An Analysis of the Entrepreneurial
Environment in Ireland:
A Regional Context
Submitted in part fulfillment of the requirements for the MSc in Business Studies University of Amsterdam
Roetersstraat 11 1018 WB Amsterdam
Student Name:
Denise Healy
Student Number:
5792703
MSc Title:
Business Studies
Supervisor:
Dr. Tsi Vinig
Academic Year:
2008
Author’s Declaration
“I certify that this MSc Thesis is my own
work and that it has not been submitted for any
other academic award of part thereof at this or
any other educational institution”.
Author’s Signature: ____________________
Supervisor’s Signature: ___________________
Acknowledgements
I would like to thank my Supervisor Dr. Tsi Vinig for his much appreciated guidance and advice through my thesis process. I would also like to thank him for the enjoyable and beneficial classes in International Entrepreneurship in Block I and 2 of my MSc.
Abstract
The “entrepreneurial environment’’ is a combination of factors that play a role in the development of entrepreneurship. Firstly it refers to the overall economic, socio-cultural and political factors that influence people’s willingness and ability to undertake entrepreneurial activities. Second, it refers to the availability of assistance and support services that facilitate the start-up process (Fogel 2001).
This MSc thesis investigates the entrepreneurial environment in Ireland with an empirical focus on regional entrepreneurship. The author undertook seven in-depth interviews with regional entrepreneurs in an effort to investigate their perception of the entrepreneurial conditions in the region of Kerry, South-West of Ireland.
The Conceptual Framework introduced by Gnyawali and Fogel (1994) was used to partly replicate the Fogel (2001) study in Hungary. In this manner a five dimension approach led to the examination of the entrepreneurial environment in the region of Kerry in Ireland. The influence of these five dimension elements in shaping the entrepreneurial environment were investigated and are the main focus of this M.Sc. thesis.
Table of Contents
Introduction
1. Thesis Overview 1
2. Research Questions 2
3. Structure 2
Chapter 1: Entrepreneurship in Ireland 5
Introduction 5
1.1 Background on Enterprise Development in Ireland 7 1.2 Entrepreneurial Activity in Ireland 2002-2006 9
1.2.1 Motivators of Entrepreneurship 9
1.3 The Entrepreneurship Environment 10
1.3.2 Strenghts of the Entrepreneurial Environment 11 1.3.3 Weaknesses of the Entrepreneurial Environment 12 1.3.4 Financial Requirements for Irish Entrepreneurs 13 1.4 Overview of the Entrepreneurial Environment 14
1.5 Ease of Starting a Business in Ireland 16
1.6 Conclusion 17
Chapter 2: Literature Review 20
Introduction 20
2.1 The Conceptual Framework 25
2.1.1 Conceptual Framework Dimensions 28
2.2 Other Perceptions on Entrepreneurial Environments 30
2.2.1 Three Policy Option 30
2.2.2 Culture 31
2.2.3 Ecology 33
2.3 Various Studies and Insights on Entrepreneurial Environments 34 2.3.1 Influencers of Entrepreneurial Environments 34
2.3.2 Governmental Procedures 36
2.3.3 Other Insights 37
2.4 Conclusion 38
Chapter 3: Methodology & Empirical Material Analysis 42
Introduction 42
3.1 Merits of Qualitative Research for Proposed Topic 43
3.2 Replication 43
3.2.1 Fogel’s (1994) Analysis of Entrepreneurial Environment 44
3.3 Usability of the Framework 45
3.4 Research Method & Analysis 46
3.5 Research Method: In-depth Interviewing 47
3.6 Framing and Interpreting the Interviews 48
3.7 Interview Analysis 49
3.8 Conclusion 50
Chapter 4: Empirical Findings 52
Introduction 52
4.1 Financial Assistance 54
4.2 Non-Financial Assistance 59
4.3 Entrepreneurial and Business Skills 61
4.4 Socio-Economic Conditions 63
4.5 Policies and Procedures 65
4.6 Conclusion 68
Chapter 5: Conclusion 71
5.1 Summary 71
5.2 Discussion 72
Bibliography 76
Appendix 86
1.1 GEM: Critical Discussion 89
1. Tables & Figures relating to Entrepreneurial Environments 88
