 3.11 Start Up Opportunities

K01 There are plenty of good opportunities for the creation of new firms.

K02 There are more good opportunities for the creation of new firms than there are people able

to take advantage of them.

K03 Good opportunities for new firms have considerably increased in the past five years.

K04 Individuals can easily pursue entrepreneurial opportunities.

K05 There are plenty of good opportunities to create truly high growth firms.

Figure 3.12 Knowledge and Skills for Start Up

0.75 0.67 0.62

0.53 0.64

-0.03 -0.08 -0.09 -0.08 -0.11

K01 K02 K03 K04 K05

Entrepreneurship Opportunity and Climate

0.14 0.17 0.22

-0.33 -0.33

L01 L02 L03 L04 L05

Abilities, knowledge to start up

L01 Many people know how to start and manage a high-growth business.

L02 Many people know how to start and manage a small business.

L03 Many people have experience in starting a new business.

L04 Many people can react quickly to good opportunities for a new business.

L05 Many people have the ability to organize the resources required for a new business.

Figure 3.13 Social Image

M01 The creation of new ventures is considered an appropriate way to become rich.

M02 Most people consider becoming an entrepreneur as a desirable career choice.

M03 Successful entrepreneurs have a high level of status and respect.

M04 You will often see stories in the public media about successful entrepreneurs.

M05 Most people think of entrepreneurs as competent, resourceful individuals.

0.83 0.83 0.78

-0.20 -0.31

-0.08 -0.03 -0.03

M01 M02 M03 M04 M05

Respect for Entrepreneurship

Figure 3.14 Intellectual Property Rights Protection

N01 The Intellectual Property Rights (IPR) legislation is comprehensive.

N02 The Intellectual Property Rights (IPR) legislation is efficiently enforced.

N03 The illegal sales of ’pirated’ software, videos, CDs, and other copyrighted or trademarked

products is not extensive.

N04 New and growing firms can trust that their patents, copyrights, and trademarks will be

respected.

N05 It is widely recognized that inventors’ rights for their inventions should be respected.

Figure 3.15 Support for Women

0.32 0.23

0.47 0.53

-0.16 -0.32

N01 N02 N03 N04 N05

IPR Protection

0.56 0.64

-0.06 -0.17

-0.28 -0.14

P01 P02 P03 P04 P05

Women Entrepreneurship

P01 There are sufficient social services available so that women can continue to work even after

they start a family.

P02 Starting a new business is a socially acceptable career option for women.

P03 Women are encouraged to become self-employed or start a new business.

P04 Men and women get equally exposed to good opportunities to start a new business.

P05 Men and women are equally able to start a new business.

Figure 3.16 Attention to High Growth

Q01 There are many support initiatives that are specially tailored for high-growth entrepreneurial

activity.

Q02 Policy-makers are aware of the importance of high-growth entrepreneurial activity.

Q03 People working in entrepreneurship support initiatives have sufficient skills and competence

to support high-growth firms.

Q04 Potential for rapid growth is often used as a selection criterion when choosing recipients of

entrepreneurship support.

Q05 Supporting rapid firm growth is a high priority in entrepreneurship policy.

0.67 0.58

-0.09 -0.09

-0.26 -0.17

Q01 Q02 Q03 Q04 Q05

High Growth Entrepreneurship

Figure 3.17 Interest in Innovation

R01 Companies like to experiment with new technologies and with new ways of doing things.

R02 Consumers like to try out new products and services.

R03 Innovation is highly valued by companies.

R04 Innovation is highly valued by consumers.

R05 Established companies are open to using new, entrepreneurial companies as suppliers.

R06 Consumers are open to buying products and services from new, entrepreneurial companies.

Figure 3.18 Wellbeing Conditions

0.58 0.44

-0.08 -0.11 -0.14 -0.22

R01 R02 R03 R04 R05 R06

Interest In Innovation

0.67 0.64 0.49

-0.17 -0.22 -0.11 -0.08

x01 x02 x03 x04

Wellbeing

X01 The general conditions (economic, social, political and cultural) allow people to perfectly

harmonize personal and working life

X02 In my country existing lab or regulations allow people to perfectly harmonize personal and

working life

X03 In my country entrepreneurs usually appear as more satisfied with their working life than

non-entrepreneurs

X04 In my country entrepreneurs usually appear as more satisfied with their personal life than

non-entrepreneurs

Figure 3.19 Youth Entrepreneurship (14-20)

Y1_01 Youth have easy access to primary and secondary education

Y1_02 Most of the youth have no option other than to find work

Y1_03 Youth are pushed into business activity out of necessity

Y1_04 families expect youth to contribute to the family’s finance

Y1_05 The youth involved in business activity are more likely to be self-employed than an

employee (work for someone else)

Y1_06 Self-employed youth learn to develop their business activities largely through their own

experience and relationships

Y1_07 there are many opportunities to develop “micro business” for youth

Y1_08 governmental programs effectively train and support youth entrepreneurs

0.47 0.42

0.72 0.61

-0.44 -0.42 -0.25 -0.22

-0.03 -0.17

Y1_01 Y1_02 Y1_03 Y1_04 Y1_05 Y1_06 Y1_07 Y1_08

Entrepreneurship & Youth (aged 14-20 years)

Figure 3.20 Young Adults Entrepreneurship (21-34)

Y2_01 Conflict situations form a substantial barrier for youth/young adults to start and grow a

business

Y2_02 The young adults are significantly involved in entrepreneurship

Y2_03 Youth and young adults face greater constraints to entrepreneurship relative to the general

adult population

Y2_04 There is an adequate system of business incubators that can be accessed by young adults

Y2_05 Most of young adults that become entrepreneurs have been helped to start up by their

families, close relatives or friends

Y2_06 Financers (banks, informal investors, business angel.) fund young adults’ business initiatives

Y2_07 Micro-credit facilities for young adults to start a business are efficient

Y2_08 The young adults consider life/work opportunities outside the country to be more attractive

0.36 0.25

0.25 0.25

-0.17 -0.28

-0.33 -0.31

Y2_01 Y2_02 Y2_03 Y2_04 Y2_05 Y2_06 Y2_07 Y2_08

Entrepreneurship & Young Adult (aged 21-34)

Figure 3.21 Overall Rating for Malaysia’s Entrepreneurial Framework Conditions.

3.3. An Overview of Entrepreneurship Institutions

A comparison with Malaysia across 69 economies participating in the NES may be done through

Table A4 in the appendix. It provides a general overview of the results of each EFC for the 69

economies participating in the NES in 2013, by geographic regions. The table shows the main rates

for each economy and all EFCs.

Table A4 (Appendix) also shows the highest rated EFCs in each country in green and the lowest rated

EFCs in red. Even though clear patterns among country-groups are not easy to discern, the averages

presented in the table reflect, for example, that education of entrepreneurship at basic levels

(primary and secondary school) is judged rather unfavourably in the majority of the countries. Only

The Netherlands has a score above 3. In contrast, physical infrastructure tends to have the highest

evaluations in experts’ judgments with averages over 4, for example in the EU. Hence it does not

seem to be a binding constraint in most economies across the globe. Only Sub-Saharan countries

have lower evaluation in physical infrastructure to support entrepreneurship.

To some degree, the observed higher rates in innovation-driven economies are consistent with the

GEM conceptual framework and the notion that EFCs have higher priorities among more

economically developed countries. At the same time, it should be noted that reference points may

differ across economies: What is perceived to be good in one country may be perceived to be poor

in others. To visualize the differences that exist, standardized mean Z-scores are shown for each EFC

in Figures 3.22 and 3.23. These figures show that many EFCs do differ by economic development

phase. The EFC’s showing this the clearest in the 2013 NES results are government programs,

national policy regulation and physical infrastructure and R&D transfer. However, some other EFCs

do not present such clear differences; for example, cultural and social norms.53

Note: Values of indicators are based on averaging the Z-scores (standardized values) for the economies in each

of the three phases of economic development.

Global Entrepreneurship Monitor 2013 - EFCs

0.30Finance

National Policy — General Policy

National Policy — Regulation

Government Programs

Education — Primary and Secondary

Education — Post-School

Note: Values of indicators are based on averaging the Z-scores (standardized values) for the economies in each

of the three phases of economic development.

3.3.1 Malaysia and the Asia Pacific and South Asia Region

Malaysia and Taiwan rate the highest globally for Finance for entrepreneurs at 3.4 and 3.7

respectively. In National Policy for entrepreneurship Malaysia is rated at 3.1 above the average of

2.8 for the Asia Pacific and South Asia region. However where National Policy for regulations are

concerned we rate at 2.5 below the regional average of 2.6. Singapore is rated highest at 4.1.

