Lorem ipsumHOT DOGS
Global Entrepreneurship Monitor:
Ontario 2016
Beyond the $ Value:Attitudes, behaviours, and aspirations of Ontario entrepreneurs D
ece
mb
er
20
17
B E Y O N D T H E $ V A L U E
A U T H O R S
A N N A L I S E H U Y N H P O L I C Y A N A LY S T
Annalise is a Policy Analyst at the Brookfield Institute for Innovation + Entrepreneurship. She isinterested in how careful designand design thinking approachesto policy can reach people whowouldn’t otherwise be a part of decision-makingprocesses. In her time at BII+E, she developed aknack for visual design and is interested in how itcan be used to effectively communicate complexinformation. Annalise holds a Bachelor of Arts inPolitics and Governance from Ryerson University.
[email protected] @hausofhuynh
M AT T H E W L O F O R M E R P O L I C Y A N A LY S T
Matthew Lo was a Policy Analyst at the Brookfield Institute for Innovation + Entrepreneurship from 2016-2017, with a background in economics, sustainable development and empirical analysis. His current research interests include fiscal policy, social welfare and the economic impacts of entrepreneurship. In his past roles, he has conducted research on the economic impacts of taxation, and the relationship between resource development and economic growth. Matthew holds a Master’s degree in Economics from the University of British Columbia and a Joint Honours degree in Economics and Environmental Studies from the University of Waterloo.
@matthewwylo
V I E T V U E C O N O M I S T
Viet is an Economist at the Brookfield Institute for Innovation + Entrepreneurship. Viet isinterested in how governmentsand companies can intentionallydesign policies and markets todrive human behaviour. He is also fascinated byhow the world adapts to the emergence of newtypes of markets as legal frameworks often lagbehind. Viet holds a Master of Science in Economicsfrom the London School of Economics & PoliticalScience and a Bachelor of Arts in Economics withHonours from the University of British Columbia.
[email protected] @vviet93
B E Y O N D T H E $ V A L U E
The Brookfield Institute for Innovation + Entrepreneurship (BII+E) is a new, independent and nonpartisan institute, housed within Ryerson University, that is dedicated to making Canada the best country in the world to be an innovator or an entrepreneur. BII+E supports this mission in three ways: insightful research and analysis; testing, piloting and prototyping projects; which informs BII+E’s leadership and advocacy on behalf of innovation and entrepreneurship across the country.
ISBN: 978-1-926769-81-3
For more information, visit brookfieldinstitute.ca.
/BrookfieldIIE
@BrookfieldIIE
The Brookfield Institute for Innovation + Entrepreneurship
20 Dundas St. W, Suite 921 Toronto, ON M5G 2C2
A C K N O W L E D G E M E N T S
Charles Davis, Professor, Edward S. Rogers Sr. Research Chair of Media Management, B.A., M.A., Ph.D.
Sarah Doyle, Director of Policy + Research
Peter Josty, Executive Director of The Centre for Innovation Studies
Entrepreneurship
EntrepreNOTship
O N TA R I O
C A N A D A
1 B E Y O N D T H E $ V A L U E
T A B L E O F C O N T E N T S
Executive Summary 2
Introduction 5
Entrepreneurship in Ontario 5
GEM: A Global Study of Entrepreneurship 5
Total entrepreneurial activity: GEM’s measurement of entrepreneurship 7
Objectives 8
Methodology 9
How Ontario Measures Up 11
Attitudes 12
Activity 19
Demographics 24
Age 24
Education 27
Income 29
Gender 31
Motives 38
Sectors 43
Participation in the Technology Sector 45
Innovation 50
Job creation 56
Exports 62
Exits 63
Conclusion 65
Entrepreneurship
EntrepreNOTship
O N TA R I O
C A N A D A
2B E Y O N D T H E $ V A L U E
E X E C U T I V E S U M M A R Y
The Global Entrepreneurship Monitor (GEM) is a longitudinal study of entrepreneurial activity and economic growth that draws on data from over 60 countries. In comparison
to other major cross-national studies that place an emphasis on firms—in particular, on their financial metrics—GEM focuses on the entrepreneur as the unit of analysis and describes the culture and circumstance of entrepreneurship.
While this report does not capture the full picture of entrepreneurship in Ontario, it illuminates the lived experience of entrepreneurs, from why they start businesses to why their businesses succeed or fail.
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
O NC A
% of respondents a
ged
18-64 who believe they
have the required
knowledge/skills
to start
a business.
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
ON
ON
ON
CA
CA
CA
Activ
e en
trep
rene
urs
Women involved in early-stage
entrepreneurship
% of early-stage
entrepreneurs who are
opportunity-driven
ON
ON
CA
CA
% of early-stage
entrepreneurs who
are necessity-driven
ON
CA
Early-stage
entrepreneurs
with high job
growth
expectations
ON
Early-stage entrepreneurs
with more than 50%
non-local custo
mers
Early-stage
entrepreneurs
that use very
latest technology CA
ON
CA
3 B E Y O N D T H E $ V A L U E
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
O NC A
% of respondents a
ged
18-64 who believe they
have the required
knowledge/skills
to start
a business.
% of respondents
aged 18-64
involved in
early-stage
entrepreneurship
ON
ON
ON
CA
CA
CA
Activ
e en
trep
rene
urs
Women involved in early-stage
entrepreneurship
% of early-stage
entrepreneurs who are
opportunity-driven
ON
ON
CA
CA
% of early-stage
entrepreneurs who
are necessity-driven
ON
CA
Early-stage
entrepreneurs
with high job
growth
expectations
ON
Early-stage entrepreneurs
with more than 50%
non-local custo
mers
Early-stage
entrepreneurs
that use very
latest technology CA
ON
CA
4B E Y O N D T H E $ V A L U E
M A P P I N G T H E J O U R N E Y S O F
E N T R E P R E N E U R S I N O N T A R I O :
Compared to the 27 comparator countries in this report, including Canada as a whole, individuals in Ontario are equally likely to know an entrepreneur (35.6 percent). They are much more confident in their knowledge and skills to start a business (54.3 percent) and believe that the local conditions for venture creation are favourable (57 percent).
Ontarians are less likely to be prevented from starting a business by fear of failure (39 percent). They’re also much more likely to engage in entrepreneurial activity, with 14.8 percent reporting involvement in early-stage entrepreneurship.
Ontarians who do engage in entrepreneurship are slightly older on average (38.7 years old). While there is still a notable gender gap in entrepreneurship participation, entrepreneurs in Ontario are much more likely to be women than in comparator countries (41 percent). They’re also much more likely to be educated and come from all economic backgrounds, though there is a bias towards those in the top income bracket. They start more businesses out of necessity (20 percent) and, when pursuing entrepreneurship out of opportunity, are less likely to cite increased income as the motive (31 percent).
Next to comparator countries, Ontarian entrepreneurs are much more likely to work in consumer services (51 percent), and are more active in the technology sector (11 percent). Ontarian entrepreneurs are less likely to have direct competitors that offer the same product (11 percent). They’re slightly more likely to use the latest technology, with 12 percent of early-stage entrepreneurs using technology released within the last year. In terms of the number of jobs that Ontarian entrepreneurs plan to create, growth expectations are much lower compared to other countries; only 13.6 percent of entrepreneurs expect to hire for more than 10 jobs or 50 percent employee growth (whichever is higher) in the next five years. However, Ontarian entrepreneurs top the rankings in having a high number of non-local customers.
When it comes time to exit, Ontarians are more likely to exit due to problems getting financing (15 percent), and are less likely to have planned the exit in advance (one percent).
5 B E Y O N D T H E $ V A L U E
i In the data presented in the Key Small Business Statistics 2016 report, small businesses are defined as businesses with fewer than 99 employees, plus those operated by the self-employed with no paid employees.
I N T R O D U C T I O N
E N T R E P R E N E U R S H I P I N O N TA R I O
Ontario is a major node of economic activity in Canada, contributing more than a third ($798,484 million) of the country’s GDP.1 Within Ontario,
entrepreneurship is a key factor in economic growth, job creation, and innovation, leading to the creation of high-growth firms as well as main street businesses. According to the Key Small Business Statistics 2016 report, 28 percent of Ontario’s GDP is generated by small businesses.2, i
Venture creation is an iterative and nonlinear process. GEM’s conceptual framework recognizes this complexity and the multifaceted nature of entrepreneurial mindsets, including with respect to risk appetite, innovation, growth ambitions, and motivation.
G E M : A G L O B A L S T U D Y O F E N T R E P R E N E U R S H I P
GEM is a longitudinal study of entrepreneurial activity and economic growth. In comparison to other major cross-national studies that place an emphasis on firms, GEM focuses on the entrepreneur as the unit of analysis, and describes the culture and circumstance of entrepreneurship.
