Transcript Business under crisis: to start or to discontinue? (The case of Russia)

Business under crisis: to start
or to discontinue? (The case
of Russia)
Alexander Chepurenko, Prof. Dr.
[email protected],
Tatiana Alimova, PhD, Ass. Prof.,
Anastasia Chenina, MA student
Structure of presentation
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Crisis impact on Russian economy and SME
Objectives
Data and methods
Hypotheses
Key findings
Political implications
Future research prospects
ISBE 2010, London, November, 3-4
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GDP and unemployment data compared (Rosstat)
GDP
2008
2009
1st quarter 2010
as % to 1st quarter
2009
Russia
5,6
-7,9
2,9
UK
0,5
-4,9
-0,3
USA
0,4
-2,4
2,5
Unemployment
2008
2009
March
2010
Russia
6,3
8,4
8,6
UK
5,6
7,6
8,0
USA
5,8
9,3
9,7
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SME development under crisis (Rosstat)
Small enterprises, total, Russian Federation
2008
2009
2010
January-March
287027
227560 219582
January-June
286177
227706 219607
January-September
281703
227742
January-December
282651
227529
Micro-enterprises, total, as to the end of the year
2008
Total
2009
1052319
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1374661
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Some comments
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GDP decrease deeper than in most developed market economies, whilst
unemployment dynamics – rather moderate: less incentives to start up
(necessity driven activity)
The economic crisis in Russia began only in autumn 2008 - later than in
Western countries, therefore
Significant SMEs number decrease not in 2008, but in 2009 (- 19,5%);
parallel to increasing number of micro-firms (= individual entrepreneurs)
+ 30 %
The proportion of small to micro-firms changed from 26.5% to 16.6%,
while the total number of small and micro businesses increased from
1.334970 to 1.602190, or + 20.0 %
Who are the new venture’s owners: necessity driven nascent
entrepreneurs + owners/managers of former juridical firms seeking for
tax and accounting preferences available for micro’s (??)
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Objectives of the
paper
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The impact of economic crisis (2008-2009) on
population’s entrepreneurial activity & entrepreneurs’
decisions to start up / continue / quit a business?
Focus on:
(1) business entry and exit dynamics of entrepreneurs,
(2) behaviour of adults with ‘entrepreneurial past’
among non-entrepreneurs
(3) future plans of those who quit the business under
the crisis
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Data and methodology
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GEM methodology (Reynolds, P. et al., 2005. Global Entrepreneurship Monitor:
Data Collection Design and Implementation 1998-2003. Small Business
Economics, 24, pp. 205-231) differentiating
Potential entrepreneurs (willing to establish a new venture)
Nascent entrepreneurs (making practical steps to realize it)
Baby (new) business owners ( < 3 < 42 months)
Established business owners (< 42 months)
Motivation (opportunity / necessity / mixed)
Discontinued a business during last 12 months, among them:
Entrepreneurs who discontinued (closed/quit) a business temporary - persons,
who during last 12 months closed a business, but not at all any the
entrepreneurial activity;
Persons who exited of a business forever (escaped) - respondents, who during
last 12 months closed a business and escaped from any entrepreneurial activity
during last 12 months.
GEM APS data for Russia (2006-2009)
N of respondents = 1850 -1900 annually
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GEM based entrepreneurship dynamic indicators for
Russia, 2006-2009
Index
Measured in
2006
TEA
%
4,9
2,7
3,5
3,9
Nascent Entrepreneurs
%
3,5
1,3
1,7
1,8
Baby Business Owners
%
1,4
1,3
1,8
2,1
Establ. Business
Owners
%
1,2
1,4
1
2,1
TEA_OPP
%
3,4
1,9
2,5
2,6
TEA_NEC
%
1,4
0,5
0,7
1,1
Business Discont. Rate
%
1,1
1,0
1,0
2,0
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2007
2008
2009
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Hypotheses on the impact of economic crisis on
entrepreneurial activity
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The assessments of the economic slowdown should be most negative by
baby business owners because of still scarce own liquidity and lack of
access to formal loans etc. (H1).
The share of necessity driven becomes higher than the share of opportunity
driven potential entrepreneurs as a result of tensions on labour market (H2).
Economic reasons to quit – dominating among those who exit of a business
forever during the crisis, but it will hardly have a strong impact on those
discontinuing a business only temporary, as the latter represent (serial &
portfolio) entrepreneurs who economically looks better (H3).
Firms of those who discontinue only temporary survive more often than firms
of ex-entrepreneurs who escape forever (H4).
The difference between entries and exits may become negative (H5).
Men and persons with higher education are more often considering a
possible entrepreneurial comeback, while women and respondents with
lower level of education tend to escape from business forever (H6).
Negative perception of opportunities to do a business and low selfefficacy would be the most important factors preventing a significant part
of non-entrepreneurs with ‘entrepreneurial past’ to start up anew (H7).
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Key findings
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H1 seems to be neither supported nor rejected: no signs of more
oppressive impact on baby business owners.
H2 did not receive support by the data; however, the shares of
opportunity vs. necessity driven among potential entrepreneurs in
2009 became nearly equal.
H3 supported: those who decided to close and exit of any business
forever were been more strongly affected by the economic
slowdown than (serial) entrepreneurs discontinuing temporary
H4 supported: firms of those who discontinue only temporary survive
more often than firms of ex-entrepreneurs who escape forever
H5 supported: ETP index became < 1
H6 supported: a correlation between education and current status of
persons with entrepreneurial experience in the past: the higher the
education status, the more often respondents don’t escape from
entrepreneurial activity forever (statistical significance is high);
however, only a weak negative correlation (ra = - 0,12) between
gender and the decision about future entrepreneurial engagement
H7 supported: negative perception of business opportunities and
low self-efficacy - most important factors preventing a significant part
of non-entrepreneurs with ‘entrepreneurial past’ to start up anew
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Political implications
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(1) to diminish the discontinuation rate of serial
entrepreneurs, easier access to guarantees and cofinancing from State development institutes needed.
(2) the crisis played to some kind a positive role
pushing less successful entrepreneurs to exit forever.
Then, the State should use a more selective policy
promoting only those who are able to compete under
much harder circumstances.
(3) no reasons for special support of baby businesses
among early entrepreneurship.
(4) no evidence of dramatic increase of necessity
driven entrepreneurship – hence, a special emphasis
on promoting unemployed people to establish a new
venture - only in special areas (so called mono-cities
etc).
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Future research
prospects
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Accumulation of data and cross-national
comparison of crisis impact on
entrepreneurship and entrepreneurial
potential
Post-crisis period: how persistent are the
changes in the structure of entrepreneurial
potential and early entrepreneurship occurred
during the economic slowdown?
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Thank you for your attention!
Спасибо!
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For more detail about the GEM:
www.gemsonsortium.org
Some findings of the Russian GEM team:
http://www.hse.ru/org/hse/soc/gem/
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