EUCA-INVEST Project Investing in Entrepreneurial Universities in Caucasus and Central Asia 2015-2018 Work Package 1: Preparation Report 1.2 Report and Assessment of Legal and Economic Conditions Pertaining to Innovation and Entrepreneurship in Partner Countries Lead Partner WP1: Vrije Universiteit Brussel, Brussels, Belgium May, 2016
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EUCA-INVEST Project
Investing in Entrepreneurial Universities in Caucasus and Central Asia 2015-2018
Work Package 1: Preparation
Report 1.2
Report and Assessment of Legal and Economic Conditions Pertaining to Innovation and Entrepreneurship in Partner Countries
Lead Partner WP1: Vrije Universiteit Brussel, Brussels, Belgium
May, 2016
Content Introduction
Georgia 1. Bank of Georgia University, Tbilisi 2. Caucasus University, Tbilisi 3. ILIA State University, Tbilisi, Georgia 4. Kutaisi University, Kutaisi 5. Country Report
Kyrgyz Republic 6. International Ataturk Alatoo University, Bishkek 7. Issykkul State University, 8. Kyrgyz Economic Universiy, Bishkek 9. University of Economics and Enterprise, 10. Country Report
Introduction The institutional descriptions of the innovation and entrepreneurial context of and by the beneficiary country partners’ institutions, and their respective country reports, in the EUCA-INVEST project have been reproduced as such in this WP1.2 report. The format of these descriptions has been agreed upon during the Bishkek 16-17 March 2016 Kick-Off Meeting. This second report, WP1.2, will follow a somewhat different format than the WP1.1 report, more adapted to the specific situation in both beneficiary countries. As in WP1.1, also these descriptions will be reproduced in their original form. The above reports will be followed by a third synthesis report, WP1.3, “Development of CreaLab Model for Georgia and Kyrgyz Republic”, due mid-June 2016. Drafting WP1.3 will give the occasion to the WP1 lead partner to ask, if needed, complementary clarifications from the EU, GE and KZ project partners on their original descriptions. At the same time, all EUCA-INVEST project partners are invited to comment on the WP1.1 and 1.2 reports and suggest material for including in the concluding WP1.3 report.
Georgia
1. Bank of Georgia University, Tbilisi
1. What is the current situation concerning CreaLab-type of initiatives (if
any) already taken in the institution;
Since the EUCA-INVEST project was granted there have been some
restructuring of BOGUNI. Namely, Vega Startup Lab was removed from the
university structure. However, technical equipment of the lab remain in
university’s possession and can be directly used for the CreaLab.
Moreover, this equipment can be used not only for the current project, but
generally for the other students who are interested in entrepreneurship.
We still maintain close contacts with the people who worked at Vegalab, so it
will be easy for us to share the ideas or use their intellectual assets for our
projects.
2. What are the ambitions/expectations for the CreaLab (disciplinary
research priorities, why does the institution wants to establish a CreaLab);
Vegalab was to assist mainly outsiders to create and commercialize their
projects. CreaLab will help students directly to be involved in the whole
process from the idea generation to the commercialization of their products.
We also acknowledge importance of the entrepreneurship. The CreaLab also
will help professors to adapt the curriculum in a way that students can use in
practice the theories learned during the courses.
3. What are the (own) potential resources to be put at the disposal of the
CreaLab;
BOGUNI will allocate special space and equipment for individual and group
works; as well as allocation training facilities within the project.
4. What is the relevant education on entrepreneurship already available
and which connections are already established (or could be developed) with
industry;
BOGUNI as a new higher educational institution. This is why we do not have
programs teaching and assisting entrepreneurial activities. However, within
the strategic management course our students have developed projects to
help existing startups in the country in commercialization their products. The
projects are supported by Technology Park in Tbilisi, created by the Ministry
of Economics of Georgia. There are some investors who are already
interested in products created by startups and strategically planned by our
students. These projects and future planned activities will create a good
background for further cooperation between the university, entrepreneurs,
governmental agencies and investors.
5. Crucially: who will be the carriers, the “agents of change” in the
institution at decision-making level, teachers, researchers and students.
At the university level, we see academic department and management
professors as a main agents of change involved in creation of Crealab,
modernizing existing and creating new study programs emphasizing
entrepreneurship.
2. Caucasus University, Tbilisi
1. What is the current situation concerning CreaLab-type of initiatives (if any)
already taken in the institution;
At this stage, there is no CreaLab type structure at Caucasus School of Business.
Although many activities are carrying out, which facilitate the creation process of
CreaLab at CSB.
2. What are the ambitions/expectations for the CreaLab (disciplinary research
priorities, why does the institution wants to establish a CreaLab);
Caucasus School of Business has an ambition to create full scale business
incubator, which will cover all phases of start-up establishment by students. All
phases of this establishment should flow through the CreaLab by using different
mechanisms. Below you will see different stages of this process and different
mechanisms which will be elaborated by CSB:
1 - Idea Generation
and Screening
- CSB introduced mandatory course “Business
Plan Development” on the fourth year of
undergraduate program. During last two
months of studies students should come up
with an idea of a small to medium size
(Georgian standards) business.
- CreaLab will announce competition for
innovative business ideas
- Idea screening will be carried out by faculty
and independent experts
2 - Business Plan
development
- Ideas will be formulated into formal business
plan (taking into account lean start-up
practices) in the CreaLab. Students will do that
under the mentorship of CSB faculty and
independent mentor network developed by
Georgian Innovations and Technology Agency
(GITA)
3 - Prototype and
promotion material
development
- Students can develop a product/service
prototype using different equipment (3D
printer, high capability computers allowing
students create software and edit materials,
etc.)
- Creation promotional materials (shooting video
ad for social networks using equipment at
CreaLab)
4 Fund raising - GGSB-CSB alumni club will create seed-fund
which will finance the best projects developed
in CreaLab;
- Will work with different investors, angels,
companies to attract funds for the projects
developed in CreaLab
5 CreaLab Online Platform Create platform bringing together experienced
mentors, interested investors and enthusiastic
entrepreneurs. The new platform basically is a startup
validation and testing platform. It helps tests and
validate a startup idea and the business model in the
very initial stages to maximize startup success rate and
accelerates startups growth. It basically involves a short
term partnership of an entrepreneur, with little or no
business expertise, and an experienced guide/mentor to
rapidly accelerate the growth cycle of the startup. It
concentrates on rapidly transferring a startup from just
being an idea to a stage where it gets acceptance from
an accelerator/ incubator or the business world in
general. It is not a competition to accelerators and
incubators.
In order for the CreaLab to function as it is indicated above, certain resources
(equipment) should be purchase through the grant: 1. Laptop-computers for working in groups on the projects
2. Projector for presentations
3. Computer with high computing power for promotion material creation, editing
the movies and running sophisticated software
4. Smartboard
5. Camera for shooting video adds or photos for promotional purposes
6. 3D printer for creation prototypes (1 unit with basic capabilities)
7. Promo-materials basic printer
8. Software
3. What are the (own) potential resources to be put at the disposal of the CreaLab;
Caucasus School of Business will allocate space and furniture for individual and
group works; Also will involve its staff for the successful establishment and
operation of CreaLab.
4. What is the relevant education on entrepreneurship already available and which
connections are already established (or could be developed) with industry;
CSB admits the importance of entrepreneurship in identifying the market
opportunities and starting business venture for capitalizing on those opportunities.
This, in turn facilitates the development of certain business sectors, small and
medium enterprises, middle class and the overall economy of the country. Because
of this, CSB has been engaged in different activities of creation certain skills which
are necessary for entrepreneurs: offering courses, designing training programs and
running the research center.
CSB offers number of courses on entrepreneurship in its academic programs,
which develop certain set of skills: Entrepreneurship
Innovations Management
Leadership
Business Plan Development, etc.
CSB academic personal has developed tailor-made training programs for certain
target groups: Women Leadership Program
Management Development Program
CSB became a Member of the Microeconomics of Competitiveness (MoC)
Network at Institute of Strategy and Competitiveness at Harvard Business School
(Michael Porter's Institute). On the basis of this relationship CSB has founded
Georgia's Center for Strategy and Competitiveness, which is dealing with the
issues of competitiveness. One foundation block of the competitiveness is the
ability of the nation to innovate and be entrepreneurial. The research
methodology is completely based on Institute for Strategy and Competitiveness
methodology.
Caucasus School of Business become Global Entrepreneurship Monitor’s Georgian
National Team in 2014 and has conducted full cycle GEM research. Georgian
national team, which is composed with three researchers, Boris Lezhava, Paata
Brekashvili and Irena Melua were approved by GERA board. Three reports were
prepared: GEM Georgia National Report 2014, Report on Women
Entrepreneurship in Georgia and Report on Export Potential.
5. Crucially: who will be the carriers, the “agents of change” in the institution at
decision-making level, teachers, researchers and students.
SCB is planning to appoint person who will be only responsible to work in
CreaLab and contribute to its development and success. Also, Business School’s
academic personal will serve as the main change agents.
3. ILIA State University, Tbilisi, Georgia
NEEDS ASSESSMENT REPORT ILIA STATE UNIVERSITY
1. What is the current situation concerning CreaLab-type of initiatives (if any) already taken in the institution:
In support of the institutional goal to enhance an entrepreneurial culture at ISU and strengthen the role of the university as an active stakeholder that contributes to the socio-economic development of society and Georgia, ISU has several initiatives fostering the entrepreneurship ecosystem building on campus as well as cooperation with the industry.
Technology Commercialization Center (TCO) is the first TCO in Georgia established at ISU that has a team of professionals with experience in research and innovation, marketing, licensing, and intellectual property management, project development and management. It works to commercialize research and facilitate collaborations between the scientists and industry and work on business development and entrepreneurship potential of researchers and outputs.
Future Fabrication Laboratory FabLab based at Ilia State University is a small-scale workshop venue offering digital and general computer fabrication that will be equipped with a set of computer-controlled tools. FabLab serves as a platform for education, idea creation, and invention that supports and facilitates innovation infrastructure development process in Georgia. In the overall goal, such an infrastructural establishment equipped with new technologies will help to train new generation of designers, engineers, and inventor entrepreneurs, support the start-up proliferation and commercialization, and facilitate the positive impact on the economic growth.
Pre-accelerator–Innovation and Entrepreneurship Space at ISU is the first pre-accelerator place in Georgia that aims to facilitate innovation and build entrepreneurial ecosystem in the university setting through providing extensive assistance in formation of startup companies. It gears the first-time and potential entrepreneurs and offers startup pre-accelerator programme that provides all necessary knowledge and skills to make a startup ready for the early product launch or leading to the accelerator programs for initial investment.
Virtualization Lab (VR Lab)/ISU GameLab – is an innovative space in the gaming industry is a new medium in education, research, therapy, communication, etc.
All described above is part of ISU’s entrepreneurship and innovation space and all work on providing support to transform the ideas and innovations into commercially viable products and connect Georgian inventors and startup companies to bring their products to the market or find initial investment for the early product launch.
2. What are the ambitions/expectations for the CreaLab (disciplinary research priorities, why does the institution wants to establish a CreaLab)
The potential CreaLab space will be established as complimentary to the already existing initiatives at ISU as it already has several projects in place. It will not be a separate lab but will be a core initiative at the pre-accelerator space that will work on soliciting good and creative ideas from individuals or groups to design and launch creative products or know-how. In the pre-accelerator plan of the subsequent years especially in 2016 together with ISU FabLab and GameLab we are planning to launch Creathon events under the CreaLab programming that will function under this space. As for the identified needs, we would need staff training, job shadowing, site visits, design and financing of the events, equipment and software purchase, set up of small library resources, etc.
3. What are the (own) potential resources to be put at the disposal of the CreaLab
ISU will offer its existing facilities and furniture to strengthen the CreaLab resources in addition to the projected resources under the project budget.
