Gem jamaica 2008 report

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GLOBAL ENTREPRENEURSHIP MONITOR 2008 JAMAICA REPORT

Vanetta Skeete

Garth Kiddoe

Louise Marcelle-Peart

Girjanauth Boodraj

Joan Lawla

Claudette Williams-Myers

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DISCLAIMER The authors have attempted to ensure the accuracy and completeness of the information contained in this publication, however, no responsibility can be accepted for any errors and inaccuracies that occur. Whilst this work is based on data collected by the GEM consortium, responsibility for analysis and interpretation of those data is the sole responsibility of the authors.

The authors wish to thank Marcia McPherson-Edwards for contributing to the section on Government Policies and Programmes. Š 2009 by Vanetta Skeete, Girjanauth Boodraj, Garth Kiddoe, Joan Lawla, Louise Marcelle-Peart, Claudette Williams-Myers, University of Technology, Jamaica.

ISBN 978-976-8027-32-0

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GEM JAMAICA 2008

EXECUTIVE SUMMARY Main Characteristics of Entrepreneurial Activity Jamaica’s Total Entrepreneurial Activity for 2008 was 16%, 4.3% below the 2006 figures, indicating a decline in the rate of start-ups of new businesses. In the nascent category which comprises individuals who have taken steps to create a new business within the past year, entrepreneurial activity was 9%. For new businesses, (those that have paid wages or salaries for more than three months but less than 42 months) total entrepreneurial activity was 7.1%. For businesses that have been in operation for over 42 months (established businesses), the rate decreased from 10.5% in 2006 to 9.1% in 2008. Necessity driven entrepreneurship (7.6%) has now surpassed opportunity driven entrepreneurship (7.3%). More males in Jamaica (16.9%) are involved in entrepreneurial activity than females (14.4%).

Development of Entrepreneurial Activity The consumer oriented sector has remained the most buoyant in 2008, accounting for 61.3% of early stage entrepreneurial activity. Retail trade, hotels and restaurants continue to dominate the sector accounting for 52.4% of all entrepreneurial activities. Over 83% of established business owner-managers did not foresee any expansion in the market, while only 1.7% of the population had expectations that businesses will grow and create job opportunities within the next five years.

National Characteristics The government continues to support entrepreneurship and has recently allocated funds for renewable energy projects and for small business development and training. Capacity at the Jamaica Business Development Corporation, the main government agency for entrepreneurial development, has been significantly increased.

Institutional factors such as bureaucracy in government agencies continue to impede the level of entrepreneurial activity. Experts (88.2%) were of the view that it takes too long to obtain the required permits and licenses to start a business, and that taxation is still burdensome for new firms. Several financial institutions have increased their level of involvement mainly through the disbursements of funds aimed at building capacity in the sector in order to enhance growth and competitiveness.

The decline in total entrepreneurial activity could be partially attributed to the downturn in economic conditions resulting from the world economic crisis. For the first half of 2008 there was no real growth in GDP. Inflation was 11.5 % in the first six months of 2008 compared with 4.7% for the same period in 2007. Inflation for the year was 16.8%, a high rate that was due largely to increases in international commodity prices, (mainly crude oil and grains) as well as depreciation of the Jamaican dollar, contributing to a substantial erosion of consumer purchasing power.

The Jamaican economy was expected to grow within the range of 2.5% to 3.5% for the year 2008, but growth expectations were unrealized as the economy recorded a negative 0.6% growth. Mining, manufacturing and tourism sectors were expected to record significant expansion during 2008 but the economy has been struggling to absorb the shocks from the international financial crisis and the outlook for these sectors remain dismal. Analysts have predicted a downturn in tourism and a decrease in remittances, two major sources of foreign exchange, for the oncoming year.

Outlook for Entrepreneurship Necessity entrepreneurship has surpassed opportunity entrepreneurship, not because business opportunities have decreased but rather an indication that more persons are gravitating towards entrepreneurship resulting from conditions and circumstances. These include the fall-off in economic activity, job losses and tightening of credit by funding agencies, conditions that are expected to worsen during the next year with the escalation of the global economic crisis. The government announced a stimulus package in the latter part of the year in an attempt to address some of these challenges. Included in this package are special loan funds for small resorts, an allocation for infrastructural development, and preferential treatment for local businesses in the awarding of contracts. With increased focus on the potential of indigenous food products, the agricultural and agro-processing sectors are expected to play an important role in stimulating economic activity and job creation. Resilience is embedded in the Jamaican culture and despite all the challenges, the outlook for entrepreneurial activity is positive.

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GEM JAMAICA 2008

TABLE OF CONTENTS

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EXECUTIVE SUMMARY

iii

LIST OF TABLES

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LIST OF FIGURES

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ACKNOWLEDGEMENT

viii

INTRODUCTION Global Entrepreneurship Monitor [GEM] GEM Conceptual Model Research Methodology

1 2 3 4

ENTREPRENEURIAL ACTIVITY AND ATTITUDES Entrepreneurial Activity in Jamaica Transition Rates and Business Discontinuation Age and Entrepreneurship Gender and Entrepreneurship Entrepreneurial Activity by Sector Entrepreneurial Activity in the Parishes Entrepreneurial Attitudes

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SUPPORT FOR ENTREPRENEURSHIP IN JAMAICA Entrepreneurship Education and Training Financing Market Openness Government Policies Government Programmes Research and Development and Commercial Infrastructure Cultural and Social Norms

22

RECOMMENDATIONS

50

REFERENCES

51

APPENDICES Appendix I: Experts and Framework Conditions Appendix II: Persons Who Conducted Interviews

53 54

7 9 12 14 16 17 19

23 28 32 37 41 43 46

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GEM JAMAICA 2008

LIST OF TABLES TABLE 1:

Prevalence Rates (in %) of Entrepreneurial Activity and Business Owner-Managers across GEM Countries in 2008, for those aged 18-64, by phase of Economic Development

TABLE 2:

TEA and Economic Growth

TABLE 3:

Age Categories and Stage of Entrepreneurial Activity

TABLE 4:

Entrepreneurial Activity by Gender

TABLE 5:

Distribution of Entrepreneurial Activity by Industry Type

TABLE 6:

Prevalence Rate by Parish

TABLE 7:

Loan Distribution by Parishes

TABLE 8:

Opportunity and Necessity Entrepreneurship in Jamaica Relative to Economic Growth

TABLE 9:

Percentage of the Population Aged 18-64 that Received Voluntary or Compulsory Training in Starting a Business during or After School, by Country Type

TABLE 10:

Sources of Financing for New and Growing Firms

TABLE 11:

Number of MSEs According to GCT Contributions

TABLE 12:

Loan Disbursements and Employment Creation

TABLE 13:

Jamaica’s World Ranking in Ease of Doing Business (2006-2008)

TABLE 14:

Ease of Doing Business 2005-2008

TABLE 15:

Number of Companies Registered (2002-2007)

TABLE 16:

Mean Ratings of Experts on Items Relating to Technological Support: 2005, 2006 and 2008

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LIST OF FIGURES

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FIGURE 1:

Entrepreneurial Process and GEM Operational Definitions

FIGURE 2:

GEM Conceptual Model

FIGURE 3:

Prevalence Rates of Entrepreneurial Activity

FIGURE 4:

Expressed Reasons behind Discontinuing Businesses

FIGURE 5:

Most Important Reason for Exiting Business

FIGURE 6:

Early Stage Entrepreneurial Activity Rates and Per Capita GDP 2008

FIGURE 7:

Relationship between Entrepreneurial Activity and Economic Growth

FIGURE 8:

Early Stage Entrepreneurial Activity for Separate Age Groups

FIGURE 9:

Total Entrepreneurial Activity in Jamaica by Age Group

FIGURE 10:

Early-Stage Entrepreneurial Rates by Gender, 2008: Percentage of Males and Females between 18 and 64 years old

FIGURE 11:

Gender Profile of Early-Stage Entrepreneurial Activity

FIGURE 12:

Early-Stage Entrepreneurial Activity by Industry Type

FIGURE 13:

Entrepreneurial Activity by Parish

FIGURE 14:

Entrepreneurial Motivation

FIGURE 15:

Opportunity Start-ups

FIGURE 16:

Reasons for Starting a Business

FIGURE 17:

Necessity and Improvement-Driven Opportunity Motivations as a Percentage of Early Stage Entrepreneurial Activity, Gem 2008 Countries

FIGURE 18:

Level of Training Received in Starting a Business

FIGURE 19:

Source of Training in Starting a New Business

FIGURE 20:

Voluntary or Compulsory Training in Starting a Business

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FIGURE 21:

Experts’ Response to the Level of Preparation for Starting and Growing New Firms

FIGURE 22:

Informal Investment

FIGURE 23:

Availability of Funding for New and Growing Firms

FIGURE 24:

Experts’ Opinions on Market Openness

FIGURE 25:

Export Intensity – Early Stage Entrepreneurs

FIGURE 26:

Export Intensity – Established Businesses

FIGURE 27:

Government Policy Support

FIGURE 28:

Number of Companies Registered (2002-2008)

FIGURE 29:

Government Support for Entrepreneurship

FIGURE 30:

Commercial Infrastructural Support for New & Growing Firms

FIGURE 31:

Encouragement of National Cultural Characteristics

FIGURE 32:

Perception of Stories in the Public Media about Successful Entrepreneurs

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GEM JAMAICA 2008

ACKNOWLEDGEMENT The GEM Jamaica Team is pleased to publish the 2008 National report. There is no doubt that this research is timely, critical and important as it tracks entrepreneurial activity in Jamaica and measures such activities against those of developed and other developing countries.

The University of Technology, Jamaica, the home of the GEM Jamaica Team , recognizes the contribution of our sponsors and supporters of this research project. Specifically, we would like to acknowledge the contribution and participation of: •

KOCI Market Research Services Ltd, that conducted the Adult Population Survey

•

The Faculty of Business and Management, our major sponsor

•

The Experts who participated in the National Experts Survey

•

All Households who participated in the Adult Population Survey

•

Lecturers of the School of Business Administration and School of Tourism and Hospitality Management who conducted the expert interviews

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INTRODUCTION

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INTRODUCTION

The Global Entrepreneurship Monitor (GEM) The Global Entrepreneurship Monitor (GEM) is one of the world’s leading research consortia.

Conceived in 1977, GEM published the first report in 1999 with only 10 countries, and since then has grown to include over 43 countries world-wide. The project is coordinated jointly by Babson College in Boston, USA and London Business School in the United Kingdom. The objectives of GEM are: • to measure differences in entrepreneurial activity among countries • to uncover factors determining national levels of entrepreneurial activity • to identify policies that may enhance the national level of entrepreneurial activity

ment and focuses on the role played by individuals in the entrepreneurial process. Individual perceptions and attitudes toward entrepreneurship are studied as well as their involvement in new and growing firms. Individuals’ activities in the entrepreneurial process are viewed in phases – from conception of the idea to firm birth, through to the established phase and possibly discontinuation. A key GEM indicator is the prevalence rate of early-stage entrepreneurial activity represented in the shaded box in Figure 1. GEM provides an umbrella under which a wide variety of entrepreneurial characteristics, such as motivations, innovativeness, competitiveness, and high-growth aspirations can be systematically and rigorously studied (GEM, 2008).

GEM seeks to provide an understanding between entrepreneurship and national develop-

Figure Figure 11 The Entrepreneurial Process and GEM Operational Definitions

The Entrepreneurial Process and GEM Operational Definitions Early-stage Entrepreneurial Activity (TEA) Potential entrepreneur: opportunities, knowledge, and skills

Owner-manager of a new business (up to 3.5 years old)

Nascent entrepreneur: involved in setting up a business

Conception

Firm birth

Owner-manager of an established business (more than 3.5 years old)

Persistence

Source: GEM APS 2008

Countries participating in GEM are grouped according to their phase of economic development, and this year the classification was shifted from high-income and middle-and-low income countries, to factor-driven economies, efficiencydriven economies and innovation-driven economies (GEM, 2008). Jamaica falls within the efficiency-driven economies.

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GEM Jamaica Through the University of Technology, Jamaica became a member of GEM in 2005 and to date is the only country in the Caribbean region that participates in the research. GEM Jamaica Reports were published in 2005, 2006, and now in 2008. Jamaica’s participation in GEM over the years has enhanced entrepreneurial research

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within the country. The research results provide valuable information that aims at informing national policy and contributing to solutions for entrepreneurial development and economic growth in Jamaica.

GEM Conceptual Model The GEM model displayed in Figure 2, illustrates the interaction among the wider environment and framework conditions. The model maintains that established business activity at the national level varies with General National Framework Conditions, while entrepreneurial activity varies with Entrepreneurial Framework Conditions (EFCs). The model has been enhanced to relate these conditions to a country’s phase of economic development. The rele-

vant national conditions for factor-driven economic activity and efficiency-driven economic activity are adopted from the Global Competitiveness Report (GCR) 2008 (Porter and Schwab, 2008 cited in GEM 2008). The revised GEM model makes a contribution to the GCR perspective on economic development by identifying framework conditions that are specific to innovation and entrepreneurship (GEM 2008).