Malaysia’s government programs are second highest at 3.1 with Singapore leading at 3.7. Thus as a

whole Malaysia’s National Policy and Regulations have much room for improvement when

compared against the region’s best.

In entrepreneurship Education at both Primary and Secondary Malaysia is rated 2.3 which is only

marginally higher than the regional average of 2.2. The Philippines is rated the highest and India the

lowest. This is crucial as entrepreneurship education needs to be instituted from the very start in

order to groom future entrepreneurs in various field. In Education Post School Malaysia rates 3.0

against the regional average of 2.9. Again the Philippines rates highest at 3.4. The Ministry of Higher

0.40R&D Transfer

Commercial & ServicesInfrastructure

Internal Market — Dynamics

Internal Market — Openness

Physical Infrastructure

Education has made it entrepreneurship as a compulsory subject for all programmes since 200754

and this requirement will likely see an increase in Malaysia’s rating in future years.

In R&D transfer i.e. the extent to which national research and development will lead to new

commercial opportunities and is available to SMEs, Malaysia is rated at 2.9. Singapore is highest at

3.2. Where commercial infrastructure is concerned i.e. the presence of property rights, commercial,

accounting and other legal and assessment services and institutions that support or promote SMEs,

Malaysia rates at 3.2 with Singapore highest at 3.5. The regional average is 3.1. As SME’s are crucial

to national economic growth providing access R&D and support services to them needs to become a

national imperative.

Where market entry regulation is concerned Malaysia’s Internal Market Dynamics (the level of

change in markets from year to year) is rated at 3.4 below the regional average of 3.6. Korea is rated

highest at 4.1. The Malaysian rate for Market Openness (the extent to which new firms are free to

enter existing markets) is rated at 2.7 the same as the regions average. Singapore rates highest at

3.4. This suggests that entry regulations in Malaysia are not as open relative to our regional

neighbours overall.

Malaysia is rated highly for Physical Infrastructure (i.e. ease of access to physical resources—

communication, utilities, transportation, land or space—at a price that does not discriminate against

SMEs) at 4.1 along with Thailand. Singapore rates highest at 4.5 in the region. Generally this

condition receives a fairly high rating by all countries in the Asia Pacific and South Asia region except

for Taiwan who at 3.0 is the lowest.

When Cultural and Social Norms (i.e. the extent to which social and cultural norms encourage or

allow actions leading to new business methods or activities that can potentially increase personal

wealth and income) Malaysia rates at 3.1 below the regional average of 3.2. Taiwan rates highest at

3.6. Thus Malaysia’s social and cultural norms does have aspects that holds back entrepreneurial

activity overall. To visualize the differences that exist, standardized mean z-scores are shown for

each EFC in figures 3.24, 3.25 and 3.26.

54 The Ministry of Higher Education’s entrepreneurial module called Basic Culture of Entrepreneurship Module or Asas Pembudayaan Keusahawanan (APK) which was introduced in 2007 as a compulsory course for two (2) credits for Year 1 in all of Higher Education Institutions in Malaysia.

Figure ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT.3.24 Malaysia’s Composite Indicators on

Entrepreneurship Institutions, By Stage of Development (1/2)

Development (2/2)

1.2Finance

National Policy

National Regulations

Government Programs

Education-Post School

Education-Primary&Secondary

Malaysia Factor-Driven Economies*

Efficiency-Driven Economies* Innovation-Driven Economies*

0.8R&D Transfer

Commercial Services andInfrastructure

Internal Market Dynamics

Internal Market Openness

of Development

1.2Finance

National Policy

Government Programs

R&D Transfer

3.3.2 A Comparison of Entrepreneurship Institutions across South East Asia

Table 3.2 Entrepreneurial Framework Conditions in 5 South East Asian countries - 201355 EFCs Vietnam Philippine Indonesia Thailand Malaysia Singapore

Entrepreneurial Finance 2.40 3.23 3.06 3.00 3.42 3.53

National Policy - General Policy 2.89 3.00 2.69 2.46 3.05 3.65

National Policy - Regulation 2.77 2.29 2.22 2.38 2.54 4.14

Governmental Programs 2.50 3.13 2.53 2.43 3.00 3.67

Education - Primary & Secondary 1.97 3.06 2.54 2.28 2.33 2.79

Education - Post-School 2.64 3.40 3.30 3.12 3.03 3.24

R&D Transfer 2.54 2.50 2.31 2.55 2.94 3.22

Commercial and Legal Infrastructure 2.89 3.37 3.25 3.35 3.17 3.53

Entry Regulations: Internal Market - Dynamics 3.50 3.82 3.92 3.71 3.39 3.47

Entry Regulations: Internal Market - Openness 2.66 2.86 2.82 2.79 2.74 3.39

Physical Infrastructure 3.58 3.69 3.45 4.08 4.15 4.51

Cultural & Social Norms 3.10 3.55 3.29 3.04 3.13 3.21

*The green shaded boxes represent the highest scores and the yellow represents the lowest for each respective

EFC amongst the 5 countries reviewed.

Entrepreneurial Framework Conditions (EFCs) captures a set of factors that shape entrepreneurial

activity. This is different for each country’s as their context is necessarily nuanced differently with

unique consequences.

The NES was carefully designed and refined to capture informed judgments of national key

informants regarding the status of EFCs in their own countries. National and regional experts are

selected on the basis of reputation and experience.

The EFCs can be considered an indispensable part of the puzzle in understanding business creation.

The state of these conditions directly influences the existence of entrepreneurial opportunities and

entrepreneurial capacity and preferences, which in turn determines business dynamics.

The first EFC reviewed is Entrepreneurial Finance. This refers to the availability of financial

resources-equity and debt-for small and medium enterprises (SMEs) (including grants and subsidies).

Vietnam is lowest and Singapore is highest followed by Malaysia. Finance for entrepreneurship is a

key condition for entrepreneurship where government support can make a real difference.

National policy refers to the extent to which public policies give support to entrepreneurship. This

EFC has two components. Firstly the general policy of governments i.e. where entrepreneurship is

treated as an important factor for economic growth. Thailand’s experts obviously do not regard their

government’s general policy for entrepreneurship as sufficient as compared to Singapore which

scores the highest. Secondly the national policy concerns regulations for entrepreneurship i.e. where

taxes or regulations are either size-neutral or encourage new and small and medium enterprises.

Regulations and taxes can stifle growth for established organisations but new and smaller or even

micro enterprises will usually not be able to survive. In national regulations Indonesia is lowest and

Singapore is highest.

Source: GEM Global Expert Survey 2013

Government entrepreneurship programs refers the presence and quality of programs directly

assisting SMEs at all levels of government (national, regional and municipal). Such programs range

from skills training to networking opportunities for entrepreneurs. Thailand is lowest rated and

Singapore is highest.

Entrepreneurship education is measured in two segments i.e. entrepreneurship education in

primary and secondary schools and entrepreneurship education in institutions of higher learning or

post- secondary levels. This would include vocational and technical colleges, universities and

business schools. It considers the extent to which training in creating or managing SMEs is

incorporated within the education and training system at all levels. Interestingly the opinion of

experts (within each country) rated Vietnam lowest for both segments whilst Philippines was rated

highest for both segments too.

R & D transfer here refers to the extent to which national research and development will lead to

new commercial opportunities and is available to SMEs. This is important for creating and infusing

innovation into SMEs. Indonesia’s score is comparatively lowest for this condition whilst Singapore is

highest accounting for its innovation-driven type economy. The Global Competitiveness Report

considers Innovation and Business sophistication as the two key pillars for an innovation-driven

economy. And R & D transfer support by governments will feed directly into this.

Commercial and Legal Infrastructure is rated based on the presence of property rights, commercial,

accounting and other legal and assessment services and institutions that support or promote SMEs.

Vietnam is comparatively the lowest and Singapore the highest.

Entry regulations is measured across two key components. Firstly Market Dynamics which is the

level of change in markets from year to year. Market changes refers to changes seen in markets for

consumer and business to business goods and services. Malaysia experiences the lowest changes

and Indonesia the highest. Secondly Market Openness indicates the extent to which new firms are

free to enter existing markets. A lack of anti-trust legislation, high cost of market entry and other

blockages can prevent the new firms from entry into markets. Vietnam’s market entry is most

difficult and Singapore affords the easiest entry for new firms within the South East Asian region.

Physical Infrastructure refers to the ease of access to physical resources-communication, utilities,

transportation, land or space at a price that does not discriminate against SMEs. Indonesia again

sees the cost of access as high for SMEs whereas Singapore is again relatively lowest.