4. What is the relevant education on entrepreneurship already available and which connections are already established (or could be developed) with industry?
At the initiatives at ISU to some extent have education component on entrepreneurship especially the pre-accelerator center that has a training center covering the series of lectures and speakers on various topics on entrepreneurship. These lectures involve speakers form the industry. One of the competitive advantages of the education on entrepreneurship at the Startup line of the pre-accelerator space is people, who will lead different directions each having professional and private contacts with the world-class specialists and professionals. These contacts are useful asset in the process of conducting workshops and master classes, which will be very interested not only for the students, but also for Georgian professionals that work in different areas. ISU has created a place, where interested individuals and groups are able to attend world-class workshops and meet professionals from different areas. Various interesting events have been already planned for 2016. This is a tentative schedule of the events covering education on entrepreneurship:
Name Topic
Palmer Luckey Founder of Oculus https://en.wikipedia.org/wiki/Palmer_Luckey
The future of VR
Esther Dyson Investor
Secrets of success of entrepreneurs from former Eastern Bloc countries
Daniel Cowen co-founder of Wobble works (3Doodler)
Secrets of successful Kickstarter campaign
Adam Kell StartX (Stanford Accelerator)
Why you need acceleration program
Felix Kochbeck Co-founder of Luuv
Why 90% of all kickstarter campaigns fail to deliver
Zack Bomsta Co-founder of OwletCare
Product management - from idea to retail shelves
Paul Holliman VP of Strategic Planning, Walt Disney Studios
Managing innovation at big corporation
Raph Crouan Startup Bootcamp London
Mix and learn among the best in Europe
Lucas Wang Founder of HWTrek
Design for manufacturability
Ami Dror Co-founder Zaitoun Ventures
How Venture Capital works
Kip Garland Founder of Innovation Seed
Innovation in Brazil
Kate Edwards CEO of IGDA https://en.wikipedia.org/wiki/Kate_Edwards
Georgia on game development map. Sharing experience of other IGDA Chapters.
Paul Bragiel Internet entrepreneur and a managing partner of i/o Ventures https://en.wikipedia.org/wiki/Paul_Bragiel
Heat-to-hear mentoring teams and startups.
Oscar Clark Evangelist at Unity https://www.linkedin.com/in/oscarclark
Unity, Games Games As A Service: How Free to Play Design Can Make Better Games
Aleksey Savchenko Evangelist (Eastern Europe) at Epic Games
Unreal Engine Unreal developer grants program and chance for Georgian developers.
Frank Lantz Director of the NYU Game Center
Workshop classes about game design.
Matt Parker Workshop classes about storytelling and
Game designer of the NYU Game Center gameplay.
CD PROJECT RED Success for small countries in Game development industry
5. Crucially: who will be the carriers, the “agents of change” in the institution at decision-making level, teachers, researchers and students
In support of the project goals the key agent of change will be ISU leadership led by ISU Vice-Rector for Advancement and Foreign Relations as well as relevant schools and faculty leadership, entrepreneurship teachers, practitioners and industry representatives. The direct beneficiaries will be students and interested individuals and groups in making their own start-up companies or launching and acquiring patents for the new and innovative products.
4 Kutaisi University, Kutaisi
Kutaisi University report
April 2016
1. What is the current situation concerning CreaLab-type of initiatives (if
any) already taken in the institution
Kutaisi University (KU) is a relatively young academic institution with only 24 years
of history. It was founded as a private higher educational institution. Since the
academic year 2006-2007, aiming to achieve optimum employment of its academic
and material resources the University has identified Economics, Business
Administration and Tourism Programs as its priorities.
At present Faculty of Social Sciences at KU provides educational programs at
all three (Bachelor’s, Master’s and PhD) levels. There are Majors in Business
Administration, Tourism, Economics; Minors in Business Administration,
Economics, Information Technology, English Language, Applied Mathematics.
Master’s Degree programs in Finances, Banking and Insurance, Accounting and
Audit; Doctor’s Degree programs in Finances and Economics. University has
authorization and all study programs are accredited. Accreditation has been granted
by National Center for Educational Quality Enhancement Georgia. Total number of
students is about 500 and 82 staff members.
The University strives to create the best possible environment for receiving
quality of education. It collaborates with various regional and national universities,
with local authorities in the areas of economic research and regional policy
development. The University closely cooperates with the foundation “Centre for
International Education”. From 2008 KU participates in TEMPUS, Tuning and
ERASMUS Projects. At the moment KU is involved in four ongoing TEMPUS
(ERASMUS+) and two ERASMUS Mundus projects. Within the framework of
TEMPUS IV Projects the partnership agreements are signed with the foreign
universities participated in consortiums. Joint Programs are being developed under
these projects.
Kutaisi University is in search of up-to-date methods and ways of meeting new
challenges, keeping up with the demands of the educational reform in Georgia and the
Bologna Process and coordinating its future development strategy with the main
tendencies in the world.
Kutaisi University tries its best to develop and constantly upgrade high quality
educational programs oriented towards the demands of the community and labor
market. Developing a viable new vision of teaching methods ensure the quality of
education, also development and adaptation of efficient and specific teaching and
assessment methods is very important for learning outcomes. This project is very
important for KU to train existing and potential professors for developing necessary
skills and knowledge for teaching effectively.
KU sees its role as participant in elaboration of the course materials, university
organize conferences and disseminate information on the results of the project in
Georgia, also provide cross-border dissemination of the recommendations.
The Career Services Center strives to provide the high quality comprehensive
career services to all matriculated undergraduate and graduate students and alumni of
the Kutaisi University. The Career Center functions as a vital component in the total
educational experience of students, primarily in the development and implementation
of career and educational plans. Career Services fosters partnerships with employers,
alumni, faculty, staff, administrators, and the greater community to increase their
participation in providing opportunities for the career development of students.
2. What are the ambitions/expectations for the CreaLab (disciplinary
research priorities, why does the institution wants to establish a
CreaLab);
University is an open knowledge center and communication platform between the
industry and the education, research and development programs. Establishment of
CreaLabs fosters innovation in the regional industry clusters by using all forms of
creativity, promotes multidisciplinary cross-sectoral collaboration. CREALAB is
contributing to a sustainable economic and societal growth in the city. It’s main goal
is to support entrepreneurs and SMEs in developing innovative ideas, services and
products in order to stay competitive. The promotion of ideas exchange, challenges
identification and development of new creativity initiatives foster student
entrepreneurship and start-up creation at university improving infrastructure,
entrepreneurial culture and skills. Setting up and equip labs at KU support students to
generate, develop and commercialize their own innovative ideas through
entrepreneurship and open innovation.
3. What are the (own) potential resources to be put at the disposal of the
CreaLab
A potential resource of CreaLab in KU is Entrepreneur Alumni Network center -
entrepreneurship-related association, a working international entrepreneurial
ecosystem of entrepreneur alumni and young founders. Main goals of this center that
university, companies and more students, graduates and HEI staff would be able to
get in contact with the entrepreneurial world.
4. What is the relevant education on entrepreneurship already available and
which connections are already established (or could be developed) with industry
Entrepreneurship education is a lifelong learning process. The Standards and their
supporting performance indicators is a framework for teachers to use in building
appropriate objectives, learning activities, and assessments for their target audience.
Using this framework, students will have: progressively more challenging educational
activities; experiences that will enable them to develop the insight needed to discover
and create entrepreneurial opportunities; and the expertise to successfully start and
manage their own businesses to take advantage of these opportunities. Nowadays
open discussions and lectures are provided for the student in this field. Staff
recruitment and training is needed to revise and adapt curricula to include
entrepreneurial skills and problem-based learning at KU.
5. Crucially: who will be the carriers, the “agents of change” in the institution at
decision-making level, teachers, researchers and students.
The “agent of changes” in the institution will be the team of the project: local
coordinator of EUCA INVEST project assoc. prof. Tea Kordzadze, professor Lela
Kelbakiani, assistant professor Robert Kamladze, assistant professor Otari Shengelia.
5. Country Report
Entrepreneurship Report
Caucasus University
1
Methodology
In order to provide reliable data, reports are based on a research methodology which
is used in Global Entrepreneurship Monitor Global Research. From 2014 Caucasus
University represents National Team of Georgia at Global Entrepreneurship Monitor
and has exclusive right to use GEM Methodology, data and reports in different
research and reports developed by CU. The data is gathered from two main sources:
Adult population survey (APS)
This data set is a survey of the adult population, namely people between the ages of
18 and 64 years. Survey sample size was 2 000 adults. The surveys was conducted
in eight different cities of Georgia using a standardised questionnaire. The data then
is immediately analysed by Caucasus University (CU).
Experts survey (NES)
The experts’ survey is an important component of research as it provides insights
into the entrepreneurial start-up environment. CU has a number of criteria which
must be met when selecting experts in order to construct a balanced and
representative sample.
Four experts from each of the entrepreneurial framework condition categories
must be interviewed, making a total of 36 experts.
A minimum of 25% must be entrepreneurs or business people, and 50% must
be professionals.
Additional aspects such as geographical distribution, gender, the public
versus private sector, and level of experience should also be taken into
account when balancing the sample.
2
CHAPTER 1 - The Rational and Structure of the Report
CU offers a unique opportunity to analyse and compare Georgian entrepreneurial
activity to entrepreneurial activities in different countries. The report includes relevant
indexes which allow the comparison of economic conditions in Georgia to those of
other countries worldwide. It can be concluded, that those economic conditions vary
dramatically according to the geographic locations and the economic development of
a country.
In order to receive more comparative power of the data, CU decided to compare the
relevant results and indexes to the results and indexes of the countries which have
certain similarities to Georgia. More specifically, we have chosen countries for
comparative analysis based on two factors:
- Geographic location: Europe (European Union and Non-European Union
Countries) and
- Level of economic development: efficiency-driven economies. Based on these criteria eight countries were identified (see table 1.1)
Economic Development
Geography
European Union Non-European Union
Efficiency-driven Economies
Croatia*, Hungary*, Lithuania*, Poland*, Romania Bosnia and Herzegovina, Georgia, Kosovo, Russian Federation*, Turkey*
* Countries in transition to Innovation-driven economies Source: GEM Executive Report 2014
Table 1.1 – Countries included in comparative study Certainly, during the analysis, the comparison between this group of countries to the
innovation-based European countries is frequently made in order to identify trends
and country-specific issues.
In addition to that, at the end of each section or chapter, a summary table compares
the indexes for Georgia to the median of similar indexes of European Union and
Non-European Union countries. Besides, we include indexes of Estonia as a
benchmark for Georgia. The choice of Estonia was based on the similarities between
these two countries: sizes of the countries, population size of the countries, both of
3
them were former Soviet Union countries, etc. Moreover, Estonia is an advancing
country in terms of entrepreneurship as its economy can already be considered as
innovation-driven.
The chapters in this report follow the logic of the modified GEM conceptual
framework:
Chapter 2 covers the Entrepreneurship profile of Georgia and consists of
three parts.
o Section 1 looks at values towards entrepreneurship in Georgia;
o Section 2 covers individual attributes that influence the possibility of
persons engaged in entrepreneurial activities
o Section 3 looks at different types of entrepreneurial activities in
Georgia;
Chapter 3 explores profiles of Georgian entrepreneur.
Chapter 4 is dedicated to the Entrepreneurship ecosystem in Georgia.
4
CHAPTER 2 - The Scale and Conditions of Entrepreneurship in
Georgia
2.1 Social Values Towards Entrepreneurship
Social values play a key role in determining whether individuals are behaving
entrepreneurially or not (Kwon and Arenius, 2010). Social values influence the
overall attitudes towards certain objects. In this survey social values are
conceptualised through three dimensions:
If people consider starting a new business a desirable career choice;
If those individuals who are successful in starting a new business enjoy a high
level of reputation and respect in the society; and
If media attention to entrepreneurship (by promoting successful ventures)
contributes to developing an entrepreneurial culture in a country.