GEM recognizes that all three principal types of

Figure 2 The GEM Conceptual Model Basic requirements - Institutions - Infrastructure - Macroeconomic stability - Health and primary education

Social, Cultural, Political Context

Efficiency enhancers - Higher education & training - Goods market efficiency - Labor market efficiency - Financial market sophistication - Technological readiness - Market size Innovation and entrepreneurship - Entrepreneurial finance - Gov. entrepreneurship programs - Entrepreneurship education - R&D transfer - Commercial, legal infrastructure for entrepreneurship - Entry regulation

Established Firms (Primary Economy)

New branches, firm growth Entrepreneurship Attitudes: Perceived opportunities Perceived capacity

National Economic Growth (Jobs and Technical Innovation)

Activity: Early-stage Persistence Exits Aspirations: Growth Innovation Social value creation

Source: GEM 2008

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economic activity (factor-driven, efficiency driven and innovation-driven) are present in all national economies, but their contribution to economic development varies. Each phase of economic development has a different optimum combination of the three activities. For factordriven economies, emphasis is placed on basic requirements. The basic requirements will help sustain necessity entrepreneurship but may do little to enable opportunity-based entrepreneurship. As economies progress and scale economies become more and more relevant, other conditions which ensure a proper functioning of the market and are called efficiency enhancers, become important. For countries whose economic development is primarily innovation-driven, EFCs become more important as levers of economic development than basic requirements or efficiency enhancers (GEM 2008). Entrepreneurial attitudes, activity, and aspiration are dynamic interactive components of entrepreneurship and when these are integrated with the framework conditions, national economic growth results. The inter-relationship among the framework conditions highlighted in the model is country-specific and creates a unique environment and opportunity in which to do business. These framework conditions are the main determinants of a country’s economic environment and are influenced by entrepreneurial attitudes, activity and aspirations. By considering the complementary nature of economic activity among different groups of firms, GEM links a nation’s economic activity to the interplay of established, new and small firms. This perspective gives a clearer understanding of the importance of entrepreneurship to national economic growth.

Research Methodology GEM views entrepreneurship as a complex phenomenon that spans a variety of contexts. GEM takes a broad view of entrepreneurship and focuses on the role played by individuals in the entrepreneurial process. Entrepreneurship, as defined by GEM is “any attempt at new business or new ven-

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ture creation, such as self employment, a new business organization, or the expansion of an existing business, by an individual, teams of individuals, or established business.” (GEM Procedures Manual, 2006). Within this context, the GEM data collection covers the life cycle of the entrepreneurial process and looks at individuals from the point at which they commit resources to start a business to the point where they own and operate an established business (Figure 1).

In accordance with the GEM objectives, the methodology used by the GEM research seeks to measure differences in entrepreneurial activity among countries; uncover factors leading to entrepreneurial activity and suggest policies that may enhance entrepreneurial activity nationally.

These objectives are explored within the context of the conceptual model (Figure 2).

Data for this research are collected using three methodological strategies: the adult population survey, the expert interview and the expert questionnaire. The conceptual framework of GEM forms the basis of the national survey, the structured questionnaire and the unstructured interview with experts.

The Adult Population Survey (APS) A contracted consultant, Koci Market Research Services, conducted an island-wide household study to examine the prevalence rate of entrepreneurial activities and other critical issues influencing entrepreneurship. The Statistical Institute of Jamaica (STATIN) was instrumental in the design of the household sample of 2,407 to ensure proportional distribution within Jamaica’s fourteen parishes. The interviews were completed during the months of July and August, 2008.

Within the core questions that GEM uses to guide its research process is a set of underlying issues that the APS seeks to capture: 1.

2.

Whether individuals’ pursuit of entrepreneurship is because of motivation or necessity The demographic profile (age, gender, education) of those who pursue entrepreneurial activity

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3.

4.

5.

The type of businesses being pursued Factors that facilitate an understanding of differences in entrepreneurial activity between Jamaica and other participating countries and those within Jamaica itself The impact of public policy and the role that government can play in enhancing entrepreneurship

GEM examines entrepreneurial activities among individuals in a population aged 18 to 64 years old. Of the 2,407 adults surveyed, 2,339 were in the age range 18 – 64 years. This report is therefore based on the usable responses; representing 97.2% of those surveyed.

The Key Informant/Expert Interview The participants in the National Expert Survey (NES) were selected from experts in the commercial and other sectors based on their knowledge, reputation and experience with a number of the framework conditions. The 2008 sample size was 33, at least 25% of whom are entrepreneurs. Faculty members from the University of Technology, Jamaica, conducted the interviews either by telephone or face to face during the months of May and June in 2008. In the interview, key informants/experts were asked three critical questions: 1.

2.

3.

GEM JAMAICA 2008

The 2008 Jamaica Report There are two major sections, the first of which reports information on entrepreneurial activity and attitudes in Jamaica, makes year to year comparisons and examines differences between Jamaica and other countries participating in GEM. The Adult Population Survey (APS) is the main data source for the first section. The second section focuses on support for entrepreneurship in Jamaica taking into consideration entrepreneurial aspirations, against the background of eight of the nine GEM framework conditions, namely: Education and Training, Financing, Research and Development Transfer, Commercial Infrastructure, Market Openness, Government Policies, Government Programmes and Cultural and Social Norms . Findings in this section were derived mainly from the data provided through the National Experts Survey.

What are the factors that constrain entrepreneurial activity in the country?

What are the most significant factors that foster entrepreneurship in the country?

Can you make recommendations about what can be done to improve entrepreneurship in the country?

The Key Informant/Expert Questionnaire Key Informant (KI) questionnaires were sent to experts ahead of the scheduled interviews. The instrument comprised of fixed standardized (Likert-type) evaluations on each of the nine entrepreneurial framework conditions and the opportunity, capacity and motivation associated with the national entrepreneurial sector.

Completion of the instrument ranged from 15 to 20 minutes.

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ENTREPRENEURIAL ACTIVITY AND ATTITUDES

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Entrepreneurial Activity in Jamaica There has been increased awareness by policy makers that entrepreneurship is a significant contributor to employment and social and economic stability. Many governments are now focused on entrepreneurial activity that accelerates the rate of business start-ups and growth with the objective of curbing increased unemployment and stimulating economic activity and development.

Entrepreneurial activity as defined by GEM (2008), is “the new venture startup rate, adjusted for the churning effect of business closure, initiated by educated entrepreneurs and launched because of opportunity motivations�.

Figure 3 Prevalence Rates of Entrepreneurial Activity

25

20 P E R C E N T

Nascent Entrepreneurs New Business Owner - Managers

15

Early Stage Entrepreneurship (TEA)

10

5

0 2005

The Global Entrepreneurship Monitor (GEM) assesses the level of start-ups or Prevalence Rate within a country by measuring total entrepreneurial activity (TEA). The TEA rate is the proportion of persons aged 18-64 who are involved in entrepreneurial activity as a Nascent Entrepreneur or as a New Business OwnerManager of a business (GEM, 2008).

Nascent Entrepreneurs are individuals who have taken steps to create a new business within the past year. New Businesses are those businesses that have paid wages or salaries for more than three months but less than 42 months. The nascent and new- business categories combined, represent Early-Stage Entrepreneurial Activity. Jamaica’s TEA in 2008 was 16%, indicating that 16% of the total population started a new business.

This compares unfavourably with 20.3% recorded in 2006, showing a 4.3% decline in the rate of start-ups. Of the 16% prevalence rate, 9% was attributed to the nascent category while the other 7% fell into the new business category (Figure 3).

2006

2008

YEAR

Table 1 displays the prevalence rates of the 43 countries, including Jamaica, that participated in the GEM research in 2008. The 2008 GEM Global Report classifies countries into three categories based on their involvement in entrepreneurship relative to their level or phase of economic development as displayed in Table 1: (1) Factor-Driven Economies are those that utilize labour and other factors to create economic value added, resulting in increased productivity and rising per capita incomes; (2) EfficiencyDriven Economies are those that move toward industrialization utilizing scale economies to achieve higher productivity, resulting in financial capital formation and large national businesses and (3), Innovation-Driven Economies are industrialized countries with expanding service sectors, increased activity in research and development, knowledge intensity and

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innovation. Jamaica falls within the efficiencydriven economies. Within this category, Jamaica has the third highest prevalence rate in earlystage entrepreneurial activity of 16%, exceeded

by Peru with 26% and Argentina’s 17%. Of the 43 countries participating in GEM, Jamaica

ranks 8th in the level of early-stage entrepreneurial activity or start-ups, maintaining its position among the top ten most entrepreneurial countries in the world (Table 1).

Table 1 Prevalence Rates (In %) of Entrepreneurial Activity and Business Managers across GEM Countries in 2008, For those aged 18-64, by Phase of Economic Development

Nascent Entrepreneurial Activity Factor-driven economies Angola Bolivia Bosnia and Herzegovina Colombia Ecuador Egypt India Iran Efficiency-driven economies Argentina Brazil Chile Croatia Dominican Republic Hungary Jamaica Latvia Macedonia Mexico Peru Romania Russia Serbia South Africa Turkey Uruguay Innovation-driven economies Belgium Denmark Finland France Germany Greece Iceland Ireland Israel Italy Japan Korea Republic Netherlands Norway Slovenia Spain United Kingdom United States

Source: GEM (APS) 2008

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New Business Ownermanagers

EarlyStage Entrepreneurial Activity (TEA)

Established Business Ownermanagers

Overall Entrepreneurial Activity

Business discontin uations rate

Sample size

19.3 17.4 6.4 13.8 8.7 7.9 6.9 5.9

4.1 14.3 2.7 11.7 9.1 5.5 4.9 3.4

22.7 29.8 9.0 24.5 17.2 13.1 11.5 9.2

4.1 19.1 8.7 14.1 11.9 8.0 16.5 6.8

26.0 45.6 17.1 36.7 28.1 20.2 27.6 15.7

23.4 10.5 5.0 7.1 5.9 6.3 10.1 5.2

1,490 1,879 1,586 2,000 2,142 2,603 1,919 3,119

8.5 2.9 8.6 4.9 11.7 3.8 9.0 3.9 7.2 9.3 19.7 2.5 1.7 4.0 5.7 3.2 7.7

8.5 9.3 5.8 2.8 9.8 2.8 7.1 2.8 7.7 4.0 6.8 1.6 2.0 3.6 2.1 3.0 4.4

16.5 12.0 14.1 7.6 20.4 6.6 15.6 6.5 14.5 13.1 25.6 4.0 3.5 7.6 7.8 6.0 11.9

13.5 14.6 6.8 4.8 8.2 5.3 9.1 3.0 11.0 4.9 8.3 2.1 1.1 9.3 2.3 4.8 7.9

29.6 26.4 20.2 12.3 27.9 11.8 24.3 9.4 24.8 17.8 32.7 5.9 4.4 16.5 9.9 10.7 19.3

10.2 3.5 5.8 2.9 11.3 1.1 8.9 1.7 5.3 13.6 10.4 2.2 1.1 3.7 5.8 3.9 9.1

1,731 2,000 4,068 1,696 2,013 1,994 2,399 2,011 1,746 2,433 1,990 1,667 1,660 1,813 2,719 2,400 1,645

2.0 2.3 4.1 3.8 2.4 5.3 6.5 3.3 3.5 2.0 3.2 3.5 2.1 5.0 4.1 3.3 3.1 5.9

0.9 2.3 3.3 1.9 1.5 4.6 3.6 4.3 3.1 2.7 2.3 6.5 3.2 4.0 2.4 3.9 2.9 5.0

2.9 4.4 7.3 5.6 3.8 9.9 10.1 7.6 6.4 4.6 5.4 10.0 5.2 8.7 6.4 7.0 5.9 10.8

2.6 4.4 9.2 2.8 4.0 12.6 7.1 9.0 4.5 6.5 7.9 12.8 7.2 7.7 5.6 9.1 6.0 8.3

5.3 8.4 16.0 8.2 7.7 22.0 16.7 16.3 10.6 11.0 12.7 22.6 12.3 15.8 11.8 14.8 11.7 18.7

1.5 1.9 2.1 2.2 1.8 2.9 3.4 3.6 3.2 1.8 1.0 4.7 1.6 3.4 1.3 1.3 2.1 4.4

1,997 2,012 2,011 1,573 4,751 1,962 2,002 1,924 1,778 2,970 1,879 2,000 2,534 1,614 3,019 30,879 5,892 3,441

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Transition Rates and Business Discontinuation The rate at which businesses grow is a significant contributing factor to economic activity within a country. It is therefore not only important for new businesses to start, but it is equally important for systems to be put in place for new businesses to grow to a level where they can sustain themselves, contribute to greater job creation and economic well being. The transition rate for Jamaica, which is the rate at which new businesses transform into established businesses, was 9.1% in 2008 (Table 1), indicating that 9.1% of businesses in the early-stage category were transformed or grew into established businesses.

An established business is one in which the owner-manager has operated the business, paying wages and salaries or any other payment for

more than 42 months. In 2005, Jamaica’s transition rate was 9.5% and in 2006, 10.5%. This 1.4% decrease in the transition rate over 2006 indicates that less start-ups are transitioning into established businesses. This decline could be largely attributed to business stagnation or discontinuation. Jamaica recorded an 8.9% business discontinuation rate in 2008 (Table 1) which indicates that 8.9% of start-ups were either discontinued, sold or quit business in the twelve months preceding the GEM survey.

Discontinuation does not necessarily mean business failure (GEM 2008).

Figure 4 Expressed Reasons behind Discontinuing Businesses

100% 90%

Incident

80%

Personal reasons

70%

Retirement

60%

Exit was planned in advance

50%

Other job or business opportunity

40%

Opportunity to sell Problems getting finance

30%

Business not profitable

20% 10% 0% Factor-driven economies

Efficiencydriven economies

Innovationdriven economies

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Figure 4 shows that for all GEM countries in the 2008 survey, the most commonly cited reason for exiting a business was unprofitability.

Personal reasons was the second most popular cause among respondents. For the efficiencydriven economies, problems in getting finance was the third most cited reason but this was not reflected in the innovation-driven economies where retirement was a greater cause for exiting business.

This cause for business closure is consistent with the GEM findings as displayed in Figure 2 and highlights the need for managerial training and other forms of technical assistance to enable entrepreneurs to meet their profitability objectives. Problems securing finance was the second most popular reason for discontinuing business (14.8%), while the remaining 36% had varying views (Figure 5). The impact of the inability to obtain financing on the viability of business start-ups is also highlighted, as the inability to obtain funding may result in business discontinuation.

In examining the reasons for discontinuing business in Jamaica, most respondents (49.2%) had done so because the business was not profitable.