Cultural and Social norms indicates the extent to which social and cultural norms encourage or

allow actions leading to new business methods or activities that can potentially increase personal

wealth and income. Risk taking propensity, creativity and innovation and locus of control are some

of the key measures of an entrepreneurial culture. Philippines is rated as having a higher

entrepreneurial culture by their experts whereas Thailand has the lowest comparatively.

This comparisons across the five countries that conducted the GEM study to some extent provides a

measurement and comparison within the SEA region. The tables and charts below will provide a

wider global view as each countries EFC is traced against EFC’s of countries across differing economic

stages i.e. factor-driven, efficiency-driven and innovation-driven type economies (Box A). The figures

have been harmonized and averaged for each economic stage to allow for broad overview of where

each SEA country stands vis a vis the EFC’s globally.

Box A Economic Stages of Development 56

These comprise countries compete based on their factor endowments—primarily unskilled labour and natural resources. Companies compete on the basis of price and sell basic products or commodities, with their low productivity reflected in low wages. Maintaining competitiveness at this stage of development hinges primarily on well-functioning public and private institutions, a well-developed infrastructure, a stable macroeconomic environment, and a healthy workforce that has received at least a basic education.

As a country becomes more competitive, productivity will increase and wages will rise with advancing development. Countries will then move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality because wages have risen and they cannot increase prices. At this point, competitiveness is increasingly driven by higher education and training, efficient goods markets, well-functioning labour markets, developed financial markets, the ability to harness the benefits of existing technologies, and a large domestic or foreign market.

Finally, as countries move into the innovation-driven stage, wages will have risen by so much that they are able to sustain those higher wages and the associated standard of living only if their businesses are able to compete with new and unique products. At this stage, companies must compete by producing new and different goods using the most sophisticated production processes and by innovating new ones

Source: Global Competitiveness Report 2013-2014

Malaysia

General Characteristics Entrepreneurship Indicators Population (x 1,000): 29,628,392 Perceived Opportunities 37.9

Area (x 1,000 km2): 329 Perceived Capabilities 27.6

Density (persons / km2): 86.1 Fear of Failure 30.9

GDP Per Capita (PPP): USD10,432 Entrepreneurship as a Good Career Choice 43.6

Nascent Entrepreneurship Rate: 1.5

Global Happiness Index: 5.76 (56/156) Owner-Managers in New Businesses Rate: 5.2

Human Development Index: 0.76 (65/187) Owner-Managers in Established Businesses Rate: 6

Total early-stage Entrepreneurial Activity Rate (TEA): 6.6

Global Competitiveness Index: 5.03 (24/148) - Necessity-Driven % of TEA Rate: 18.4

Global Innovation Index: 46.9 (32/142) - Improvement-Driven % of TEA Rate: 64.9

Ease of Doing Business Index: (6/189) Male Entrepreneurial Activity Rate 50.2

Female Entrepreneurial Activity Rate 49.8

- Male Established Business 8.7

- Female Established Business 3.7

Classification Phase of Economic Development: Efficiency-Driven Economy (transition from stage 2 to stage 3)

of Development

1.5Finance

National Policy

Government Programs

R&D Transfer

Viet Nam

General Characteristics GEM 2013 Entrepreneurship Indicators

Population (x 1,000): 90,000 Perceived Opportunities 36.8

Density (persons / km2): 272 Fear of Failure 56.7

Human Development Index: 0.62 (127/187) Owner-Managers in Established Businesses Rate: 16.4

Classification Phase of Economic Development: Factor-Driven Economy

Figure 3.28 Vietnam’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development

0.6Finance

National Policy

Government Programs

R&D Transfer

Vietnam Factor-Driven Economies*

PHILIPPINES

General Characteristics GEM 2013 Entrepreneurship Indicators Population (as of May 2010) 92.34 million Perceived Opportunities 47.9

Density (persons / km2): 308 Fear of Failure 36.2

GDP Per Capita (US$ current) prices):

2,587 Entrepreneurship as a Good Career Choice 84.9

Human Development Index: 0.65(114/187) Owner-Managers in Established Businesses Rate: 6.6

Global Innovation Index: 3.75 (58/148) - Improvement-Driven % of TEA Rate: 38

Classification Phase of Economic Development: Factor-Driven Economy (transition from stage 1 to stage 2)

Figure 3.29 The Philippines’s Overall Composite Indicators on Entrepreneurship Institutions,

By Stage of Development

1.5Finance

National Policy

Government Programs

R&D Transfer

Philippines Factor-Driven Economies*

INDONESIA

General Characteristics GEM 2013 Entrepreneurship Indicators Population (x 1,000): 238,518.8 (in 2010) Perceived Opportunities 47

Area (x 1,000 km2): 1811570 Perceived Capabilities 62

Density (persons / km2): 131.664 (in 2010) Fear of Failure 35

GDP Per Capita (PPP): 5,100 USD Entrepreneurship as a Good Career Choice 71

Global Happiness Index: 5.348 (76/156) Owner-Managers in New Businesses Rate: 20.4 Human Development Index: 0.629 (121/187) Owner-Managers in Established Businesses Rate: 21

Total early-stage Entrepreneurial Activity Rate (TEA):

Global Competitiveness Index Index:

4.53 (38/148) - Necessity-Driven % of TEA Rate: 25

Global Innovation Index: 31.95 (85/142) - Improvement-Driven % of TEA Rate: 44

Ease of Doing Business Index: 120/189 Entrepreneurial Activity Rate 45

- Male Established Business 22

- Female Established Business 21

Classification Phase of Economic Development: Efficiency-Driven Economy

Figure 3.30 Indonesia’s Overall Composite Indicators on Entrepreneurship Institutions, By

Stage of Development – 2013

0.8Finance

National Policy

Government Programs

R&D Transfer

Indonesia Factor-Driven Economies*

THAILAND

General Characteristics Entrepreneurship Indicators Population (x 1,000): 68,229 Perceived Opportunities 45.3

Density (persons / km2): 130.75 Fear of Failure 49.3

Ease of Doing Business Index: (18/189)

Classification Phase of Economic Development: Efficiency-Driven Economy

Figure 3.31 Thailand’s Overall Composite Indicators on Entrepreneurship Institutions, By Stage

of Development

0.6Finance

National Policy

Government Programs

R&D Transfer

Thailand Factor-Driven Economies*

SINGAPORE

General Characteristics GEM 2013 Entrepreneurship Indicators Population (x 1,000): 5.567 Perceived Opportunities 22.2

Area (km2): 697 Perceived Capabilities 24.8

Density (persons / km2): 7,669 Fear of Failure 39.8

Global Happiness Index: 6.54(30/156) Owner-Managers in New Businesses Rate: 4.4

Total early-stage Entrepreneurial Activity Rate (TEA):

Global Competitiveness Index IneIndexIndex:

5.61 (2/148) - Necessity-Driven % of TEA Rate: 8.4

Ease of Doing Business Index: (1/189)

Classification Phase of Economic Development: Innovation-Driven

Figure 3.32 Singapore’s Overall Composite Indicators on Entrepreneurship Institutions, By

Stage of Development

2Finance

National Policy

Government Programs

R&D Transfer

Singapore Factor-Driven Economies*

The above EFC views reflect the diverse economic stages of growth in SEA. Each country has its

unique opportunities and challenges against a backdrop of varying capacities to promote

entrepreneurship. Where some SEA nations need to improve National Policies others see a need for

improving Physical Infrastructure or Entrepreneurial Finance. By defining these key imperatives it

affords an opportunity to structure an overall entrepreneurship strategy which will support and

strengthen the individual entrepreneurial eco systems of these SEA nations.

CHAPTER 4: RECOMMENDATIONS FOR POLICY AND PRACTICE

The number of countries using innovation as a means and source for economic growth continues to

increase. In this regard Malaysia is no exception as we see innovation and entrepreneurship as one

of the key pillars that can spearhead economic growth for the nation. Innovation and

entrepreneurship will allow Malaysia to move from a manufacturing and resource based type

economy to an innovation type economy. This improvement up the value chain involves not just the

use of knowledge but the creation of knowledge.

In this regard Malaysia leads the region where tertiary enrolment rates are concerned when

compared with the region. In fact within SEA, Malaysia and Singapore, the education budgets are

amongst the highest. A positive trend is the closing gap between rural and urban new business

owners between 2009 and 2013. This important as the government has made extra efforts to close

the income/opportunities gap between them.