Perceptions related to the above three features shown in Table 2.1
Region and Economies Entrepreneurship High status to Media attention as a good career successful for
choice entrepreneurs entrepreneurship All EU Average 56.9 66.6 53.3
Countries
Georgia 66 75.9 58.5 All Non-EU Average 63.3 72.9 51.3
Countries
Position of Georgia out of 9 6th 2nd 2nd
countries Table 2.1 – Perception of Social Values toward Entrepreneurship (% of Population aged 18-64) Georgia’s score in social values towards entrepreneurship is higher than the average
scores of EU and Non-EU countries in all three dimensions. Georgia is on 6th
place
in terms of perceiving creating of a business as a good career choice among
efficient-driven European countries. Although, the surveys showed that starting a
business is a desirable career choice more in factor and efficiency-driven economies
(see figure 2.1 – red columns represent efficient-driven EU countries and blue
columns innovation-driven) than in innovation-driven economies (GEM Global Report
2014, p. 30), it can be assumed that more people are willing to start business in the
countries with fewer job opportunities. Based on these observations, the low
5
standing of Georgia on this index can be interpreted in different ways. For a
comprehensive understanding of this issue more tailored research might be needed.
Figure 2.1 – Perception of Population regarding Entrepreneurship as Desirable Career
Choice (Comparison of Efficiency-driven and Innovation-driven EU economies)
Moreover, the high status of successful entrepreneurs within the Georgian society
(2nd
among efficiency-driven European countries and 6th
place among all European
countries) is a good starting point for promoting entrepreneurship because it can be
an essential motivating factor for Georgians to engage in starting new ventures (see
figure 2.2 – red columns represent efficient-driven EU countries and blue columns
innovation-driven). When it comes to the public perception of perceiving
entrepreneurship as a desirable career choice, Georgia ranks among countries such
as Finland, Norway, Germany, Romania, Ireland and the United Kingdom. The figure
is pretty high – almost 76% Georgians think that entrepreneurs in Georgian society
enjoy a high status. The highest figure in Europe is of Finland, with 84.4% of the
population admitting the high status of Entrepreneurs.
6
Figure 2.2 – Perception of Population regarding High Status to Successful Entrepreneurs
(Comparison of Efficiency-driven and Innovation-driven EU economies)
Media attention for entrepreneurship is perceived as high by the Georgian population
(age 18-64), ranking 2nd
among efficiency-driven European economies and 6th
among all European countries. This is a good tendency, because media plays a
crucial role in building an entrepreneurial culture within the society. However, the
proportion of the population who agrees entrepreneurship is paid high level of media
attention is not high enough (58.5% of the population 18-64 years). Therefore,
programs which will facilitate the process of promoting entrepreneurial activities
through the media have to be intensified (see figure 2.3 – red columns represent
efficient-driven EU countries and blue columns innovation-driven). Georgia ranks
among countries such as the United Kingdom and Sweden.
Figure 2.3 – Perception of Population regarding Media Attention to
Entrepreneurship (Comparison of Efficiency-driven and Innovation-driven EU
economies)
The gap between people’s respect for entrepreneurship as a profession (high status
of successful entrepreneurs) and their belief that entrepreneurship is a good career
choice (entrepreneurship as a good career choice) varies across countries and does
not show trend of any kind. In Georgia, we have a slightly positive correlation (0.357)
among these variables, meaning that the percentage of the population believing
entrepreneurs have a high status within the society is somewhat higher than the
percentage of the population thinking it is a good career choice (see table 2.2)
In table 2.2 there are correlation coefficients among these three variables Media
Attention for Entrepreneurship, High Status to Successful Entrepreneurs and Entrepreneurship as a good career choice. The correlation coefficients are very low
among these variable, except for the correlation between “status of successful
entrepreneurs” and “media attention for entrepreneurship”.
Media High Status EGCC
Media Attention for 1 .357 .032
Entrepreneurship
High Status to Successful .357 1 -.096
Entrepreneurs
Entrepreneurship as a good .032 -.096 1
career choice
Table 2.2 – Pearson Correlation
8
Figure 2.4 – Comparison of the Percentages of Population Perceptions regarding High Status
to Successful Entrepreneurs and Entrepreneurship as a Desirable Career Choice
Finally, in table 2.3 a comparison of the results for Georgia to indexes of EU and Non-EU countries averages is provided. Besides, indexes of Estonia as a
benchmark are included.
Region and Economies Entrepreneurship High status to Media attention as a good career successful for
choice entrepreneurs entrepreneurship
Georgia 66 75.9 58.5
All EU Countries 56.9 66.6 53.3
All Non-EU Countries 63.3 72.9 51.3
Estonia 55.6 64.9 43.3 Table 2.3 – Social Values Towards Entrepreneurship Georgia vs EU and Non-EU Countries
Averages vs Benchmark country - Estonia From this table we see that:
The proportion of the population who thinks that entrepreneurship is a good
career choice is higher in Georgia than the average proportion within EU and
Non-EU countries (66 vs 59.6 and 63.3). It is even higher than the proportion
received in the benchmarked country – Estonia (66 vs 55.6).
9
The proportion of the population who thinks that successful entrepreneurs
have a high status within the society is higher in Georgia than the average
proportion of EU and Non-EU countries (75.9 vs 66.6 and 72.9). It is higher
than the proportion received in the benchmarked country – Estonia (75.9 vs
64.9).
The proportion of the population who perceives that media attention is high for
entrepreneurship is higher in Georgia than the average proportion of EU and
Non-EU countries (58.5 vs 53.3 and 51.3). It is higher than the proportion
received in the benchmarked country – Estonia (75.9 vs 43.3).
2.2 Individual Attributes
Research provides insights in several individual attributes:
perception of opportunities reflects the percentage of individuals who believe
there is a chance to start a venture in the next six month in their immediate
environment;
perception of own capabilities to act entrepreneurially shows the percentage
of individuals who believe they have the required skills, knowledge and
experience to start a new venture;
fear of failure considers only those people who perceive opportunities to start
the business and measures how many of them have fear of failure;
entrepreneurial intentions are defined by the percentage of individuals who
expect to start a business within the next three years (those who are already
entrepreneurially active are excluded from this survey), These individual attributes, in a certain context, lead to a variety of entrepreneurial
activities. In order to compare those surveys across efficiency-driven EU countries,
research has to take into account the different contexts within different countries
(e.g. individuals might have different business opportunities in their minds in different
countries, etc.).
Table 2.4 shows the results regarding different individual attributes in efficiency-
driven European countries.
10
Region and Economies Perceived Perceived Fear of Entrepreneurial
opportunities capabilities failure intentions European Croatia 18.4 45.9 30.3 19.5
Union
Hungary 23.4 40.9 42 13.9
Lithuania 31.7 33.4 44.8 19.7
Poland 31.3 54.3 51.1 15.6
Romania 32.4 48.4 41.3 31.7 Non- Bosnia and
19.6 47.3 26.8 20.4 European Herzegovina
union Georgia 36.6 37.5 34.8 15.6
Kosovo 65.6 65.2 26.7 6.3
Russia 26.5 27.8 39.5 3.5 Average scores of
Efficiency-driven 31.7 44.5 37.5 16.2
European Countries Table 2.4 – Individual attributes in the efficient-driven European economies in 2014 (% of
population ages 18-64)
In almost all efficiency-driven European countries perceived capabilities are higher
than perceived opportunities. This means that in these countries, a higher proportion
of the adult population evaluate their capabilities (required skills, knowledge and
experience) sufficient enough for entrepreneurial activities, but at the same time a
smaller proportion of the population sees good business opportunities in the country
where they live. For Georgia these two proportions are almost identical: 37.5% of
adult population thinks that they are capable of performing entrepreneurial activities
and 36.6% sees opportunities in the Georgian business environment. This kind of
proximity can be observed in the case of Lithuania and Kosovo (see figure 2.5)
11
Figure 2.5 – Perceived opportunities and perceived capabilities in efficient-driven
European countries
37.5% of the Georgians think there are entrepreneurial opportunities in Georgia but
only 52% of them think they have enough skills, knowledge or experiencerequired for
starting new ventures. Accordingly, 48% think they do not have required capabilities;
the fact might suggest policy makers a direction in which to invest time and money.
If we look at all European countries, we will notice that in innovation-driven European
economies (which did not face economic crisis in recent past), in general, perceived
opportunities are higher than perceived capabilities. In the countries which faced
long-term economic trouble or belong to efficiency-driven European economies
perceived capabilities are higher than perceived opportunities (see figure 2.6).
12
Figure 2.6 – Perceived opportunities and perceived capabilities in European countries
The proportion of the population who perceives opportunities in entrepreneurial
activities is moderate in Georgia – approximately 1/3 of the adult population
perceives business opportunities in the Georgian environment. In comparison,
70.1% of the Swedish population, 63.5% of Norwegian population and 60% of
Danish population (2/3rd
) perceives opportunities for entrepreneurial activities in their
countries. Georgia holds a middle position within this index. In general, a low level of
perceived opportunities (especially in countries with low economic development or
with problems in economic development) provides relevant information not only to
governments (GEM Global Report, 2014, p. 33) but also to other institutions,
including education sector, which can help in building the individual’s capacity of
recognizing opportunities
Fear of failure and expected(legal and financial) consequences of failure may
prevent individuals from exploiting good business opportunities. According to results
of the present survey, 34.8% of the Georgian adult population experience fear of
failure (table 2.3). Within the group of respondents who perceives opportunities for
13
entrepreneurial activities, 37% have fear of failure, which in its turn might deter them
from opening up new ventures. However, 63% do not have any fear of this kind (fear
of failure).
In terms of perception of fear of failure, the Georgian population holds the middle
position (4th
place) among efficiency-driven European countries, right after the
Balkan states (see figure 2.7)
Figure 2.7 – Fear of failure among efficiency-driven European countries
Fear of failure might be a strong inhibitor for stopping transformation of
entrepreneurial intentions into entrepreneurial activities. Looking at the comparison
of results in terms of perception of opportunities and fear of failure in all European
countries (see figure 2.8) we see that the highest fear of failure can be found in
Greece - 61.6% and lowest is in Bosnia & Herzegovina – 26.8%. It should be noted
that the more a country can be described as innovation-driven country, the higher is
the proportion of people who perceive opportunities and the less is the proportion of
people who have a fear of failure. Therefore, in innovation-driven economies fear of
failure inhibits to a lesser extent entrepreneurial activities. For Georgia these two
proportions are almost equal, which might give a certain direction to policymakers.
14
Figure 2.8 – Perceived Opportunities and Fear of Failure in European countries
Georgia has the lowest difference between perceived opportunities and perceived
capabilities.
Figure 2.9 depicts Entrepreneurial intentions of the population in efficiency-driven
European countries. Georgia is on the sixth place among those countries. It is
estimated that the score on entrepreneurial intentions is the highest among factor-
driven economies and the lowest among innovation-driven economies, which
confirms the pattern that starting once own business is a dominant option there
where other options of getting income of any kind are rather limited (GEM Global Report, 2014, p.34).
15
Figure 2.9 – Entrepreneurial Intentions among efficiency-driven European countries
Table 2.5 the comparison of results for Georgia to indexes of EU and Non-EU
countries averages are provided. Besides, we included indexes of Estonia as a
benchmark.