Figure 5 Most Important Reason for Exiting Business

50

Percent

40

30

20

10

0 AN OPPORTUNITY TO SELL THE BUSINESS

THE BUSINESS WAS NOT PROFITABLE

PROBLEMS GETTING FINANCE

ANOTHER JOB OR BUSINESS OPPORTUNITY

EXIT PLANNED IN ADVANCE

RETIREMENT

PERSONAL REASONS

AN INCIDENT

OTHER

REFUSED

Reasons

The decrease in the rate of start-ups in 2008, as well as the rate at which businesses grow may be attributed to economic factors as well as other factors that may be cultural or institutional.

GEM as well as other authors (Thurik and Wennekers, 2001) have established a relationship between a country’s economic development and

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the level of entrepreneurial activity. GEM data shows that the prevalence rate of early-stage entrepreneurial activity is higher in countries with lower GDP per capita and lower in those with higher GDP. The relationship is not linear but U-shaped (Figure 6) with the following explanation:

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Figure 6 Early Stage Entrepreneurial Activity Rates and Per Capita GDP, 2008

Prevalence rate of early-stage entrepreneurial activity

30%

25%

20%

15%

10%

5%

0%

In countries with low GDP per capita, the rate of start-ups is higher, hence the prevalence of many small businesses in these countries. As GDP increases there is a greater presence of industrialization and a stronger presence of established firms that satisfy the needs of growing markets. The rate of start-ups is reduced because more persons find employment in large firms hence a downward trend in entrepreneurial activity. As GDP per capita increases, more persons can access the resources to start their own business in an economic environment that allows for the exploitation of opportunities. GEM posits that for countries with low levels of GDP, a decrease in the prevalence rate of entrepreneurial activity may be a good sign, but that not all countries follow this pattern over time; for

the effect to be positive, the decrease should be supported by conditions of economic growth and political stability.

In 2006, Jamaica recorded an increase in economic growth of 1.7% over the previous year which was accompanied by a 3% growth in entrepreneurial activity (Table 2). In 2008, there was a 4.3% decrease in entrepreneurial activity over 2006. Does this 4.3% decrease in the TEA auger well for Jamaica relative to the U-shaped paradox? Jamaica recorded a real economic growth figure of negative 0.6% in 2008 accompanied by the 4.3% decrease in entrepreneurial activity. Jamaica’s growth trend relative to the TEA, therefore countervails the U-shaped paradox.

11

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Figure 7 Relationship between Entrepreneurial Activity and Economic Growth

Table 2 TEA and Economic Growth

Year

TEA

2005 2006 2007 2008

17% 20.3% n/a 16%

*Economic Growth % 1.0 2.7 1.4 -0.6

25 20 15 T E A %

10

Economic Growth

5 0

*PIOJ (2009) p.1

2005

2006

2008

-5

However, the trend is consistent with the argument that there is a correlation between entrepreneurial activity and economic development; viz a viz economic development also increases

with an increase in entrepreneurial activity and vice versa as displayed in Figure 7.

Age and Entrepreneurship GEM (2008) asserts that at each stage of economic development, prevalence rates of early stage entrepreneurial activity differ across age groups, but the 25-34 years age group has the

highest prevalence rate for every phase of economic development followed by the 35-44 age group (Figure 8). The GEM data also shows that in general, the level of start-ups decreases as age increases.

Figure 8 Early Stage Entrepreneurial Activity for Separate Age Groups

Percentage of adult population in age group

25%

20%

15% 18-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs

10%

5%

0%

Factor-driven economies

Efficiency-driven economies

Source: GEM Adult Population Survey (APS) 2008

12

Innovation-driven economies

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The APS for Jamaica reveals somewhat different results. Start-up in new business activity was concentrated around the 35-44 age group, followed closely by the 25-34 age group, a 4-6 per-

GEM JAMAICA 2008

centage points separating both categories (Figure 9). More older persons were involved in start-up activities than in prior years.

Figure 9 Total Entrepreneurial Activity in Jamaica by Age Group

0

20

40

60

18-24 25-34 Baby

80

35-44

45-54

55-64

9

37

44

26

10

36

69

79

38

13

100

Owner-manager(%) Nascent Entrepreneur(%)

A further analysis of the age factor (Table 3) reveals that for 2008, in the 25-34 age group the rate of early-stage entrepreneurship was consistent in both the nascent and new business categories (29.4%). There was also very little variation between these two categories in the 35-44 age groups. One could therefore conclude that the majority of persons who start new businesses in Jamaica fall within the 25-44 age group, accounting for 60.5% of total entrepreneurial activity (TEA). In 2006 both age groups (2544) combined accounted for 68% of TEA, indicating a decrease in entrepreneurial activity in the category. The difference was redistributed to the 45-64 age group which accounted for only 19% in 2006 but 23.5% in 2008. There has been no significant change (.5%) in the 18-24 age group.

Data from the Statistical Institute of Jamaica (STATIN) revealed that for 2008, the largest increase in the labour force was in the 35-44 age group while unemployment in the under 24 age group for both males and females grew (Planning Institute of Jamaica, 2009). The government of Jamaica views entrepreneurship as a method of job creation and based on the GEM findings, supported by findings of STATIN; much effort needs to be directed in the area of youth entrepreneurship.

13

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Table 3 Age Categories and Stage of Entrepreneurial Activity

TEA 2008: Stage of activity

Age Categories

Nascent

New business

entrepreneur

owner -manager

Total Early stage entrepreneur (2008)

18-24 YRS

15.3%

7.1%

12.5%

13%

25-34 YRS

29.4%

29.4%

29.4%

40%

35-44 YRS

33.6%

34.9%

34.1%

28%

45-54 YRS

16.2%

20.6%

17.7%

14%

55-64 YRS Total

5.5%

7.9%

6.4%

5%

100.0%

100.0%

100.0%

100.0%

For entrepreneurial activity to grow, there needs to be more stimulation in not only the 25-34 age group which captures the tertiary level graduates, but also in the 18-24 age group which also captures undergraduate university students as well as high school leavers.

However, the motivation for entrepreneurship (opportunity or necessity) is of significance.

Studies suggest that businesses that start up out of identified opportunities are more sustainable than those started out of necessity. Young entrepreneurs in both categories are susceptible to failure due to their lack of management skills, experience and low education levels.

Both categories contribute to economic activity, even though the impact may be minimal and should therefore be nurtured and given the support for business growth. Those businesses that show growth potential should be identified and given the necessary institutional support such as access to networks, finance, technology and managerial training (Listerri et al, 2006).

14

Total Early stage entrepreneur (2006)

Gender and Entrepreneurship The GEM 2008 APS revealed that in all participating countries (except Angola) the proportion of males involved in entrepreneurship was higher than females (Figure 10). It is further explained that there are variations in the ratio of male to female participation in entrepreneurial activities in the various phases of development. Whereas the ratio of males to females is higher in the innovation-driven economies, the gender gap is reduced in the factor-driven and efficiency-driven economies, more so in the latter. For example, in South American countries such as Argentina, Peru and Brazil, there is hardly any difference in the proportion of male to female entrepreneurs.

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GEM JAMAICA 2008

Percentage of (fe)male population between 18-64 years

Figure 10 Early-Stage Entrepreneurial Rates by Gender, 2008 Percentage of males and females between 18 and 64 years old

Iran Egypt Bosnia and Herz.

India Ecudaor Colombia Angola Bolivia Romania Turkey Russia Lativia Croatia Hungary Serbia South Africa Macedonia Uruguay Brazil Chile Mexico Jamaica Dominican Rep. Argentina Peru Belgium Italy Denmark Japan France Netherlands Germany United Kingdom Ireland Israel Slovenia Finland Korea Rep. Norway Spain Iceland Greece United States

Male Fe.

Factor-driven economies

Efficiency-driven economies

Innovation-driven economies

Source: GEM Adult Population Survey (APS) 2008

Jamaica also displays a similar situation to other efficiency-driven economies. Fifty-four percent of Jamaican entrepreneurs are males while 46% are females. These findings are similar to the 2005 survey whereby male entrepreneurs accounted for 55% of the total number and females for the remaining 45%. However, there was no gender gap in 2006 (Figure 11).

Figure 11 Figure 11 Gender of Entrepreneurial Early-StageActivity Gender Profile ofProfile Early-Stage

Entrepreneurial Activity

60

50

P E R C E N T

40

Male 30

Female 20

10

Sixteen percent of Jamaica’s population started businesses in 2008. A further analysis of the gender figures for Jamaica shows that in the early stage category, males were more dominant, indicating that more males (16.9%) of the population) started businesses than females (14.4%) (Table 4). Eight percent of the population who started a business based on opportunity was male while 6.4% of the population was female, suggesting that more Jamaican males capitalize on business opportunities than females; This male dominance is consistent with the findings of Allen, Langowitz and Minniti (2006), that there is a significant difference in the prevalence rate of opportunity entrepreneurs by gender in

0

2005

2006

2008

YEAR

both low/middle-income and high-income countries and that the rate of male opportunity entrepreneurship is higher than that of females.

Whilst these findings may suggest that females are more risk averse than males considering that start-ups involve risk, it has been found that there is no real difference in the risk-taking propensities of male and female entrepreneurs.

Women take risks after carefully analyzing the 15

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situation (Masters and Meier, 1988). With respect to risk taking, sex differences are diminishing particularly in the efficiency driven economies. In these economies, more women are becoming involved in entrepreneurial activity, undertaking the risks involved. The sex difference in Jamaica may also be explained by the incidence of more women being employed, as in professions such as nursing and teaching and as

household assistants. Data on the employed labour force for 2008 (PIOJ 2008, p 21.2) revealed that of the total employed labour force, there was an increase of 4,400 males and 14,800 females in 2008, hence more males being available and open to opportunity entrepreneurship.

Table 4 Entrepreneurial Activity by Gender (in Jamaica)

Male Male % % TEA TEA Early Early Stage Stage Opportunity Opportunity Entrepreneurship Entrepreneurship Necessity Necessity Entrepreneurship Entrepreneurship

Female Female % %

Overall Overall % % (Average) (Average)

16.9 16.9

14.4 14.4

15.6 15.6

88

6.4 6.4

77.33

7.6 7.6

7.6 7.6

7.6 7.6

The gender gap in Jamaica is quite narrow and in 2006 there was no obvious gap, thus suggesting a fluctuating trend in gender differences (Figure 11). There was no gender difference in necessity entrepreneurship (7.6:7.6), which is consistent with the findings of Allen et al (2006), that there is no significant difference in gender in the rate of necessity entrepreneurship in the different country groups. The trend may imply that more females start businesses out of necessity, but as explained by Bergmann’s and Sternberg’s (2007) study in Germany, factors influencing necessity entrepreneurship are far more difficult to determine.

followed by extractive (21.3%), transforming (14.3%) and business services (3.1%).

Figure 12 Early-Stage Entrepreneurial Activity by Industry Type 70 60

Consumer Oriented 61.3%

50 40

Extractive 21%

30 20

Transforming 14.3%

10

Business Services 3.1.%

0 T EA : FIRM T YPE

Entrepreneurial Activity by Sector Similar to the other efficiency-driven economies, Figure 12 shows that most entrepreneurial activity in Jamaica during 2008 took place in the consumer oriented sector, which accounted for 61.3% of total entrepreneurial activity. This was 16

A detailed report of entrepreneurial activity trends in the various sectors is presented in Table 5. Five of the ten industries showed decreases in entrepreneurial activity over the 2006 figures.

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GEM JAMAICA 2008

Table 5 Distribution of Entrepreneurial Activity by Industry Type Types of Businesses

Year 2005

2006

2008

%

%

%

Agriculture, Forestry, Hunting, Fish

8.1

10.8

21.0

Mining, Construction

1.4

0.6

1.4

Manufacturing

3.5

7.3

5.9

Utilization, Transport, Storage & Communications

2.9

3.7

3.9

Wholesale Trade

11.0

7.1

4.5

Financial Intermediation, Real Estate Activities

1.2

0.4

0.3

Business Services Retail Trade, Hotels & Restaurants

2.3

1.9

2.8

54.2

56.2

52.4

Government, Health, Education, Social Services

1.2

1.2

-

Personal/Consumer Service Activities

14.1

11.1

7.8

Total

100

100

100

The national figures reveal a decrease in real value added of 5.1% in the agriculture, fishing and forestry industry (PIOJ, 2009). The fall-out in traditional export products, sugar and bananas, contributed significantly to this decline.

However, entrepreneurial activity in the sector grew significantly, (10%) in 2008, indicating that more businesses started in the agricultural sector than in 2006 (Table 5). The government’s low cost fertilizer initiative for farmers coupled with “a grow what we eat” campaign by the government may have contributed to this increase.

The increase in agricultural start-ups is a positive trend for the country’s economic development in terms of food security, reducing the import bill and its direct linkage to the hospitality industry. Retail Trade, Hotels and Restaurants continue to be the sector with the highest level of entrepreneurial activity, even though recording a 3.8% decrease over 2006. In the tourism industry, which falls into this category, the number of hotel rooms expanded and stop over arrivals increased. However, average length of stay as well as cruise passenger arrivals decreased. According to PIOJ (2009), the Hotels & Restaurants industry grew by an estimated 2.7% for the year 2008 but real value

added decreased, influenced largely by unfavourable global conditions.

Entrepreneurial Activity in the Parishes

Jamaica is divided into fourteen parishes and St. Catherine was the parish with the highest level (18.1%) of business start-up activity in 2008, compared with its 16.8% in 2006 (Figure 13 ).

St. Catherine also outperformed the twin parishes of Kingston & St. Andrew which together recorded a 17.3% prevalence rate, down from 25.5% in 2006 (Table 6). The 2008 TEA rate for Kingston was 5.3% while for St. Andrew it was 12% (Table 6).

The slow-down in business start-ups in Kingston & St. Andrew could be attributed to the slow-down in economic activity, most of which is centered around Kingston & St.