2. Entrepreneurial Environment Models 103
3.9 Defining Qualitative Research 105
3.10 Defining Quantitative Research 106
3.11 Qualitative versus Quantitative 107
3.12 Merits of Replication 111
4. Information and Pictures of the entrepreneurs Interviewed 118
List of Tables
Table 1.1: Entrepreneurial Activity in Ireland 9
Table 1.2: Financial Requirements of Irish Early Stage Entrepreneurs 13 Table 1.3: Anticipated Financial Sources of Early Stage Entrepreneurs 13
Table 1.4: Informal Investors 14
Table 1.5: Services Currently Provided by the State to Entrepreneurs & SMEs 90
Table 1.6: Entrepreneurial Culture 91
Table 1.7: Selected Environments for Entrepreneurship: Strenghts & Weaknesses 92 Table 1.8: Summary of Entrepreneurial Environments in Ireland 93
Table 1.9: Entrepreneurial Rankings 94
Table 1.10: Strengths and Weaknesses in Entrepreneurial Environments 95
Table 1.11: Corporate Tax Rates 95
Table 1.13: Taxes and Mandatory Contributions for Start-ups in Ireland 101 Table 2.1: Selected Research on Entrepreneurial Conditions for Entrepreneurship 22 Table 2.1: Attributes of the Conceptual Framework 26
Table 3.1: Types of Replication 45
Table 3.2: Aspects of Qualitative & Quantitative Modes of Research 108 Table 3.3: Features of Qualitative and Quantitative Research 109
Table 3.4: Main Types of Qualitative Research 110
Table 3.5: List of Interview Questions on the Entrepreneurial Environment 112
Table 3.6: Features of In-depth Interviews 116
Table 3.7: Stages of the In-depth Interview Investigation 117
Table 4.1: Summary of the Research Subjects 53
List of Figures
Figure 1.1: GEM Conceptual Model 89
Figure 1.2: Countries that Rate Risk of Failure as a Barrier to Entrepreneurship 96 Figure 1.3: Percentage of countries that see lack of Financial Support as a Barrier 97 Figure 1.4: Steps in Starting a Company in Ireland 98
Figure 1.5: Getting Credit in Ireland 99
Figure 1.6: Ranking of Ireland in Trading across Borders 100 Figure 2.1: An Integrative Model of Entrepreneurial Environments 103 Figure 2.2: A Model of the Entrepreneurial Context of Entrepreneurship 104
1. Thesis Overview
This Master Thesis will investigate the environmental conditions for entrepreneurial development in Ireland. In order to narrow the broad scope of this topic, the author will focus her empirical research on the case of the prosperous entrepreneurial region of Kerry, which is situated in the South West of the Country, therefore regional entrepreneurship will be incorporated more than national entrepreneurship.
The empirical study of this particular region was chosen as the entrepreneurial endeavours of some of Ireland’s most innovative businesses have been founded and developed from the Kerry region. Because of this, entrepreneurs from the locality have been awarded the Ernst and Young Entrepreneurial award for five years. The region has produced some of the most exciting and renowned entrepreneurs and some of the Country’s most successful companies despite being considered a peripheral region as opposed to Dublin and other core regions.
The author’s aim is to conduct in-depth interviews with some of the region’s successful entrepreneurs in a case-focused (Stake 1994) pilot attempt to investigate their perceptions on various entrepreneurial environmental conditions; to examine which elements hinder entrepreneurial development and which elements of the region’s environment could be improved to further foster growth.
The environmental conditions that influence entrepreneurial activities proposed in this study will be examined using Gnyawali and Fogel’s (1994) conceptual framework. This framework uses five dimensions which will be used to examine the entrepreneurial environment: (1) financial assistance; (2) non-financial assistance; (3) entrepreneurial and business skills; (4) socio-economic conditions and (5) policies and procedures for entrepreneurial activities.