Region and Economies Perceived Perceived Fear of Entrepreneurial
16
opportunities capabilities failure
Georgia 36.6 37.5 34.8 Average score of EU 34.8 42.3 40.7
countries
Average of Non- 42.6 41.7 32.4 European countries
41.8 Estonia 49.4 42.5
intentions 15.6
12.1
9.7
9.8 Table 2.5 – Individual Attributes: Georgia vs EU and Non-EU Countries Averages
vs Benchmark country - Estonia
From this table the following conclusions can be made:
The proportion of the population who perceives entrepreneurial opportunities
in the local environment is higher in Georgia than the average proportion of
EU countries (36.6 vs. 34.8), but lower in Georgia than in the average of Non-
EU countries (36.6 vs 42.6). Compared to the score of the benchmark country
Estonia, this proportion is lower in Georgia (36.6 vs 49.4).
The proportion of the population who perceives that they are capable of
engaging in entrepreneurial activities is lower in Georgia than the average
proportion of EU and Non-EU countries (37.5 vs. 42.3 and 41.7). Compared to
the score of the benchmark country Estonia, this proportion is also lower in
Georgia (37.5 vs 42.5).
The percentage of the population who admits experiencing fear of failure
while engaging in possible entrepreneurial activities is lower in Georgia than
the average percentage of EU countries and the benchmark country Estonia
(34.8 vs 40.7 and 41.8). However, this proportion is higher in Georgia than the
average proportion of Non-EU countries (34.8 vs 32.4)
The percentage of population who has entrepreneurial intentions in Georgia is
higher than the average proportion of EU and Non-EU countries (15.6 vs. 12.1
and 9.7). It is higher than the percentage of the population in the
benchmarked country – Estonia (15.6 vs 9.8).
2.3 Entrepreneurial Activities
17
For a better understanding of entrepreneurial activities, CU uses the organizational
life-cycle approach and differentiates across the following categories of entrepreneurs:
Nascent entrepreneurs are labelled as those who are committing resources to
start a business, but the business has not yet yielded wages or salaries.
New businesses are those managed by their owners and paying wages, up to
42 months of existence of the firm.
Established businesses are considered those businesses which have been
paying wages for more than 42 months. This cut-off point has been derived by
combining theoretical and practical considerations (Reynolds et al., 2005).
Discontinued businesses are considered those businesses which existed
once and now are discontinued for different reasons.
The GEM framework identifies three different indexes:
Total Early-Stage Entrepreneurial Activity rate (TEA) as a percentage of
individuals aged 18-64 in an economy who are in the process of starting
business and/or are already running a new business not older than 42
months.
Established Business Ownership rate is the percentage of individuals aged
18-64 in an economy who own and manage a business older than 42 months)
Discontinuation rate is the percentage of individuals aged 18-64 who owned a
business but discontinued it for different reasons during the last 12 months.
Table 2.6 shows rates for different phases of entrepreneurial activity in efficiency-
driven European countries. The first two phases constitute the central measure of
GEM – Total Early Stage Entrepreneurial Activity (TEA) – the most crucial stage of
entrepreneurship, because at this stage the most growth and innovation are
originated, which is decisive for new businesses survival. Based on table 3.6,
Georgians TEA holds the 7th
position out of 9 efficiency-driven European economies. This means that only 7.2% of the Georgian population is engaged in opening-up or
running a new venture. In comparison, in Lithuania and Romania 11.3% of the adult
population is involved in entrepreneurial activities.
18
Early-stage Established
Region and
Nascent New entrepreneurial business
entrepreneneurship business activity ownership
Economies rate rate (TEA) rate
Croatia 6 2 8 3.6
European
Hungary 5.6 3.9 9.3 7.9
Lithuania 6.1 5.3 11.3 7.8
Union
Poland 5.8 3.6 9.2 7.3
Romania 5.3 6.2 11.3 7.6
Bosnia and
Non-
Herzegovina 4.5 2.9 7.4 6.7
European Georgia 4.1 3.2 7.2 7.3
union
Kosovo 2.5 1.8 4 2.1
Russia 2.4 2.4 4.7 3.9
Position of Georgia 7th
Place 5th 7th
Place 5th
Place out of 9 countries Place
Table 2.6– Phases of entrepreneurial activity in the efficiency-driven European countries
In 2014, in general, African economies have the highest TEA, while European
economies (both EU and Non-EU) have the lowest.
Figure 2.12 – Nascent entrepreneurship, new business ownership and TEA
19
Figure 2.12 shows that in Europe the highest TEA rates were observed in efficient-
driven economies, namely in Romania and Lithuania. The lowest TEA rates were
observed in Italy and Russia. Georgia has the middle position among the European
countries.
Several correlations were calculated to underline the linkages between different
components needed to build entrepreneurial activity. Namely, perceived opportunity
(R2=0.3638) and perceived capability (skills) (R
2=0.4757) are positively correlated
with the level of TEA. Strong correlation between perceived capability (skills,
knowledge and experience) and TEA indicates that all forms of education (formal,
informal, non-formal) are important in developing entrepreneurial competencies
(GEM Global report, 2014).
Region and Nascent New Early-stage Established Economies entrepreneurship business entrepreneurial business
rate rate activity ownership rate
Georgia 4.1 3.2 7.2 7.3 Average score of EU 4.8 3.2 7.8 6.7
countries
Average of Non- 3.3 2.8 6.0 5.7 European countries
Estonia 6.3 3.5 9.4 5.7 Table 2.7 – Nascent entrepreneurship, new business ownership and TEA: Georgia vs
EU and Non-EU Countries Averages vs Benchmark country - Estonia
Table 2.7 indicates that:
The proportion of the population who are nascent entrepreneurs (those who
are committing resources to start a business, but the business has not yet
yielded wages or salaries) is lower in Georgia than the average proportion of
EU countries (4.1 vs. 4.8), but higher than the average proportion of Non-EU
countries (4.1 vs 3.3).
The proportion of the population who has new businesses (those managed by
their owners and which are paying wages, up to 42 months of existence of the
firm) in Georgia is equal to the average proportion of EU countries (3.2 vs.
3.2), but higher than the average proportion of Non-EU countries (3.2 vs 2.8).
The rate of TEA in Georgia is lower than the TEA rate of EU countries (7.2 vs.
7.8), but higher than the TEA rate of Non-EU countries (7.2 vs 6.0).
20
The percentage of the population who has established businesses of their
own in Georgia is higher than the average rate of EU and Non-EU countries
(7.3 vs. 6.7 and 5.7).
Figure 2.13 shows the comparison of these rates between Georgia and the
benchmark country – Estonia. All rates concerned with early entrepreneurial
activities are higher for Estonia, while the rate concerning established
business ownership is higher in Georgia.
Figure 2.13 – Nascent entrepreneurship, new business ownership, TEA and established
business ownership rate: Georgia vs Estonia
Established businesses are very important for the healthiness of the country, as it is
the logical sequence of business phases. Not all start-up companies continue
functioning after certain period. In general, in order to provide for stable economic
structures, the rate of early-stage entrepreneurial activity should always be higher
than the rate of established business ownership (because of the discontinuation
rate). These two rates are approximately equal in Georgia (7.2% Early-stage
entrepreneurial activity vs. 7.3% Established business ownership rate), which might
indicate to policy makers that promoting the early stage entrepreneurship is an
essential challenge.
21
When it comes to the rate of total entrepreneurs, Georgia holds the 5th
place within
efficiency-driven European countries (see table 2.7). The first place belongs to Lithuania and on the last places we see Kosovo and Russia.
Country Total
Entrepreneurs*
Lithuania 18.62
Romania 18.35
Hungary 16.93
Poland 15.99
Georgia 14.20 Bosnia and
13.95 Herzegovina
Croatia 11.44
Russia 8.63
Kosovo 5.93
Median 14.62
Position of Georgia 6th
/10
* “Total Entrepreneurs” include everyone that has identified themselves as nascent, new or
established entrepreneurs, with those subtracted who identified themselves as members of
mutual groups
Table 2.7 – The rate of Total Entrepreneurs in efficiency-driven European Countries
2.3.1 Motivation for starting a business CU looks at two different incentives for starting entrepreneurial activities:
1. Necessity-driven motivated entrepreneur is the one who indicates in the
survey that he/she started the business because there were no better options
to obtain resources for living;
2. Opportunity-driven motivated entrepreneur is the one who recognized an
opportunity in the environment and started their own business. The
22
improvement-driven opportunity is the type of opportunity-driven motive, in
which we include individuals who started business because they want to earn
money or to be more independent.
Region and Early-stage Necessit Opportuni improveme Motivation Economies entrepreneur y-driven ty -driven nt -driven al index*
ial activity (% of (% of opportunity
(TEA) (% of TEA) TEA) (% of TEA)
adult
population)
Europe Croatia 8 46.6 51.3 28.7 0.6 an
Hungary 9.3 33.2 64.7 36.3 1.1
Union
Lithuania 11.3 19.6 79.6 43.8 2.2
Poland 9.2 36.8 59.2 47.1 1.3
Romania 11.4 28.9 70.1 49.8 1.7 Non- Bosnia 7.4 50.8 48.5 25.2 0.5 Europe and
an Herzegovi
union na
Georgia 7.2 48.6 50.6 31.0 0.6
Kosovo 4 22 59.9 29.1 1.3
Russia 4.7 39 58.7 41.6 1.1
* Ratio between improvement-driven opportunity and necessity-driven entrepreneurs
Table 2.8 – Motivation for early-stage entrepreneurial activity in efficiency-driven
European Countries
Compared to efficiency driven EU and non-EU economies, early stage
entrepreneurship activities in Georgia are mainly necessity-driven rather than
opportunity-driven. Among the 9 selected countries, after Bosnia and Herzegovina
and Romania, Georgia takes the 3rd place among necessity-driven motivation to
engage in entrepreneurial activities. Compared to this, Georgia takes the 6th place
when it comes to opportunity-driven motivation. Taking this into consideration, we
can conclude that in Georgia, currently TEA is more driven by necessity than by
opportunity. These trends are presented in table 2.8 and figure 2.14.
The motivational index, as a ratio between necessity-driven entrepreneurs and
improvement-driven entrepreneurs, contributes to a better understanding of the
23
entrepreneurial capacity within a country. A high motivational index indicates a high
share of improvement-driven entrepreneurs which ensures more long-term and
ambitious expectations to the creation of a venture (GEM Global Report 2014, p.43).
Unfortunately, the lowest motivation index is observed in non-EU countries, including
Georgia. Moreover, Georgia has one of the lowest motivational indexes among
efficiency-driven European countries (table 2.8). The highest motivational index can
be found in Lithuania.
Figure 2.14 – Percentage of entrepreneurs motivated by Necessity and Opportunity in the
environment in Efficiency-driven European countries
Table 2.9 shows the comparison of Georgian rates to EU and Non-EU countries averages, as well as to the benchmark country – Estonia.
Region and Early-stage Necessity- Opportunity improvement Motivational Economies entrepreneurial driven (% -driven (% -driven index*
activity of TEA) of TEA) opportunity
(TEA) (% of (% of TEA)
adult
population)
Georgia 7.2 48.6 50.6 31.0 0.6 Average 7.8 22.8 73.4 47.9 2.1 score of
EU
countries
24
Average of 1.4 Non-
6.0 29.7 63.2 42.3
European
countries
Estonia 9.4 15.1 74.5 41.2 2.7 Table 2.9 – Motivation for early-stage entrepreneurial activities: Georgia vs EU and Non-
EU Countries; Averages vs Benchmark country - Estonia Table 2.9 shows that:
The percentage of the population who is motivated by necessity to engage in
early-stage entrepreneurial activities is higher in Georgia than the average
percentage of EU and Non-EU countries (48.6 vs 22.8 and 29.7).
The percentage of the population who is motivated by opportunities to engage
in early-stage entrepreneurial activities is lower in Georgia than the average
percentage of EU and Non-EU countries (50.6 vs 63.2 and 74.5).
In Georgia, the Motivational Index is lower than the average Motivational
Indexes of EU and Non-EU countries (0.6 vs 2.1 and 1.4).