17

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Figure 13 Entrepreneurial Activity by Parish

20 18 16 14 12 10 8 6 4 2 0

do

rin

e

n

r te

St

.C

at

he

en Cl

ar

es

M

an

liz St

.E

tm

ch

ab

et

an or

el

ov an W es

H

h

d

er

es

y

am .J

wn la

Tr e

St

nn

y ar

.A St

d

.M

rtl

an

m Po

.T

ho

nd St

.A St Ki

ng

st

on

&

St

w

as

Parishes re

Percent

TEA by Parishes

Andrew. Also, the reduction in startups in the information technology sector that was quite buoyant in 2006 could be a factor. Five rural parishes showed increases in start-up activities with the parish of Clarendon recording a significant increase of 7.4% over 2006 (Table 6). A decline in start-up activity was noted in six rural parishes with the parish of St. Ann recording the largest decline (5%) over 2006. Start-up activity in the parishes of St. Thomas, Portland, Trelawny and Hanover continue to be low. It is interesting to note that the APS revealed that the parish of St. Catherine had the highest rate of start-ups and according to the PIOJ data (PIOJ, 2009), (Table 7), St. Catherine received the largest amount of loan disbursements (32%) while 7 parishes combined received only 8% of loans disbursed.

18

Table Table 66 Prevalence Parish PrevalenceRate Rate by Parish

PARISH

TEA 2006

TEA 2008

Kingston

6.70

5.3

St. Andrew

18.80

12.0

St. Thomas

5.02

3.8

Portland

4.73

1.8

St. Mary

2.82

5.0

St. Ann

11.23

6.0

Trelawny

3.60

3.3

St. James

2.76

8.3

Hanover

5.82

2.3

W estmoreland

8.18

7.1

St. Eli zabeth

3.30

6.9

Manchester

5.96

8.4

Clarendon

4.28

11.7

St. Catheri ne

16.80

18.1

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Table 7 Loan Distribution by Parishes

Parishes St. Catherine Kingston St. James Portland Clarendon

GEM JAMAICA 2008

Figure 14 Entrepreneurial Motivation

Percentage of Loans Disbursed 32% Necessity 51%

17% 15% 12% 9%

Source: PIOJ (2009) Figure 13A

Entrepreneurial Attitudes GEM recognizes two distinct reasons that motivate entrepreneurial behavior: opportunity and necessity. According to GEM, most individuals are pulled into entrepreneurship because they perceive or recognize a business opportunity that they wish to capitalize on (opportunity entrepreneurs). Necessity entrepreneurs on the other hand, are pushed into entrepreneurship because they have no other means of making a living or because they fear becoming unemployed in the near future. The 2008 Adult Population Survey (APS) revealed that for Jamaica, necessity-driven entrepreneurship has now surpassed opportunity driven entrepreneurship. Fifty-one percent of early-stage entrepreneurial activity was necessitybased, 48% was opportunity driven while the remaining 1% was attributed to other motives (Figure14).

Other 1%

It is further explained that two major drivers of opportunity entrepreneurship can be identified: those who are pulled primarily because they desire independence, and those who are primarily pulled to entrepreneurship because they want to increase their income as compared to, for instance being an employee (Bosma et al, 2008).

Consistent with these GEM findings, Jamaica’s 2008 APS results showed that most respondents saw independence as the major driver of opportunity entrepreneurship (55%), followed by an opportunity to increase one’s income (31.7%) (Figure 15).

Table 15 Opportunity Start-ups

Percent

The prevalence rates shown in Table 6, confirm that rural parishes lag behind their urban counterparts in entrepreneurial activity to a large extent. Large scale entrepreneurial interventions that stimulate entrepreneurial activity and ultimately business development and job creation, are needed in these parishes that lag behind.

Opportunity 48%

INDEPENDENCE

INCREASE INCOME

JUST MAINTAIN INCOME

REFUSED

Opportunity Start-up Reasons

19

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Additionally, 41.6% of respondents perceive lots of good opportunities for start-ups in the future (six months), and only 19% expect to start a new business within three years. For those who

expressed an intention to start a new business, the most common reason given for this was that it was the best work choice, as indicated by 41% of respondents (Figure 16).

Percent

Figure 16 Reasons for Starting a Business

EXPLOIT BUS OPPORT

BEST WORK CHOICE

WK CHOICE & OPPORT

JOB & BETTER OPPORT

DON’T KNOW

REFUSED

Start-up Reasons

GEM has established a relationship between the level of economic development of a country and entrepreneurial motivation. According to GEM, for countries with higher per capita income, the prevalence of opportunity motivated entrepreneurship is higher. It is perceived that

in such countries, opportunities may be expected to be more abundant and individuals may have more alternatives to making a living. GEM explains that necessity entrepreneurship is more prevalent in countries with lower per capita incomes such as the efficiency driven economies;

Figure 17 (GEM APS) Necessity and Improvement-Driven Opportunity Motivation as Percentage of Early-Stage Entrepreneurial Activity, GEM 2008 countries

Opportunity & necessity motivations, in % TEA

100%

20

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

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the category into which Jamaica falls. GEM also asserts that when countries progress in economic development, their rate of necessity entrepreneurship decreases. On the same note, when countries experience economic decline, their rate of necessity entrepreneurship increases. Figure 17 illustrates the relationship between opportunity entrepreneurship, necessity entrepreneurship

GEM JAMAICA 2008

and GDP per capita for the different countries in GEM. This assertion is consistent with the trend shown by Jamaica. Jamaica’s growth rate in GDP has fluctuated since 2005 and in line with this decline is opportunity entrepreneurship (Table 8).

Table 8 Opportunity and Necessity Entrepreneurship in Jamaica Relative to Economic Growth

Year

Opportunity Necessity Other Entrepreneurship Entrepreneurship Motive

2005 2006 2007 2008

57% 64% n/a 48%

38% 33% n/a 51%

5% 3% n/a 1%

Total Entrepreneurial Activity (TEA) 17% 20.3% n/a 16%

*Economic Growth Figures (%) 1.0 2.7 1.4 -0.6

*PIOJ (2009) p. I

GEM, however, admits that the explanation is not typical for all countries as other variables such as institutional, cultural and social factors may influence the findings. Authors outside of GEM (Bergmann and Sternberg, 2007; Rosa, Kodithuwakku and Balunywa, 2006) have examined the necessity and opportunity concept. Rosa et al (2009) in a Ugandan and Sri Lankan study, hypothesised that necessity is a primary motive for business start-ups in poor countries. Empirical evidence in the study did not support the hypothesis and the authors concluded that there were other motives for business startups that were more prevalent than necessity such as the need to progress in life and improve one’s status, as well as diversifying into another type of business to offset the unpredictability of the former. Bergmann and Sternberg (2007) in their study in Germany, concluded that the results for opportunity entrepreneurship are in line with theoretical predictions, but the factors influencing necessity entrepreneurship are far more difficult to determine.

Based on GEM’s definition of necessity entrepreneurship, unemployment is an underlying cause. In a 2002 study, Cowling and Bygrave explored the relationship between entrepreneurship and unemployment. Along with unemployment, they tested five hypotheses with the independent variables: welfare, pension, unemployment, youth unemployment and barriers to market entry. They concluded that there is tremendous variation in necessity entrepreneurship rates across countries and that there appears to be short-run persistence in necessity entrepreneurship rates. Significant to Jamaica, Cowling and Bygrave (2002), concluded in their findings that, “It appears that in some countries, more than others, there is a culture of the unemployed seeking to create their own employment when waged jobs are scarce. Alternatively, being unemployed is so undesirable, due to low levels of benefits, that starting a business is the only way of earning a living”.

21

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Entrepreneurship Education and Training Significant advancements have been made globally in the field of entrepreneurial education over the last twenty years. Entrepreneurial ventures are developed through individuals’ innovation, creativity, and opportunity recognition supported by the availability of the requisite resources.

These characteristics can be encouraged and developed through education and training because, according to Kuratko (2005), entrepreneurship or certain facets of it can be taught.

This recognition has contributed to the tremendous increase in entrepreneurial education programmes. According to Safranski (2004) in his assessment of a Kauffman staff article entitled “The Growth and Advancement of Entrepreneurship in Higher Education” collegiate entrepreneurship programmes in the United States grew from only 16 programmes in 1970 to nearly 2000 colleges and universities offering some entrepreneurship training by 2004.

GEM JAMAICA 2008

plines in universities. Research in entrepreneurship is also on the increase and universities are now playing a more integral role in the development of the discipline and its integration into the wider environment. This growing phenomenon is not exclusive to educational institutions as other organizations have recognized the need for entrepreneurial training and have capitalized on this market through short term training programmes.

However, the question of relevance of training courses to actual practice is raised by Edelman, Manolova and Brush (2008). Their study concluded that there is a lack of correspondence between teaching and practice, a gap between start-up practices of nascent entrepreneurs and those prescribed by entrepreneurship texts. They recommend that to enhance the relevance of curricula, course content needs to be improved to meet constituents’ needs.

GEM (2008) has observed distinct differences in the quantity of training in entrepreneurship across countries with similar levels of economic development (Table 9). The percentage of the population that has received training in entrepreneurship varies from a high of 48% in Finland to a low of 6.3% in Turkey. The 2008 APS revealed that 21% of Jamaica’s population had received some training in entrepreneurship, a rate that may be described as average, considering that 21 of the 43 countries participating in GEM had rates below 20%. GEM (2008) also observed that in most countries, the proportion of individuals ever having had training in starting a business decreased with age. However, there was no significant decrease in Jamaica, Greece, Iceland and Israel.

Safranski (2004) further commented that hundreds of millions of dollars have been invested in entrepreneurship programmes and faculty chairs.

The study of entrepreneurship has become a vital component of business education programmes at both the secondary and tertiary levels, and has expanded considerably into non-business disci23

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Table 9 Percentage of the Population Aged 18-64 that Received Voluntary or Compulsory Training in Starting a Business During or After School, (by Country Type)

School voluntaryi Factor-driven economies Bolivia Bosnia and Herzegovina Colombia Ecuador Egypt India Iran Country average Efficiency-driven economies Argentina Brazil Chile Croatia Dominican Republic Hungary Jamaica Latvia Macedonia Mexico Peru Romania Serbia South Africa Turkey Uruguay Country average Innovation-driven economies Belgium Denmark Finland France Germany Greece Iceland Ireland Israel Italy Japan Korea Republic Slovenia Spain United Kingdom Country average

School compulsory

School any

After school voluntaryi

After school compulsory

After school any

8.2 12.7 19.2 16.1 3.8 3.3 8.9 10.3

2.4 0.8 4.0 4.3 0.9 1.7 6.6 3.0

10.6 13.5 23.2 20.4 4.7 5.0 15.4 13.3

10.3 8.1 20.7 8.3 2.1 3.8 9.2 8.8

3.9 2.5 8.7 7.3 2.1 7.0 10.3 6.2

14.2 10.6 29.4 15.6 4.2 10.8 19.5 14.9

19.1 19.9 40.0 27.2 7.5 13.1 28.9 22.2

6.4 4.5 16.8 8.6 4.7 2.8 6.8 6.1 10.3 5.8 11.5 3.3 1.5 6.6 1.9 9.7 6.7

3.2 0.8 8.5 11.1 0.6 14.2 9.2 8.4 2.3 3.6 2.9 2.2 1.5 2.7 0.6 1.0 4.6

9.6 5.3 25.3 19.7 5.3 17.1 16.0 14.5 12.6 9.5 14.4 5.5 3.0 9.3 2.5 10.7 11.3

7.3 1.6 18.9 8.0 1.9 1.4 2.9 9.0 7.2 3.6 12.2 2.8 2.6 3.8 1.9 9.5 5.6

3.6 5.0 13.8 7.6 2.1 8.6 6.4 10.1 3.7 5.9 12.5 1.8 4.9 5.2 2.3 8.9 6.3

10.9 6.6 32.7 15.6 4.0 10.0 9.3 19.1 10.9 9.5 24.7 4.6 7.6 9.0 4.2 18.4 12.3

17.4 9.4 42.5 27.6 7.7 24.4 21.0 28.0 19.1 15.5 29.6 8.0 10.2 13.8 6.3 24.1 19.0

17.8 2.4 10.1 5.3 10.3 5.0 6.5 8.1 4.1 6.0 2.8 2.7 13.0 9.5 5.8 7.3

7.0 7.1 7.8 4.9 2.0 1.2 5.3 5.8 1.7 4.2 2.1 3.2 11.3 3.0 3.1 4.6

25.0 9.5 17.9 10.2 12.3 6.1 11.8 14.0 5.8 10.2 4.9 5.9 24.3 12.5 8.9 11.9

3.0 2.1 19.6 5.9 8.4 6.4 11.3 9.9 4.5 5.3 10.1 3.8 10.3 7.9 7.7 7.7

15.2 11.9 20.8 6.6 4.7 6.5 6.5 7.6 4.1 3.7 5.6 5.4 12.3 6.8 6.1 8.3

18.2 14.0 40.4 12.5 13.2 12.9 17.8 17.5 8.6 9.1 15.7 9.2 22.6 14.7 13.8 16.0

33.3 22.0 47.9 18.1 21.0 17.0 26.7 26.1 12.8 16.5 17.4 13.6 35.7 21.9 19.5 23.3

(Gem APS 2008) i: “Voluntary� includes those reporting voluntary training or a mix of voluntary and compulsory training

24

Any training

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The relevance of entrepreneurial education to business start-ups has been recognized (Edelman, Manolova and Brush, 2008; Jack and Anderson, 1999). Educational institutions, government agencies as well as private sector organizations are involved in education and training activities. GEM examines the availability and effectiveness of entrepreneurial education at various levels in the education system - primary, secondary and tertiary as well as continuing education.