This Conceptual Framework was used to examine the entrepreneurial environment in the national setting of Hungary (Fogel 2001). However due to time constraints, access issues and scope of this MSc project, this framework will only be used as a heuristic tool for the fieldwork research that will be undertaken in the Kerry region. In this context seven in-depth interviews (Fontana and Frey 1994) were conducted.
2. Research Questions
The research questions seen of interest for the analysis of the selected regional entrepreneurial environment were derived form a rich literature and largely influenced by
Gnywali and Fogel’s (1994) conceptual framework which is a tool for analysing entrepreneurial environments. These relate to:
• The main environmental constraints, shortcomings and limitations when starting a business from this region compared to a core region?
• The amount of financial assistance received and desired? • The amount of non-financial assistance received and desired?
• The perception of socio-economic conditions for entrepreneurship including public attitude, societal promotion and recognition of entrepreneurial success?
• Access to Business training and support services?
• The perception of policies and procedures for entrepreneurial activity? • Recommendations to further foster an entrepreneurial environment?
Each of the outlined questions are considered as the themes in which various codes were evolved. Each entrepreneur was asked an estimated 25 questions (see tables 3.5 in appendix 3). O’Dwyer (2003) and Miles and Huberman (1994) protocols for analysis were closely followed throughout the empirical research process. These will be discussed in chapter 3.
3. Structure
Chapter 1: Entrepreneurship in Ireland
This chapter provides an overview of entrepreneurial development in Ireland complemented by statistical tables which can be accessed in Appendix 1. A brief history on enterprise development in Ireland, the amount of entrepreneurial activity and culture, the strengths and weaknesses of the environment; motivators, international comparisons and governmental policies, are presented.
This Chapter gives an overview of the literature relating to ‘entrepreneurial environments’ in light of the conceptual framework developed by Gnyawali and Fogel (1994); together with influencing factors followed by a combination of various author’s insights and research studies on the issue. The chapter ends with the conclusions drawn. Specific emphasis is given to the role of environmental conditions in developing opportunities and in enhancing the entrepreneur’s propensity and ability to enterprise.
Chapter 3: Methodology and Empirical Analysis
This chapter discusses the methodological issues in the field of ‘entrepreneurial environments’ research. Qualitative methodologies are compared to quantitative approaches in Appendix 3. Since the subject matter can be termed as a replication study of Fogel’s (2001) study in Hungary, the notion of replication in research will be briefly discussed. The research method chosen by the author (in-depth interviews) relating to the framing and interpreting of the interviews and techniques of empirical material collection and analysis is outlined. The methods used in the author’s interview analysis are also discussed in relation to themes and codes developed from the interviews in which Miles and Huberman’s (1994) processes of analysis were followed.
Chapter 4: Empirical Findings
This chapter outlines the author’s empirical findings from her seven in-depth interviews. The findings are presented in a cohesive story relating to the five dimensions of Gnyawali and Fogel’s (1994) conceptual framework. There are numerous codes that are discussed under each theme and the author uses typical quotes from the various interviews to compliment the statements put forward.
Chapter 5
This chapter gives a brief summary of the overall purpose of this MSc relating to her findings and commentary on the literature relevant to the entrepreneurial environment in
Ireland. A discussion is also included with recommendations to further foster regional entrepreneurship. Areas for future research and the limitations of this study are briefly discussed.
Chapter 1: Entrepreneurship in Ireland Introduction
The previous chapter gave the reader an introduction to the thesis topic outlining the research questions relating to the entrepreneurial environment in a region within Ireland (Kerry). This chapter will give a general overview of entrepreneurial development in Ireland in relation to entrepreneurial activity, culture, the environment, motivators, international comparisons and governmental policies. Assistance in obtaining information in relation to reports and statistics was received from enterprise development agencies in
Ireland; IDA1, Enterprise Ireland, Shannon Development, Forfas and the World bank Website.
