Entrepreneurship

Project Name: Entrepreneurship: Factors leading to an entrepreneurial culture

Team Number: 13 (Rohit Kwatra, Anmol Singla, Manan Mehta, Amritanshu Kumar)

Team Name: Team Calvin

Problem Statement: What combination of factors lead to an entrepreneurial culture?

Data Source: 2007 World Bank Group Entrepreneurship Survey measuring entrepreneurial activity in 84 developing and industrial countries over the period 2003-2005

The Benefit / Utility: The dataset analysis will reveal important drivers for entrepreneurship across countries and its related effect on economic development. As a result it can help economists and administrators give a better idea about the relationship between entrepreneurial activity and other indicators such as economic and financial development and growth, the quality of the legal and regulatory environment etc. The entry rates of new firms (defined as newly registered firms as a percentage of total registered firms in the previous year) range between 7 and 9 percent among various regions. Also provided are data pertaining to electronic business registration, which is shown to be related to lower costs and a shorter number of days required to start a business, highlighting the impact of regulatory, political, and tax changes on new firm registrations. Thus the new data provides managerial perspectives on this aspect, raising questions about the effects of changes in the business environment on entrepreneurial risk taking, and about reforms which will spur faster firm registration. It may also help entrepreneurs looking at the results, in relating to and identifying reforms that promote higher growth in the sector.

Expected Outcomes: We expect that the results would provide better understanding about the factors that contribute to greater entrepreneurship, formal sector participation and the impact of related policy reforms. These results can guide effective policymaking and deliver new capabilities for identifying the impact of reforms. Although we find significant relationships with these measures – i.e. more dynamic economies in countries with better business environments – we cannot postulate on the direction of causality. This survey will provide a new set of indicators to study the relationship between business creation, the investment climate, and economic development. Expectations are that a higher level of entrepreneurship significantly relates to greater economic development, formal sector participation, and better governance. For instance, countries with lower barriers to entry and less corruption generally should see higher percentages of firm registrations and entry. This might suggest that countries that facilitate entrepreneurship see commensurate increases in overall economic growth and an expansion of the formal sector. Alternatively, it might be the case that periods of economic expansion encourage optimism and entrepreneurship; for instance, individuals might be willing to leave their job security to start a business if they are more confident they could find another job if their business fails. We hope to analyse these factors, which will allow us to better understand how the private sector behaves over business and financial cycles. Furthermore, entrepreneurship indicators can be used to complement the development of policy recommendations to promote private sector development and growth. Moreover, the process of collecting data will become a valuable tool for the diagnosis of the business environments. For instance, direct contact with business registries in more than a 125 countries will help us to better understand the difficulties that entrepreneurs face when incorporating a business, as well as the impact of the institutional and technological framework of registries in the ease of starting a business. On the whole, we will be able to link the outcomes with our expectations regarding the entry barriers a business faces while entering a new region. Though these findings and our expectations should be line, but any deviations will be better looked upon through this data and the reasons behind them analysed.