The uniqueness of GEM lies in its focus on the activities, attitudes, and aspirations of individual entrepreneurs, as well as the perceptions of the community at large toward entrepreneurship.
B E Y O N D T H E $ V A L U E 6
GEM focuses on three main sets of indicators:
+ Entrepreneurial activity: How much early-stage and established entrepreneurial activity is occurring among the general population?
+ Entrepreneurial attitudes: How positively does the general public perceive entrepreneurship?
Figure 1.1: The GEM model. Social values, individual attributes, and entrepreneurial activity
Source: Adapted from the 2015 GEM Global Report
Note: Total Early-stage Entrepreneurial Activity (TEA) and Employee Entrepreneurial Activity (EEA)
GEM defines entrepreneurship as: Any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business by an individual, a team of individuals, or an established business.
+ Entrepreneurial aspiration: What do entrepreneurs in the province hope to achieve?
The GEM framework considers the social factors that shape perceptions of and participation in entrepreneurship. It recognizes the interaction of the entrepreneur’s behaviour with the characteristics of their environments.
Outcome (Socioeconomic Development)
Entrepreneurial Activity
+ By Phases Nascent, New, Established, Discontinuation
+ By Impact High Growth, Innovative, Internationalization
+ By Type TEA, EEA
Entrepreneurial Output(New Jobs, New Value Added)
Social Values about Entrepreneurship
Individual Attributes (Psychological, Demographic, Motivation)
NationalFrameworkConditions
EntrepreneurialFrameworkConditions
Basic RequirementsEfficiency Enhancers
Innovation and Business Sophistication
Social, Cultural, Political, Economic Context
+-
+-
+-
+-
+-
+-
Conception Firm Birth Persistence
7 B E Y O N D T H E $ V A L U E
T O TA L E N T R E P R E N E U R I A L A C T I V I T Y : G E M ’ S M E A S U R E M E N T O F E N T R E P R E N E U R S H I P
The heart of the GEM model is in its indicators of entrepreneurial activity; GEM primarily focuses on the phase just before the creation of a new firm, and the phases directly following a firm’s creation. TEA, or total early-stage entrepreneurial activity, measures those between 18 and 64 years old who fit in one of the two descriptions below:
+ Nascent entrepreneurs, who are actively planning a new venture. These entrepreneurs have done something during the previous 12 months to help start a new business that they
will at least partly own. Activities such as organizing the startup team, saving money for the startup, looking for equipment or writing a business plan would all be considered as active commitments to starting a business. Wages or salaries will not have been paid for more than three months in respect of the new business. Many of these people are still in full-time employment.
+ New business owners, who at least partly own and manage a new business that is between four and 42 months old and have not paid themselves salaries for longer than this period. These new ventures are in the first 42 months after the new venture has been set up.3
Figure 1.2: The phases of entrepreneurship
Source: Adapted from the 2014 GEM Global Report
Owner-Manager of an Established Business (more than 42 months old)
Potential Entrepreneur: Opportunities, Knowledge and Skills
Discontinuation of Business
Nascent Entrepreneur: Involved in Setting Up a Business (0-3 months)
TOTAL EARLY-STAGE ENTREPRENEURIAL ACTIVITY (TEA)
Owner-Manager of a New Business (up to 42 months old)
8B E Y O N D T H E $ V A L U E
Further to this measure of entrepreneurial activity, GEM measures perceptions of entrepreneurship and their influence on how likely individuals are to take the risks necessary to start or grow a business. While this report does not capture the full picture of entrepreneurship in Ontario, it illuminates the lived experience of entrepreneurs: from why they start businesses to why their businesses succeed or fail.
GEM’s standardized methodology also enables a clearer picture of how Ontario compares to other jurisdictions in terms of entrepreneurial activity and citizen perceptions of entrepreneurship.
O B J E C T I V E S
The goal of this report is to offer a helpful overview of entrepreneurship in Ontario. In particular, we aim to:
1. Describe the principal features and trends related toentrepreneurship in Ontario.
2. Compare the entrepreneurship trends of Ontario, Canada,and comparable Organisation for Economic Co-operation andDevelopment (OECD) economies.
3. Highlight potential insights for public policymakers and otherstakeholders who are aiming to promote and cultivate entrepreneurialactivity in Ontario.
9 B E Y O N D T H E $ V A L U E
M E T H O D O L O G Y
T H E A D U LT P O P U L AT I O N S U R V E Y
GEM relies on an adult population survey (APS) for its analysis. The core of the APS is identical in each country: it administers a random survey and asks respondents about their attitudes toward entrepreneurship, their involvement in entrepreneurial activity, and their aspirations for their ventures. The broad focus on both behaviours and perceptions is one reason for GEM’s robustness; GEM’s data on perceptions offers a picture of what drives individual behaviour. The full set of questions in the survey is available at gemconsortium.org.
Sixty-five countries participated in the 2016 APS. Survey respondents were randomly selected and the stratified sample included adults aged 18 to 99. In Canada, 2,186 adults were surveyed, of which 1,114 were located in Ontario.ii The raw data was then weighted by age and gender to ensure the result formed a representative sample (on age and gender).
Furthermore, for the first time this year, Ontario collected geographical data on sub-provincial regions. While this allows us to examine populations more closely at the sub-provincial level, results should be treated with caution. In some cases, sample limitations prevent meaningful discussions on the differences between sub-provincial areas. For example, an inference about entrepreneurial behaviour and perception from London, Ont., was informed by six entrepreneurs identified from a sample of 78 individuals. As a result, this report will only include discussion on sub-provincial areas where meaningful insights can be obtained.
The confidence intervals for both Ontario (2.93 percent) and Canada (2.1 percent) at the 95 percent confidence level at the worst-case percentage (50 percent) were calculated. The 95 percent confidence interval is where the true population value lies 19 out of 20 times with numerous repetition of the same survey. The worst-case percentage is the percentage with the widest interval; it is when 50 percent of respondents answer “yes” to a yes-no question. Any comparisons that fall within these confidence intervals are therefore problematic; however, there is value in seeing where Ontario and Canada place when differences are more significant. Even then, comparative analysis presented here needs to be interpreted with caution. For some measures, the confidence interval may vary, as the comparison populations could be different.
Throughout the report, we discuss interesting trends and potential explanations for beliefs and behaviours. It is important to note that these are found correlations; where possible, we present a variety of potential explanations for observed trends. We encourage further research into these trends to identify the existence (or lack) of concrete causal mechanisms.
ii In the data presented in the Key Small Business Statistics 2016 report, small businesses are defined as businesses with fewer than 99 employees, plus those operated by the self-employed with no paid employees.
B E Y O N D T H E $ V A L U E 10
C O M P A R AT O R E C O N O M I E S
In 2016, 65 economies participated in the GEM study. The comparator countries used for analysis in this report reflect economies that:
1. Are OECD members, and
2. Participated in the 2016 GEM study.
For the purposes of comparison, GEM has adapted the classification of economies by economic development from the World Economic Forum.4 The comparator countries that appear in this report are organized by this classification in Table 1.1.
Table 1.1:World Economic Forum classification of comparator economies5
Factor-driven Efficiency-driven Innovation-driven
No factor-driven countries were used as comparators
Chile
Latvia
Mexico
Poland
Slovakia
Turkey
Australia
Canada
Israel
South Korea
Austria
Estonia
Finland
France
Germany
Greece
Italy
Luxembourg
Netherlands
Portugal
Slovenia
Spain
Switzerland
United Kingdom (UK)
United States (US)
GEM surveys in other countries focus on adults between the ages of 18 and 64; for the purposes of consistency, this age range is the focus of this report. In published GEM results for other economies, survey responses of “don’t know” or “refused” were excluded from percentage calculations. While we follow this method for comparative purposes, the extent of such exclusions are noted in this report.
1 1 B E Y O N D T H E $ V A L U E
H O W O N T A R I O
M E A S U R E S U P
Table 2: GEM Indicator Rankings: Ontario and the world
Note 1: 1 indicates the highest percentage, and 28 indicates the lowest percentage.
Note 2: For the purposes of this comparison, one key metric from each section is selected. This table shows a ranked list of GEM indicators reflecting positive responses from respondents. For example, the value of 5 under “% involved in TEA” for Ontario means that among the countries considered here, Ontario had the fifth highest rate of people who identified as being involved in early-stage entrepreneurship.