Much of the information was drawn from the GEM (2006)2 and it is presented in statistical tables within the text and the appendices. The GEM was used extensively due to its relative reliability and up-to-date information. However, according to Reynolds et al (2005) there are also limitations associated with the GEM despite the considerable amount of time, effort and resources inputted into its process. There is a need to provide for larger sample sizes, longer interviews, and more precise field procedures to improve the precision of the estimates and the richness of the details on new firm creation. The GEM was used in this project due to its large scale sample and broad framework and also the existing evidence on measures of reliability that met contemporary standards. The author also recognized the weaknesses of the GEM one of which was the lack of focus on regional entrepreneurship among others. Refer to Appendix 1.1 for a critical discussion on the GEM.
According to the GEM (2006), published in Sept 2007, Ireland is a dynamic economy with the highest rate of start-up companies in Europe. The tax system and Government incentives, together with a positive attitude towards business, contribute to a highly positive entrepreneurial culture. In 2005, the Economist Intelligence Unit listed Ireland as no.1 in a quality of life index for 111 countries (ahead of the USA). The Irish economy is seen as a model for developing economies all over the world. In March 2006, the Wall
Street Journal referred to Ireland as a ‘real star’ and the French newspaper, Le Figaro,
recommended Ireland as a ‘shining example’. Ireland’s economic outlook is positive and it is forecasted that Ireland will maintain its present rate of economic expansion in the forthcoming 15 years (Forfas 2007).
1 Irish Development Authority
2 The 96 page report contains an analysis of entrepreneurship and entrepreneurs in Ireland (e.g. who
becomes an entrepreneur, planned financing of new businesses); a comparison of Ireland with other EU and OECD countries; an analysis of women’s entrepreneurship in Ireland; and the profile of recent entrepreneurs
Ireland has a young, well-educated, English-speaking population, exposed to global influences, with a ‘can do’ attitude and the ambition to create their own businesses. As economies become wealthier entrepreneurship becomes a key driver of economic growth. It would seem that there has never been a better time to start a new business in Ireland (Madison 2008).
However, according to Flanigan (2008)3 despite the high level of entrepreneurial activity in Ireland and the number of business support mechanisms available, there are still shortcomings in the Irish environment including: limitations imposed on new business by the small size of the Irish home market; availability of finance and seed capital for new business; failure scares; cultural norms; lack of R&D transfer from Universities; lack of appropriate skills and experience; regional access to support; and short comings in physical infrastructure. As a result Flanigan (2008) questions Irish entrepreneurial success as overrated in light of the existing environmental shortcomings that are evident.
A study carried out by Forfás, the National Competitiveness Council, Enterprise Ireland and the Department of Enterprise Trade and Employment in (2002) found that there are both benefits and difficulties associated with a regional location for Irish entrepreneurs. Benefits frequently take the form of lifestyle choices; the quality of life is seen to be much higher in areas outside the major cities for such entrepreneurs and their families.
The negative elements reflect the other side of this coin and relate mainly to access difficulties. Access to markets, communication technology, business expertise and specialist State support 4 are seen to all create additional difficulties for such entrepreneurs. The author perceives this may be a result in her empirical research when examining the Kerry region. However, recruitment and retention difficulties may be less, if the appropriate employees are available. In this environment (peripheral region), the role of enterprise development agencies is particularly important in providing entrepreneurs with support and advice, and in assisting them to access specialist support
3
An international acclaimed speaker on entrepreneurship
4 Appendix 1 Table 1.5 refers to services currently provided by the state to entrepreneurs.
services that are often located in the Dublin & core areas (Economic Consultants Report 2002).
This thesis will investigate the availability of support agencies in the decentralized region of Kerry and will examine the general entrepreneurial environment and conditions of this region in the South West of the country which is considered a periphery.