Major hurdles to consider is the real challenge of a middle-income trap, innovation mainly by large

multinational corporations and sections of the economy not being open to competition. Additionally

local suppliers also are seldom party to the innovation integration for products and services.

Today globally the common and constant bane of entrepreneurs are the uncertain economic

situation and the inadequacy or non-existence of starting capital. Both which increases the ‘fear of

failure’. They become obstacles to self-employment. Why? Failing results in legal consequences for

their business, financial burdens, disappointed families and the stigma associated with not

succeeding.

However for Malaysia, over the last five years, these challenges i.e. uncertain economic conditions

and the lack of starting capital have been largely mitigated. Economic growth has been constant (see

http://www.worldbank.org/en/country/malaysia/overview) and as our research shows above

Malaysia has amongst the best start-up funding provisions not just regionally but globally as well.

The off shoot of this is that our fear of failure has reduced by half.

So it begets the question why are we not doing better where entrepreneurship growth and

sustainability of those enterprises are concerned.

There are three key aspects that go towards illuminating an answer to this question.

High Growth Sustainability Concerns

Firstly is the availability of options for potential entrepreneurs in Malaysia. Economic growth

becomes a double edged sword that at once provides growth and in tandem decent employment

opportunities which draws away human resources from entrepreneurship. In a relatively small

population of 29 million (compared against nations in the region) the impact is fairly great.

The solution would be to recalibrate our emphasis and make the entrepreneurial employee activity

(EEA)57(Bosma et al, 2013) equally important. This employee working within an organisation could be

provided the same incentives as given to new start-ups. However it will be for innovation efforts or

spin off organisation for their employers. This approach has the added benefit of the EEA having a

Entrepreneurial Employee Activity or EEA is defined by the GEM EEA Report 2013 as ‘employees developing new activities for their main

employer, such as developing or launching new goods or services, or setting up a new business unit, a new establishment or subsidiary.

The scope adopted is therefore broader than new organization creation; however it excludes employee initiatives that mainly aim at

optimizing internal work processes’

mentor in addition to other subsidiary resources for the new spin off venture. New monitoring

mechanisms may be put in place that ensures that both the employer and employee benefits. The

employee benefitting is an important aspect as they are the source of ideas and innovation and

should be the ones working the project.

Secondly the lack of evaluation of those business. In Malaysia we tend to take a less than Kirznerian

view to what constitutes an entrepreneurial business. What we need is to take a Schumpeterian

view i.e. a view that promotes innovation with a will to change small businesses into larger ones

(Henrekson and Sanandaji, 2013). Entrepreneurship is not and historically has never been about

business for businesses sake. It is about adding value and filling gaps. As the American’s say, ‘It’s

about solving your customers’ pain’. And today it is more about anticipating our customers’ pain and

delighting them with a solution if one wants to stay in the forefront.

Having said that it is not possible to ‘guarantee’ great business success. The reason is due the

complexity of our environment, both external and internal. We must learn the ‘complicated’ and

expertly manage the ‘complex’. Overcoming those complexities will require adaptation and

persistence for success after a business model is thoroughly evaluated. The importance of a good

and rigorous education standard is a primary requirement here (Schumpeter, The Economist,

2014)58. However if at its infancy businesses could, through objective evaluations, be sieved the

chances for potential high growth entrepreneurial businesses will be much higher. The result will be

much less new businesses but the quality of those who actually start-up will be higher and

consequently result in higher job creation and sustainability. This is where we need to infuse our

resources. The global scenario does offer many lessons including that it is not the quantity of

businesses that matter but the high growth value added quality that counts (Shane, 2009). Patent

registrations too mean little without innovation for the marketplace. It has shown that structural

transformation and the creation of new industries is contributed by growth-oriented entrepreneurs.

The global scenario also adequately clues us in that it is the private sector, driven by expediency and

urgency, are best placed to achieve this. Government role will be as gate constructors and keepers

to facilitate that innate private sector drive.

Thirdly, also resulting from a lack of evaluation, and due to the well-meaning push for

entrepreneurship by government has resulted in what may be termed entrepreneurship on steroids.

Steroidal entrepreneurship will not last. It only serves to conjure a view that meets data statistics

and government agencies KPI’s. When the waves of competition both regional and global arrive

those businesses will not survive. The ‘rakyat’59 are the ones who eventually will bear the brunt of

those inevitable failures and suffer legal, financial and stigmatized ramifications.

Thus an overall relook, based on national research data and our inferences should in part serve to

point Malaysia’s unique entrepreneurial landscape in the right direction. Below we offer an outline,

drawing on global strategies from successful nations that provide an indication of the pain points

that need addressing within Malaysia’s context.

http://www.economist.com/blogs/schumpeter/2014/02/our-schumpeter-columnist

59 Malaysian citizens

Table 4.1 National Entrepreneurship Framework60

This framework highlights the key areas for improvement based on GEMs research conducted over 5

years in Malaysia. It needs to be mapped over many other important factors and stakeholders that

make up an entrepreneurial ecosystem. It thus serves to highlight critical shortcomings that needs

attention to bring us to par with other efficiency driven economies even as we work towards

becoming an innovation driven economy.

The future challenges for Malaysia is to close the gaps within the Entrepreneurship Framework

conditions. This will require a rethink and revamp of our national entrepreneurship policies as

regards our economic and business climate. Key areas would include to improve the coordination

amongst ministries, improve national regulations, increase market openness, enhance SME

development and support policies and promote sustainable development. Sustainability

development refers to women entrepreneurship focus, environmental protection and continuous

evaluation of the effectiveness of implementation and meeting of expected outcomes.

60 This framework does not emphasize Malaysia’s strengths which are apparent from the earlier discussions but rather highlights our pain paoints i.e. where and what will need fixing, adding and improving.

National Entrepreneurship Policies

Economic and Business

Improve Coordination

Across Ministries

Improve National

Regulations

Increase Market Openness

Enhance SME Develpment &

Support Policies

Promote Sustainability Development

National Entrepreneurship Strategy

An entrepreneurial ecosystem approach i.e. in consultation with all government agencies, all sectors of business, educational institutions and financial instituions.

Enhance Education and

Training

Facilitate R&D Transfer

Emphasize Attention to High

Growth

Inculcate TEA & EEA

National Entrepreneurship Focus

Primary/Secondary

/Vocational schools

Inclusive Govenment Programmes

Enhance Abilities & Knowledge to Start

A key subset of that will be to have a national entrepreneurship strategy. A strategy that spearheads

the enhancement of education and training, facilitates R&D transfer, emphasizes attention to high

growth business and inculcates Total Early Stage Entrepreneurial Activity (TEA) and Entrepreneurial

Employee Activity (EEA) as benchmarks for measurement. A further subset (within the national

entrepreneurship strategy) for Malaysia's national entrepreneurship focus will be to include

entrepreneurship education within primary, secondary and vocational schools, to have more

inclusive government programs involving and lead by the private sector and to enhance the abilities

and skills for start-ups.

Even though it is a long-term goal, we need to establish a culture that values entrepreneurship,

encourages and supports potential high growth entrepreneurs and help them overcome the fears of

an uncertain future. It will be worthwhile as these efforts will make entrepreneurship and sustaining

innovation key pillars of growth for Malaysia.

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APPENDIX

Table A1

TABLE A1 ENTREPRENEURIAL ATTITUDES AND PERCEPTIONS IN THE GEM ECONOMIES IN

2013 BY PHASE OF ECONOMIC DEVELOPMENT (% OF POPULATION AGED 18-64)

Perceived opportuni

Perceived capabiliti

es Fear of failure*

Entrepreneurial

intentions **

Entrepreneurship as a

good career choice***

High status to

successful entrepreneu

Media attentio

n for entrepreneursh

Argentina 41 62 25 31

Brazil 51 53 39 27 85 82 84

Chile 68 60 28 46 69 67 66

Colombia 68 58 32 55 91 71 68

Ecuador 57 74 35 40 66 68 79

Guatemala 59 66 33 39 87 71 55

Jamaica 51 79 27 40 79 81 82

Mexico 54 59 32 17 58 62 51

Panama 59 66 29 27 64 59 70

Peru 61 62 26 34 70 71 71

Suriname 53 54 24 13 76 79 66

Trinidad & Tobago

58 75 20 29 80 72 61

Uruguay 48 61 27 25 58 56 58

Average (unweighted)