GEM JAMAICA 2008

The level of training received by respondents in starting a business was investigated in the APS. Sixteen percent of respondents had received training up to the primary or secondary level; 9% had received training after completing education in school, while 79% had received training as part of their formal education after school (Figure 18). These results reveal that entrepreneurship training at the lower levels of the education system still remains inadequate and requires intervention.

Figure 18 Level of Training Received in Starting a Business

100 90 P e r c e n t

80

Yes

70

No Undecided

60 50 40 30 20 10 0 Primary or Secondary School

After completing school

The Government plays an integral role in entrepreneurial education and training through special agencies, special programmes and subsidised funding. Figure 19 reveals that 29% of respondents in the APS had benefited from training in starting a business through a government agency.

Seventy percent of these persons reported that the training had been voluntary and 30% said that it was compulsory (Figure 20).

Part of formal education

Employers have also made a contribution to education and training in start-up activity.

Forty-five percent of the APS respondents indicated that they had undergone compulsory training in starting a business during past or present employment (Figure 19). Fifty-five percent said that the training had been voluntary.

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Figure 19 Source of Training in Starting a New Business

100 90 P e r c e n t

80

Yes

70

No Undecided

60 50 40 30 20 10 0 Government Agency

Informal Learning

Past or present Employer

Fifty-two percent had received training through informal sources and on-line training had been privy to only 6% of respondents (Figure 19).

Training at the university or college level was reported to have been voluntary by 69% of respondents while 31% said it had been compulsory (Figure 20).

Experts’ Views on Education and Training In expressing their views about the encouragement of creativity, self-sufficiency and personal initiative at the primary and secondary levels,

Online

only 9% of experts agreed that this was adequate; 80% felt that this was lacking while the other 11% were undecided. Most of the experts (71%) believed that teaching in primary and secondary education does not provide adequate instruction in market economic principles; 18% believed that instruction was adequate while 11% were undecided. Fifty-one percent of respondents were of the view that colleges and universities provide good and adequate preparation for starting up and growing new firms, 26% disagreed and 23% were undecided (Figure 20).

Figure 20 Voluntary or Compulsory Training in Starting a Business 80 70 P e r c e n t

60 50

Voluntary

40

Compulsory

30

Both

20 10 0 Primary or Secondary School

26

Collge or University

Government Agency

Past or Present Employer

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On the issue of the quality of business and management education, only 35% of the experts felt that the preparation for starting up and growing new firms was adequate; 35% believed it to be inadequate and 29% was undecided (Figure 21).

GEM JAMAICA 2008

The availability of public and/or private centres or agencies that can provide persons with adequate education and training in entrepreneurship were viewed by experts as moderate (56%); 20% believed that they were not equal while 24% was undecided. The overall responses of the experts indicate that although facilities are in place for entrepreneurial education and training, they are not inadequate.

Training Institutions and Agencies In support of the view that entrepreneurship contributes to economic development, the government of Jamaica, the private sector, educational institutions and other organizations have recognized that training in entrepreneurship is an imperative. The HEART Trust/National Training Agency has been mandated by the government to play an integral role in entrepreneurial development.

With regard to vocational, professional and continuing education systems, 31% of respondents felt that the preparation for starting and growing businesses was adequate, 32% believed it to be inadequate while 37% was undecided.

Figure 21 Experts’ Response to the Level of Preparation for Starting and Growing New Firms 60 50 P e 40 r c 30 e n 20 t

TRUE FALSE

10

Undecided

0 Colleges & Universities

Business & Management Education

Vocational Professional, & Continuing

A mandate has also been given to the Jamaica Business Development Corporation ( JBDC), formerly Jamaica Business Development Centre, to lead government’s initiative to facilitate the sustainable development of Micro and Small Enterprises (MSEs) in Jamaica. Included in the broad objectives of the JBDC is the development of solution oriented services for the productive sector by providing workshops, business start-up kits and modernization kits. The JBDC’s Business Centre offers technical assistance in product development, packaging and labeling and process improvement ( JBDC Company Profile, 2008).

Public & Private Agencies

Curricula at the three major universities in the country, University of Technology, the University of the West Indies and Northern Caribbean University, Jamaica have been significantly enhanced to include programmes in entrepreneurship. The Technology Innovation Centre at UTech offers short courses and training programmes and the Private Sector Development Programme (PSDP) as well as other private sector training agencies offer training in Business Plan writing and other relevant areas.

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country. The average proportion of classic venture capital is 13.4% of classic venture capital and informal investment combined” (GEM 2005). Conversely, the average amount of informal investment is 86.6% of classic and informal investment combined.

Financing In 2005, the International Year of Micro Credit, the Global Entrepreneurship Monitor Executive Report suggested that “ there are two sources of financing for start-up entrepreneurs: the 4Fs (founders, family, friends and foolhardy strangers) and professional venture capitalists”.

It described the trend in classic venture capital investment over the period 2000–2004 but conceded that “as important as classic venture capital is in financing new industries, high-technology ventures in particular, the number of companies that it funds is miniscule compared with the number funded with other sources of financing, especially informal investment. Additionally, the total amount of venture capital is less than the total amount of informal investment in every

The 2006 GEM Jamaica Report implied a somewhat similar perspective – that informal investment was the main source of funding for start-ups. In 2008, the situation is no different.

Results from the APS revealed that 45% of informal start-up capital was obtained from close family members, 26.4% from friends or neighbours, 7% from work colleagues, 7.7% from other relatives and 4.2% from strangers. The source for the remaining 9.7% was undecided (Figure 22).

Figure 22 Informal Investment

P e r c e n t

45 40 35 30 25 20 15 10 5 0

r

es

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ily

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Cl

Fa

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le ol

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he

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ei

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or

The 2005 GEM Executive Report highlighted the pioneering work of eventual Nobel Peace Prize winner, Professor Muhammad Yunus in giving birth to the concept of microfinance which has since expanded into the Grameen Bank based in Bangladesh. Micro financing is now available in many countries especially in the developing world such as Latin America and the Caribbean. Organizations in Jamaica that are

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involved in micro financing include Micro Investment Development Agency (MIDA), Jamaica National Small Business Loan Limited ( JNSBL), Micro Enterprise Financing Limited (MEFL), National Export-Import Bank (EXIM Bank, National Insurance Fund (NIF) Loan Programme, National Development Foundation of Jamaica, and Jamaica Co-operative Credit Union League.

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National Experts’ Views on the Availability of Funding Honig (1996) acknowledged that larger amounts of starting capital provide a more extensive range of capital equipment that, if properly chosen and utilized, produce competitive advantages through improved productivity and higher quality.

Although the availability of capital to small and medium enterprises has increased over the last

GEM JAMAICA 2008

three years, accessibility continues to be a major challenge. High interest rates, even though sometimes preferential, and the inability to meet the rigid collateral requirements of lending agencies continue to be a deterrent in entrepreneurial development. The GEM national experts interviewed in 2008 were generally of the view that there was still insufficient funding available for new and growing firms (Figure 23).

Figure 23 Availability of Funding for New and Growing Firms

90 80 70 P e r c e n t

60 50 40 30 20 10 0 ty

ui

Eq

bt

ls

t

De

r

ve

re

d

Go

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t iva

Pr

A summary of the experts’ responses follow (Table 10): Equity Funding: The majority, (84.9%) of respondents agreed that there is insufficient equity funding available for new and growing firms.

Debt Funding: A minority (48.3%) agreed that there is insufficient debt funding available for new and growing firms. Conversely, the majority (51.7%) of respondents agreed or were indifferent that there was sufficient debt funding available for new and growing firms.

Government Subsidies: In relation to government subsidies, the majority (78.1%) agreed that there is insufficient government subsidies available for new and growing firms.

Private Individuals (other than founders): A similar number (75%) agreed that there is insufficient funding available from private indi-

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ua

en

nm

Os

IP

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viduals (other than founders) for new and growing firms.

Initial Public Offerings (IPOs): The majority (71.5%) agreed that there is insufficient funding available through initial public offerings for new and growing firms.

Venture Capital Funding: Another large majority (81.8%) of respondents agreed that there is insufficient venture capital funding available for new and growing firms. Table 10 presents the details of the experts’ responses regarding financing sources.

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Table 10 Sources of Financing for New and Growing Firms

Sources of Financing

Sufficient %

Equity Funding

6

Insufficient % 85

Debt Funding

32

48

19.4

Government Subsidies

9.4

78.1

12.1

Private Individuals Other than Founders Venture Capitalists

9.4

75

15.6

9.1

81.8

9.1

Initial Public Offerings

3.5

25

71.5

From these results, it is evident that there is a need to shift the provision of funds for financing new ventures from the traditional informal sources to more sustainable sources such as venture capital inputs. As the experts concluded, debt financing is sufficient but accessibility to these loans still remains a problem while there is a gross inadequacy of venture capital funding.

Financing Initiatives Over the past three years, support for entrepreneurial activities especially at the level of Micro Small and Medium Sized Enterprises (MSME) in Jamaica, has been expanding steadily. This has been due to initiatives implemented by the Government of Jamaica and some of its designated agencies as well as the private sector. The Economic and Social Survey Jamaica (ESSJ) published by the Planning Institute of Jamaica (2009), describes the various Government and Private Sector initiatives targeting the Micro and Small Enterprises (MSEs) sector. The ESSJ defines micro-enterprises in Jamaica as businesses that carry an asset base (excluding land and building) not exceeding US$10,000 and an annual turnover of less than US$125,000. Small Enterprises carry an asset base (excluding land and building) of between US$10,000 and

30

Undecided % 9

US$100,000 and an annual turnover of between US$125,000 and US$1,000,000. Employment levels in either may vary based on structure and type of activity but for small enterprises it usually does not exceed 50 persons (PIOJ, 2009).

As the report points out, consistent with “Vision 2030 Jamaica – Integrated National Development Plan”, the Jamaican Government during 2008 reaffirmed its commitment to championing the important role of MSEs in Jamaica’s development. The ESSJ report provides a range of indicators of the performance of the MSE sector during 2008. These include the number of MSEs per General Consumption Tax (GCT) returns (Table 11) and loan disbursement and employment creation (Table 12).

Table 11 Number of MSEs According to GCT Contributions, 2006-2008

MSEs Micro Small Total

2006 10,371 3,834 14,205

2007 10,593 3,877 14,470

Source: PIOJ (2009) Table 13.3

2008 10,737 3,544 14,281

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Based on the indicator of General Consumption Tax (GCT) returns, Table 11 indicates that there was a slight reduction in the number of qualified MSEs in operation in 2008 compared with 2007. This implies that there were less

start-ups in the sector over 2007, or that more firms were operating informally than in the previous year.

Table 12 Loan Disbursement and Employment Created

Institution

No of Loans Disbursed Value (J$ M) Employment Created 2007 2008 % Chge 2007 2008 % Chge 2007 2008 % Chge

431 191 1424 1045 807 855 33380 38010 GoJ/MicroFin 2887 3775 Pan Caribbean 29 8 EX-Im Bank n/a 289.4 First Union Financial 375 436 Jamaica Credit Union 9767 10967 Total 49100 55576.4 NDFJ MID A COPE JNSBL

(55.7) (26.6) 5.9 13.9 30.8 (72.4) n/a 16.3 12.3 13.2

44.5 242.1 50.2 1350 157.5 89.9 289.4 13.4 973.5 3211

27.4 264.5 58.4 1829 213.7 51.2 455.9 34.3 825.9 3760

(38.4) 9.3 16.3 35.5 35.7 (43.0) 57.5 156.0 (15.2) 17.1

n/a 657 1500 20,013 2887 n/a n/a 3 4.8 25064.8

410 1633 1285 21932 3775 n/a 1217 3 19.5 30274.5

n/a 148.6 (14.3) 9.6 30.8 n/a n/a 0.0 306.3 20.8

Source: PIOJ (2009), Table 13.7

In terms of the number and value of loans to MSEs as well as employment creation, growth of 13%, 17% and 21% respectively was recorded across the range of selected financial institutions indicated in the above table. During 2008, the Development Bank of Jamaica (DBJ) continued to make loans available for agricultural projects through the People’s Cooperative Bank and other approved financial institutions. The uptake

of loan funds amounted to approximately $890 million compared with $316.8 million in 2007 (PIOJ, 2009). Loan utilization increased for livestock, export crops and agro-processing. The DBJ also has a loan facility for renewable energy projects.

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In 1998, the Organization for Economic Cooperation and Development (OECD) released a study entitled "Open Markets Matter: The Benefits of Trade and Investment Liberalisation" (OECD, 1998a) which extols the benefits of openness. While trade and foreign direct investment can undoubtedly generate benefits, the extent of these benefits and the manner in which they are distributed depends critically on the institutional context in which liberalization occurs. By changing the set of economic options available to business, increased market openness changes the pattern of relations amongst business, labor and government. These changes can be positive sum with all benefitting, zero sum with benefits to one group coming at the expense of another, or negative sum with all losing. Positive sum outcomes should be actively sought out, while negative sum outcomes should be avoided.

ment policy and its impact on the level of market openness. The recent thrust at market openness for emerging economies and less developed countries like Jamaica have driven recent moves to engage regulatory reform initiatives.

With the expansion of economic globalisation and the fall of traditional barriers to trade, the interconnectedness of market openness and domestic regulatory reform issues continues to be increasingly important. This interconnectedness implies, on the one hand, that regulatory reform can play a strong role in ensuring that liberalized conditions for trade and investment bring the expected benefits in trade and economic performance; and on the other hand, that trade and investment liberalisation can be an important factor in successful regulatory reform.

Given the substantial effects of domestic regulations on the openness of economies, it is important that domestic regulatory reform efforts take the market openness perspective into consideration. With the help of advanced regulatory reform tools and approaches, governments can create regulations and regulatory procedures that efficiently meet their policy objectives but at the same time are supportive of market access.

Countries that progress simultaneously with market openness and regulatory reform policies are better placed to take advantage of the benefits of trade liberalization.