Figure 2.15 shows the comparison of these rates between Georgia and the
benchmark country – Estonia. All rates, except the necessity-driven rate,
regarding the motivation to engage in early entrepreneurial activities are
higher for Estonia.
Figure 2.15 – Motivation for early-stage entrepreneurial activities:
comparison of Georgia to Estonia
25
2.3.2 Business Discontinuations
One important part of the business dynamics is when business discontinues its
operations. Table 2.10 shows discontinuation rates among efficiency-driven
European economies.
Region and Economies Discontinuation of businesses
(% of TEA)
Croatia 3.8
Hungary 3.1
European Union Lithuania 2.9
Poland 4.2
Romania 3.2
Bosnia and Herzegovin 4.5
Non-European union
a
Georgia 2.5
Kosovo 6.6
Russia 1.2
Position of Georgia out of 9 8th
Place countries
Table 2.10 – Discontinuation rates among efficiency-driven European countries
A too high intensity of discontinuation might be tracked back to several potential
reasons, like starting business venture which is not well prepared, bad management
of the venture, etc. –in any case this is an indicator of wasted resources. On the
contrary, a too low intensity of business discontinuation might be an indicator for low
dynamics within the economic system, which enables non-efficient businesses to
maintain (GEM Global report 2014, p. 47). The rate of business discontinuation in Georgia is the second lowest among efficiency-driven European countries. It is also
important to understand the reasons for business discontinuation. Figure 2.16 points
out such reasons for the Georgian case. In Georgia, the major reasons for
26
discontinuation of businesses are unprofitable businesses (48.9%) and personal
reasons (22.2%).
Figure 2.16 – Reasons for business discontinuance in Georgia
2.3.3 Ambitious early-stage activities
Not only entrepreneurial activity level matters per se for future economic
development of a given country, also the “quality” of entrepreneurial activities –
“ambitious entrepreneurial activities”. According to the definition of surveys,
ambitious early-stage entrepreneurs show aspirations to increase their number of
employees, to innovate (product or process) and to internationalize their enterprise.
Job creation
By asking early-stage entrepreneurs how many employees (other than the owner)
they currently have and how many they expect to hire in the next five years, CU
gives information on expectations for job creation (GEM Global report 2014). This
figure might determine the growth orientation of the business. In this regard, new job
27
creation is a crucial issue for policymakers. Looking at this figure, one should note
down that this measure reflects ambitions and may not be actually realized in reality. But we have to consider that without planning the growth, actual growth will not
happen. Table 2.11 shows the expected job creation rate (as a percentage from
TEA) in efficiency-driven European countries.
0 - 5 jobs (% Job 6 - 19 jobs (% Job 20 or more jobs (% growth as percent growth as percent of Job growth as
of TEA) TEA) percent of TEA)
Romania 31.08 26.67 20.50
Croatia 25.11 25.72 14.79
Bosnia and 53.35 23.14 9.73
Herzegovina
Lithuania 42.56 22.10 12.22
Hungary 47.79 22.06 19.26
Georgia 43.34 15.00 6.64
Poland 47.86 14.30 13.35
Russia 41.70 14.19 9.79
Kosovo 18.21 17.42 1.39
Position of
Georgia out 4th
place 7th
place 8th
place of 9
countries
Table 2.11 – Job creation expectations in efficiency-driven European countries
Out of nine countries Georgian early entrepreneurs take the 4th
place in creating 0-5
jobs in five years, 7th
place in creating 6-19 jobs and 8th
place in creating 20 or more
jobs.
If we look at the same metrics in comparison to average rates of EU and Non-EU
countries, we will notice that there is no significant difference in the expected
employment of 0 – 5 or 6 -19 jobs. However, when it comes to the expectation of
creating 20 or more jobs, Georgia displays lower rates than the average of EU and
Non-EU countries. (see table 2.12)
0 - 5 6 - 19 20 or
more
jobs
jobs
jobs
Georgia 43.34
15.00 6.64
EU Average 54.29
15.52 9.25
non-EU
Average 56.13 15.50 7.28
Estonia 58.85 15.63 6.77
Table 2.11 – Job creation expectation: comparison of Georgia to averages of EU and Non-
EU Countries Innovative orientation
GEM looks at innovation as the composite of two factors: the degree to which a
product or service is new to customers (product innovation) and the availability of
similar product on the market (market/industry innovation). When comparing
countries on these dimensions we have to be particularly careful because the
product or industry which is new in one country might be very common in another
country. It might be reasonably assumed that a high degree of innovation-orientation
of entrepreneurs is positively correlated with future growth of the economy. In table
2.12, one can find the comparison of these indexes to the average indexes of EU
and Non-EU countries, as well as to the benchmarked country – Estonia.
% within TEA: product is
new to all or some % within TEA: new to
customers market
Georgia 28.95 35.70
EU Average 47.24 49.75
non-EU Average 30.84 43.86
Estonia 46.88 57.29 Table 2.12 – Innovative Orientation: comparison of Georgia to averages of EU and
Non-EU Countries and Benchmark country - Estonia
The percentage of early-stage entrepreneurs who have new product to all or
to some customers is lower in Georgia than the average percentage of EU
and Non-EU countries (28.95 vs 47.24 and 30.84).
The percentage of early-stage entrepreneurs who have new product which is
at the same time new to the market is lower in Georgia than the average
percentage of EU and Non-EU countries (35.7 vs 49.75 and 43.86).
• Figure 2.15 shows the comparison of these measures between Georgia and benchmark country – Estonia. All rates are almost two times higher for Estonia.
29
Figure 2.17 – Innovative Orientation: comparison of Georgia to Benchmark country
- Estonia
International orientation
Georgia’s economy is part of the Global economy. Especially for countries like
Georgia with a small population it is vital to strive for having access to external
markets. In the study, this issue is captured by the level of internationalization which
is measured by the proportion of customers living outside the early-stage
entrepreneurs’ country. CU categorizes four levels of intensity in internationalization:
no customers outside country, 1-25%, 25-75% and 75-100% customers outside
country.
%TEA: %TEA: 1- %TEA: 25- %TEA: 75-
No 25% of 75% of 100% of
customers customers customers customers
outside outside outside outside
country country country country
Poland 16.79 68.71 8.88 5.63
Lithuania 24.70 52.14 14.36 8.80
Romania 23.96 46.71 20.68 8.64
Hungary 32.86 43.81 15.73 7.60
Croatia 20.53 41.09 14.9 23.48
Georgia 41.63 37.08 13.00 8.28
Bosnia and
Herzegovina 47.80 34.26 12.89 5.06
Russia 90.34 4.82 1.13 3.71 Table 2.13 – Level of Internationalization in efficiency-driven European Countries
30
In Georgia, 41.63% of early-stage entrepreneurial ventures have no customers
outside the country (On the other hand,Poland and Croatia have the highest
proportion of customers outside their countries.
%TEA: %TEA: 1- %TEA: 25- %TEA: 75- No 25% of 75% of 100% of customers customers customers customers outside outside outside outside
country country country country
Georgia 41.63 37.08 13.00 8.28
EU Average 41.98 37.27 12.51 8.23
non-EU
Average 69.07 19.54 7.01 4.39
Estonia 29.45 46.58 14.38 9.59 Table 2.14 – Level of Internationalization: comparison of Georgia to averages of EU
and Non-EU Countries and Benchmark country - Estonia
In terms of “no customers outside country”, Georgia has almost similar
percentage to the EU country average percentage (41.63 and 41.98) and
lower percentage than the average of Non-EU countries (41.63 and 69.07).
In terms of “1-25% customers outside country”, Georgia has almost similar
percentage to the EU country average percentage (37.08 and 37.27) and
higher percentage than the average of Non-EU countries (37.08 and 19.54).
In terms of “25-75% customers outside country”, Georgia indicates slightly
higher percentage in comparison to the EU country average percentage
(13.00 and 12.51) and higher percentage than the average of Non-EU
countries (13.00 and 7.01).
In terms of “75%-100% customers outside country”, Georgia has similar
percentage to the EU country average percentage (8.28 and 8.23) and higher
percentage than the average of Non-EU countries (8.28 and 4.39).
Figure 2.18 shows the comparison of these rates between Georgia and
benchmark country – Estonia. All rates concerned with level of
internationalization are higher for Estonia, except the category of “no
customers outside the country”.
31
Figure 2.18 – – Level of Internationalization: comparison of Georgia to Benchmark
country - Estonia
2.3.4 Relation of TEA and EEA to GDP per capita
In order to understand what impact different entrepreneurial activities have on the
economic well-being of the countrythe relationship between two measures of
entrepreneurial activity (Total Early-stage Entrepreneurial Activity - TEA and
Entrepreneurial Employee Activity - EEA) and level or economic development (GDP
per capita) must be analysed. Two important features emerge from this analysis:
TEA rate is decreasing along the development phases –innovation-driven
economies show the lowest TEA rate (see Figure 2.19)
EEA rate is increasing along with the development phases – in innovation-
driven economies, EEA rate is the highest (see Figure 2.20)
These features confirm that the entrepreneurial activity can be carried out in different
forms and in order to evaluate the level of entrepreneurial capacity of an economy it
is necessary to combine both indicators (TEA and EEA). By combining TEA and
32
EEA, it is possible to cover entrepreneurial behaviour within two major segments of
business sector (owners and employees) (GEM Global Report 2014, p. 52)
Figure 2.19 – TEA rate and GDP per capita source: GEM Global Report 2014, p. 53
33
Figure 2.20 – EEA rate and GDP per capita source: GEM Global Report 2014, p. 53
CHAPTER 3 – Profile of Georgian Entrepreneur Entrepreneurial activity is performed by people. Therefore, it is essential to
understand personal characteristics of people involved in entrepreneurial activities.
The framework gives us an opportunity to get an insight into certain demographic
characteristics, such as gender, age, education, income and place of residence. The
main goal of this chapter is to describe the profile of an average Georgian
entrepreneur and to determine his/her demographic characteristics. After this
analysis, we might define groups of people in Georgia, who are “under-represented”
in terms of entrepreneurial activity and, therefore, might be a good target for policy-
makers.
Division by gender
According to the figures provided by the National Statistics Department of Georgia,
the gender distribution in Georgia in 2014 was 52.2% female and 47.8% male. However, the distribution of early-stage entrepreneurs is 37.5% to 62.5%, with
34
female and male respectively. The situation is the same in most European countries,
where the entrepreneurial activity of women is significantly lower. However, the
results of the surveys show that the difference in entrepreneurial activity between
genders is slowly starting to decrease.
Men and women differ in evaluating their entrepreneurial skills. In Georgia, 43.3% of
men involved in early-stage entrepreneurial activities claim to have sufficient skills for
starting a business, compared to 26.7% of women. Likewise, 56.7% of early-
entrepreneur males admit they do not have sufficient skills compared to 73.3% of the
women interviewed.
The gender distribution based on the motivation to pursue entrepreneurial activity
among those people who are early-stage entrepreneurs is the following:
37.5% of the interviewed men engage in entrepreneurial activities because
they see opportunity in the environment compared to 11.1% of women.
45.8% of the interview men engage in entrepreneurial activities because of
necessity, compared to 66.7% of women. Age
The age distribution of early-stage entrepreneurs in efficiency driven European
economies is represented in Table 3.1
18 - 24 25 - 35 35 - 44 45 - 54 55 - 64 years years years years years
Poland 18% 36% 19% 16% 11% Bosnia and
Herzegovina 20% 35% 21% 19% 5%
Lithuania 19% 34% 23% 17% 7%
Croatia 16% 34% 29% 11% 9%
Russia 16% 33% 26% 16% 9%
Kosovo 19% 29% 20% 27% 5%
Norway 9% 28% 26% 25% 13%
Romania 27% 27% 23% 13% 10%
Georgia 15% 20% 22% 24% 18%
Hungary 20% 20% 26% 23% 11%
Switzerland 10% 19% 30% 21% 20% Table 3.1 – Age distribution of early-stage entrepreneurs
35
The largest part of all entrepreneurship in most European countries is spread across
the range of 25-44 years (more than 50%). In Georgia, this is the case for 42% of
entrepreneurial activity.