56 64 29 33 74 70 68

Algeria 62 56 33 36 80 84 47

Iran 37 57 36 31 64 82 60

Israel 47 36 52 24 61 80 49

Libya 52 59 33 62 85 84 38

49 52 39 38 72 83 49

Sub-Saharan Africa

Angola 57 56 64 38 67 73 62

Botswana 66 67 19 59 81 84 86

Ghana 69 86 25 46 82 94 82

Malawi 79 89 15 67

Nigeria 85 87 16 47 81 62 77

South Africa 38 43 27 13 74 75 78

Uganda 81 84 15 61 88 95 88

Zambia 77 80 15 44 67 71 69

69 74 25 47 77 79 77

China 33 36 34 14 70 74 71

India 41 56 39 23 61 70 61

Indonesia 47 62 35 35 71 80 75

Japan 8 13 49 4 31 53 58

Korea 13 28 42 12 51 68 68

Malaysia 41 28 33 12 42 45 62

Philippines 48 68 36 44 85 79 87

Singapore 22 25 40 15 51 59 75

Taiwan 42 27 41 28 73 64 87

Thailand 45 44 49 18 75 75 77

Vietnam 37 49 57 24 63 82 81

34 40 41 21 61 68 73

Europe – EU 28

Belgium 32 34 47 8 55 52 44

Croatia 18 47 35 20 61 43 43

Czech Republic 23 43 36 14 48

Estonia 46 40 39 19 53 59 41

Finland 44 33 37 8 44 85 69

France 23 33 41 13 55 70 41

Germany 31 38 39 7 49 75 50

Greece 14 46 49 9 60 65 32

Hungary 19 38 45 14 46 74 28

Ireland 28 43 40 13 50 81 60

Italy 17 29 49 10 66 72 48

Latvia 35 48 42 23 61 59 59

Lithuania 29 35 42 22 69 57 48

Luxembourg 46 43 43 14 39 71 36

Netherlands 33 42 37 9 79 66 55

Poland 26 52 47 17 67 60 59

Portugal 20 49 40 13

Romania 29 46 37 24 74 73 61

Slovakia 16 51 33 16 49 59 52

Slovenia 16 51 30 12 57 68 51

Spain 16 48 36 8 54 52 46

Sweden 64 39 37 10 52 72 59

United Kingdom

36 44 36 7 54 79 50

29 42 40 13 57 66 49

Europe – Non-EU

Bosnia 23 51 26 22 82 72 39

Macedonia 37 50 36 29 69 68 67

Norway 64 34 35 5 49 75 57

Russia 18 28 29 3 66 68 49

Switzerland 42 45 28 10 41 65 48

37 41 31 14 61 70 52

North America

Canada 57 48 35 14 61 70 70

Puerto Rico 28 53 25 13 18 50 69

USA 47 56 31 12

44 52 30 13 39 60 69

* Denominator: 18-64 age group perceiving good opportunities to start a business. ** Respondent expects to start a business within three years. Denominator: 18-64 age group that is currently not involved

in entrepreneurial activity (including involvement in early-stage and established entrepreneurship). *** This is an optional item in the GEM 2013 Adult Population Survey.

TABLE A2 PHASES OF ENTREPRENEURIAL ACTIVITY IN THE GEM COUNTRIES IN 2013, BY

GEOGRAPHIC REGION

Nascent entrepreneur-ship

New busines

s ownership rate

Early-stage entrepreneur

ial activity (TEA)

Established

business ownershi

p rate

Discontinuation of

businesses

Necessity-

driven (% of TEA)

Improvement-driven

opportunity (% of TEA)

Argentina 10.5 5.6 15.9 9.6 5.5 29.8 47.4

Brazil 5.1 12.6 17.3 15.4 4.7 28.6 57.4

Chile 15.4 9.6 24.3 8.5 7.6 20.1 57.7

Colombia 13.6 10.3 23.7 5.9 5.4 18.1 26.7

Ecuador 25.3 13.6 36 18 8.3 33.6 32.1

Guatemala 7.6 4.9 12.3 5.1 3 31.4 44.2

Jamaica 8 6 13.8 6.3 7.4 40.6 34.2

Mexico 11.9 3.3 14.8 4.2 6.6 6.7 26.3

Panama 15.4 5.2 20.6 3.5 3.4 18.6 39.8

Peru 17.8 5.9 23.4 5.4 4.2 22.5 54.2

Suriname 3.9 1.3 5.1 1.7 0.8 17.8 57.6

Trinidad & Tobago

11.4 8.5 19.5 11.4 4.1 11.2 76

Uruguay 8.5 5.7 14.1 4.9 3.4 12 36.8

11.9 7.1 18.5 7.7 4.9 22.4 45.4

Algeria 2.2 2.6 4.9 5.4 3.3 21.3 62.3

Iran 6.4 6.1 12.3 10.6 5.7 38 35.8

Israel 5.3 4.8 10 5.9 4.8 17.4 49.2

Libya 6.6 4.7 11.2 3.4 8.1 8.1 60.3

5.1 4.6 9.6 6.4 5.5 21.2 51.9

3.00 Sub-Saharan Africa

Angola 8 14.7 22.2 8.5 24.1 26.1 40.3

Botswana 11 10.2 20.9 3.4 17.7 26.3 52

Ghana 8.5 17.7 25.8 25.9 8.3 33.3 44.1

Malawi 10.1 18.8 28.1 12 30.2 43.7 29.4

Nigeria 20 20.7 39.9 17.5 7.9 25.4 52.3

South Africa 6.6 4 10.6 2.9 4.9 30.3 31.5

Uganda 5.6 20 25.2 36.1 20.1 25.1 47.5

Zambia 22.6 18 39.9 16.6 19.8 38.8 37.2

11.5 15.5 26.6 15.4 16.6 31.1 41.8

4.00 Asia Pacific & South Asia

China 5.2 8.9 14 11 2.7 33.9 35.9

India 5.1 4.9 9.9 10.7 1.5 38.8 35.9

Indonesia 5.7 20.4 25.5 21.2 2.4 25.4 43.7

Japan 2.2 1.5 3.7 5.7 1.5 25 59.6

Korea 2.7 4.2 6.9 9 2.5 36.5 51.1

Malaysia 1.5 5.2 6.6 6 1.5 18.4 64.9

Philippines 12 6.7 18.5 6.6 12.3 43.6 38

Singapore 6.4 4.4 10.7 4.2 3.3 8.4 68.8

Taiwan 3.3 5 8.2 8.3 5 28.7 45.8

Thailand 7.9 10.4 17.7 28 3.5 18.7 67.8

Vietnam 4 11.5 15.4 16.4 4.2 25.1 62.2

5.1 7.6 12.4 11.6 3.7 27.5 52.2

European Union

Belgium 3.1 1.9 4.9 5.9 1.9 29 43.9

Croatia 6.3 2 8.3 3.3 4.5 37.4 29.8

Czech Republic

4.9 2.7 7.3 5.3 3.4 22.7 60.3

Estonia 8.8 4.5 13.1 5 2.1 14.8 50.1

Finland 2.7 2.7 5.3 6.6 2 17.9 66

France 2.7 1.8 4.6 4.1 1.9 15.7 60.9

Germany 3.1 2 5 5.1 1.5 18.7 55.7

Greece 3.3 2.3 5.5 12.6 5 23.5 35.8

Hungary 6 3.7 9.7 7.2 2.9 28 38.7

Ireland 5.5 3.8 9.2 7.5 2.5 18 43.8

Italy 2.4 1.1 3.4 3.7 1.9 18.7 18.4

Latvia 8.1 5.3 13.3 8.8 3.5 21.2 52.7

Lithuania 6.1 6.4 12.4 8.3 3.5 23.3 55.2

Luxembourg 6 2.8 8.7 2.4 2.8 5.6 56.6

Netherlands 4.7 4.8 9.3 8.7 2.1 8 67.1

Poland 5.1 4.3 9.3 6.5 4 47.4 32.7

Portugal 4.2 4.2 8.2 7.7 2.8 21.4 50.7

Romania 6.2 4.2 10.1 5.3 4.3 31.6 31.6

Slovakia 6.1 3.6 9.5 5.4 5.5 40.2 40.2

Slovenia 3.6 2.9 6.5 5.7 2.6 24.1 53.4

Spain 3.1 2.2 5.2 8.4 1.9 29.2 33.2

Sweden 5.9 2.5 8.2 6 2.4 9.7 58.4

United Kingdom

3.6 3.6 7.1 6.6 1.9 16.1 45.2

4.8 3.3 8 6.4 2.9 22.7 47

Non-European Union

Bosnia and Herzegovina

5.8 4.6 10.3 4.5 6.2 58.9 22

Macedonia 3.4 3.5 6.6 7.3 3.3 61 22.9

Norway 2.9 3.4 6.3 6.2 1.6 4 60.8

Russia 3 2.8 5.8 3.4 1.6 35.4 42

Switzerland 4.5 3.7 8.2 10 2.3 7.5 67.2

3.9 3.6 7.4 6.3 3 33.4 43

North America

Canada 7.8 4.7 12.2 8.4 4.4 15.1 66.9

Puerto Rico 6.6 1.8 8.3 2 1.8 21.5 42.9

USA 9.2 3.7 12.7 7.5 3.8 21.2 57.4

7.8 3.4 11.1 6 3.3 19.3 55.7

Table A3

Table A4

TABLE A4 ENTREPRENEURSHIP FRAMEWORK CONDITIONS MAIN INDICATORS

1 Finance 2a Nat. Policy — General Policy 2b Nat. Policy — Regulation 3 Government Programs 4a Education — Prim.

& Second. 4b Education — Post-School 5 R&D Transfer 6 Commercial Infrastructure 7a Internal Market – Dynamics 7b