The discussion about market openness should be paralleled with a discussion about protectionism versus globalization. It is expected that there will be a discussion about the levels of international trade and investments. It will also seek to comment on the role of non-tariff barriers and their use for protectionism, as well as antidumping regulations and capital restrictions and the eventual impact on market openness. In the era of globalization with which market openness is synonymous, it is imperative that the impact of trade liberalization and the measure of foreign direct investment (FDI) be examined for an assessment of general perspectives of market openness. In addition, any discussion on market openness should examine the impact on relations between business persons, labor and government.

It should also comment on the nature of govern-

The Jamaican economy has benefitted from reasonably high levels of foreign direct investment over the last few years with Jamaica averaging about US $700m between 2003 and 2006 and increasing to US$886m in 2007 ( Jamaica Gleaner, 2009). Jamaica ranked 23rd in the Inward FDI Performance Index in 2006 and 26th in the same index in 2008 (UNCTAD, 2008). However, the difficulty lies in seeing how the Jamaican economy has used this level of investment to drive its production, productivity and efficiency. The data suggests that the investment gets transferred out of the economy in payment for supplies to support tourism, repayment for loans and contractual fees for example. The challenge remains to get this level of investment to create items for export which will earn foreign exchange.

Market Openness

Market Openness may be defined as the extent to which commercial trading arrangements are stable but open to change, thus enabling new and growing firms to participate in the market, competing with existing suppliers, subcontractors, and consultants.

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Doing Business in Jamaica – Is the Market Open?

A good starting place to examine the micro factors which have a direct impact on market open-

GEM JAMAICA 2008

ness is to explore the data which describes doing business in Jamaica. The indicators include the activities listed in Table 13.

Table 13 Jamaica’s World Ranking in Ease of Doing Business (2006-2008)

World Ranking Business Activity Ease of Doing Business Starting a Business Dealing with Construction Permits Employing Workers Registering Property Getting Credit Protecting Investors Paying taxes Trading Across Borders Enforcing Contracts Closing a Business

2006 50 10 n/a

2007 62 11 74

2008 63 11 49

26 107 101 60 163 74 46 23

33 108 79 66 173 96 102 23

32 109 84 70 173 100 127 22

2006 – 175 economies 2007 – 178 economies 2008 – 181 economies Note: Doing Business 2008 rankings have been recalculated to reflect changes to the methodology and the addition of three new countries (Doing Business 2009)

The preceding table indicates that Jamaica slipped 12 places between 2006 and 2007in the ease of doing business ranking, but only one place between 2007 and 2008 indicating a rekindling of confidence in doing business in Jamaica.

The activity that presents the greatest stability over the three years is “starting a business” even though slipping one place over 2006.

Market Entry Market openness explains the ease or difficulty with which growing firms can enter a new market. Based on the 2005 GEM data (Experts’ Opinion on Market Entry), experts agreed that the Jamaican market is very open and that this allows for the easy start up of many businesses.

In the 2008 National Experts Survey, six questions related to market openness were addressed to the experts. The results are illustrated in Figure 24. As it relates to antitrust legislation and its level of effectiveness and enforcement, the experts believe that there is room for improvement in this area as 62% believe that these laws are not effectively enforced with 17% expressing the opposite view. The remaining 21% were undecided.

In response to the ability of new and growing firms to enter the market without being blocked by established firms, many of the experts did not believe that this is so as 38% stated that this was either somewhat false (16%) or completely false

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Figure 24 Experts’ Opinions on Market Openness

70 60 P e r c e n t

50 40 30

TRUE FALSE Undecided

20 10 0 Antitrust legislation is effective

Easy market entry for new firms

Affordable market entry for new firms

(22%) while another 25% were undecided. The remaining 37% of the experts believe that this is true.

As it relates to affordability of market entry for new and growing firms in Jamaica, the experts (61%), believe that new and growing firms do not find it affordable to enter new markets.

Only 19% believe that new firms can afford the cost of market entry while 20% are undecided.

With regard to ease of entry into new markets, the experts (48%) feel that it is indeed difficult to enter new markets compared to the 32% who said it was easy. The remaining 20% are undecided on this matter.

Market openness is dependent to some extent on the level of changes that takes place in markets.

When asked to comment on the changes in the business to business (B2B) markets over time, 57% of experts agreed that changes in demand in these markets were not dramatic. Twenty-five percent felt that the markets have changed dramatically while 3% were undecided.

On the final area related to market openness, experts appear to believe that there is some sta-

34

Stable market for consumer goods and services

Stable market for B2B goods and services

bility in the markets for consumer goods and services and that these do not change dramatically from year to year as 41% supported the view, 36% disagreed while the remaining 23% felt that they are not in a position to state clearly, so they were undecided.

Market Openness and Entrepreneurial Aspirations “The effort of the entrepreneur to engage in introducing new products or new production processes, to open foreign markets, …” is included in GEM’s definition of entrepreneurial aspirations (Bosma et al, 2008, p. 38).

Consumers’ evaluation of products on the market and the perception of their level of similarities or differences could be interpreted as a contributory factor to market openness. Markets that have similar products may indicate that variety is not significant. From the APS sample, 79.2% of the respondents indicated that none of their products was considered new by consumers, 13% considered some of their products new and only 7.8% considered them all new. Forty-five percent of customers perceive that many businesses offer the same products with another 45.2% perceiving that few businesses offer the same products, and a limited 9.1% report that

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they perceive that businesses do not offer similar products. This could reflect consumer purchasing patterns and the market opportunities. An examination of the export intensity for new and established businesses is outlined below. Export intensity refers to the extent or degree to which entrepreneurs are involved in exporting.

Figure 25 indicates that of the respondents involved in early-stage entrepreneurial activity

p P e r c e n t

GEM JAMAICA 2008

(TEA), only 7.3% considered that the extent of their export activity was above 75%, whilst 7% suggested that export intensity was between 2575% of their activity. With 25.6% suggesting that only between 1-25% of their businesses were for export and the largest portion of the sample (60%) suggesting that none of their business activity was for export, it is not surprising that Jamaica’s market openness is one-sided (inward bound).

Figure 25 Export Intensity - Early Stage Entrepreneurs

y

y

g

p

80 60 40 20 0 75% - 100%

25% - 75%

1% - 25%

None

Involvement in Exporting

A further examination of the export intensity of established businesses (Figure 26) reveals a more alarming position. Only 4.7% of the sample suggested that there is some level of export activity exceeding 75%, 5.9 % suggested that

their level of export activity is between 25-75% , 29.7% suggesting that their export intensity is between 1-25% and 53.9% suggesting that they can report no export activity.

Figure 26 Export Intensity - Established Businesses

P e 60 r 40 c 20 e n 0 t

Export Intensity Established Businesses

75% - 100%

25% - 75%

1% - 25%

None

Undecided

Involvement in Exporting

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It needs to be cautioned, however, that factors that could impact these levels of export activity may not rest only on the entrepreneurs in Jamaica and their products but may be due to factors external to their control such as tariff barriers and other protectionist regulations. The literature suggests that globally, there is a favourability to market openness and this is stated based on the debates put forward largely by Palley (1998) and the OECD (1998). They forewarn though, that while trade and foreign direct investment can generate benefits, there must be tight control in order for this to happen.

As it relates to Jamaica, it is agreed that Jamaica’s markets are very open and as a result, this allows for the easy start up of businesses.

However, there is a strong perception that small and medium businesses are at a distinct disadvantage as they lack access to large domestic markets. Still others believe that there are some industries that because of a lack of transparency on the part of government in the area of procurement of services, they are very difficult to enter.

36

The Outlook The prevailing views of the experts suggest that over the past five years, opportunities for new firms have been good with over 55% reporting this as being true. In order to address what we observe as some element of variation between the global position and that of Jamaica, we can begin by looking more closely at the start-up operations for businesses (particularly as it relates to time and cost considerations). In addition, the area of licences and taxes should be examined so as to ascertain whether these are equitable and realistic. The strengthening of institutional support is also an imperative.

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Government Policies

A vital component of any nation’s development lies in its entrepreneurial spirit and the policies, initiatives and programmes implemented to foster this spirit. The policies and programmes implemented to facilitate and encourage the growth of entrepreneurship are critical to the country’s economic growth and development.

An analysis of the 2008 NES data shows that 24% of the experts surveyed were strongly of the view that government policies do not consistently favour new firms. Fifty-two percent felt that it was somewhat false to say that government policies consistently favour new firms. This means that 76% of the experts believe that government policies were not favourable to new firms. Some of the respondents were of the view that the word “consistently” is not necessary in coining the statement as they believe that the government policies in Jamaica do not favour new firms. Eighteen percent were neutral, rating this as neither true nor false. Only 6% felt that somewhat true would be a fair response to the statement. A National Industrial Policy (NIP) was developed in 1996 and Chapter 6 of this policy focuses entirely on support framework with one section dealing specifically with small businesses. These responses on government policy indicate that more effort needs to be made by government to set policies which will assist small, new firms to become established and grow. A revision and expansion of the NIP should facilitate the effort to address this perception in a structured manner as reflected in the Jamaica 2030 Development Plan.

Forty-one percent of the respondents did not believe that the support for new and growing firms is a high priority at the national government level. Twenty-four percent felt that it was neither true nor false and 35% indicated that it was somewhat true (Figure 27). The fact that more than one third of the respondents agree that there is some amount of support, is probably due to the effort of government to place greater emphasis on the development of small businesses by instituting more programmes.

GEM JAMAICA 2008

This is especially true, as with the economic downturn there is seemingly greater effort on the part of government to foster the entrepreneurial spirit in the country.

Many of the policies that affect the establishment of small entrepreneurial firms were not formulated specifically to address the needs and concerns of those types of businesses. The policies were developed for regulating the business sector of the country in general. There has been little or no change in the policy framework of the country since the 2006 GEM report was done as portrayed in Table 14.

Entrepreneurship is seen as a possible avenue through which the number of jobs, income and production may be increased. To alleviate some of the difficulties encountered by entrepreneurs in accessing available capital, a new bill is currently being developed by government to allow for the credit rating of individuals to be used as a primary consideration in their application for financing.

Table 14 Ease of Doing Business 2005 - 2008

Starting a Business

Year

Procedures/ payments (Number)

Time

Cost (% of income per capita)

2008

6 procedures

8days

7.9

2007

6 procedures

8 days

8.7

2006

6 procedures

8 days

9.4

2005

6 procedures

9 days

8.3

procedures

days

10

236

438.4

2006

14 Procedures

242 days

417.5

2005

13 procedures

242 days

526.1

Dealing with 2008 Licenses 2007

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possible (Figure 27). Another 3% indicated that they were of the view that it was neither true nor false. This position is also reflected in the data in Table 14.

With regard to the level of policy support at the local government level, a total of 75% of respondents indicated that they believe that it is false to say that this is given high priority. This was divided equally between the number of respondents who felt that it was completely false and those who felt that it was somewhat false.

Thirteen percent felt that it was neither true nor false and only 12% felt that it was true (Figure 27). In comparing the responses regarding policy support at the national and local government level, one could conclude that most of the support offered is at the national government level.

This was expected as there is very little focus, if any, on the development and support of entrepreneurship at the local government level given the focus and constraints at that level.

A measure of the ease of doing business is the length of time usually taken to obtain permits and licenses. Eighty-eight percent of the experts interviewed agreed that new firms are not able to obtain permits and licenses within a week and only 9% of respondents thought that this was

Ninety-one percent of the respondents felt that it was false to state that the amount of taxes is not a burden for a new and growing firm while 73% indicated that this was completely false and 18% indicated that it was somewhat false. Three percent stated that it was neither true nor false and 6% viewed it as being somewhat true.

In seeking to analyse the predictability and consistency of the business environment with respect to regulatory measures, respondents were asked to give their views on tax administration.

Thirty-nine percent felt that it was somewhat false to say that taxes and other government regulations are applied in a predictable and consistent way (Figure 27).

Figure 27 Government Policy Support

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This may be compared with the 24% who felt that this was completely false: 12% felt it was neither true nor false; 8% indicated that it is somewhat true and 65% viewed it as being completely true. Based on the way in which the statement was phrased and the responses received it is not clear whether the respondents interpreted it correctly and therefore indicated their true evaluation of the statement.

The majority of respondents (85%) were of the view that coping with government bureaucracy, regulations and licensing requirements is unduly difficult for new and growing firms. Six percent were undecided on the issue while the remaining 9% believed that it was not difficult (Figure 27).

Regulatory Reform It has been widely recognized that improving the regulatory environment for businesses through reforms, significantly facilitates entrepreneurial growth. According to the World Bank publication, Ease of Doing Business,

2009, most of the reform that took place in 2008 were in Eastern Europe, Central Asia and rich OECD economies. Outside of these economies, reform has been moving slowly worldwide.

There has been very little reform in Jamaica over the past few years (Table 13). However, of significance is the revision of the Companies Act of Jamaica. The Registration of Business Names Act was amended in 2006 and now incorporates Recognition of Electronic Registration, Registration of Business Names by Companies and the prohibition of unregistered businesses from advertising. The time for registering a business has also been considerably reduced.

Business Name Certificates are now issued within two working days of receipt of properly completed applications. The Certificate of Company Registration is issued within five working days of receipt of properly completed applications (Companies Office of Jamaica, 2009).

Figure 28 Number of Companies Registered (2002-2008)

p

GEM JAMAICA 2008

g

(

)

6000

number of companies

5000

4000 Series1

3000

Linear (Series1)

2000

1000

0 2002/3

2003/4

2004/5

2005/6

2006/7

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Period Source: Jamaica Information Service (www.jis.gov)

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Despite the reform in business registration, the trend remains flat year over year as indicated in the trend line (Figure 28). Of note is the decrease in 2008 over the 2007 figures in the number of companies registered (Table 15).

The decrease in business registration numbers is consistent with the decrease in entrepreneurial activity as reported by the APS. The decrease may also be attributed to more businesses remaining as informal entities.