The results for Georgia are as follows (see Figure 3.1).
Figure 3.1 – Age distribution of early-stage entrepreneurs: comparison Georgia to Estonia
Education
On the basis of their education, CU classifies the respondents into four main groups:
1. Basic education or unfinished secondary education
2. Secondary education (including vocational)
3. Higher education (bachelor)
4. Masters’ degree or higher (MA, MBA, PhD, etc.)
Table 3.2 shows distribution of the people who are involved in early entrepreneurial
activities based on education. For Georgia, there is no such person who does not
have any level of education.
Basic education or unfinished secondary education 3.0%
Secondary education (including vocational) 51.5%
Higher education (bachelor) 19.0%
36
Masters’ degree or higher (MA, MBA, PhD, etc.) 26.4%
Table 3.2 – Education level of early-stage entrepreneurs
More than half of the respondents engaged in early-stage entrepreneurship donot
have more than secondary education. However, 26.4% of the interviewed early-
stage entrepreneurs have a Master’s degree or higher.
Basic education or unfinished secondary
education
Do you have the knowledge, skill and experience required to start a new business? No Yes
Table 3.3 – Relation between education level of early-stage entrepreneurs and perception
of their skills
In table 3.3 we can see how persons with different education levels, involved in
early-stage entrepreneurship, evaluate their skills, knowledge and experience in
performing entrepreneurial activities.
CHAPTER 4 – Entrepreneurship Ecosystem of Georgia
4.1 The Entrepreneurial Framework Conditions
The 2014 GEM Global Report illustrates the relevant national conditions that have an
overall impact on economic development and activity, as well as specific conditions
which facilitate to innovation and entrepreneurship in a society. Three sets of
Framework Conditions are expected to be of concern for policy makers at different
stages of economic development.
The basic requirements, namely a country’s macro-economic stability, institutions,
infrastructure, health and primary education, are the underlying fundamental
conditions required for a well-functioning business environment. These requirements
are usually the focus of development efforts in factor-driven countries. As these
factors become relatively established, and the economy moves toward the efficiency
stage, more funding and development efforts should focus on the efficiency
enhancers. These factors include higher education and training, goods and labour
market efficiency, financial market sophistication, technological readiness and
market size. The model then looks at factors aiming at stimulating and supporting
innovation and entrepreneurial activity. The features that are expected to have a
significant impact on the entrepreneurial sector are captured in the nine Entrepreneurial Framework Conditions (EFCs), which are described in Figure 4.1. Although the EFC’s can be addressed at any stage of development, these conditions
function best in economies with an underlying foundation of basic requirements and
efficiency enhancers. For example, it is unlikely that government entrepreneurship
programmes will be effective if the country provides inadequate health care and
primary education to its population.
The 2014 Georgian National Experts’ Survey (NES) provides insights into the ways
in which these EFCs either foster or constrain the entrepreneurial climate, activity
and development.
38
Figure 4.1 - The GEM Entrepreneurial Framework Conditions
4.2 An assessment of Georgia’s entrepreneurial environment
In order to assess the national conditions influencing entrepreneurial activity in
Georgia, experts were asked to complete a closed questionnaire consisting of 97
statements about factors related to Georgian entrepreneurial environment. Each
response was measured on a 5-point Likert scale (1= completely false, 2=partly
false, 3=neither true nor false, 4=partly true and 5=completely true). The statements
were phrased so that a score of 4 or 5 would indicate that the expert regarded the
factor as positive for entrepreneurship, while a score of 1 or 2 would indicate that the
expert regarded the factor as negative for entrepreneurship. The data obtained from
the 36 respondents was analysed in order to determine the mean score for each
category of questions. The results are depicted in Table 4.1 where Georgia is
compared and ranked among nine other countries. The table is organised according
to descending means – in other words, the highest ranked categories are those
about which the experts feel more positive, while the lowest ranked categories are
seen as the most underdeveloped. On the Likert scale of five, a median score of
three is regarded as average.
39
RUSSIA HUNGARY ROMANIA TURKEY LITHUANIA POLAND KOSOVO CROATIA BOSNIA & HZ GEORGIA Median Position of
Georgia
/10 Position of
Georgia
/10
Finance National National Government Education Education R&D Commercial Internal Internal Physical Cultural Policy - Policy - Programs - Primary - Post- Transfer Infrastructure Market - Market - Infrastructure and General Regulation & Secondary Dynamics Openness Social
Table 4.1 – Summary of experts’ assessment of the entrepreneurial environment
As we see on figure 4.1, Georgian experts are quite critical about their
entrepreneurial ecosystem, but at the same time they recognize some strong points.
It is notable that, except government programmes and commercial infrastructure,
other items are evaluated either high among compared countries or low. From 12
items national policies, education, internal market openers and cultural and social
norms are evaluated as top categories and the rest (finance, R&D transfer, and
internal market dynamics) as bottom categories. The Georgian ranking with regard to
those 12 items is visually compared with median data on figure 4.2 below.
40
Figure 4.2 – Georgian NES ranking compared to median of selected countries.
As mentioned earlier in the report, Estonia was chosen as a benchmark country for
Georgia, because of its similar size and historical heritage. On figure 4.3 below,
Georgia is compared with Estonia across indicators on entrepreneurship framework
conditions.
Figure 4.3 – Indicators on entrepreneurship framework conditions – Georgia VS Estonia. As shown on figure 4.3 above, Georgia is only leading in National policy. In all other
items Estonia is ahead of Georgia with 2014 rankings. Estonia is especially far
41
ahead when it comes to finance, government programs, R&D transfer and internal
market dynamics. For a complete representation and composite analyses of Georgian EFCs figure 4.4
below presents Georgian EFC level and its position among 10 nations.
Figure 4.4 – Indicators on entrepreneurship framework conditions of Georgia with rankings.
Moreover, for a better visualization of EFCs scorings, figure 4.5 and 4.6 include
mean coefficients for each EFC. These figures show that EFCs do differ across all
12 items.
Figure 4.5 – Indicators on entrepreneurship framework conditions of Georgia with median of selected nations.
42
Figure 4.6 – Indicators on entrepreneurship framework conditions of Georgia with median of selected nations.
The items with the clearest differences in the 2014 Georgian NES results are
national policies (figure 4.6) and R&D transfer and internal market dynamics (figure 4.6). Conversely, not all EFCs have such clear differences.
43
CHAPTER 5 – Conclusion
Table 5.1: Recommendations for improving Georgia’s entrepreneurial capacity Category Recommendations for entrepreneurial development in
Georgia
Education and training In education and training we have two pillars, primary and
secondary and post-secondary. In both of them Georgia has
top positions residing 2nd
and 3rd
places respectively.
Although population responses show that education levels
are high, we suggest that special concentrations on
innovation and entrepreneurial activities should be
emphasized and encouraged by entrepreneurial incubators
and innovation research labs.
Government policies Both general and regulatory policies are ranked high by
national experts, with 2nd
and 1st
positions respectively.
Despite high rankings in this regard entrepreneurs still face
some extend of regulatory burden.
With a purpose to have efficient policy system, government
bodies are advised to have monitoring mechanism for policy
functioning on place. Monitoring could include assessment
of policy effectiveness in practice and adjustments for
improvement if needed.
Access to finance and Financial resource availability in the country is considered
financial support by national experts to be one of the least developed item.
Among the selected 10 nations, Georgia is ranked as 9th
.
Different studies have also shown that the lack of finance is
a main hindrance to economic development. As it is true for
general economic development, for a healthy
entrepreneurial ecosystem it is more important for
innovation to rely on adequate financial sources. Thus, we
suggest that cheap, available and accessible finance should
be offered in the country which should be supported and
motivated by public sector.
Government programs In general, government programs were ranked as average,
slightly below to median and on 6th
place among 10 nations.
44
Transfer of research
and development
Commercial
infrastructure
Openness of the domestic
market
Access to physical infrastructure
Social and cultural norms
We understand moderate expert emphases on this item as
their will to keep government less proactive with programs
rather than policies.
Among selected 10 nations Georgian experts reported
lowest research and development transfer rate. Although,
we have not measured real transfer of R&D, the perception
of experts shows the real urgency in this direction. We
suggest to more intensively supporting academic research
and innovation driven programs, which should be directed
both towards knowledge creation and knowledge transfer
for innovative research centers on university level.
Commercial infrastructure was considered by national
experts as about satisfactory. We consider that it could be
influenced by relatively positive standing of commercial
infrastructure compared to other dimensions. Although a
level of development in commercial infrastructure is good,
the relevancy and accessibility of this to existed business
environment is not high.
For internal market analyses we got contradictory response
from national experts. On the one hand, we have highest
rate in market openness, but on the other hand, we have
lowest rate in market dynamics. This represents a non–
healthy market environment. Natural question should arise,
if there is openness, why are dynamics lacking? One of the
potential responses can be natural or semi natural
restriction of market dynamics because of monopolies and
oligopolies. From this, we can suggest that there is explicit
need of anti-monopoly legislation and the implementation of
legislation.
Although physical infrastructure was reported by national
experts as one of the most advanced, there are still a lot to
be done in this regard. The development of number of
infrastructural complex which will be directed to support
efficiency of the operations and effectiveness should be
maximized.
National experts released supporting nature of social and
45
cultural norms to entrepreneurship. Here we may have
response bias, as they also represent the same group.
Factors like traditional customs, age of average
entrepreneurs and time orientation can be also considered
as a negative for entrepreneurship development.
46
REFERENCES Acs, Z.J. and J.E. Amoros (2008). “Entrepreneurship and competitiveness
dynamics in Latin America.” Small Business Economics, 31(3), 305-322. Bosma, N.S., Z. Acs, E. Autio, A. Coduras and J. Levie (2009). Global
Entrepreneurship Monitor 2008 Executive Report. London Business School:
London; Universidad del Desarrollo: Santiago, and Babson College:
Wellesley, MA. GEM Global Report 2014
Kwon, S- W. and P. Arenius (2010). “Nations of entrepreneurs: A social
capital perspective.” Journal of Business Venturing, 25(3), 315-330. Porter, Michael E., Jeffrey Sachs, and Klaus Schwab. Global Competitiveness
Report, 2001-2002. New York, NY: Oxford University Press, 2002. Report of World Bank (World Bank, 2012) on the
entrepreneurship in Georgia Reynolds et al., 1999, p.3 Schwab and Salari-Martin, 2009
Van Stel, A., M. Carree and R. Thurik (2005). “The effect of entrepreneurial
activity on national economic growth.” Small Business Economics, 24(3), 311-
321.
Von Broembsen, Marlese, Eric Wood, and Mike Herrington. "Global
entrepreneurship monitor: South African report 2005." The UCT Centre for
Innovation and Entrepreneurship (2005). Wennekers, S., A. Van Stel, M. Carree and A.R. Thurik (2010). “The
relationship between entrepreneurship and economic development: Is it U-
shaped?” Foundations and Trends in Entrepreneurship, 6(3), 167-237.
47
Kyrgyz Republic
6. International Ataturk Alatoo University, Bishkek
INTERNATIONAL ATATURK ALATOO UNIVERSITY
ERASMUS+ INSTITUTIONAL OFFICE
REPORT
Prepared by:
Dr. Bedelbai Mamdiev, Department of Industrial Engineering
Dr. Nurlan Atabaev, Department of Finance
Bishkek 14, 2016
1
CONTENTS
REPORT ON INSTITUTIONAL LEVEL 2
Question1 - What is the current situation concerning CreaLab? 2
Question2 - What are the ambitions/expectations? 2
Question3 - What are the (own) potential resources? 2
Question4 - What is the relevant education on entrepreneurship? 3
Question5 - Who will be the carriers? 3
LEGAL AND ECONOMIC CONTEXT AND MEASURES TAKEN AT
NATIONAL LEVEL TO PROMOTE ENTREPRENEURSHIP IN CASE OF
KG 3
ENTREPRENEURSHIP ATMOSPHERE IN KYRGYZSTAN 6
REFERENCES 8
2
Report on Institutional Level
Question1 - What is the current situation concerning CreaLab?