1.1 Background on Enterprise development in Ireland.
Ireland has not always been an encouraging place for new business creation. Traditionally, start-ups were viewed with great suspicion and support infrastructure was non-existent. Those interested in starting a small business found that they had to leave Ireland to get the assistance they needed. The relatively new emphasis on entrepreneurship in Ireland is the culmination of nearly four decades of government policies that have lifted the economy from centuries of poverty to modern prosperity. The change began when Ireland entered the European Union in 1973. In subsequent years, the government rewrote its tax policies to attract foreign investment by American corporations, made all education free through the university level, and used direct equity investment to encourage Irish people to set up their own businesses (Flanigan 2008).
The Irish government’s attitude to small business has changed dramatically over the last two decades. This shift in attitude can be attributed to a number of factors, including:
• The transformation from an economy dependent on agricultural businesses to service-based and industrial businesses which provided opportunities for new businesses ventures.
• High unemployment levels left individuals with no other alternatives than establishing their own businesses.
• Realization that FDI as a source of investment and employment was not secure, as some transnational companies terminated their operations in Ireland.
Small businesses began to spring up as a result of the location of multi-national companies in Ireland. This occurred for a number of reasons:
• New companies were established to supply specific goods and services to the TNC s.5
• Some employees learnt new skills and developed new ideas while working in the TNCs and established their own business as a result.
• When some TNCs pulled out of Ireland, some of their employees launched their own business (Martin 2005)
In the most recent GEM report6, it was found that Ireland remains one of the leading countries in Europe in terms of entrepreneurship and is fast approaching the levels of early stage entrepreneurial activity prevalent in the US. Overall, the research found that one in ten of the adult population living in Ireland are actively planning or have recently set up a business.
Table 1.1: Entrepreneurial Activity in Ireland
Source: GEM
1.2 Entrepreneurial Activity in Ireland 2002-2006
The total early stage entrepreneurial activity rate for Ireland in 2006 was 7.4%. This rate for the period 2002 to 2006 averaged to 8.4%. In 2006 there were approximately 201,000 people involved in early stage entrepreneurial activity; 122,000 people attempted to start a new business (nascent entrepreneurs). Approximately 80,000 people were personally
5
Transnational Companies
6
GEM (2006) Published Sept (2007) The GEM Report is sponsored by Enterprise Ireland, Forfás and the Gender Equality Unit at the Department of Justice, Equality and Law Reform.
involved in starting a new business in the period January 2003 to June 2006. In addition, there are approximately 214,000 people actively involved in businesses they established prior to 2003. Looking into the future 269,000 people reported that they would aspire to start a new business in the next three years, whereas 48,000 reported that they terminated a business in the previous twelve months (GEM 2006)
1.2.1 Motivators of entrepreneurship
In Ireland, the decision by an individual to become involved in starting a new business is mostly to take advantage of a business opportunity (89% of entrepreneurs), while the remaining individuals (11% of entrepreneurs) have decided to become involved in starting a new business because of no better choices for work. The former are referred to as ‘opportunity’ driven entrepreneurs, while the latter are referred to as ‘necessity’ driven entrepreneurs (Forfas 2007). GEM (2006) gathered new data on the motivations of ‘opportunity’ entrepreneurs. About half of ‘opportunity’ entrepreneurs described their primary motivation as the desire to be independent (54%), a quarter said their primary motivation was to increase their income (26%), while 13% reported that their primary motivation was to maintain their income. (A further 7% had some other primary motivation.).
According to the Economic Consultant Report (2002) the main motivating factors were relating to push/pull and internal/external factors and when these factors came together, the decision to become an entrepreneur was made. Most entrepreneurs interviewed in this report stated that the low corporate tax rate in Ireland (12.5%) was the main motivating factor along with supportive family background and access to support agencies.
1.3 The Entrepreneurial Environment
1.3.1 Culture
The national culture is generally considered to be well disposed towards entrepreneurs as GEM reports the following:
• 82% reports that successful entrepreneurs are held in high regard.
• 84% reports that there are often stories in the public media about successful entrepreneurs.