4 5 3 3 8 20 10 27 7
% b
elie
ve th
ey h
ave
the
requ
ired
skill
s/kn
owle
dge
to s
tart
a b
usin
ess
% in
volv
ed in
TEA
% w
omen
invo
lved
in T
EA
% o
f act
ive
entr
epre
neur
s (e
arly
-sta
ge, n
ew a
nd e
stab
lishe
d)
% T
EA a
nd o
ppor
tuni
ty m
otiv
e
% T
EA a
nd n
eces
sity
mot
ive
% T
EA e
xpec
ting
to c
reat
e an
y jo
bs n
ow o
r in
5 ye
ars
% T
EA a
nd h
igh
job
crea
tion
expe
ctat
ions
% T
EA a
nd m
ore
than
50%
no
n-lo
cal c
usto
mer
s
6 62 2 8 5 22 6 12
% T
EA a
nd u
ses
late
st te
chno
logy
7 6 5 7 4 10 22 762
10 13 13 18 18 24 16 41212
1 1 1 1 1 5 8 511
15 3 4 3 9 12 12 34 4
26 22 19 22 21 24 23 2120 27
25 25 26 25 14 5 262428 25
Ontario
Canada
Australia
Austria
Chile
Estonia
Finland
France
24 27 28 26 17 20 252826 24Germany
Greece 18 24 24 24 28 4 102610 11
Hungary 23 20 23 12 3 15 1519 21 17
20 9 10 10 15 17 39 16 14Israel
Italy 28 28 27 3 2125 27 28 1626
13 23 21 14 2423 22 19 1316South Korea
Latvia 9 7 9 28 96 5 6 410
Luxembourg 21 15 15 7 611 23 21 1923
Mexico 22 12 7 26 2713 14 13 2713
Netherlands
Poland
Portugal
Slovakia
19 10 11 23 1910 9 11 239
2 11 12 27 1814 13 9 66
17 18 17 9 818 17 16 1815
14 14 14 2 1622 15 14 112
Slovenia 8 19 22 1 1420 19 17 1212
12 26 25 11 282725 27 2620Spain
Sweden
Switzerland
Turkey
US
UK
27 21 16 25 221724 23 2528
16 17 20 13 131611 20 722
5 4 8 21 1143 2 15
11 16 18 18 171518 15 821
3 8 6 19 2088 7 219
LEG
ENDIN
DIC
ATO
R
COUNTRY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
B E Y O N D T H E $ V A L U E 1 2
AT T I T U D E S
Attitudes toward entrepreneurship reflect how Ontarians regard entrepreneurship as a career choice as well as their beliefs in their ability to start a business.
GEM assesses attitudes with four questions in the adult population survey:
+ Do you know someone who started a business in the past two years?
+ In the next six months, will there be good opportunities for starting a business in the area where you live?
+ Do you have the knowledge, skill, and experience required to start a new business?
+ Would fear of failure prevent you from starting a business?
I N D I C AT O R S
+ “Knows someone who started a business in the past two years” reflects respondents who say that they have met an entrepreneur within the last two years, and can be indicative of the perceived climate for entrepreneurship.
+ “Good opportunities to start a business in local area in the next six months” measures perceptions of favourable conditions to engage in venture creation, which reflects both attitudes toward entrepreneurship and local economic conditions.
+ “Knowledge/skills to start a business” provides an understanding of whether comfort with entrepreneurship and business literacy are common within an economy.
+ “Fear of failure” reflects respondents who say that fear of failure would prevent them from starting a business. It is primarily an indicator of risk aversion.
1 3 B E Y O N D T H E $ V A L U E
Figure 2.1: Entrepreneur network: Share of respondents who know someone who started a business in the past two years
60%
50%
40%
30%
20%
10%
0%
35.6 35.5 35.6
22.4 22.724.3 25.1
27.0 27.930.6 31.3
33.0 33.2 33.2 34.7 34.936.3 37.2 37.3 38.3 39.1 39.9 40.4 41.8
44.047.4
50.5 50.8
Ger
man
y
Gre
ece
Turk
ey
Port
ugal
Hun
gary
Italy US
Switz
erla
nd
Slov
akia
Fr
ance
Uni
ted
King
dom
Net
herl
ands
Aust
ralia
Ont
ario
Spai
n
Latv
ia
Cana
da
Luxe
mbo
urg
Swed
en
Es
toni
a
Sout
h Ko
rea
Aust
ria
Chile
Slov
enia
Fi
nlan
d
Pola
nd
Isra
el
Mex
ico
Note: % of total respondents in Ontario who answered “don’t know” or “refused”: 2.7% (not included in chart total)
Figure 2.2: Business optimism: Share of respondents with belief in good conditions to start a business in the next six months in their local area
60%
50%
40%
30%
20%
10%
0%
70%
80%
56.9 57.3
13.0
23.025.3 25.6
28.6 28.6 29.5 30.1 30.935.3
37.6 39.4 39.4 41.4 42.2 42.2
49.1 49.2 49.5 49.8 50.4 52.3 53.7 54.2
59.0
78.5
Gre
ece
Slov
akia
Slov
enia
Spai
n
Fran
ce
Italy
Port
ugal
Hun
gary
Latv
ia
Sout
h Ko
rea
Ger
man
y
Mex
ico
Pola
nd
Switz
erla
nd
Aust
ria
Uni
ted
King
dom
Finl
and
Aust
ralia
Turk
ey
Luxe
mbo
urg
Chile
Esto
nia
Isra
el
Net
herl
ands
Ont
ario US
Cana
da
Swed
en
Note: % of total respondents who answered “don’t know” or “refused”: 18.8% (not included in chart total)
B E Y O N D T H E $ V A L U E 14
Figure 2.3: Skill beliefs: Share of respondents who believe they have the sufficient skills and ability to start a business
60%
50%
40%
30%
20%
10%
0%
54.1
31.2
35.5 35.8 36.3 37.4 38.440.7 40.8 41.1 41.1 41.7 42.4 43.3 43.7 44.0 45.1 46.7 48.0
49.6 49.951.8 52.3 54.3 55.0
60.2 61.2Ita
ly
Swed
en
Finl
and
Fran
ce
Ger
man
y
Hun
gary
Mex
ico
Luxe
mbo
urg
Isra
el
Net
herl
ands
Gre
ece
Port
ugal
Switz
erla
nd
Esto
nia
Slov
akia
Sout
h Ko
rea
Spai
n
Uni
ted
King
dom
Aust
ria
Latv
ia
Slov
enia
Aust
ralia
Ca
nada
Turk
ey
Ont
ario US
Pola
nd
Chile
54.2
Note: % of total respondents who answered “don’t know” or “refused”: 6.5% (not included in chart total)
Figure 2.4: Fear of failure: Share of respondents who cited fear of failure as the primary reason for not starting a business
70%
50%
60%
40%
30%
20%
10%
0%
Mex
ico
Chile
Sout
h Ko
rea
US
Net
herl
ands
Turk
ey
Slov
enia
Switz
erla
nd
Uni
ted
King
dom
Ont
ario
Fran
ce
Fina
lnd
Aust
ralia
Latv
ia
Cana
da
Ger
man
y
Spai
n
Swed
en
Port
ugal
Aust
ria
Esto
nia
Slov
akia
Hun
gary
Luxe
mbo
urg
Italy
Isra
el
Pola
nd
Gre
ece
38.7 40.4 40.5 42.1 42.7
31.1 31.234.0 34.9 35.1 35.7 35.7 36.1 36.2
49.4 49.7 51.4 53.3 53.5
58.4
70.2
44.0 44.3 45.0 45.4 46.1 46.2 47.2
Note: % of total respondents who answered “don’t know” or “refused”: 4.7% (not included in chart total)
1 5 B E Y O N D T H E $ V A L U E
U N D E R S TA N D I N G T H E L I M I TAT I O N S O F AT T I T U D E - F O C U S E D I N D I C AT O R S
It is important to emphasize that results in this section reflect beliefs rather than objective conditions and can be interpreted in more than one way. For instance, the relationship between knowledge to start a business and the likelihood of engaging in nascent entrepreneurship may not be causal. A person may conceive of themself as having a high level of knowledge without ever testing this in practice. Conversely, someone who reports an insufficient level of knowledge to start a business may find themself to be a successful entrepreneur who learns throughout the process of engaging in nascent entrepreneurship.
O N TA R I A N S B E L I E V E T H E Y H A V E T H E K N O W L E D G E , S K I L L S , A N D C O N D I T I O N S T O B E S U C C E S S F U L E N T R E P R E N E U R S A N D A R E I N C R E A S I N G LY C O M F O R TA B L E W I T H R I S K
A high number of Ontarians believe they have the required knowledge and skills to start a business and that the conditions for starting a business in their local community are good. While these beliefs in Ontario were recorded as marginally lower than in the US (within the confidence interval), individuals in Ontario are more confident in their knowledge, skills and local conditions than individuals in most other comparator countries. This could be due to, for example, the strength of Ontario’s entrepreneurship culture, education system, or perception of entrepreneurship as a viable career path. Alternatively, this could be interpreted as a sign of overconfidence.