1. What is the current situation concerning CreaLab-type of initiatives (if any)
already taken in the institution;
Currently, International Ataturk-Alatoo Univeristy (IAAU) does not have its
Crea-Lab type facility because lack of professionals in this field. However, it is
closely working with 2 business startups (incubators) initiatives out of university:
Business Clinic of Central Asia (BCCA) and QooVee.
Several teams from IAAU participated in BCCA’s competition and 3 were
selected and went through incubation programme. 2 out of 3 teams were presented in
front of investors, and one of them had serious dialogues with them in order to
continue the business. This year, BCCA is about to announce Summer Programme,
where IAAU’s students are invited.
QooVee is mostly concentrated on IT industry. Several seminars and workshops
about increasing the entrepreneurship capacity of students. Several seminars are
planned about startups and introducing a business.
Question2 - What are the ambitions/expectations?
2. What are the ambitions/expectations for the CreaLab (disciplinary research
priorities, why does the institution wants to establish a CreaLab);
The main idea behind the establishment of CreaLab is to enhance the
entrepreneurship skills of both faculty members and students. Moreover, CreaLab will
be the meeting point of industry and university. The ambition is cooperation of above
mention bodies will create new ideas, products or services, and contribute to the
national economy. Furthermore, it is hoped that CreaLab will be initial steps of
Technopark’s establishment at the university.
Question3 - What are the (own) potential resources?
3. What are the (own) potential resources to be put at the disposal of the
CreaLab;
Currently, we have bright students, of whom IAAU is proud of. Some of them
have already shown that they can introduce something new.
Faculty members have enough technical skills. 3 computer labs and 2 electronics
labs are ready for service.
Together with KyrgyzPatent, the Center for Technology and Innovation was
established. There faculty members and students can access information about how to
protect their work, ideas and patents’ database for further research.
3
Question4 - What is the relevant education on entrepreneurship?
4. What is the relevant education on entrepreneurship already available and
which connections are already established (or could be developed) with
industry;
Currently “Innovation Management” and “Entrepreneurship” courses are taught at
several department. It is aimed to update those courses and make them available to all
departments.
Students usually have internships at companies, and if they are successful, they
are offered positions. Faculty members do cooperate with the industry to solve their
problems (usually these are technical problems). However, introduction of CreaLab
and transfer of experience from EU countries will enable to generate new ideas,
products and services together.
Question5 - Who will be the carriers?
5. Crucially: who will be the carriers, the “agents of change” in the institution at
decision-making level, teachers, researchers and students.
Deans together with the head of CreaLab will be agents of change. First of all, deans
already have good connections with institutions out of university; they can
disseminate information and attract representatives of industry to CreaLab. There,
head of CreaLab would further receive the duty of furthering the dialogue between the
university and industry.
Legal and economic context and measures taken at national level to promote
entrepreneurship in case of KG
In any market economy, the development of entrepreneurship plays an essential
role in promoting economic growth. However, in the case of Kyrgyz Republic, the
entrepreneurship has not made a significant contribution to sustainable economic
development. It serves for the rapid accumulation of capital without tangible
productive effect. The main field of its activity is trade mediation. The exception is
rural entrepreneurs that created peasant/ farms and its cooperatives.
Currently there are more than 12 thousand small and medium-sized enterprises. The
total number of workers employed in this sector is 417,3 thousand people (excluding
those employed in peasant/farm households). The volume of industrial output
produced by the small and medium-sized enterprises is 1828.8 million soms. A large
share of production concentrated in the agricultural sector of the economy (60.8% of
total output of production).
Entrepreneurship is defined as an initiative independent activity of legal entities or
private individuals aimed at gaining profits or personal income, carried out on the
rights of any form of ownership.
4
Under business entities are considered private individuals and legal entities,
registered in accordance with the law and involved in the activity, not prohibited by
the law, for extracting profit, regardless of their organizational-legal forms and forms
of ownership. ( Law of the Kyrgyz Republic "On protection of rights of
entrepreneurs" from 01.02.2001 No. 15)
Small entrepreneurship is defined as a set of economic units: small enterprises,
peasant/ farms and individual enterprises. In the Kyrgyz Republic for the period 1991-
2013, the number of small and medium-sized enterprises was increased (Table 1).
Table 1. Dynamics of development of small and medium enterprises in Kyrgyzstan
1. What is the current situation concerning CreaLab-type of initiatives (if any) already taken in the institution;
Nowadays, IKSU did not have any structural unit such CreaLab. IKSU had PERSEUS TEMPUS project experience relevant to creation of the REDIC (Research and Development center). This center re-designed to Student Support center. Still support young scientists, develop linkages between different organization in government, NGO, business and industry. However, idea of REDIC was not totally as CreaLab. During the project life, we develop the database, which is useful, also we had re-trained staff in Brno- Check Republic in Technology Transfer, Technology Park development etc.
2. What are the ambitions/expectations for the CreaLab (disciplinary research priorities, why does the institution wants to establish a CreaLab);
IKSU would like to develop and establish CreaLab, which will be the structural unit at the university motivate students and staff to do research together with industry, develop their start-up ideas, business plans, marketing research, support any inventions and ideas. We interested on CreaLab development as the company producing some services such as consulting, development competences necessary to employments, teaching and trainings regarding to the needs, entrepreneurial school establishment (see the figure 1)
Figure 1. Main services provided at CREALAB at IKSU
Capacity development
• Consulting • Teaching and training • New competences development: enterpreneural school
Innovation Production
• Start-up and business plans implementation • Inventions (if any) and patient obtaining • Production development: promomaterials, video and presentation development
R&D
• Market research providing • Analize of stakeholders • Research on innovations • Publications • Working on database development
Meetings and discussions
• Round tables providing • Meetings and interview with employers • Participation on competitions, conferences etc
3. What are the (own) potential resources to be put at the disposal of the CreaLab Issykkul State University is one of the biggest university in Issykkul region. Nowadays, University has a great potential of human resources and material technical base. University has several virtual platforms: University website: http://www.iksu.kg/ Students’ services platform Moodle education platform (on the development) moodle.iksu.kg University has 277 staff with more than 70 PhDs, 10 DcS, 4000 students IKSU structure is as following 7 faculties, 1 college, 1 Long life learning center and provided 22 BA and 7 MA programs. As material technical base, university has 7 buildings, 5 educational buildings and 1 for entertainment (Cultural-aesthetical center), 1 Sport complex. Issykkul State University is the leader on the TEMPUS and Erasmus + projects. And we have 16 centers established by projects, they have different goals:
Chinese language Confucius center, Student Tourism Information Center English Language Lab and Recourse Center Arab Language and Culture center Korean Language Center Indian Study center Russian Language Center Kyrgyz Language Center Students Support Development Center Qualification Frameworks Development and IT implementation center Scientific Innovation Center Distance Education Center for Civil Servants Natural Science programs development center Automation of education process center Tuning education center E-learning center and studio
All these centers involved to the university life and education.
IKSU has several agreements with different organizations as with universities, also with companies, most of them for employment and practical trainings, but they also could be developed to joint research, capacity development etc.
4. What is the relevant education on entrepreneurship already available and which connections are already established (or could be developed) with industry
IKSU has the Economics Faculty where university provide course “Entrepreneurship” as elective course. This course still necessary to develop to modern standards. Each university faculty has agreements with industrial and business companies as base for practical trainings for students. Especially connections good developed in Tourism Faculty, because Issykkul is a touristic area. We have some plans to develop new Entrepreneurial School and provide course to all students who want to certified course “Entrepreneurship”. 5. Crucially: who will be the carriers, the “agents of change” in the institution at decision-making level, teachers, researchers and students.
IKSU develops working group for the EUCA project, which is as following: Sagyntay kyzy Elvira – project coordinator at IKSU Umetalieva Munara – assistant of coordinator Decision making group:
1. Akanov Doolot – Vice-rector on the Academic Issues 2. Karybaeva Cholpon – Dean of the Economics Faculty 3. Erkimbaev Maksat – Head of the Accounting and Audit Department 4. Omurkolova Florida – Head of the Finances and Credit Department
Teachers and researchers:
1. Beirmanov Asan 2. Takyrbasheva Zhyldyz 3. Sarbanova Archa
List of students will be complete later. Month ago we announced the competition to the best innovation ideas at the university. Students participated and nominated as leaders will be involved to the project. Apart from the above a brief description of each institution will be provided. This description can be the same as the one to be provided to Ednet for the project website. It was done above.
8. Kyrgyz Economic Universiy, Bishkek
Kyrgyz Economic University
Report on establishing CreaLab in KEU
Work Plan 1.2
1. What is the current situation concerning CreaLab-type of initiatives (if any)
already taken in the institution?
KEU has the following laboratories / centers: - Educational and methodical center of the department of "Finance and Credit" - Teaching and research laboratory of "Management, Hospitality and Tourism" -Training and industrial laboratory of «Accounting, analysis and audit" - Laboratory of "Chemistry" - Laboratory of "Food Technology" - Laboratory of « Cooking Technology» - Training and production workshops - Recording studio, webinar But these laboratories / centers do not work as expected and in many cases are used for theoretical studies. The reason: lack of adequate modern equipment, teaching materials, poor motivation of the staff, etc.
Therefore, it is possible to transform into a single large CreaLab by merging or synergy existing university laboratories based on innovations and apply an entirely new approach to the work oriented to result. 2. What are the ambitions/expectations for the CreaLab (disciplinary research priorities, why does the institution want to establish a CreaLab)? For a better functioning of the existing laboratories KEU needs new technical equipment. For example, it would be possible to carry out research works in creative labs for the business environment upon request. The establishment of this laboratory will contribute to the renovation and implementation of the courses into the curriculum of the specialty "World economy and foreign trade activities", "Foreign economic activity and international trade", "International Economics and Business." Besides during internship, students and undergraduates would give advice to local businesses on implementation of the principles and norms of the WTO. Within the frame of this laboratory, it is planned to invite experts/public officials from the Ministry of Economy of the Kyrgyz Republic, Investment Promotion Agency under the Ministry of Economy and business consultants.