Clark (2002) stated that the cultural climate within which entrepreneurs operate in Ireland is seen to have improved significantly in recent years. However attitudes of begrudgery, though diminishing, are still seen to exist in some regions of the country. Non-acceptance of failure both on the part of the financial institutions and the general public is still perceived to be an issue by Irish entrepreneurs. These attitudes are somewhat at variance with recent international studies which indicate that the general public’s attitude towards entrepreneurship in Ireland is now highly favorable. According to Clark (2002) this issue needs to be explored further in all regions of Ireland. The empirics of this thesis will investigate this issue in the Kerry region.
Table 1.6 in the Appendix shows that the culture for entrepreneurship in Ireland is very strong relative to other OECD and EU countries
1.3.2 Strengths of the Environment.
The GEM (2006) research 7 stated that Irish Entrepreneurs considered that the proliferation of success stories in the media, and through word of mouth created a feeling that entrepreneurs can thrive in Ireland. It was also considered that people were generally more confident because of the strength of the economy. The support provided through government supported initiatives and programs were identified by one in five of the entrepreneurs consulted as very important. Enterprise Ireland (EI) and the Country Enterprise Boards (CEBs) were identified by many of the entrepreneurs as being particularly helpful8.
7 The Irish team for the GEM research has over 70 key informants, entrepreneurs and experts, who were
asked for their views of the particular strengths and weaknesses that are prevalent in Ireland and affect entrepreneurs and new enterprise development.
8 See table 1.5 in Appendix 1 for the various Agencies
The availability of financial support in particular was frequently mentioned. The Enterprise Platform Programs, run through the Institutes of Technology with the support of Enterprise Ireland, were also highly praised. The third most frequently mentioned strength related to networking possibilities through the highly networked nature of Irish society. This was in the form of networking among those in their peer group who were just setting up, opportunities for interaction between larger companies and entrepreneurs who are trying to get established, and relatively easy access to influential individuals in business and politics.
The expert group consulted, were very strong in their praise for both the pro-business government policy and the manner of its implementation through a wide range of support agencies. The nature of the very positive culture among the general population, strong media support and a growing awareness of the success of entrepreneurs were contributing to a very supportive environment for entrepreneurship according to the experts. The experts also emphasized the growing number of experienced entrepreneurs that were present in the country and the continued strength of the economy which continued to create opportunities and fuel confidence (GEM 2006).
1.3.3 Weaknesses of the Entrepreneurial Environment
Turning now to those areas which are less strong, issues related to finance most occupied the entrepreneurs when they considered shortcomings within the Irish environment for entrepreneurship. Two in every five of the shortcomings that they specified related to this area. Difficulty with finding sufficient initial start-up funding was mentioned by many and negative mention was also made of the attitude of the banks, the lack of business angel investors and the relative small scale of domestic VCs (consistent with the literature in section 2.1.1).
Certain areas of the operations of the development agencies were also mentioned as being less than helpful by the entrepreneurs. The rising costs of doing business in Ireland was
also mentioned by several of the entrepreneurs as a weakness within the Irish environment for entrepreneurship. Finance was the weakness of the environment that was mentioned most frequently in the GEM, in particular about the availability of business angels and sufficient sources of VC funding (Forfas 2007)
The GEM experts mentioned a wider range of areas that were less strong in the Irish environment than did the entrepreneurs. They were concerned about a lack of the necessary skills among entrepreneurs; several mentioned piecemeal and unlinked sources of support; and they perceived weakness in the infrastructure particularly with regard to road networks and the availability of broadband. Mention was also made of issues related to the opportunity cost of becoming an entrepreneur and the impact that a full employment economy would have on slowing the movement into entrepreneurship (GEM 2006). See table 1.7 in the appendix for an overview of the selected environments for entrepreneurship relating to strengths and weaknesses. It is evident that Ireland scores particularly well in respect to the availability of opportunities for creation of new high growth firms.