In 2015, Ontarians exhibited higher risk aversion, with almost half (46.6 percent) of the sample reporting that fear of failure would prevent them from starting a business. This number improved in 2016; Ontarians reported lower risk aversion than Canadians more generally, and Ontario sits significantly below the median of comparable countries. This could be an encouraging sign for the province if lower risk aversion translates into an increased level of entrepreneurial activity.
A R E O N TA R I A N S O V E R LY C O N F I D E N T ? A C L O S E R L O O K AT F E A R O F F A I L U R E A N D B E L I E F I N F A V O U R A B L E B U S I N E S S C O N D I T I O N S
Figure 2.5: Rational fears: Relating fear of failure with belief in skills and conditions to start business
40%20% 60% 80%
Good condition to start a business in next six months
Fear
of f
ting
a bu
sine
ssai
lure
in n
ot s
tar
tugalSlovakia
Slovenia
Spain Sweden
Switzerland
Turkey
US
United Kingdom
30%
40%
50%
60%
70%
Australia
Austria
Canada
Chile
Estonia
FinlandFrance
Germany
Greece
Hungary
IsraelItaly
Korea
Latvia
Luxembourg
Mexico
Netherlands
Ontario
Poland
Por
Rightly Pessimistic
Perilously Optimistic Rightly Optimistic
Needlessly Pessimistic
Note: Larger dots represent greater con�dence in the knowledge/skills to start a business.
While the question of whether Ontarians are overly confident is not fully answered here, we provide a proxy using the relationship between fear of failure, belief that conditions to start a business in the next six months are good, and the belief that one has the skills needed to start a business. In this context, fear of failure is understood as the fear that a business will fail leading to a decision to not pursue entrepreneurship.
There are no clear relationships between the three mapped variables. However, it could be hypothesized that belief in favourable conditions to start businesses paired with high confidence in
knowledge/skills should result in lower levels of fear. The graph is divided into four quadrants, with the axes being the mean belief in the existence of positive conditions for starting a business (x-axis) and fear of failure leading to a decision not to start a business (y-axis). The size of each point reflects the level of belief in survey respondents’ knowledge/skills to start a business. One would expect a higher fear of failure to correlate with lower confidence in positive conditions (top left quadrant) and/or lower confidence in personal knowledge/skills (smaller dot size).
B E Y O N D T H E $ V A L U E 16
17 B E Y O N D T H E $ V A L U E
Ontarian entrepreneurs appear to be “rightly optimistic”: higher confidence in good conditions and knowledge/skills to start a business is accompanied by a low fear of failure. On the other hand, Canada as a whole has a higher than average level of fear despite relatively high confidence in favourable conditions and knowledge/skills to start a business. Canadian entrepreneurs could therefore be considered “needlessly pessimistic”.
However, further analysis would be needed to fully assess the risk of overconfidence among Ontarian entrepreneurs. Interestingly, Koellinger, Minniti, and Schade (2007)6 demonstrated a high negative correlation between confidence in skills and the rate at which businesses survive, using GEM data up to 2006.
18B E Y O N D T H E $ V A L U E
S U B - P R O V I N C I A L I N S I G H T: D E C O M P O S I N G O N TA R I A N S ’ F E A R O F F A I L U R E
Figure 2.6: Deep dive: Fear of failure in Ontario subregions (with 95% confidence bands)
Win
dsor
–Sar
nia
King
ston
–Pem
brok
e
Nor
thea
st
Mus
koka
–Kaw
arth
as
Toro
nto
O�
awa
Ham
ilton
–Nia
gara
Pen
insu
la
Nor
thw
est
Kitc
hene
r–W
ater
loo–
Barr
ie
Stra
tfor
d–Br
uce
Peni
nsul
a
Lond
on
0%
10%
20%
30%
40%
50%
When the Ontario sub-provincial regions are explored in more detail, Toronto and Ottawa observe (statistically significant at a 95 percent level) higher levels of risk aversion compared to other regions, including the Hamilton–Niagara Peninsula and Northwest Ontario.
This trend could be driven by a number of factors such as increased competition in larger cities, or different perceptions of the type of business that can be started in different regions. Network effects could also be relevant, as exposure to more entrepreneurs, and perhaps to more stories of failure, could affect risk aversion.
19 B E Y O N D T H E $ V A L U E
A C T I V I T Y
In GEM’s adult population survey, Ontarians were asked about their involvement in various stages of entrepreneurship:
+ Are you, alone or with others, currently trying to start a new business, including any self-employment or selling any goods or services to others?
+ Are you, alone or with others, currently trying to start a new business or a new venture for your employer as part of your normal work?
+ Over the past 12 months, have you done anything to help start this new business?
+ Will you personally own all, part, or none of this business?
+ Has the new business paid any salaries, wages, or payments in kind, including your own, for more than three months?
+ What was the first year the founders of the business received wages, profits, or payments in kind from this business?
+ Did the founders of this business receive any wages, profits or payments in kind from this business before January 1, 2013?
Figure 3.1: Identifying nascent entrepreneurs, owners/managers of new or established firms, and early-stage entrepreneurs from GEM adult population survey questions
Source: Adapted from GEM Manual: A report on the design, data and quality control of the Global Entrepreneurship Monitor7
Yes / Don’t know
Yes / Don’t know
Yes / Don’t know
No
No
Not paid any yet2012-2015
Don’t know
2011 and earlier
Yes
Yes
Yes
Yes / Don’t know Yes / Don’t know
Currently setting up a business, individually?
Active in the past 12 months?
Currently owning-managing a business
Owner or part-owner?
Business paid wages etc last 3 months?
What was the first year of wages?
Founders received wages before 1 Jan 13?
Owner-manager of an established firm (more than 42 months old)
Owner or part-owner?
Currently setting up a business, sponsored?
Nascent entrepreneur: Involved in setting up a business
Owner-manager of a new firm (less than 42 months old)
Total Early-Stage Entrepreneurial Activity
B E Y O N D T H E $ V A L U E 20
I N D I C AT O R S
+ The “total early-stage entrepreneurial activity (TEA) rate” refers to the total rate of early-stage entrepreneurial activity among the adult population (aged 18 to 64 years, inclusive). In some instances, this rate is less than the combined percentages for nascent and new business owners. This is because in circumstances where respondents qualify as both a nascent and a new business owner, they are counted only once.
+ “Nascent entrepreneurs” are those actively planning a new venture. These entrepreneurs have done something during the previous 12 months to help start a new business that they will at least partly own. Activities such as organizing the startup team, saving money for the startup, looking for equipment, or writing a business plan would be considered active commitments to starting a business. Wages or salaries will not have been paid for more than three months in respect of the new business. Many of these people are still in full-time employment.
+ “Owner or manager of a new business” are entrepreneurs who at least partly own and manage a new business that is between four and 42 months old, and have not paid themselves salaries for longer than this period. These new ventures are in the first 42 months after the new venture has been set up.
+ “Owner or manager of an established business” includes those who have set up businesses that they have continued to own and manage and which have paid wages or salaries for more than 42 months.
2 1 B E Y O N D T H E $ V A L U E
Figure 3.3: Entrepreneurship trends in Canada and Ontario: Share of respondents engaged in early-stage entrepreneurship activity over the years
18%
12%
14%
16%
8%
10%
6%
4%
2%
0%2013
12.211.7
13.0 13.0
14.714.4
16.7
14.8
2014
Ontario
Canada
2015 2016
Figure 3.2: Entrepreneurship activity: Share of respondents who are at an early stage of starting a business (<42 months with owners not being paid yet)
25%
15%
20%
10%
5%
0%
14.816.1 16.2
4.4 4.65.2 5.3 5.7
6.7 6.77.6 7.9 8.0 8.2 8.2
8.8 9.2 9.5 9.6 9.610.7 11.0 11.3
12.6
14.2 14.6
16.7
24.2
Italy
Ger
man
y
Spai
n
Fran
ce
Gre
ece
Sout
h Ko
rea
Finl
and
Swed
en
Hun
gary
Slov
enia
Port
ugal
Switz
erla
nd
Uni
ted
King
dom
Luxe
mbo
urg
Slov
akia
Aust
ria
Mex
ico
Pola
nd
Net
herl
ands
Isra
el US
Latv
ia
Aust
ralia
Ont
ario
Turk
ey
Esto
nial
Cana
da
Chile
B E Y O N D T H E $ V A L U E 2 2
P A R T I C I P AT I O N I N E A R LY- S TA G E E N T R E P R E N E U R S H I P I N O N TA R I O I S G R O W I N G i i i
In 2016, Ontario was one of the highest performing economies in early-stage entrepreneurial activity. While this is an encouraging sign, Canada as a whole still surpasses Ontario in TEA rate. This points to higher performance in other provinces—for instance, the 2016 TEA rate in Alberta is recorded at 17.3 percent (in comparison to Ontario’s 14.8 percent).8 Ontario’s TEA rate has continued to grow over 2013 to 2016, although its rate of growth slowed in between 2015 and 2016.
iii Some caution is required in the interpretation of these results: a business count by Statistics Canada from December 2016 listed 1.2 million businesses nationwide. (Statistics Canada 2016) According to Statistics Canada’s Entrepreneurship Indicators Database, about 78,000 businesses were created in 2013. Even on the lower end of the confidence interval, extrapolating GEM results imply that roughly 3.6 million Canadians were engaged in setting up a firm or owned a young firm in 2016. Notwithstanding the fact that multiple people may be involved in any one venture, this number seems high. This could be interpreted a number of different ways; one possible explanation is a high rate of failure for early-stage entrepreneurs who are setting up or running a young firm, or delays in getting up and running. Potential flaws in the data collection process may also have led to skewed results, inhibiting population inferences. Finally, there is a possibility that some entrepreneurs choose not to register their businesses.
