labels: economy - general, indian institute of management, management - general
India is second highest among 37 countries in IIM-B monitor news
Our Economy Bureau
03 April 2003

Mumbai: The NS Raghavan Centre for Entrepreneurial Learning (NSRCEL), part of the Indian Institute of Management-Bangalore (IIM-B), has released the Global Entrepreneurship Monitor (GEM) 2002 in Mumbai. GEM 2002 is the prestigious international research project primarily designed to assess the level of entrepreneurial activity in national economies including India.

The GEM project is a multi-country research project aimed at assessing the level of entrepreneurial activity in the participating countries and linking it to the entrepreneurial framework conditions (EFCs) prevailing in the countries on the one hand and their projected economic growth on the other. The project was started in 1999 at the joint initiative of Babson College, USA, and London Business School, UK, with an initial membership of 10 countries, which has grown to 37 in 2002.

“India being ranked as the second highest among the 37 countries goes to prove that there is a significant positive change in terms of market perceptions, entrepreneurial capacity and financial support. Clearly the findings of the survey point to the task ahead for all those connected with nurturing entrepreneurship in India. These relate to entrepreneurship support systems, research and development and transferring the knowledge to entrepreneurs, fine-tuning government programmes to nurture entrepreneurship and changes that need to be introduced in the education system,” says Dr Prakash G Apte, director, IIM-B.

The findings of the GEM 2002 Global Project are summarised below:

  • This is based on the data analysis done at the global level involving inputs from the 37 countries.
  • Twelve per cent of the world’s population in the 18-64 years range is entrepreneurial. Since these countries represent about 62 per cent of the world’s population, the total number of entrepreneurial individuals in the world will be about 460 million.
  • The level of entrepreneurship varies from country to country. In 2002 it was less than 3 per cent for countries like Japan, Russia and Belgium and more than 18 per cent for countries like Thailand and India. If the country groups were to be graded from low to high on entrepreneurial activity, the order will be as follows: (i) developed Asian countries; (ii) East European countries; (iii) European Union; (iv) former British colonies outside Asia; (v) Latin American countries; and (vi) developing Asian countries.
  • The level of entrepreneurial activity changes over time. There was a decline of 25 per cent in the GEM global average between 2001 and 2002. However, it increased by more than 50 per cent in India during the same period (from 11.6 per cent in 2001 to 17.9 per cent in 2002).
  • The demographic profile of entrepreneurs suggests that about two-thirds of them are men and one-third women. The largest represented age group is 25-44.
  • In assessing the entrepreneurial framework conditions, the overall assessment of the national experts was focused on three conditions: (a) government policies; (b) cultural and social norms; and (c) education and training. Another condition was assessed to be of intermediate importance, which was financial support.

In order to assess the supportiveness of entrepreneurial framework conditions in a country, it was necessary to define the various components of EFC. This was done by an international consortium of researchers who selected the following 14 components for EFC:

  1. Financial support to new firms
  2. Government policy on new firms
  3. Government programmes for new firms
  4. Education and training support
  5. Research and development transfer
  6. Commercial, legal and professional infrastructure
  7. Market-openness and ease of entry
  8. Adequacy of physical infrastructure
  9. Appropriateness of social norms
  10. Appropriateness of cultural norms
  11. Opportunities for new venture creation
  12. Entrepreneurial capacity
  13. Intellectual property rights (IPR) law and enforcement
  14. Facilitation for women entrepreneurs

“The level of entrepreneurial activity in India was assessed through an adult population survey. The sample size was increased from 2,011 in the year 2001 to 3,047 in 2002. Based on the procedures and weightage systems outlined above, the Total Entrepreneurial Activity (TEA) index was computed for the country, which was 17.9 per cent for the year 2002, the second highest among 37 countries (Thailand being the highest with 18.9 per cent). The figure is 6.3 per cent higher than the 11.6 per cent of 2001, implying that the level of entrepreneurial activity in India has gone up by more than 50 per cent in one year,” says Dr Mathew J Manimala, author of the GEM India 2002 report, and professor of Organisation Behaviour and chair professor of entrepreneurship, IIM-B.

“The vibrancy of the Indian economy and the substantial improvement in the opportunity-based entrepreneurship may be due to the irreversible process of economic liberalisation which has created several opportunities for private operators. This is also substantiated by the fact that in the assessment of the entrepreneurial framework conditions (EFCs) of the country, the experts have given a more favourable rating to those aspects where more and more of private operators are allowed into. Obviously, a major precondition for entrepreneurship to flourish is the empowerment of the private sector,” says Dr S Raghunath, chairperson, NSRCEL, and professor of corporate strategy.

“The NSRCEL was set up at IIM-B to encourage young management and technology graduates to act upon their ideas, energy and talents for producing leading global companies of the future. The NSRCEL seeks to help budding entrepreneurs define their perceived objectives with a view to accessing resources,” says N S Raghavan, chairman, advisory council, NSRCEL.

The NSRCEL has been set up at IIM-B to encourage young management and technology graduates to act upon their ideas, energy and talents for producing leading global companies of the future. It seeks to help budding entrepreneurs define their perceived objectives with a view to accessing resources.

IIM-B was established in 1973. The IIM-B campus is located in 100 acres of sylvan surroundings on the southern edge of Bangalore. Today, IIM-B is recognised as India’s best business school. Its world-class infrastructure provides the foundation for its programmes of teaching, research, consulting and other professional services.


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India is second highest among 37 countries in IIM-B monitor