1.3.4 Financial Requirements for Irish Entrepreneurs
Most early stage entrepreneurs expect to use relatively small amounts of money to start their new business, though most anticipate requiring investment from a third party. Entrepreneurs expect to get funding from a range of sources, the most important being banks-Financial institutions, government programs and family. Informal investors also provide money to early stage entrepreneurs and are typically related to the entrepreneur.
Table 1.3: Anticipated Financial Sources of Early Stage Entrepreneurs
Table 1.4: Informal investors
Source: GEM (2006)
1.4 Overview of the Entrepreneurial Environment9
Start-up Opportunities
9 See table 1.8 for an overview on the entrepreneurial environment in Ireland
• Many Irish people perceive good opportunities in their local area for starting a new business (44%). This is higher than the OECD average.
• Most early stage entrepreneurs are motivated by the desire to take advantage of a market opportunity.
• Experts and entrepreneurs consulted believe a key strength in the Irish environment is the ‘availability of opportunities’.
Culture
There is a supportive culture for entrepreneurship in Ireland as:
• Experts and entrepreneurs consulted believe a key strength in the Irish environment is the ‘high regard for entrepreneurs’.
• Seven out of every ten Irish people believe entrepreneurship is a good career choice. • There is no evidence of begrudgery, with eight of every ten Irish people believing
successful entrepreneurs are held in high regard.
• The media plays an important role in ‘profiling’ entrepreneurs and Ireland is the highest ranking of the OECD countries in terms of the number of people who report that there are often stories in the media about successful entrepreneurs.
• One in every three Irish people report that ‘fear of failure’ would prevent them starting a business (though some of these do start businesses!).
Role Models
• Many Irish people know a recent entrepreneur. Four of every ten Irish people report that they know a recent entrepreneur. Entrepreneurial role models are considered important for individuals when they are starting a new business.
Cost of Start-up
• For most entrepreneurs the ‘cost of start-up’ is relatively low. Two thirds of entrepreneurs expect to be able to start with less than €100,000. The average amount for these entrepreneurs is €20,000.
• One in every two Irish people believe they have the skills and knowledge required to start a business. This is high compared to other OECD countries
(GEM 2006)
Government Policies
• The relative support for entrepreneurship by national Governments is assessed through a range of measures. Included in these are ‘Government Policy’, ‘Government Programmes’, Government Regulations’, ‘Intellectual Property Protection’, ‘Market Openness (Anti-Competition Policy and Enforcement)’, ‘Technology Transfer (Commercialization)’, ‘High Growth Firms (Supports)’, and ‘Support for Women Entrepreneurship’
• Two of these factors were considered ‘supportive’ in Ireland: Intellectual Property Protection and the Support for High Growth Firms. Relative to most other countries this is positive as in half of the countries none of these eight factors were considered ‘supportive’. The US had the most ‘supportive’ factors (three factors): Intellectual Property Protection, Supports for High Growth Firms, and Support for Women Entrepreneurship (GEM 2006).
See table 1.9 in the appendix for an overview of the entrepreneurial Rankings comparing countries in terms of rates of total early stage entrepreneurs (TEA), including nascent and new firm entrepreneurs, and established entrepreneurs. According to Flanigan (2008) Ireland ranks relatively high in all categories. See table 1.10 in the appendix for an overview table on the strengths and weaknesses in the entrepreneurial environments in Ireland and other OECD countries.
1.5 Ease of starting a Business in Ireland
Information was also drawn from The World Bank published reports (ease of doing business 2008). This information can be accessed in Appendix 1 relating to figures on risk of failure (fig 1.2), tax rate comparisons (table 1.11), steps in starting a business in
Ireland (fig 1.4), obtaining credit (fig 1.5) and other mandatory contributions for start-ups in Ireland (table 1.13).