Internal Market – Openness 8 Physical Infrastructure 9 Cultural and Social Norms

1 2a 2b 3 4a 4b 5 6 7a 7b 8 9

ARGENTINA 2.2 2.0 1.5 2.8 2.2 3.3 2.7 3.0 3.2 2.6 3.5 3.2

BARBADOS 2.0 2.8 2.0 2.3 2.0 2.7 1.6 3.0 2.5 2.4 3.4 2.5

BRAZIL 2.3 2.5 1.7 2.3 1.5 2.4 2.0 2.4 3.0 2.1 3.0 2.7

CHILE 2.5 3.4 3.2 3.1 1.7 2.7 2.2 2.7 2.4 2.3 4.2 2.8

COLOMBIA 2.3 2.8 2.6 3.0 2.3 3.2 2.4 2.8 2.9 2.8 3.3 3.1

ECUADOR 2.2 2.9 2.1 2.5 2.0 3.2 2.1 2.9 2.3 2.4 4.2 3.1

GUATEMALA 2.2 2.2 2.1 2.4 1.8 3.2 2.2 3.4 2.4 2.4 3.8 2.6

JAMAICA 2.9 2.6 2.2 2.3 2.2 3.5 2.3 3.2 3.8 2.7 3.8 3.5

MEXICO 2.4 3.0 2.2 3.1 2.0 3.3 2.6 2.7 2.5 2.4 3.9 3.1

PANAMA 2.4 2.7 2.8 3.1 1.6 2.8 2.3 2.8 2.8 2.4 3.8 3.0

PERU 2.3 2.0 2.1 2.2 2.1 2.8 1.9 2.7 2.6 2.6 3.4 2.9

SURINAME 2.4 2.4 2.2 2.0 2.1 3.3 1.8 2.8 2.7 2.2 3.3 2.8

TRINIDAD AND TOBAGO 3.1 2.2 2.2 2.4 2.1 3.0 2.0 3.1 2.8 2.0 3.8 3.0

URUGUAY 2.2 2.3 2.8 3.2 1.7 3.5 3.0 3.1 2.0 2.8 3.8 2.4

Average 2.4 2.6 2.3 2.6 2.0 3.1 2.2 2.9 2.7 2.4 3.7 2.9

ALGERIA 3.4 3.2 2.6 2.7 2.4 3.2 2.9 2.9 4.0 3.0 3.5 3.2

IRAN 2.0 1.9 1.6 1.5 1.5 2.1 1.9 2.1 3.2 1.8 4.1 2.2

ISRAEL 2.8 2.0 1.7 2.2 2.0 3.0 2.3 3.3 2.7 2.2 4.1 3.8

LIBYA 2.1 2.0 2.6 1.7 1.4 2.3 1.8 2.9 3.2 2.8 3.0 2.5

Average 2.6 2.3 2.1 2.1 1.8 2.7 2.2 2.8 3.3 2.4 3.6 2.9

Sub-Saharan Africa

ANGOLA 2.6 2.9 2.2 2.2 1.6 2.1 1.8 2.5 3.1 2.0 2.3 2.8

BOTSWANA 2.7 2.6 2.7 2.6 2.3 3.1 2.1 2.7 3.1 2.8 3.3 2.8

GHANA 2.6 2.7 2.2 2.3 2.1 2.9 2.1 3.0 3.1 3.0 3.0 3.1

MALAWI 1.9 2.3 1.9 2.0 2.2 2.9 1.9 2.8 3.4 2.7 2.8 2.4

NAMIBIA 2.6 3.0 2.1 2.4 2.8 3.1 2.0 2.8 3.0 2.6 3.5 3.2

NIGERIA 2.1 2.0 1.8 2.2 2.1 2.8 1.7 2.6 3.3 2.3 3.0 3.3

SOUTH AFRICA 3.3 2.9 2.1 2.2 1.8 2.3 2.1 2.7 2.8 3.1 2.8 3.0

UGANDA 2.5 2.3 2.0 2.4 2.2 3.1 2.1 3.3 3.8 2.7 3.4 3.1

ZAMBIA 1.9 2.1 2.3 2.1 2.1 2.5 1.7 2.6 3.1 2.7 2.9 2.6

Average 2.5 2.5 2.2 2.3 2.1 2.7 2.0 2.8 3.2 2.7 3.0 2.9

CHINA 2.5 2.7 2.6 2.6 1.6 2.7 2.5 2.6 3.9 2.6 4.0 3.0

INDIA 2.8 1.9 1.8 2.1 1.5 2.4 1.9 3.0 3.5 2.5 3.7 2.7

INDONESIA 3.1 2.7 2.2 2.5 2.5 3.3 2.3 3.2 3.9 2.8 3.5 3.3

KOREA SR 2.3 3.4 2.7 3.0 2.1 2.5 2.5 2.3 4.1 2.3 4.0 3.1

MALAYSIA 3.4 3.1 2.5 3.0 2.3 3.0 2.9 3.2 3.4 2.7 4.1 3.1

PHILIPPINES 3.2 3.0 2.3 3.1 3.1 3.4 2.5 3.4 3.8 2.9 3.7 3.5

SINGAPORE 3.5 3.7 4.1 3.7 2.8 3.2 3.2 3.5 3.5 3.4 4.5 3.2

TAIWAN 3.7 2.7 2.8 2.3 2.0 2.7 2.5 3.4 3.0 2.8 3.0 3.6

THAILAND 3.0 2.5 2.4 2.4 2.3 3.1 2.5 3.4 3.7 2.8 4.1 3.0

VIETNAM 2.4 2.9 2.8 2.5 2.0 2.6 2.5 2.9 3.5 2.7 3.6 3.1

Average 3.0 2.8 2.6 2.7 2.2 2.9 2.6 3.1 3.6 2.7 3.8 3.2

Non-European Union

BOSNIA & HERZEGOVINA 2.2 2.0 1.8 2.0 2.0 2.6 1.9 2.7 3.4 2.0 3.3 2.2

MACEDONIA 2.3 2.6 2.9 2.5 2.3 3.0 2.4 3.0 3.0 2.4 3.5 2.8

NORWAY 2.8 2.4 2.8 3.0 2.6 2.6 2.9 3.6 2.9 2.6 4.1 2.8 ROMANIA 2.3 2.4 2.0 2.4 2.3 2.9 2.6 3.0 3.3 2.7 2.9 2.3 RUSSIA 2.0 1.9 1.9 1.8 2.2 2.7 2.1 3.1 3.2 2.1 3.1 2.5