40

Table 15 Number of Companies Registered (2002-2008)

No of Companies Registered Period 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 to September 2007

4,246 4,687 3,874 4,855 4,956 >4,000

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Government Programmes

There are several programmes and initiatives which have been implemented by the Government of Jamaica in an effort to promote entrepreneurship. These are mainly focused on the improvement of three areas: financing, education and training. The Corporate Finance Broker Unit (CFB) of Jamaica Trade and Invest, Jamaica’s Business Promotion and Development agency has partnered with the Jamaica Stock Exchange to facilitate potential capital injection into small and medium enterprises through the Junior Stock Exchange. The CFB is a part of the Private Sector Development Programme established by the Government of Jamaica and the European Union.

Fifty-three percent of the experts who were interviewed in relation to government programmes indicated that it was completely false to say that there is a wide range of government assistance for new and growing firms through contact with a single agency. Twenty percent believed that this statement was somewhat false, 6% thought that it was neither true nor false and 21% felt that it was somewhat true (Figure 29). The level of bureaucracy involved in establishing and operating a business has been a major complaint of business owners and operators over the years.

GEM JAMAICA 2008

parks and providing support for targeted industrial space for small businesses.

Thirteen years later there has been no significant improvement in this area.

Support for new and growing firms in the form of government programs is very important. Of the respondents, 42% believe that it is completely false to say that such programs are effective in Jamaica. More than one third (36%) of the respondents indicated that this was neither true nor false which could be taken to be negative since such programs are established to provide effective support for new and growing firms thereby fostering the growth of entrepreneurship.

Only 12% of respondents believe that the programmes are adequate (Figure 29).

The competency of persons working in government agencies was put to the experts. As much as 47% of the respondents believe that persons working for government are not competent and effective in supporting new and growing firms. Twenty-four percent believe that they are competent while 29% are undecided (Figure 29). Some of the persons interviewed currently work for government agencies or have worked for government agencies in the past, but despite this, only 24% have mildly agreed with the statement by saying it is somewhat true.

In the National Industrial Policy document for Jamaica ( Jamaica Information Service, 1996), it is acknowledged that the Micro and Small Enterprise (MSE) sector (non-agricultural) plays a major role in the economy. As one of the steps towards improving their contribution to the Jamaican economy, the document acknowledges the need to promote the development of specialized industrial 41

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Figure 29 Figurefor29Entrepreneurship Government Support

Government Support for Entrepreneurship

P

Adequate

e r

Inadequate

c

Undecided

e n t

Govt.

Assistance through Single Agency

No. of Govt.

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Competent Govt. Workers

Sixty-four percent of the experts believe that science parks and business incubators do not provide effective support for new and growing firms. Twenty-one percent indicated that this was neither true nor false while the other 15% felt that these were not adequate (Figure 29).

This area needs to be urgently addressed.

Organisations that Support Entrepreneurship Programmes which helped to drive performance in the sector during 2008, included many of those initiated by the Jamaica Business Development Corporation ( JBDC) which is the main government agency that focuses on entrepreneurial development. The JBDC was established in April, 2001, under the portfolio of the Ministry of Investment Industry and Commerce.

Its mandate was to modernise the business environment and deliver cost-effective technical and marketing services. Government of Jamaica, in October 2008, broadened its scope of responsibility and renamed it the Jamaica Business Development Corporation. JBDC is responsible for the operation of a business incubator and resource centre. The JBDC’s programme includes Technical Services, Business Services and Industrial Secretariat Services ( JBDC, 2009).

42

Science Parks & Business Incubators

Among the other organizations that are actively involved in entrepreneurial activity are: Scientific Research Council, Bureau of Standards, Jamaica Intellectual Property Office ( JIPO), Technology Innovation Centre at the University of Technology, Jamaica, Micro, Small and Medium Enterprises (MSME) Alliance and the Private Sector Development Programme (PSDP).

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Research and Development and Commercial Infrastructure

Technological Support In 2007, several initiatives in Jamaica aimed at maximizing and promoting science, technology and innovation (STI) for developmental purposes were launched. The most significant among these was the application of Information and Communications Technology (ICT) to advance efficiency and service delivery. In fact, more and more public agencies were providing on-line services, access to knowledge via Community Access Points (CAPS), as well as ongoing research to enhance agricultural production, improve the environment and promote health.

The Government’s drive to establish Jamaica as the ICT hub of the region through an expansion of e-commerce was given a boost through the passing of the E-Transaction Act and the initiation of the National ICT Strategy(2007-2012), Empowering Jamaica 2012 (PIOJ 2007, p. 4.1).

Additionally, in 2007 the island made significant strides in enhancing the quality of local products through the introduction of quality management systems such as the International Standards Organisation (ISO) series. Thirty-three local companies earned ISO certification including the Scientific Research Council (SRC) which obtained the ISO 9001:2000 certification for its quality management system (ibid.).

According to the Economic and Social Survey (ESSJ) 2007, the number of applications made to the Jamaica Intellectual Property Office ( JIPO) for patents increased by 6.5% over 2006. The application for, and granting of patents are significant indicators of technological and scientific productivity. Moreover, in manufacturing, service, and small business excellence, three National Quality Awards (NQAs) were given in 2007.

The main objective of the NQA Programme is to enhance the quality and competitiveness of Jamaican products (ibid., p.4.11).

GEM JAMAICA 2008

The ESSJ (2007) also recorded significant strides in technological capability in the food sector: The drive to improve the quality of local foods, explore new food products and build capacity in food technology was facilitated by the SRC through the facilities and services which it offers to external clients. A Food Pilot Plant was used by 65 clients for drying and milling of 40 products and a food processing business which focuses on smoked fish and meats was established through the incubator facility offered by this plant. In addition consultancy services and technical assistance were accessed by 60 clients in various aspects of food processing (meat, jams, jellies, sugarcane, sauces and seasoning), essential oils and tissue culture (p. 4.9).

The Expert Survey The thirty-five experts whose views were solicited regarding aspects of technology as well as research and development (R&D), presented as in previous years, results that were disappointing, thus suggesting areas for improvement. For instance, the experts declared that science parks and business incubators hardly provided effective support for new and growing firms. In fact, only 14% (5 out of 35) declared that such parks and incubators actually provided any support. Most of the respondents (69%) declared that new and growing firms have just as much access to new research and technology as large, established firms. In fact, the overwhelming majority (74%) believed that new and growing firms cannot afford the latest technology. Moreover, eighty seven percent stated that there were inadequate government subsidies available for new and growing firms to acquire new technology. Less than 50% of the experts claimed that the science and technology base efficiently supported the creation of world-class new technology-based ventures in at least one area.

Additionally, (Figure 30) 70% of the experts believed that there was inadequate support available for engineers and scientists to have their ideas commercialized through new and growing firms. Most of them (51.4%) claimed that the available physical infrastructure (roads, utilities,

43

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communications, waste disposal systems, etc.) did not provide good support for new and growing firms. However, 80% of the respondents admitted that it was not too expensive for a new and growing firm to get satisfactory access to communications (phone, internet, etc.). Indeed, the majority of the experts (71%) declared that a new or growing firm can get good access to communications (telephone, internet, etc.) in

about a week. Only 37% said that new and growing firms can afford the cost of basic utilities (gas, water, electricity and sewage disposal systems). However, most of them agreed that new and growing firms can get good access to utilities (gas, water, electricity and sewage disposal systems) in about a month.

Figure 30 Commercial Infrastructural Support for New & Growing Firms P 100 e r c 50 e n 0 t

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Cultural Characteristics

The statements in the questionnaire relating to various dimensions of technological support required the experts to respond on a 5-point scale (1 - completely false; 2 - somewhat false; 3 - neither true nor false; 4 - somewhat true; and 5 - completely true). Hence, the average rating of each of the statements is 3.00. Table 16 presents the means of the ratings for the years 2005, 2006 and 2008. Between 2005 and 2008 there was an increase in the rating in all of the components of technological support except items (ii) and (v).

The ratings of the experts were below average (3.00) in six of the nine items relating to technological support in 2008: (i) science parks and business incubators provided effective support for new and growing firms; (ii) new technology, science and other knowledge were efficiently transferred from universities and public research centres to new and growing firms; (iii) new and growing firms have just as much access to new research and technology as large, established firms; (iv) new and growing firms can afford the latest technology; (v) there were adequate gov44

ernment subsidies for new and growing firms to acquire new technologies; (vi) there was good support available for engineers and scientists to have their ideas commercialized through new and growing firms.

Jamaica’s rating for 2008 For these six components were also less than the respective global 2008 averages as depicted in the last column of Table 16. Higher-than-average ratings were recorded in three components: the science and technology base efficiently supports the creation of world-class new technology-based ventures in at least one area [item (vi)]; it is not too expensive for a new or growing firm to get good access to communications (phone, internet, etc.) [item (viii)]; and, a new or growing firm can get good access to communications (phone, internet, etc.) in about a week [item (ix)]. In terms of item (vi), the caveat ‘in at least one area’ probably led the experts to make a judgment call and hence does not constitute a reason to be satisfied.

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It would have been more meaningful to ask the experts to identify that ‘one area’ which could, perhaps, provide pertinent data to match against the other responses relating to technological support. However, it is highly noteworthy that the ratings of the last two components relating to communications technology were higher than

GEM JAMAICA 2008

the global average. In particular, item (viii) with a rating of 4.09, was relatively close to the highest rating of 4.49 obtained by Norway. These results were clearly linked to the several initiatives described above aimed at expanding the application of ICT in Jamaica.

Table 16 Mean Ratings of Experts on items Relating to Technological Support: 2005, 2006 and 2008

Items relating to technological support (i) Science parks and business incubators provide effective support for new and growing firms (ii) New technology, science and other knowledge are efficiently transferred from universities and public research centres to new and growing firms (iii) New and growing firms have just as much access to new research and technology as large, established firms (iv) New and growing firms can afford the latest technology (v) There are adequate government subsidies for new and growing firms to acquire new technology (vi) The science and technology base efficiently supports the creation of world-class new technology-based ventures in at least one area (vii) There is good support available for engineers and scientists to have their ideas commercialized through new and growing firms (viii) It is not too expensive for a new or growing firm to get good access to communications (phone, internet, etc.) (ix) A new or growing firm can get good access to communications (phone, internet, etc.) in about a week AV ERAGE

Lowest (which country)

Highest (which country)

All countries 2008

2.29

1.97 Ecuador/ Egypt

3.97 Ireland

2.91

2.21

1.94

1.46 Egypt

3.05 Uruguay

2.25

1.95

2.12

2.06

2.63 Korea

2.16

1.78

1.75

1.91

1.53 Brazil 1.47 South Africa

2.90 Korea

2.05

1.76

1.79

1.68

1.21 Bahrain

3.00 Greece

2.15

2.65

2.71

3.00

1.69 Bosnia

4.53 Norway

2.71

1.88

1.88

2.18

1.58 Bolivia

3.50 Ireland

2.29

3.68

3.58

4.09

2.62 South Africa

4.49 Norway

3.67

3.81

3.17

3.83

2.24 South Africa

4.57 Korea

3.65

2.40

2.38

2.55

Jam 2005

Jam 2006

Jam 2008

2.05

2.18

2.00

2.65

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Cultural and Social Norms

Culture has been defined as “the way of life of a people” (Division of Culture, The National Cultural Policy of Jamaica: Towards Jamaica the Cultural Superstate Kingston: Ministry of Education, Youth and Culture, March 2003, page 9). “A country’s culture is the dynamic reservoir of the ways of thinking and doing accumulated over time, which has come to be agreed upon and transmitted across generations.

It includes the knowledge, experience, beliefs, values, customs, traditions, foods, distinctive institutions and its ways of making meaning in life.” It is expressed in areas such as language, the arts and the various arenas of interaction, including business, religion and other social relations. Culture, inherently, affects all aspects of human life and forms the basis for our values, objectives and outlook for the future.

The area of cultural and social norms in Jamaica was examined by assessing the extent to which the national culture encourages entrepreneurial risk-taking. This was then compared with the literature from other parts of the world to ascertain whether there were similarities or differences between the approaches.

A Global Perspective of Cultural and Social Norms Research reveals that there is a powerful connection between the culture of a people and its propensity to be entrepreneurial. Kenya, for example, has national sub-cultures which have important implications for creating an entrepreneurial economy. That would mean that in the effort to build greater entrepreneurship, it is useful to first understand the culture of a people and work with it, not against it (The East African Standard, 2005).

Studies suggest that there are cultural traits that enable certain societies and peoples to be more or less entrepreneurial. For example the Global Entrepreneurship Monitor (GEM) 2000, claims that the Japanese culture presents major barriers 46

to entrepreneurial behaviour by its members.

Conversely, the same research ascertains that the American culture enables rewards and even celebrates entrepreneurial behaviour. The GEM conclusion is that there is a strong connection between cultural characteristics and entrepreneurial societies.

Another example of the strength of the cultural and social support for entrepreneurship, comes from looking at the data for Ireland which shows clearly that there is a continuing strong supporting cultural context in Ireland as the data shows that 70% of adults consider that starting a business represents a good career choice, 82% of adults consider that there is a high degree of status associated with successful entrepreneurial endeavour and another 84% of adults believe there is good media coverage of entrepreneurship in Ireland (Fitzsimons and O’Gorman, 2006). As it relates to the social context, the picture looks a bit different as we see that despite a supporting cultural context, there is a relatively high ‘fear of failure’ in Ireland (39% of adults) compared to the US (21% of adults).

This discussion has shown that there appears to be very good cultural and social support in place for the development of entrepreneurial activities across the world. While some countries are clearly more advanced than others as it relates to the levels of support, overall it is safe to say that it is highly recognized that cultural and social norms are an integral part of the framework required for successful entrepreneurial activities.

From a global perspective, many of the countries reviewed appear to be lending support to entrepreneurial activity in the area of cultural and social norms.