L I M I TAT I O N S O F T E A A S A N I N D I C AT O R
As an overall measure of entrepreneurial behaviour in an economy, TEA is first and foremost a participation rate, reflecting the number of people involved in the early stages of venture creation rather than the number of ventures.7
23 B E Y O N D T H E $ V A L U E
Figure 3.4: Stages of early entrepreneurship: Share of respondents who own a young firm/are nascent entrepreneurs
25%
15%
20%
10%
5%
0%
Nascent entrepreneur
Italy
Ger
man
y
Spai
n
Fran
ce
Gre
ece
Sout
h Ko
rea
Finl
and
Swed
en
Hun
gary
Slov
enia
Switz
erla
nd
Port
ugal
Uni
ted
King
dom
Luxe
mbo
urg
Slov
akia
Mex
ico
Aust
ria
Pola
nd
Net
herl
ands
Isra
el US
Latv
ia
Ont
ario
Aust
ralia
Esto
nia
Turk
ey
Cana
da
Chile
8.6
6.4
106.
9
Figure 3.5: Entrepreneurship activity: Share of respondents who own/manage an established business (>42 months)
15%
10%
5%
0%
7.1 7.1 7.3
3.24.0 4.3 4.5
5.2 5.56.1 6.1 6.2
6.6 6.7 6.8 7.07.5 7.8 8.0 8.1
8.89.2 9.4 9.5
10.2
11.1 11.3
14.1
Luxe
mbo
urg
Isra
el
Fran
ce
Swed
en
Italy
Hun
gary
Uni
ted
King
dom
Slov
akia
Spai
n
Sout
h Ko
rea
Slov
enia
Cana
da
Ger
man
y
Pola
nd
Port
ugal
Finl
and
Mex
ico
Esto
nia
Chile
Ont
ario
Aust
ria US
Turk
ey
Latv
ia
Net
herl
ands
Switz
erla
nd
Aust
ralia
Gre
ece
24B E Y O N D T H E $ V A L U E
G O O D C O N D I T I O N S F O R N E W B U S I N E S S O W N E R S / M A N A G E R S
In terms of its rate of nascent entrepreneurship, Ontario performs well relative to comparator economies, but lags behind Canada.
Ontario has a high number of new business owners, but again falls behind Canada as a whole; Ontario and Canada rank fourth and third respectively among comparator economies. Ontario’s ratio of new businesses to nascent businesses suggests that a relatively high proportion of nascent businesses in the province succeed in getting off the ground. The
ratio puts Ontario and Canada in the upper third of comparator economies, at 10th and 13th respectively.
On established businesses, Canada and Ontario seem to perform moderately. When these results are taken in the context of previous extrapolations, they suggest that while businesses in Canada are relatively well able to start up and survive in the short to medium run (up to 42 months), there are fewer businesses that survive for longer. This may point to a scale-up challenge faced by Canadian entrepreneurs, with Ontario faring slightly better than Canada as a whole.
D E M O G R A P H I C S
A G E
GEM studies focus on five age ranges. Respondents are asked:
What is your current age (in years)?
Respondent data is then grouped into the following ranges:
+ 18 to 24
+ 25 to 34
+ 45 to 54
+ 55 to 64
25 B E Y O N D T H E $ V A L U E
Figure 3.6: Age and entrepreneurship: Share of respondents who are early-stage entrepreneurs by age category
55−64 not involved in entrepreneurship
55−64 involved in entrepreneurship
45−54 not involved in entrepreneurship
45−54 involved in entrepreneurship
35−44 not involved in entrepreneurship
35−44 involved in entrepreneurship
25−34 not involved in entrepreneurship
25−34 involved in entrepreneurship
18−24 not involved in entrepreneurship
18−24 involved in entrepreneurship
Age
2.1
12.2
4.4
15.4
4.1
16.8
4
20.7
2.2
18.3
2.4
12.1
4.1
14.6
3.1
17.3
3.1
22.1
2.2
19
Luxe
mbo
urg
Isra
el
Fran
ce
Swed
en
Italy
Hun
gary
Uni
ted
King
dom
Slov
akia
Spai
n
Slov
enia
Cana
da
Ger
man
y
Pola
nd
Port
ugal
Finl
and
Mex
ico
Esto
nia
Chile
Ont
ario
Aust
ria US
Turk
ey
Latv
ia
Net
herl
ands
Switz
erla
nd
Aust
ralia
Gre
ece
Sout
h Ko
rea
% o
f res
pond
ents
in e
ach
grou
p
B E Y O N D T H E $ V A L U E 26
Figure 3.7: Youth engagement with entrepreneurship across time: Share of 18 to 24-year-olds involved in early-stage entrepreneurship
20%
10%
15%
5%
0%2013
8.0
9.6
12.0
4.0
2014
CanadaOntario
18.2
15.9
2015
16.6
14.6
2016
Y O U T H P A R T I C I P AT I O N I N E A R LY-S TA G E E N T R E P R E N E U R S H I P I S V E R Y S T R O N G I N O N TA R I O
Canada shows the highest rate of participation in entrepreneurship in the 25 to 34 age range, at 22.3 percent, and shows consistently high rates across age groups relative to comparator economies. Ontario also excels in participation rates across age ranges, but only outperforms Canada in the 18 to 24 range. Within this age range, participation of Ontarians in early-stage entrepreneurship has rapidly grown from 2014. This could speak to a positive environment for youth entrepreneurs.
27 B E Y O N D T H E $ V A L U E
Figure 3.8: Age and entrepreneurship: Share of 18 to 24-year-olds who own established businesses
6%
4%
1%
2%
3%
5%
0%
1.4 1.5
1.9
0.20.40.40.4
0.70.9 0.9 0.9 1.0 1.1 1.1 1.1 1.1
2.2 2.2 2.3
4.04.3
4.54.8
5.0 5.1
Uni
ted
King
dom
Swed
en
Sout
h Ko
rea
Spai
n
Switz
erla
nd
Italy
Esto
nia
Chile
Isra
el
Ger
man
y
Aust
ralia
Hun
gary
Ont
ario
Luxe
mbo
urg
Finl
and
Slov
enia
Port
ugal US
Mex
ico
Net
herl
ands
Aust
ria
Latv
ia
Cana
da
Gre
ece
Turk
ey
E D U C AT I O N L E V E L
In GEM’s adult population survey, respondents were asked:
What is the highest level of education you have completed?
+ Some secondary or lower
+ Secondary degree
+ Post-secondary degree
+ Graduate experience
This narrative changes when examining the proportion of Ontarians aged 18 to 24 who own or manage established businesses—in this indicator, Ontario sits at 1.1 percent. The result for Canada as a whole places it well above Ontario and other
comparator countries such as the US, with 4.8 percent of Canadians aged 18 to 24 owning or managing established businesses. In all other age groups, however, Ontario outperforms Canada.