SWITZERLAND 3.0 3.4 3.7 3.5 2.4 3.4 3.5 3.6 2.7 3.2 4.7 3.3

TURKEY 2.7 2.9 2.7 2.7 2.3 2.9 2.5 3.1 3.2 2.7 3.8 3.2

Average 2.5 2.5 2.5 2.6 2.3 2.9 2.5 3.1 3.1 2.5 3.6 2.7

European Union

BELGIUM 2.6 2.6 2.2 3.3 2.0 3.1 2.6 3.3 2.8 2.7 3.7 2.2

CROATIA 2.3 2.2 1.8 2.5 1.9 2.6 2.1 2.7 3.6 2.1 3.5 2.0

CZECH REPUBLIC 2.5 2.0 2.0 2.3 1.6 2.4 2.2 3.1 2.6 2.6 4.0 2.0

ESTONIA 2.7 2.5 3.1 3.3 2.3 3.0 2.9 3.0 3.6 2.5 4.3 3.5

FINLAND 2.8 3.3 3.1 2.9 2.7 2.9 3.0 3.5 2.8 2.9 4.3 2.9

FRANCE 2.9 3.3 3.0 3.2 1.7 2.7 2.5 3.0 3.2 2.4 4.2 2.2

GERMANY 2.8 2.6 2.6 3.4 1.9 2.6 2.8 3.3 3.2 2.8 3.7 2.8

GREECE 2.0 2.1 1.8 2.0 1.7 2.6 2.2 3.2 3.2 2.2 3.6 2.3

HUNGARY 2.8 2.3 1.9 2.3 1.9 2.8 2.5 3.4 3.1 2.7 3.9 2.6

IRELAND 2.6 2.9 2.8 3.2 2.0 2.8 2.9 3.4 2.7 2.9 3.9 3.0

ITALY 2.5 2.0 1.5 2.1 1.7 2.6 2.5 3.1 3.5 2.5 3.3 2.1

LATVIA 2.9 2.9 3.0 3.0 2.7 3.3 2.4 3.4 2.6 3.0 4.1 3.1

LITHUANIA 2.8 2.4 2.0 2.6 2.4 2.8 2.4 3.5 4.0 2.5 4.2 3.0

LUXEMBOURG 2.6 3.4 3.4 3.6 2.2 2.9 2.8 3.3 3.0 2.9 3.9 2.4

NETEHERLANDS 2.8 3.0 3.2 3.0 3.1 3.3 2.8 3.8 2.9 3.3 4.6 3.1

POLAND 2.7 2.6 2.1 2.7 1.8 2.4 2.1 3.0 3.8 2.8 3.6 2.8

PORTUGAL 2.9 2.6 1.8 2.9 2.2 2.9 2.7 3.4 2.4 2.5 4.4 2.6

SLOVAKIA 2.2 1.9 1.9 2.2 1.9 2.8 1.9 2.8 3.0 2.5 3.9 1.9

SLOVENIA 2.2 1.9 2.1 2.5 2.1 2.8 2.4 2.8 3.1 2.4 3.9 2.2

SPAIN 1.8 2.3 2.0 3.1 1.4 2.3 2.2 2.5 2.1 2.3 3.9 2.1

SWEDEN 2.3 2.7 2.5 2.7 2.3 2.4 2.4 3.0 3.4 2.6 4.2 3.2

UNITED KINGDOM 2.7 3.0 2.6 2.7 2.2 2.6 2.5 3.1 2.8 2.7 3.9 3.1

Average 2.6 2.6 2.4 2.8 2.1 2.8 2.5 3.2 3.1 2.6 4.0 2.6

North America CANADA 2.6 2.9 2.3 2.8 2.2 2.7 2.5 3.1 3.0 2.6 3.9 3.2

PUERTO RICO 1.9 2.3 1.5 2.5 1.6 3.0 2.1 2.9 3.0 2.2 3.4 2.5

UNITED STATES 2.6 2.8 2.2 2.6 2.2 3.1 2.4 3.2 3.2 2.9 4.2 3.9

Average 2.4 2.7 2.0 2.6 2.0 2.9 2.3 3.1 3.1 2.6 3.8 3.2

Table A5

TABLE A5 SUBJECTIVE WELL-BEING GENERAL RESULTS BY GEOGRAPHIC REGION

ecessit

Latin America & Carribean

Argentina 0.41 0.39 0.52 0.41 0.46 0.20 0.40 0.38

Brazil 0.17 0.14 0.22 0.17 0.28 -0.21 0.23 0.05

Chile 0.58 0.65 0.76 0.57 0.73 0.30 0.67 0.61

Colombia 0.17 0.27 0.31 0.17 0.33 0.03 0.30 0.24

Ecuador 0.54 0.62 0.56 0.54 0.68 0.49 0.69 0.54

Guatemala 0.37 0.44 0.40 0.37 0.49 0.32 0.46 0.41

Jamaica -0.53 -0.42 -0.44 -0.54 -0.44 -0.37 -0.23 -0.63

Mexico 0.21 0.22 0.39 0.21 0.37 0.07 0.18 0.28

Panama 0.72 0.66 0.73 0.72 0.67 0.61 0.73 0.55

Peru 0.46 0.71 0.42 0.46 0.77 0.51 0.75 0.66

Suriname 0.01 0.39 0.02 0.01 0.50 -0.01 0.42 0.34

Trinidad & Tobago 0.38 0.37 0.70 0.38 0.37 0.38 0.36 0.39

Uruguay 0.29 0.34 0.43 0.28 0.34 0.33 0.33 0.35

Average 0.29 0.37 0.39 0.29 0.43 0.20 0.41 0.32

Algeria -0.43 -0.33 -0.31 -0.43 -0.29 -0.44 -0.34 -0.32

Iran -0.15 -0.11 -0.09 -0.15 0.01 -0.31 -0.19 0.14

Israel 0.07 0.16 0.24 0.08 0.23 -0.08 0.04 0.41

Libya -0.42 -0.31 -0.21 -0.42 -0.28 -0.49 -0.24 -0.44

Average -0.23 -0.15 -0.09 -0.23 -0.08 -0.33 -0.18 -0.05

Sub-Saharan Africa

Angola -0.31 -0.02 0.38 -0.31 0.15 -0.45 0.13 -0.18

Botswana -1.06 -0.96 -0.73 -1.06 -0.90 -1.12 -0.88 -1.05

Ghana -0.55 -0.55 -0.37 -0.55 -0.41 -0.80 -0.48 -0.61

Malawi -0.70 -0.65 -0.61 -0.70 -0.57 -0.75 -0.64 -0.66

Nigeria -0.22 -0.24 -0.05 -0.22 -0.26 -0.18 -0.31 -0.17

South Africa -0.49 -0.11 -0.07 -0.49 -0.06 -0.20 -0.16 -0.04

Uganda -0.47 -0.55 -0.66 -0.46 -0.68 -0.13 -0.63 -0.47

Zambia -1.26 -1.29 -1.23 -1.26 -1.31 -1.26 -1.28 -1.30

Average -0.63 -0.55 -0.42 -0.63 -0.51 -0.61 -0.53 -0.56

China -0.32 -0.28 -0.09 -0.32 -0.25 -0.34 -0.25 -0.32

India 0.27 -0.01 0.52 0.26 0.03 -0.10 -0.07 0.13

Indonesia -0.05 -0.02 0.02 -0.05 -0.01 -0.07 -0.04 -0.01

Japan -0.23 -0.31 -0.08 -0.23 -0.26 -0.43 -0.55 0.14

Korea -0.42 -0.42 -0.47 -0.42 -0.27 -0.69 -0.49 -0.24

Malaysia -0.04 -0.01 0.31 -0.04 0.15 -0.70 -0.11 0.15

Philippines -0.23 -0.03 0.00 -0.23 0.01 -0.11 -0.24 0.18

Singapore 0.18 0.25 0.23 0.18 0.25 0.26 0.17 0.39

Taiwan -0.12 -0.08 -0.05 -0.12 0.01 -0.31 -0.11 -0.03

Thailand -0.01 0.06 0.17 -0.02 0.07 -0.03 0.02 0.09

Vietnam -0.26 -0.27 0.07 -0.27 -0.23 -0.41 -0.32 -0.22

Average -0.11 -0.10 0.06 -0.11 -0.05 -0.27 -0.18 0.02

Europe – EU28

Belgium 0.16 0.16 0.27 0.16 0.18 0.17 0.12 0.25

Croatia -0.31 -0.05 -0.14 -0.32 0.12 -0.35 -0.08 0.03

Czech Republic -0.03 0.00 0.10 -0.03 0.05 -0.15 -0.02 0.05

Estonia -0.12 0.20 0.07 -0.12 0.21 -0.04 0.07 0.41

Finland 0.40 0.39 0.58 0.40 0.42 0.21 0.36 0.44

France -0.03 0.09 0.08 -0.03 0.17 -0.62 -0.01 0.30

Germany 0.12 0.06 0.27 0.12 0.18 -0.40 -0.04 0.22

Greece -0.50 -0.30 -0.48 -0.50 -0.25 -0.46 -0.23 -0.50

Hungary -0.29 -0.19 -0.06 -0.29 0.03 -0.77 -0.27 -0.06

Ireland 0.24 0.31 0.43 0.24 0.31 0.36 0.30 0.34

Italy 0.02 -0.01 0.19 0.02 0.13 -0.64 0.01 -0.06

Latvia -0.20 0.02 -0.13 -0.20 0.12 -0.34 -0.01 0.08

Lithuania -0.08 0.11 0.18 -0.08 0.15 -0.06 0.13 0.05

Luxembourg 0.36 0.23 0.08 0.36 0.21 -0.51 0.16 0.37

Netherlands 0.29 0.47 0.42 0.28 0.50 0.26 0.55 0.35

Poland -0.16 0.00 -0.03 -0.16 0.13 -0.12 -0.05 0.11

Portugal -0.14 0.11 0.07 -0.14 0.20 -0.13 0.10 0.13

Romania -0.11 0.17 0.19 -0.12 0.27 -0.06 0.18 0.15

Slovakia -0.21 -0.09 0.04 -0.21 0.13 -0.41 -0.16 0.02

Slovenia 0.08 0.16 0.19 0.08 0.23 -0.09 0.16 0.16

Spain 0.08 0.15 0.15 0.08 0.23 0.01 0.13 0.19

Sweden 0.24 0.31 0.30 0.24 0.40 -0.34 0.15 0.59

United Kingdom 0.30 0.11 0.32 0.29 0.22 -0.45 0.22 -0.03

Average 0.00 0.10 0.13 0.00 0.19 -0.21 0.08 0.16

Europe – non-EU28

Bosnia -0.14 0.11 0.10 -0.14 0.34 -0.06 0.13 0.06

Macedonia -0.11 0.04 0.17 -0.12 0.23 -0.05 -0.05 0.24

Norway 0.61 0.53 0.70 0.61 0.51 0.44 0.49 0.63

Russia -0.81 -0.60 -0.27 -0.81 -0.46 -0.83 -0.55 -0.64

Switzerland 0.62 0.74 0.85 0.62 0.78 0.06 0.63 0.85

Average 0.03 0.16 0.31 0.03 0.28 -0.09 0.13 0.23

North America

Canada 0.33 0.32 0.51 0.33 0.41 -0.22 0.22 0.46

Puerto Rico 0.49 0.79 0.91 0.49 0.78 0.75 0.90 0.60

USA 0.22 0.14 0.54 0.22 0.26 -0.38 0.14 0.14

Average 0.35 0.42 0.65 0.35 0.48 0.05 0.42 0.40

Note: In green are the most satisfied populations, and in red are the less satisfied populations.

The Malaysian GEM Team

Malaysian GEM National Team Leader

Assoc Professor Dr Siri Roland Xavier

Assoc Prof Dr Siri Roland Xavier is the Deputy Dean and Programme Director for Entrepreneurship in

UNIRAZAK in collaboration with Babson College, Boston, USA. He is also a board member of the

Global Entrepreneurship Research Association and Malaysian team leader for the Global

Entrepreneurship Monitor research survey. In South East Asia he is the SEA Project Leader for

entrepreneurship research, a grant by IDRC – 2013-2016. Much of his training in entrepreneurship

was with the Stanford Research Institute and Babson College, USA. Prior to academia he started his

career with Andersen Consulting providing consultation services to the local banking industry. His

