Toby at tipp(l)ing point

GEM overlooks value-based entrepreneurs 7 April 2011

At the COPIE mid-term event Kick-starting Economic Recovery in Berlin on 31 March, Professor Rolf Sternberg of Hannover University talked about the economic effects of necessity entrepreneurship. Professor Sternberg is part of the team that produces GEM, the Global Entrepreneurship Monitor, which has just published its 2010 report.
In his allotted 10 minutes, he explained that GEM divides the world into two types of entrepreneurs:
- opportunity entrepreneurs: “I am involved in this firm to take advantage of a business opportunity”
- necessity entrepreneurs: “I am involved in this form because I have no better choices for work”
GEM’s research shows that necessity entrepreneurship is more economically relevant than they expected, and is getting more so. About 2 million Europeans are necessity entrepreneurs. Greece has 2.3% of adults in this category, while Denmark has only 0.2%. Unspoken message: self-employment makes you poor.
I didn’t find myself anywhere in this classification – yet I am undeniably an entrepreneur in a small way, or at the very least self-employed. GEM’s oversimplified picture leaves out all those people who go into business as away to meet needs that are higher up the Maslow’s hierarchy of needs than the search for profit or power. Two major motivations in this category are:
- to change the world for the better – leading to social enterprises
- to gain control over one’s own working life – leading to worker’s co-operatives.
If we fail to recognise these value-based motivations for self-employment, then we will fall into the trap of censoring the message that self-employment can be fun – so we will end up with fewer entrepreneurs and a more ossified society.
Professor Sternberg said that GEM has developed a more sophisticated typology of entrepreneurship. I’m not sure it’s published, but it deserves to be.