Ontario: 1.1% Canada: 4.8%Note: APS data was not available for France, Poland, and Slovakia
B E Y O N D T H E $ V A L U E 28
Figure 3.9: Scholastic Entrepreneurs: Entrepreneurship participation by education level
10.2
22.3
67.5
11.117.8
71.1
6.4
17.3
76.3
8.516.1
75.4
6.613.6
79.7
5.812.6
81.6
4.96.7
88.5
8.34.6
87
Aust
ralia
Aust
ria
Cana
da
Chile
Esto
nia
Finl
and
Fran
ce
Gre
ece
Hun
gary
Isra
el
Sout
h Ko
rea
Latv
ia
Luxe
mbo
urg
Mex
ico
Net
herl
ands
Ont
ario
Pola
nd
Port
ugal
Slov
akia
Slov
enia
Spai
n
Swed
en
Switz
erla
nd
Turk
ey
Uni
ted
King
domUS
Non-entrepreneurs with a graduate degree
Early-stage entrepreneurs with a graduate degree
Establised business owners with a graduate degree
Non-entrepreneurs with a post-secondary degree
Early-stage entrepreneurs with a post-secondary degree
Established business owner with a post-secondary degree
Non-entrepreneurs with a secondary degree
Early entrepreneurs with a secondary degree
Established business owner with a secondary degree
Non-entrepreneurs without a secondary degree
Early-stage entrepreneurs without a secondary degree
Established business owners without a secondary degree
Education level
% o
f res
pond
ents
in e
ach
grou
p
8.3% 4.6% 87% 5.8% 12.6% 81.6%Ontario
4.9% 6.7% 88.5% 6.6% 13.6% 79.7%Canada
Ontario 8.5% 16.1% 75.4% 11.1% 17.8% 71.1%
6.4% 17.3% 76.3% 10.2% 22.3% 67.5%Canada
29 B E Y O N D T H E $ V A L U E
As the education level increases, so does involvement in early-stage entrepreneurial activity; this trend was also exhibited in the 2015 results. The same trend does not apply to established businesses.
This result may require further investigation to unpack, as it is not corroborated by other studies, which have generally suggested that entrepreneurial activity is related to parental educational attainment but not to an individual’s educational attainment.iv This relationship may vary, however, depending on factors such as the nature of an entrepreneur’s motives or the nature of their business.v
iv A preliminary analysis using the Barro-Lee educational attainment dataset showed no correlation between country-level educational attainment and higher TEA involvement in the surveyed countries. In addition, recent research (Aghion et. al., 2016) points to a correlation between parental educational attainment and entrepreneurial activity while showing a lack of correlation with the entrepreneur’s level of education. A meta-analysis also shows that there is neither a positive nor negative relationship between educational attainment and entrepreneurship (van der Sluis et al, 2003).
v This more granular analysis is not possible given sample size limitations for GEM Ontario data.
I N C O M E
In GEM’s adult population survey, respondents were asked to identify with provided ranges of incomes:
Which of these ranges best describes the total annual income of all the members of your household, including your income, as one combined figure?
GEM studies divide income ranges into tertiles which are classified as:
+ Lowest household income tertile
+ Middle household income tertile
+ Highest household income tertile
B E Y O N D T H E $ V A L U E 30
Figure 3.10: Those more fortunate: Entrepreneurship participation by income groups
Income level
Non−entrepreneurs in top third income group
Ear ly entrepreneurs in top third income group
Established business owners in top third income group
Non−entrepreneurs in middle third income group
Ear ly entrepreneurs in middle third income group
Established business owners in middle third income group
Non−entrepreneurs in bo�om third income group
Ear ly entrepreneurs in bo�om third income group
Established business owners in bo�om third income group
11.8
18.5
69.7
14.818.5
66.8
516.6
78.4
6.214.4
79.4
6
17.8
76.3
5.714.3
80
% o
f res
pond
ents
in e
ach
grou
p
Aust
ralia
Aust
ria
Cana
da
Chile
Esto
nia
Finl
and
Fran
ce
Gre
ece
Ger
man
y
Hun
gary
Isra
el
Italy
Sout
h Ko
rea
Latv
ia
Luxe
mbo
urg
Mex
ico
Net
herl
ands
Ont
ario
Pola
nd
Port
ugal
Slov
akia
Slov
enia
Spai
n
Swed
en
Switz
erla
nd
Turk
ey
Uni
ted
King
domUS
Ontario
Canada
Ontario
Canada 6% 17.8% 76.3%
5.7% 14.3% 80%
11.8% 18.5 6% 9.7%
14.8% 18.5% 66.8%
5% 16.6% 78.4%
6.2% 14.4% 79.4%
31 B E Y O N D T H E $ V A L U E
In general, both Ontario and Canada exhibit a high rate of participation in early-stage entrepreneurship at the highest income tertile; this is consistent with 2015 GEM results. While high-income households in Ontario and Canada have the highest early-stage entrepreneurship rate, participation levels have decreased from 2015. This could be linked to the corresponding decrease of opportunity-driven entrepreneurship.
The high rate of participation from high-income households may indicate that it is easier to start a company with a greater household income. This would suggest that income supports or incentives could help to drive rates up. Conversely, it could also be that entrepreneurship is contributing to high incomes; however other evidence corroborates the first interpretation.9
G E N D E R
Respondents were identified as women or men in GEM’s adult population survey.
B E Y O N D T H E $ V A L U E 32
Figure 3.11: Mind the gap: Early-stage entrepreneurship rates for men and women
20%
15%
10%
5%
25%
30%G
erm
any
Italy
Fran
ce
Spai
n
Gre
ece
Hun
gary
Slov
enia
Sout
h Ko
rea
Switz
erla
nd
Finl
and
Uni
ted
King
dom
Port
ugal
Swed
en
Luxe
mbo
urg
Slov
akia
Aust
ria
Pola
nd
Net
herl
ands
Isra
el
Latv
ia
Turk
ey
Mex
ico
US
Aust
ralia
Esto
nia
Ont
ario
Cana
da
Chile
Early entrepreneurship rate of menEarly entrepreneurship rate of women
4%
2%
0%
6%
-2%
4.34.7 4.8
-0.7
1.11.8
2.2 2.3 2.5 2.7 2.9 3.13.6 3.8 3.9
4.3
5.2 5.25.7 5.8 5.8
6.2 6.47.0
8.8 9.1 9.2
12.4
Mex
ico
Spai
n
Gre
ece
Finl
and
Italy
Swed
en
Sout
h Ko
rea
Ger
man
y
Aust
ria
Slov
akia
Fran
ce
Isra
el
Port
ugal US
Net
herl
ands
Ont
ario
Pola
nd
Luxe
mbo
urg
Switz
erla
nd
Slov
enia
Hun
gary
Aust
ralia
Uni
ted
King
dom
Cana
da
Chile
Esto
nia
Latv
ia
Turk
ey
0%
Note: Male - Ontario: 17.3%, Canada: 20.3. Female - Ontario: 12.5%, Canada: 13.3%
Figure 3.12: The divide: Percent difference between men and women early-stage entrepreneurship rates
14%
12%
10%
8%
33 B E Y O N D T H E $ V A L U E
Knows someone who started
business in past two years
Believes there are good conditions to start business
in the next six months in their
area
Has required knowledge/skills to start business
Fear of failure would prevent
starting a business
Men 37.8% 55.6% 61.6% 34.2%
Women 33.4% 58.3% 47.2% 43.0%
Table 3.3: Attitudes toward entrepreneurship in Ontario, by gender
TEA and necessity motive TEA and opportunity motive
Men 3.1% 13.7%
Women 3.0% 9.0%
Table 3.4: Rates of opportunity and necessity motives among early-stage entrepreneurs (Ontario)
T H E R E I S A N E E D F O R G R E AT E R S U P P O R T F O R W O M E N I N E N T R E P R E N E U R S H I P
Ontario has one of the highest women entrepreneurship rates amongst comparator countries. While Canada slightly outperforms Ontario in participation of women in entrepreneurship, Ontario displays better gender parity; however, it is notable that neither Ontario or Canada perform particularly well on gender parity.
Across measures of attitudes toward entrepreneurship, the rate of positive responses from men tend to be higher. There is a notable gap between men and women respondents with respect to confidence in having the skills and knowledge to start a business. This is perhaps influenced by fewer contacts with entrepreneurs and a higher fear of failure.
While the rate of necessity-driven entrepreneurship is roughly the same between men and women, women are less likely to engage in opportunity-driven entrepreneurship.
If gender parity with respect to entrepreneurship is a goal, attention should be paid to factors that may influence women participation. The data presented here suggests a need for further efforts to ensure that women have access to training, networks, and sources of social encouragement. Ontario’s upcoming strategy on women’s economic empowerment, which is being developed by the Ministry of the Status of Women, may seek to tackle some of these issues.
3 4B E Y O N D T H E $ V A L U E
H O W G E N D E R , S E L F - A S S E S S E D S K I L L S , A N D A C T U A L I N V O L V E M E N T I N T E A I N T E R A C T
Figure 3.13 plots knowledge to start a business against TEA rate, broken out by gender. There appears to be a similar relationship between these variables for women and men; however, consistently fewer women assess themselves as having enough knowledge to start a business. To design measures aimed at lowering barriers to entrepreneurship for women, consideration should be given to exploring whether self-assessed levels of knowledge are equivalent to actual levels of knowledge, and potentially whether they correlate to entrepreneurship education and training targeted to women.