The establishment of such a laboratory will serve as a single platform for research; identify startup ideas for its research, realization and implementation. It will give the opportunity to work together and get concrete results. Short overview of the future CreaLab in KEU Objectives:
* To foster entrepreneurial spirit among students/graduates (academic disciplines of business, economics, management, and tourism), as these people have untapped business potential * To enhance scientific entrepreneurship levels within KG Universities, decreasing over the long-term youth unemployment and boosting job creation and growth across the country * To open up new learning opportunities through the practical application of entrepreneurial skills, which will involve the creation of start-ups, commercialization of new services, products and prototypes Activities: * Conducting in-depth needs analysis; identify the obstacles that PhD students/graduates face in transferring their research findings into business ideas * Students involved in internships, working in interdisciplinary teams and under the guidance of academic faculty, managers, investors and entrepreneurs, having thus the unique opportunity to understand business needs and how their research can be applied in real business settings * Development and testing of a complete pre-accelerator programme offered in universities, research and entrepreneurship centres, accelerators and incubators Specialized areas: accounting & finance services; marketing; event management; management and service in tourism; restaurant business; catering; IT service; logistics; creative entrepreneurship; rural entrepreneurship
CreaLab academic and administrative staff: Teachers Professors Researchers Students (undergraduate, postgraduate) Manager (decision maker)
Expected Results/Outcomes: FOSTER ENTREPRENEURSHIP Foster the entrepreneurial spirit among students/graduates who have untapped business potential. DEVELOP BUSINESS SKILLS Develop business skills for students/graduates, creating new professional paths for them. BOOST JOB CREATION
Enhance scientific entrepreneurship levels within KG universities, decreasing over the long-term youth unemployment and boosting job creation and growth across partner countries. REMOVE OBSTACLES Identify and remove the obstacles that students/graduates encounter in transferring their research findings into business ideas. COMMERCIALISE RESEARCH Involve participants in internships and provide them with hands-on experience on how their research can be applied in real business settings FIND START-UP FUNDING CreaLab participants will be able to present their business plan in front of business angels and VCs for obtaining funding in order to create their start-ups. BUILD BRIDGES Support and stimulate the flow and exchange of knowledge between higher education and enterprises across partner countries. TEACH ENTREPRENEURSHIP Develop state-of-the-art teaching methods and techniques on entrepreneurship education for students/graduates. TRANSFER BEST PRACTICES Transfer best practices from EU countries that have long-term experience in entrepreneurship and accelerator programmes to partner countries. ESTABLISH PARTNERSHIPS Encourage and sustain long-term cooperative partnerships between universities and businesses. 3. What are the (own) potential resources to be put at the disposal of the CreaLab? There is an opportunity to use the research works of the students and teachers. It is possible to use webinar recording studio to record video lessons and research objectives undertake their dissemination through conferences and round tables involving government and business, ie as a whole will act a PPP program. There is an extensive library, departments and laboratories of the department, lecture halls with the organizational and technical equipment. There are conference facilities for conducting scientific and practical conferences and round tables. 4. What is the relevant education on entrepreneurship already available and which connections are already established (or could be developed) with industry? There is a course on "Fundamentals of Entrepreneurship" in all programs. There is a university Career Center and marketing which have contracts with enterprises and organizing internship for students. The Career center is working directly with small and medium-sized businesses as well as with an appropriate Kyrgyz ministries and agencies where the qualification improvement programs are developed.
Since 2015, KEU trains specialists on educational profiles (specializations) "The global economy and foreign trade activities" and "Foreign economic activity and international trade", besides the second education program taught in English. Implementation of the training program "International Economics and Business" will start on 2016-2017 school year. The cooperation can be established with industry structures of small and medium-sized businesses within the capital as well as in the regions of Kyrgyz Republic. In addition, it is planned to develop a bachelor program "Business Administration" at the Department of "Economics, Management and Marketing." 5. Crucially: who will be the carriers, the “agents of change” in the institution at decision-making level, teachers, researchers and students? Teachers, students, undergraduates, doctoral students, professor and manager-coordinator of the CreaLab.
6. Legal and economic context and measures taken at national level to promote
entrepreneurship
The state policies in Kyrgyzstan are aimed at creating favorable conditions for SME. This resulted by creation of the legal framework in the field of entrepreneurship and its further improvement, attracting private sector investment and reducing state intervention in economic activities of businesses.
In order to protect the citizens' rights established by legislation of the Kyrgyz Republic free use of their abilities and property for implementation of entrepreneurial activity as well as the establishment of forms and methods of state regulation and stimulation of the initiative of business entities, the Law of the Kyrgyz Republic "On protection of the rights of entrepreneurs" was adopted in 2008. This Law applies to relations where the business entities interact, created and operating in accordance with the legislation of the Kyrgyz Republic, regardless of their organizational-legal forms and forms of ownership.
The Government of the Kyrgyz Republic has made considerable efforts to a fundamental change of investment attractiveness of the country and creation of favorable conditions for business. In 2009, adopted a new Tax Code provides for the optimization of the tax system (the number of taxes was reduced) and the introduction of modern principles of taxation (tax audits based on risk assessment, the presumption of good faith of the taxpayer and etc.) as well as a modern tax administration to reduce the tax burden on business and maximize the effectiveness of tax administration. Thereby it created quite a liberal tax regime for subjects of the country's business and investors. Since 2006, the VAT on import of equipment is exempted which was intended for its own production use. The government lowered the income tax for enterprises from 20% to 10%.
Since the entry into force of the new edition of the Code, the total number of paid by business and / or collected from business taxes within the general regime of taxation fell from taxes 15 (8 national and 7 local taxes) up to 8 taxes (6 national and
2 local tax). In particular, it has been canceled most of the local taxes, which significantly simplified the tax system for the majority of small and medium businesses, as well as the administrative costs of the tax authorities themselves was significantly reduced. Moreover, the reductions of single tax rate by 1% - 4%, depending on the type of activity, enhance the attractiveness of the simplified tax regime for business; the rate of value added tax (VAT) has also been reduced from 20% to 12%.
In order to create maximal favor for business activity in the country and reduce tax burden of business entities, the Resolution of the Government of the Kyrgyz Republic "About the registration threshold of the value added tax" was adopted which provides for increased VAT registration threshold from 2.5 million up to 4 million soms for SMEs.
The State bears the obligation to support and develop small businesses, to stimulate and regulate the activities of small businesses (Law "On State Support of Small Enterprise", "National Sustainable Development Strategy of the Kyrgyz Republic for the period 2013-2017" dated January 21, 2013 №11). Reducing the frequency of reporting and payment of taxes for all taxpayers except for large is a significant step in supporting of small and medium-sized businesses.
The Kyrgyz Republic joined to EEU and the Common Economic Space (CES). Joining the EEU and the CES is necessary firstable for development of exports to EEU countries without customs borders:
no customs processing at the border;
VAT is not paid when crossing the border, the Customs Union standards allow paying VAT deferred to 1.5 months i.e. there will be preservation of working capital exporters;
common requirements for the products and all the documents confirming the safety of the product will be in a single sample;
cancellation formalities, duties and customs controls at the internal borders of the Customs Union and freedom of transit provides a reduction of costs of participants of foreign trade activities, and creates favorable conditions for the operation of wholesale markets of the country. The investor is interested to come to a more receptive market, rather than in one country.
The CES membership provides migrant workers with favorable conditions of stay and activities in terms of employment of the simplified procedures, reducing the length of stay in the country of migration, improvement of social living conditions for migrant workers and their families;
duty-free supply of strategically important goods such as petroleum products, lumber, metal which are very necessary during implementation of material-country projects in hydropower, oil and gas, construction of residential and transportation infrastructure.
In order to optimize license permitting system of the Kyrgyz Republic, there was adopted the Law "On licensing system in the Kyrgyz Republic" on October 19, 2013 №195.
The law assumes transparent and open principles of the licensing conditions for the issuance, suspension or cancellation of licenses and permits, the procedure for licensing control, measures of influence for violation of licensing requirements and provides an exhaustive list of all types of licenses and permits.
There are following organizational and legal forms of business in Kyrgyzstan with formation of legal entity business activities carried out in the form of: JSC - Joint Stock Company; OJSC - Open Joint Stock Company, CJSC - Closed Joint Stock Company, LLC - Limited Liability Company, SAL - a society with additional liability, Associations: Full and limited partnership, Cooperative - without establishing a legal entity in the form: the individual entrepreneur, who works under the certificate and individual entrepreneurs operating under the patent.
In addition, it is possible to do business forming farms and farms that can be registered as an individual if the founder is one person and as a legal entity if the founder is more than one person.
Non-profit organization has the right to engage in business / income-generating activities
The legislation assumes two conditions for the implementation of income-generating (business) activity of non-profit organizations:
• entrepreneurial NGO activities should not contradict the goals and objectives of the organization;
• the resulting profits should not be distributed among the participants (founders), members of the NGO.
• NGOs Entrepreneurial activity can be carried out:
(1) directly by the organization itself, or
(2) through the establishment of subsidiaries of commercial organizations. This subsidiary
commercial organization profits sends founder, i.e. NGOs, which in turn sends the funds to achieve the objectives of its establishment.
The procedure of registration of the legal entity
The deadline for registration of commercial legal person is 3 working days. Deadline for registration of non-profit legal entity is 10 days.
To address the shortcomings of procedure of registration of commercial and non-commercial entities it is necessary to be registered in many state agencies (the Ministry of Justice, the Statistical Committee, the Tax Service, the Social Fund, etc.), the Government of the Kyrgyz Republic made a decision to reform registration system of legal entities and transition to the registration system on the principle of "single window". As a result the new Law of the Kyrgyz Republic "On state registration of legal entities", was adopted on February 20, 2009 which came into force on 1 April 2009.
Under the new system for registration of legal persons, the applicants visited only one state body - the Ministry of Justice or its territorial divisions, and all other necessary operations must be carried out by the public authorities through the exchange of information. Entrepreneur creates one set of documents in one public body with simultaneous registration and registration with the tax authorities, statistics and the Social Fund. After the set period of time (from 3 to 10 days) he/she receives the registered constituent documents and a certificate of registration with the assigned all the numbers and codes (registration number, VAT number, Main code)
9. University of Economics and Enterprise
University of Economics and Enterprise
1. What is the current situation concerning CreaLab-type of
initiatives (if any) already taken in the institution;
At the University of Economics and Enterprise (UEP) study of more than 3,000
students annually. Of these, about 95% - from the Southern region of the country,
80% -Students from rural areas, more precisely 75% - because of Jalal-Abad region.
Referring to the above statistics we can see that the main contingent of students from
the region occupied by the most needy but promising in the development of socio-
economic nature.
In our university were carried out a number of activities to promote and familiarize
with the activities on the creation CreaLab. Such as:
• Information day for teachers, where they familiarized themselves with the purpose
of the project and a preliminary working group composed of four people was
established.
• In turn, teachers provide students with the purpose and activities of the project,
creative and prospective students were included in the working group.
• There were a number of proposals and ideas for the development CreaLab.
2. What are the ambitions/expectations for the CreaLab (disciplinary
research priorities, why does the institution wants to establish a
CreaLab);
• Meeting the needs of the individual in intellectual, social and material development
by working in CreaLab;
• Development of fundamental and applied sciences and arts by means of joint
creative activity of scientific and pedagogical staff and students, the use of the results
obtained in the process;
• Formation of students' citizenship and creative activity;
• Increase the amount of experience in the development of a strategy on the creation
of new jobs.
• Find and reinforce the skills and knowledge to form CreaLab full operation.
• Methods and directions to enter the new modern activities.
• Move to new levels of modern business and the provision of services taking into
account the creation of jobs.
• Since our present time and skills are studying theoretical knowledge, so expect to
review the structure of action.
• The project to create CreaLab assigns to each student a great responsibility, which
manifests itself in the development of socio-economic background on all States.
3. What are the (own) potential resources to be put at the disposal of
the CreaLab;
Our university provides CreaLab under the premise of 30 m2;
A working group of students and teachers;
at the disposal of the working group CreaLab University has a library with Internet
access.
4. What is the relevant education on entrepreneurship already available and
which connections are already established (or could be developed) with industry;
At the moment we have conducted training of students on the profile of Economy,
which is divided into the following areas:
- Finance,
- Banking,
- Tax and taxation,
- Insurance business,
- Accounting and analysis,
- Audit,
- Management.
Also, we have established relations with the following companies and organizations:
- Joint Stock Company "Kelechek"
- Joint Stock Company "Nur"
- Maylisu lamp factory,
- Joint Stock Company Gazprom Neft Jalal-Abad,
- Association of Young Entrepreneurs (JIA).
5. Crucially: who will be the carriers, the “agents of change” in the institution at
decision-making level, teachers, researchers and students.
The Project Manager will oversee the activities of the working group to engage in
logistics coordinator to help in making decisions on issues CreaLab.
10. Country Report
1
Information about authors
Takyrbasheva Dzhyldyz – is a teacher, economist, MA of public administration and local
self-government
Currently – teacher of "Economics, Finance and Taxation" in IKSU named after