working experience has included senior managerial positions in sales, marketing, production and

distribution in a NYSE listed company, Asia Pulp & Paper. He became a business practitioner as the

Country Manager of the Malaysian E-Pulp n Paper country office for 8 years partnering with an

international e-commerce group.

He is also an Editorial Board Member of the Journal of Global Entrepreneurship Research (JGER),

since 2012 and a Reviewer of Emerald Emerging Markets Case Studies focusing on SEA. His speaking

engagements range from the George Washington University, Washington DC, to Seoul, Korea and

conferences worldwide. A keen researcher he has presented papers at international conferences

and journals including Asia Pacific Journal of Innovation and Entrepreneurship, Journal of Asia

Entrepreneurship and Sustainability, International Journal of Business Administration, International

Journal of Entrepreneurship and Small Business and Journal of Chinese Entrepreneurship. His 2013

total research grant value was MYR2.645 million.

His consultancy and corporate training includes companies like PETRONAS, Toyota Tsusho, MiTi-

INSKEN, Biotech Entrepreneurship Special Training (BEST), SME Bank, Maybank and local

universities. An appointed subject matter expert to many universities his working experience spans

25 years both in industry as well as new ventures. His first degree is the LL.B (Hons) from the

University of London, U.K. He then completed the MBA specializing in Strategic Marketing with

Charles Sturt University, Australia and was nominated valedictorian. He obtained his Doctorate in

Business Administration (Entrepreneurship) from the University of Newcastle, Australia. Areas that

currently encapsulate his research interests include Corporate Entrepreneurship, New Venture

Development, Innovation Strategies and National Entrepreneurship Development.

MALAYSIAN GEM TEAM MEMBER

Garry J. Clayton

gclayton@unirazak.edu.my

Professor Garry J. Clayton he has an earned a doctorate from the University of Waikato, a

postgraduate diploma in business from the University of Auckland, postgraduate diploma in public

policy from Victoria University of Wellington and a Diploma of Teaching from Hamilton Teachers

College. He is also a graduate of the New Zealand Defence Force Staff College.

He is currently the Dean, Bank Rakyat School of Business and Entrepreneurship (BRSBE) at Universiti

Tun Abdul Razak (UNIRAZAK) Malaysia. He has previously held senior research, teaching and

administration appointments in the New Zealand Defence Force, Waikato Museum, the University of

Auckland, Waikato University, the Eastern Institute of Technology in New Zealand, at the University

of Massachusetts Dartmouth and has been a visiting Professor at the Universiti Teknologi MARA

(UiTM) in Malaysia.

Professor Clayton has published and consulted in entrepreneurship, sustainable economic

development, creativity, professional education, leadership and strategy.

Mohar Yusof mohar@unirazak.edu.my

Mohar’s specialization and research interest are in the field of entrepreneurship, family business and strategy. He has published in several international refereed journals namely the International Entrepreneurship and Management Journal, Journal of Entrepreneurship, Management and Innovation, Journal of Asia Entrepreneurship and Sustainability, New England Journal of Entrepreneurship, Asia Pacific Journal of Innovation and Entrepreneurship, Asian Journal of Case Research, and an ardent writer of cases for teaching and publication purpose. He has been involved in the Global Entrepreneurship Monitor (GEM) study and the Successful Transgenerational Entrepreneurship Practices (STEP) project on family business since 2009. He has a Ph.D. in Management (by Research) in which he studied the organizational antecedents of academic entrepreneurship. In addition, he holds the Malaysian Institute of Management – Certified Professional Intellectual Property Manager (MIM-CPIPM) certification, has completed six modules of Entrepreneurship Educators training with Babson College, USA, and underwent training on Case Teaching at the Richard Ivey School of Business, the University of Western Ontario, Canada.

Leilanie Mohd Nor leilanie@unirazak.edu.my

Leilanie Mohd Nor’s area of specialization is in Entrepreneurship, focusing on family business

theories and models, decision making process, venture creation and portfolio entrepreneurship. She

has conducted numerous studies on understanding the dynamics of a family business - the element

of “familiness” that creates a competitive advantage to a family business. Leilanie is the team leader

for STEP (Successful Transgenerational Entrepreneurship Practices) Malaysia since 2009. She is the

STEP Asia Pacific Leadership Council (Chair), and sits on the STEP Global Board. She is also involved in

the Global Entrepreneurship Monitor (GEM) study since 2009. In February 2014, Leilanie successfully

defended her Ph.D. thesis, focusing on decision making process within family businesses when

creating new ventures. She is a reviewer for USASBE since 2011 and as an educator, she is actively

involved with students’ ideas and progress on their business opportunities. Leilanie Mohd Nor, who

came from a corporate background, has had more than 10 years professional experience holding

managerial positions at large conglomerate companies in Malaysia prior to joining the academia in

Dewi Amat Sapuan

dewi@unirazak.edu.my

Dewi Amat Sapuan is an Associate Professor of Organisational Behaviour at the Graduate School of

Business (GSB), Universiti Tun Abdul Razak (UNIRAZAK). Dewi is currently holding the position of the

Director of Bureau for Excellence in Research and Teaching (BERT) and prior to this, she has held the

positions of Deputy Dean at the GSB, and the Bank Rakyat School of Business and Entrepreneurship

(BRSBE). Dewi began her teaching career in 1999 as an Assistant Lecturer at the Faculty of Business

Administration and later earned her MBA, and her Ph.D. in Management from Universiti Tun Abdul

Razak, in 2003 and 2010, respectively. She has published journal articles, book and book chapters,

cases and courseware in the fields of Organisational Behaviour, Entrepreneurship, Management and

Education Management and has also received recognitions for her research and teaching

accomplishments. Dewi has also recently been awarded national research grants to lead studies in

Emotional Labour in the mental health professions as well as Talent Management in the Malaysian

Armed Forces.

ENTREPENEURSHIP TRENDS IN MALAYSIA:A National Five Year Longitudinal Study Using GEM Methodology

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