The middle section of the graph, where the slope for both groups are well-defined, seems to indicate that at least locally, the trends for men and women are similar. This could suggest that given the same level of belief in ability, women will have a comparable level of entrepreneurial activity compared to men. However, this interpretation cannot be made definitively, as it is unclear whether such similarity will hold for either the high or the low ends of knowledge self-assessment. Reverse causality could also be present, with women’s self-assessment of their ability based on their own networks and success within those networks.
Figure 3.13: Gender differences in beliefs in skill and entrepreneurship participation
Belief in skills/knowledge to start a business
Portugal
SlovakiaSlovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
USA
Italy
Korea
Latvia
Luxembourg
Mexico
Netherlands
Ontario
PolandIsrael
Hungary
Greece
United Kingdom
USA
Australia
Austria
Canada
Chile
Estonia
Finland
FranceGer many
Turkey
SwitzerlandSpain
Sweden
Canada
Chile
Estonia
Finland
France
Ger many
GreeceHungary
Israel
Italy
Korea
Latvia
Luxembourg
Mexico
Netherlands
Ontario
Poland
Portugal
Slovakia
Slovenia
Australia
Austria
% in
volv
ed in
TEA
20%
30%
10%
0%
30% 40% 50% 60%
Gender
Women
Men
Note: Local linear regression, band represents 95% confidence interval.
35 B E Y O N D T H E $ V A L U E
S U B - P R O V I N C I A L I N S I G H T S : C O N F I D E N C E I N K N O W L E D G E / S K I L L S T O S TA R T A B U S I N E S S B Y G E N D E R A N D O N TA R I O S U B - P R O V I N C I A L R E G I O N S
Figure 3.14:Deep dive: Gender difference in skill confidence in Ontario subregions (with 95% confidence bands)
Win
dsor
–Sar
nia
King
ston
–Pem
brok
e
Nor
thea
st
Mus
koka
–Kaw
arth
as
Toro
nto
O�
awa
Ham
ilton
–Nia
gara
Pen
insu
la
Nor
thw
est
Kitc
hene
r–W
ater
loo–
Barr
ie
Stra
tfor
d–Br
uce
Peni
nsul
a
Lond
on
MenWomen
Gender
0%
20%
40%
60%
80%
Within Ontario, the Kitchener-Waterloo-Barrie region and Toronto region exhibit a clear difference in skill confidence on a gender basis, in line with the trend for the province as a whole. The difference for other regions is less clear based on the data, as it falls within the confidence intervals.
B E Y O N D T H E $ V A L U E 36
E N T R E P R E N E U R I A L E M P L O Y E E S ( I N T R A P R E N E U R S H I P )
The adult population survey asked respondents about their activities in the workplace:
In the last three years, have you been involved in the development of new activities for your last employer?
And are you currently involved in the development of such new activity?
I N D I C AT O R S
+ Entrepreneurial employee activity (EEA) measures employee entrepreneurial activity internal to a business, and is also commonly referred to as “intrapreneurship.” Intrapreneurs are employees who develop new products/services or set up a new business entity for their employer. This does not include, for example, work on optimizing internal operations of a firm. This indicator parallels early-stage entrepreneurial activity, although EEA and TEA populations can overlap.
37 B E Y O N D T H E $ V A L U E
Figure 3.15: Intrapreneurs: Share of employed respondents who lead or have led employee entrepreneurial activity in the past three years
14%
10%
12%
6%
8%
4%
2%
0%
Gre
ece
Slov
akia
Sout
h Ko
rea
Port
ugal
Italy
Hun
gary
Spai
n
Fran
ce
Turk
ey
Latv
ia
Ger
man
y
Swed
en
Finl
and
Slov
enia
Mex
ico
Cana
da
Esto
nia
Pola
nd
Chile
Sw
itzer
land
Ont
ario
Uni
ted
King
dom
Luxe
mbo
urg
US
Net
herl
ands
Isra
el
Aust
ria
Au
stra
lia
4.13.4 3.7 3.9
4.4 4.4
5.56.3 6.5 6.5
7.5 7.7 8.0 8.0 8.1 8.5 8.6 8.7 8.79.1 9.3
9.810.2 10.4 10.4 10.7 10.9
13.4
Figure 3.16: Intrapreneurs: Share of employed respondents currently leading employee entrepreneurial activity
12%
8%
10%
4%
6%
2%
0%
Hun
gary
Gre
ece
Slov
akia
Port
ugal
Sout
h Ko
rea
Italy
Spai
n
Turk
ey
Fran
ce
Latv
ia
Ger
man
y
Swed
en
Esto
nia
Finl
and
Pola
nd
Chile
Cana
da
Net
herl
ands
Luxe
mbo
urg
Slov
enia
Switz
erla
nd
Uni
ted
King
dom
Isra
el
Ont
ario US
Mex
ico
Aust
ria
Aust
ralia
3.53.1 3.1 3.2
3.63.9
4.9 5.0 5.1 5.1 5.35.8
6.3 6.5 6.67.0 7.0 7.0 7.0
7.3 7.3 7.5 7.67.9 8.0 8.1
9.0
11.2
38B E Y O N D T H E $ V A L U E
While Canada as a whole is not an intrapreneurial leader based on APS results, Ontario seems to have relatively high levels of employee entrepreneurship. It is possible that Ontario has a higher proportion of employees with a tendency
M O T I V E S
In GEM’s adult population survey, Ontarians were asked about their motivations for starting a venture:
Are you involved in this startup to take advantage of a business opportunity or because you have no better choices for work?
+ Which of the following do you feel is the most important motive for pursuing this opportunity?
― Greater independence
― Increase personal income
― Just to maintain income
― Other
I N D I C AT O R S
GEM distinguishes between two motives for starting a venture:
+ “Opportunity-driven entrepreneurs” are people who establish their businesses because they have identified a viable business opportunity that could lead to substantial benefits. Within the proportion of entrepreneurs that identify as opportunity-driven, GEM further disaggregates the reasons for pursuing opportunity entrepreneurship:
― “Independence as a reason for opportunity motive among early-stage entrepreneurs,” which indicates the proportion of opportunity-driven entrepreneurs naming independence as a primary reason for establishing a business.
― “Increased income as a reason for opportunity motive among early-stage entrepreneurs,” which refers to the proportion of the population pursuing entrepreneurship with the aim of significantly increasing incomes.
+ “Necessity-driven entrepreneurs” establish businesses because they cannot identify other viable employment opportunities.
to lead new initiatives in the workplace; however, opportunities to engage in EEA also depend on the innovation strategies of businesses, as well as openness to opportunities for employee leadership from employers.
39 B E Y O N D T H E $ V A L U E
Figure 4.1: Motive dive: Share of early-stage entrepreneurs by motive type
TEA and necessity motive
TEA and opportunity motive
Cana
daIs
rael
Aust
ralia
Switz
erla
ndLa
tvia
Uni
ted
King
dom
Luxe
mbo
urg
Fran
ceIta
ly
Finl
and
US
Swed
en
Pola
nd
Turk
ey
Ger
man
y
Slov
enia
Chile
Ont
ario
Hun
gary
Net
herl
ands
Port
ugal
Mex
ico
Aust
ria
Esto
nia
Sout
h Ko
rea
0%
25%
50%
75%
100%Sl
ovak
iaG
reec
eSp
ain
76.3
20.4
79.9
14.3
Note: In no case do the bars in Figure 4.1 add up to 100% because “other” responses were not graphed.