This information was drawn in an effort to compliment data from the GEM (2006). According to the World Bank report (2008) on doing business in Ireland; it requires 4 procedures, takes 13 days, and costs 0.29% GNI per capita to start a business. The procedures are the following; (1) the founder swears before a Commissioner for Oaths, (2) file application with registrar, (3) makes a company seal, (4) register for taxes and employment payments. Ireland is ranked 5 overall for starting a Business compared to best practice and selected economies. Australia is the top ranked economy followed by Canada, New Zealand and United States. More information on “ease of doing business” in Ireland can be obtained from the report Doing business
2008 (Ireland) in relation to economy rankings on dealing with licences, employing
workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing business (Doing Business 2008).
1.6 Conclusion
What has been happening in Ireland over the last decade is, according to Kelly (2004) a significant increase in the availability of resources for the pursuit of opportunities and today those resource are at levels never available to previous generations of entrepreneurs in the country. He says that many people focus on the availability of capital, but this is narrow as there are equally, if not more important societal resources such as intellectual, human and public capital in the form of infrastructure and social norms that provide a vital resource to the entrepreneur. Government programmes, procedures and policies have created the resource platform for world-chart topping entrepreneurialism in Ireland today.
Martin (2006) points out, from a study covering the history and culture of more than 40 countries that all of the drivers for an entrepreneurial economy are now in place in the country:
• Availability and mobility of resources
• Successful entrepreneurs reinvesting their excess capital in the projects of other entrepreneurs
• Success of entrepreneurs is celebrated, rather than derided • Change is seen as positive, rather than negative
In the 2006 GEM report Ireland had four aspects of its environment that were perceived by key informants of experts and entrepreneurs as being supportive of entrepreneurship; the availability of opportunities, respect for entrepreneurs, intellectual property protection and for high growth firms. 10 From the Forfas (2007) report on developing entrepreneurial initiatives, it was outlined that there is a need for regional initiatives as there is evidence of unequal access to support services in relation to finance, advice and training. It is the author’s intention to address the entrepreneurial environment conditions in the Kerry region and investigate the possible shortcomings and limitations of the entrepreneurial conditions in that particular region.
In general, the GEM report for 2006 is encouraging as it reports that 44% of Irish adults perceive that there are good opportunities to establish a new business at present. 50% also believe that they have the necessary skills to successfully establish and run a new business. Within this environment, Enterprise Ireland encourages and supports export-oriented entrepreneurs as they establish and grow their businesses. A wide range of business supports are available to companies throughout Ireland at every stage of development from the pre start-up phase through to scaling and internationalisation. Irish society is highly supportive of entrepreneurs with the 2006 GEM report finding that over 70% of those surveyed believe entrepreneurship to be a good career choice (Martin 2006)
10
The eighteen aspects of environment are Availability of Funding, Government Policy, Government Regulations and Institutions Government Programmes, Education Systems (Primary & Secondary), Education Systems (Higher), Technology Transfer (Commercialisation), Business Services, Market Change, Market Openness (Anti-competition), Physical Infrastructure, National Entrepreneurial Culture, Availability of Opportunities, Population Entrepreneurial Competencies, Intellectual Property Protection, Respect for Entrepreneurs, Support for Women Entrepreneurship, and High Growth Firms.
Flanigan (2008) noted that the positive disposition towards entrepreneurship, coupled with a highly responsive environment to the needs of enterprise at a national and local level is supporting the high level of entrepreneurship in Ireland. A thriving entrepreneurial economy can bring about a range of economic, regional and social benefits and accordingly entrepreneurship has a key role to play in the future growth and prosperity of the Irish economy.
The aim of this chapter was to give the reader a general overview of enterprise development in the Irish context; in relation to its progress compared to other EU/OECD countries and the general conditions facing entrepreneurs in Ireland. It is heartening for the author to see that Ireland has progressed to be a good place to do business and to see that entrepreneurship has a prominent role to play in the continuation of its economic progress. The following chapter will give an in-depth analysis of the literature surrounding the topic on entrepreneurial environments. The chapter will encompass past studies carried out on entrepreneurial environments relating to the many enviromental conditions that support and hinder enterprise development. The conceptual framework of Gnyawali and Fogel (1994) which will guide the author through her empirical research will also be outlined.