Cultural and Social Norms in Jamaica As shown in Figure 31, the experts believe that the national culture emphasizes that as individuals, we are responsible for managing our own lives as 45% of our experts stated that this was true as compared with 33% who disagreed while the remaining 22% were undecided. In response to the encouragement of creativity and innovativeness in the national culture, many of the

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experts (44%) did not believe that the national culture encourages creativity, 35% were undecided, while only 21% of the experts believe that creativity is encouraged. As it relates to entrepreneurial risk taking in Jamaica, the experts are somewhat undecided as 38% of experts believe that the culture encourages entrepreneurial risk taking. Another 33% do not believe that this is so, while the remaining 29% are unclear as to

GEM JAMAICA 2008

whether this is so or not. On the question of the emphasis of the culture on self sufficiency, autonomy and personal initiative, the experts were largely uncertain (44%). Thirty-eight percent believed that the culture emphasizes self sufficiency, autonomy and personal initiative, while the remaining 18% hold opposing views on the issue (Figure 31).

Figure 31 Encouragement of National Cultural Characteristics

60 P

50

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TRUE FALSE Undecided

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There is strong support for the position that the national culture is highly supportive of individual success achieved through one’s own personal efforts as more than half of the experts (59%) felt that this was true compared with 18% who said that it was false. The remaining 23% of the experts were undecided.

The media in a country can significantly affect the peoples’ views. This role played by the media is particularly significant in developing and fostering an entrepreneurial culture. When questioned about the role of the media in enhancing entrepreneurial development, 74% of the experts reported that the news media carry positive sto-

en

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ries on successful entrepreneurs and entrepreneurial activity (Figure 32). The media should therefore be greater utilized as a facilitator of entrepreneurial development.

Closing the Gap Jamaica is seen to be a country where people instinctively have an entrepreneurial spirit.

However, strong support and fostering of this spirit through the cultural and social fibre of the society is not fully developed as many people believe that the norm, based on our socialization, is that we are to “work for others”. This mindset inhibits many from breaking free of this well

47

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Figure 32 Perceptions on Stories in the Public Media about Successful Entrepreneurs

P e r c e n t

40 35 30 25 20 15 10 5 0 e

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established norm. In general, the structures appear similar as it relates to the global position on cultural and social norms and that of Jamaica.

In order to address the situation as it relates to this area, there is no visible gap. However, there are some areas that could be more closely examined. There can be, for example, a greater fostering of a culture of entrepreneurship and

48

greater encouragement of the entrepreneurial spirit. Jamaica should also seek to provide education and training that guides and teaches persons to become entrepreneurs as this will likely reduce the fear of failure and the fear of taking chances, or reduce the tendency to be risk averse.

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RECOMMENDATIONS REFERENCES APPENDICES

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RECOMMENDATIONS

RECOMMENDATIONS

To Government 1.

More women should undertake the risk of developing new businesses. Women entrepreneurs should be encouraged and assisted in identifying opportunities, particularly in traditionally male dominated industries.

2.

In light of the dominant role played by women as heads of households, more training programs that focus on female entrepreneurs should be developed.

3.

Reduce Government Bureaucracy – Institute a one-stop-shop for business startup requirements. A single agency should be created.

4.

Greater emphasis needs to be placed on support for entrepreneurial activity in rural Jamaica, particularly in parishes such as St. Thomas, Portland, Hanover and Trelawny in which the start-up rates are extremely low.

5.

Develop at least one business incubator in each parish to facilitate more start-ups.

6.

Those businesses that show growth potential for economic development should be identified and given the necessary institutional support such as access to networks, finance, technology and managerial training.

To Educators/Training Agencies 7.

8.

50

Develop a wider range of training programmes in entrepreneurship for young people, particularly those in the under 24 age group. These programmes should be strategically developed and incorporated at all levels of the education system – in the primary, secondary and tertiary curricula.

Entrepreneurial programmmes at the university level should be designed with more relevance and practical applications in order to give students the hands-on experience required to start and run their own businesses.

9.

Managerial training, training in financial planning and business plan development for entrepreneurs continues to be deficient.

There needs to be a structured approach nationally to fill this gap. A public education campaign could be developed by the government through the Jamaica Information Service and other media to assist in sensitizing business owners and potential owners to proper business management practices.

10. Business Partnerships and other forms of collaboration should be encouraged.

Resource sharing is one route to successful enterprises as exhibited by countries such as India, China and Bangladesh.

To Providers of Finance 11. Banks and other lending institutions should develop more creative and flexible lending policies for entrepreneurs, particularly where collateral requirements are concerned.

12. The need for venture capital financing continues to increase. A few individuals and organizations have been exploring the method but more financiers need to get on board.

To Organizations that Provide Support for Entrepreneurship 13. Professional support agencies that provide legal, financial, managerial and operational services at subsidized rates for new and growing businesses should be established in all parishes.

14. More initiatives should be taken by the private sector to encourage innovation and creativity through business plan competitions, innovation incentive awards and the sponsorship of training programmes.

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REFERENCES

References

Allen, I.E., Langowitz, N. and Minniti, M. (2007). Global Entrepreneurship Monitor 2006 Report on Women and Entrepreneurship. The Center for Women’s Leadership at Babson College.

Bergmann, H. and Sternberg, R. (2007). The Changing Face of Entrepreneurship in Germany.

Small Business Economics (2007) 28:205-221.

Bosma, N., Acs, Z.J., Autio, E., Coduras, A. and Levie, J. (2009). Global Entrepreneurship Monitor, 2008 Executive Report. Babson College, Universidad del Desarrollo and London Business School.

Bosma, N. and Harding, R. (2007). Global Entrepreneurship Monitor, GEM 2006 Summary Results. Babson College and London Business School.

Companies Office of Jamaica (2009).

Retrieved from www.orcjamaica.com, August 2009.

Cowling, M. and Bygrave, W.D. (2002).

Entrepreneurship and Unemployment: relationships between unemployment and entrepreneurship in 37 nations participating in the Global Entrepreneurship Monitor (GEM) 2002.

London Business School.

Culture and Values Task Force (October 2007) Vision 2030 Jamaica: National Development Plan Culture and Values Sector Plan (1st draft).

Czaga, P. (2004), "Regulatory Reform and Market Openness: Understanding the Links to Enhance Economic Performance", OECD Trade Policy Working Papers, No. 9, OECD Publishing.

Division of Culture, The National Cultural Policy of Jamaica: Towards Jamaica the Cultural Superstate (Kingston: Ministry of Education, Youth and Culture, March 2003, page 9)

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The East African Standard (October 2005) Entrepreneurship Thrives in an Enabling Culture. The East African Standard — allafrica.com, 2005.

Edelman, L.F., Manolova, T.S. and Brush, C.G. (2008). Entrepreneurship Education: Correspondence Between Practices of Nascent Entrepreneurs and Textbook Prescriptions for Success. Academy of Management Learning & Education, 2008, Vol.7.

Fitzsimons, P. and O’Gorman, C. (2006). Global Entrepreneurship Monitor 2006: The Irish Report.

The Business School, Dublin University.

Glasgow, S., Williams-Myers, C., Ismail, O., & Skeete, V. (2006). Global Entrepreneurship Monitor Jamaica, 2005 Report. University of Technology, Jamaica.

Honig, B. (1996). Education and SelfEmployment in Jamaica. Comparative Education Review, Vol. 40, no. 2.

Jack, S.L. and Anderson, A.R. (1999).

Entrepreneurship Education within the Enterprise Culture Producing Reflective Practitioners. International Journal of Entrepreneurial Behaviour & Research.

Bradford: 1999, Vol. 5, Issue 3.

Jamaica Business Development Corporation Company Profile (2009): How Can We Help You? Jamaica Information Service ( JIS). Retrieved August 2009 from www.jis.gov.jm/commerce_science/html/200709 18T120000 Kuratko, D.F. (2005). The Emergence of Entrepreneurship Education: Development, Trends, and Challenges. Baylor University, 2005, 1042-2587.

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REFERENCES

Listerri, J.J., Kantis, H., Angelelli, P. and Tejerina, L. (2006). Is Youth Entrepreneruship a Necessity or an Opportunity? A First Exploration of household and new Enterprise surveys in Latin America. Inter-American Development Bank, Washington, D.C. Masters, R. and Meier, R. (1988). Sex Differences and Risk-Taking Propensity of Entrepreneurs. Journal of Small Business Management.

Sampson, C (1997). Competition Policy: Jamaica’s Experience.

Minniti, M., Bygrave, W.D., Autio, E. (2006).

Global Entrepreneurship Monitor 2005 Executive Report. Babson College and London Business School.

Skeete,V., Williams-Myers, C., Ismail, O. and Glasgow, S. (2007). Global Entrepreneurship Monitor Jamaica 2006. University of Technology, Jamaica.

Organization for Economic Cooperation and Development (1998 a). Open Markets Matter: The Benefits of Trade and Investment Liberalization.

Thurik, R. and Wennekers, S. (2001). A Note on Entrepreneurship, Small Business and Economic Growth. ERIM Report Series Research in Management.

Palley, T. Recalibrating the Market Openness Paradigm: Making Globalization Work for All. Planning Institute of Jamaica (2009). Economic and Social Survey, Jamaica 2008. Planning Institute of Jamaica.

Planning Institute of Jamaica (2008). Economic and Social Survey, Jamaica 2007. Planning Institute of Jamaica.

Planning Institute of Jamaica (2007). Economic and Social Survey, Jamaica 2006. Planning Institute of Jamaica.

Reynolds, P.D., Hay, M., Bygrave, W.D., Camp, S.M. and Autio, E. (2003). Global Entrepreneurship Monitor 2000 Executive Report. Babson College, Ernst & Young, Kauffman Center and London Business School.

Rosa, P., Kodithuwakku, S. and Waswa, B. (2006). Reassessing Necessity Entrepeneurship in Developing Countries. Institute for Small Business & Entrepreneurship, 31st October – 2nd November 2006, Cardiff-Caerdydd.

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Safranski, S.R. (2004). A Review of “The Growth and Advancement of Entrepreneurship in Higher Education: An Environmental Scan”; “The Contribution of Entrepreneurship Education: An Analysis of the Berger Program” and “Impact of Entrepreneurship Education”.

Academy of Management Learning and Education, September 2004.

United Nations Conference on trade and Development (UNCTAD).

Retrieved from www.unctad.org/sections/dite_dir/docs/

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APPENDICES

Appendices

Appendix I List of Experts by Entrepreneurial Framework Conditions (EFC)

EFC 5: Research & Development Transfer Mr. Richard Pardy: Chief Financial Officer, Flow Jamaica Mr. Arnett Campbell: Head, School of Computing , University of Technology, Jamaica Dr. Audia Barnett: Executive Director, Scientific Research Council

EFC 1: Financial Support Ms. Deika Morrison: Chief Research Officer, Jamaica National Group of Companies Ms. Maxia Fairweather: Business Development Manager - SME National Commercial Bank Mr. Dennis Cohen: Deputy Group Managing Director, National Commercial Bank Mrs. Patsy Latchman-Atterbury: Vice President Small and Medium Enterprises, Scotia Bank

EFC 6: Commercial and Professional/Legal Infrastructure Mr. Stephen Meghoo: General Manager, IBM World Trade Corporation Ms. Dionne Palmer: Incubator Manager, Technology Innovation Centre Mr. Errol Gregory: Financial Analyst and Lecturer Mr. Brian Denning: Taxation Specialist, Price Waterhouse Coopers

EFC 2: Government Policies Dr. Rosalie Hamilton: Professor of Entrepreneurship, University of Technology, Jamaica Mr. Aldain Reid: President, Young Entrepreneurs’ Association Mr. Martin Henry: Academic Administrator, School of Graduate Studies, Research and Entrepreneurship, University of Technology, Jamaica

EFC 7: Market Openness/Barriers to Entry Mr. Michael Edwards: Baking Technologist and Entrepreneur Mr. Robert Gregory: President, Jamaica Trade and Invest Mrs. Marlene Street-Forrest: General Manager, Jamaica Stock Exchange Mr. Paul Barclay: Entertainment Manager

EFC 3: Government Programmes Mrs. Sandra Glasgow: Chief Executive Officer, Private Sector Organization of Jamaica Mr. Harold Davis: Executive Director, Jamaica Business Development Corporation Mrs. Karen Ford-Warner: Chief Executive Officer, Tourism Product Development Company EFC 4: Education and Training Professor Errol Morrison: President, University of Technology, Jamaica Professor E. Nigel Harris: Vice Chancellor, University of the West Indies, Mona Mrs. Maxine Henry-Wilson: Opposition Spokesman on Education, Science & Technology Mr. Donald Foster: Executive Director, HEART Trust/NTA

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EFC 8: Access to Physical Infrastructure Dr. Carol Archer: Dean, Faculty of the Built Environment, University of Technology, Jamaica Mr. Errol K. Miller: Corporate Communications, Cable & Wireless, Jamaica Ltd. Mr. Silburn Clarke: Chief Executive Officer, Spatial Innovision Ltd. Mr. Brian Collins: Finance Director, Digicel Group EFC 9: Cultural and Social Norms Mr. John R. Daige: Manager, John’s Enterprise Ms. Cheralee Morgan: Lecturer and Marketing Consultant Dr. K. Adamawe K’nife: Lecturer, Department of Management Studies, University of the West Indies Dr. Haldane Johnson: Dean, Faculty of Education and Liberal Studies, University of Technology, Jamaica

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APPENDICES

Appendix II Dr. Girjanauth Boodraj Persons Who Conducted Interviews Mrs. Marcia McPherson–Edwards Ms. Ava Sewell Mrs. Louise Marcelle-Peart Dr. Claudette Williams Myers Mrs. Joan Lawla Mrs. Noreen Brown–Roomes Mrs. Vanetta Skeete Mr. Errol Gregory Ms. Patrice Farquharson Mr. Garth Kiddoe Dr. Jennifer Cadogan

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