Figure 4.2: Motive dive (opportunity): Share of opportunity-driven early entrepreneurs citing independence as a reason
70%
50%
60%
30%
40%
20%
10%
0%
Turk
ey
Port
ugal
Gre
ece
Isra
el
Chile
Mex
ico
Swed
en
Uni
ted
King
dom
Spai
n
Hun
gary US
Italy
Sout
h Ko
rea
Aust
ralia
Latv
ia
Ont
ario
Cana
da
Slov
enia
Net
herl
ands
Finl
and
Slov
akia
Ger
man
y
Fran
ce
Luxe
mbo
urg
Aust
ria
Pola
nd
Esto
nia
Switz
erla
nd30.6
21.5
26.530.3
36.538.3 39.0 40.5
42.844.8
46.7 46.9 47.2 47.9
57.5 59.6 59.7 60.064.4
69.0
53.8 54.8 55.2 55.2 55.4 55.9 56.1 57.3
Note: % of total respondents who answered “don’t know” or “refused”: None
B E Y O N D T H E $ V A L U E 40
Figure 4.3: Motive dive (opportunity): Share of opportunity-driven early entrepreneurs citing increased income as a reason
60%
30%
40%
50%
20%
10%
0%
Switz
erla
nd
Ger
man
y
Net
herl
ands
Luxe
mbo
urg
Aust
ria
Fran
ce
Finl
and
Esto
nia
Pola
nd
Slov
enia
Ont
ario
Slov
akia
Hun
gary
Swed
en
Latv
ia
Cana
da
Uni
ted
King
dom
Aust
ralia US
Italy
Spai
n
Sout
h Ko
rea
Gre
ece
Chile
Port
ugal
Mex
ico
Turk
ey
Isra
el
36.0
15.217.9
22.7 22.825.0
28.3 28.5 29.2 29.7 30.1 31.4 31.735.0 35.1 36.2 36.9 37.2 38.3
41.845.0
51.7 52.9 54.156.6 56.7 57.7
59.5
Figure 4.4: Change in motives: How the share of respondents motivated by necessity or opportunity has changed over time in Ontario
12%
8%
10%
4%
6%
2%
0%2015 20162013
8.9
2.5
11.9
2.0
11.3
3.0
2014
Opportunity motive
Necessity motive
vi Data for 2014 was not available.
vi
Note: % of total respondents who answered “don’t know” or “refused”: None
4 1 B E Y O N D T H E $ V A L U E
M O R E T H A N H A L F O F O P P O R T U N I T Y-D R I V E N E N T R E P R E N E U R S I N O N TA R I O A R E M O T I V AT E D B Y I N D E P E N D E N C E
Ontario performed well in the participation of opportunity-driven entrepreneurs in 2016; its levels are comparable to economies such as the US and Australia. While the level of opportunity-driven entrepreneurship in Ontario is high compared to many comparator countries, Canada’s higher level reflects that provincial differences within Canada seem to be significant.
In 2015, 51.9 percent of early-stage entrepreneurs in Ontario reported that they started a business motivated by a desire for more independence; in 2016, this figure rose to 54.8 percent. Within the range of comparator countries where independence as a reason for opportunity-driven entrepreneurship is measured, Ontario and Canada fall roughly in the middle. Comparator economies such as the US and Australia score lower than Ontario and Canada, while others such as France, Germany, and the Netherlands score higher. This could be a positive sign, implying alignment between the flexibility offered by entrepreneurship and personal goals for over half of early-stage entrepreneurs in Ontario.
Increased income as a reason for engaging in early-stage entrepreneurship is an illustrative indicator; it sheds some light on the perceived profitability of entrepreneurship within an economy. While it could be argued that this indicator can be misleading—for instance, in cases where people turn to entrepreneurship during recessions to increase their incomes—its link to opportunity-driven entrepreneurship focuses this indicator on profitability, rather than survival (which is linked to necessity-driven entrepreneurship). In 2016, Ontario ranked well below the median in this indicator. This could be a discouraging sign, with the implication that entrepreneurship presents fewer financial incentives in Ontario.
H I G H E R N U M B E R S O F O N TA R I A N S A R E T U R N I N G T O E N T R E P R E N E U R S H I P O U T O F N E C E S S I T Y
While the percent of early stage entrepreneurs driven by necessity in Ontario is low relative to those motivated by opportunity, it is high compared to other countries. The province ranked third among comparator economies in 2016, in absolute numbers. The implication is that these Ontarians are turning to entrepreneurship because they see no other viable options for employment. This could be a symptom of broader labour market disruption or individual barriers to employment. There is research, however, that suggests that a high necessity motive has no negative consequences for economic growth.10 This is further contextualized on the following page.
4 2B E Y O N D T H E $ V A L U E
H O W D O E S O N TA R I O ’ S R AT I O O F N E C E S S I T Y – A N D O P P O R T U N I T Y- D R I V E N E N T R E P R E N E U R S C O M P A R E T O O T H E R C O U N T R I E S ?
Although Ontario ranked high in necessity-driven entrepreneurship relative to other countries, it is important to contextualize this by looking at the
proportion of opportunity-driven and necessity-driven entrepreneurs around the world.
Figure 4.5: Mapping motives: How Ontario’s composition of motives compares with other regions
1%
2%
3%
4%
5%
15%
% of respondents reporting opportunity motive
% o
f res
pond
ents
repo
rtin
g ne
cess
ity m
otiv
e
Portugal
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
USUK
Greece
HungaryIsrael
Italy
SouthKorea Latvia
Luxembourg
Mexico
Netherlands
Ontario
Australia
Austria
Canada
Chile
Estonia
FinlandFrance
Germany
Poland
5% 10%
The ratio between necessity and opportunity motives is fairly consistent across economies— with outliers such as Poland, Slovakia and Sweden—at about 1:3 to 1:7 necessity to opportunity with an average of 1:5.4. Ontario’s ratio is slightly above the average, at 1:3.7, while Canada’s ratio is below, at 1:5.8. Though Ontario’s ratio between necessity motive and opportunity motive is higher than average, the overall entrepreneurship rate in Ontario is also high.
43 B E Y O N D T H E $ V A L U E
S E C T O R S
GEM divides reported businesses into four sectors:
+ Extractive (including oil, mining, and agriculture) (Typically termed primary sector)
+ Transforming (including manufacturing) (Typically termed secondary sector)
+ Business-oriented services (Typically termed tertiary sector)
+ Consumer-oriented services (Typically termed tertiary sector)
In the GEM APS, respondents are asked an open-ended question:
What kind of business is this?
Respondents are expected to provide a statement that clearly describes the nature of the product or service, as well as their primary customer base. From this statement, the nature of the business is determined: whether its products are manufactured, extracted through mining, created in construction, or traded in retail or wholesale; if its services fall under categories such as medical, educational, repair, financial, or social services. These descriptions are then used to code to the four-digit level of the international standard industrial classification codes (ISIC), which are then grouped into four sectors.
B E Y O N D T H E $ V A L U E 4 4
Most early-stage entrepreneurs have businesses in the consumer-oriented services, followed by business-oriented services, the transforming sector and the extractive sector.
Figure 5.1: If there were 100 businesses: Share of early-stage entrepreneurs in Ontario by sector
Extractive sector (5%)
Consumer-oriented services (50%)
Business-oriented services (26%)
Transforming sector (19%)
45 B E Y O N D T H E $ V A L U E
Figure 5.2: Early-stage entrepreneurship by sector
Extractive sector
Transforming sector
Business services
Consumer services
Italy
Pola
nd
Slov
enia
Aust
ralia
Finl
and
Swed
en US
Aust
ria
Uni
ted
King
dom
Switz
erla
nd
Slov
akia
Turk
ey
Luxe
mbo
urg
Cana
da
Net
herl
ands
Isra
el
Port
ugal
Ont
ario
Chile
Ger
man
y
Spai
n
Sout
h Ko
rea
Gre
ece
Mex
ico
Fran
ce
Hun
gary
Esto
nia
Latv
ia
0%
25%
50%
75%
100% 218
.732
.848
.4
518
.625
.850
.6
Ontario’s and Canada’s sector breakdown closely resembles that of a more developed nation, where the majority of businesses are in
the service sector. In the following section, we further contextualize this by looking at participation in the technology sector.
P A R T I C I P AT I O N I N T H E T E C H N O L O G Y S E C T O R
Participation of businesses in the technology sector, as defined by the OECD, is measured with the same open-ended question used to determine sectors.
Note: % of total respondents who answered “don’t know” or “refused”: none
B E Y O N D T H E $ V A L U E 46
Figure 5.3: The young tech sector: Share of early-stage entrepreneurs in the technology sector
14%
10%
12%
6%
8%
4%
2%
0%
Turk
ey
Mex
ico
Latv
ia
Port
ugal
Chile
Sout
h Ko
rea
Gre
ece
Spai
n
Net
herl
ands
Fran
ce
Finl
and
Hun
gary
Ger
man
y
Slov
akia
Italy
Esto
nia
Luxe
mbo
urg
US
Pola
nd
Isra
el
Ont
ario
Cana
da
Swed
en
Aust
ralia
Slov
enia
Aust
ria
Uni
ted
King
dom
Switz
erla
nd
10.610.9 11.1 11.2
12.513.0
13.9
10.5
1.5
2.73.4
5.86.2
6.7 7.07.5 7.6 7.8
8.2 8.58.9 9.0 9.1
9.5 9.6 9.6 9.8 10.1
Figure 5.4: Changes in the tech sector: Trends in the share of early-stage entrepreneurs in the tech sector in Ontario and Canada
12%
10%
10%
8%
2%
4%
0%2013 2014
Ontario
Canada
2015 2016
6.9
9.38.7
5.7
8.4
7.0
10.5 10.6
47 B E Y O N D T H E $ V A L U E
Figure 5.5: The established tech sector: Share of established businesses in the tech sector
20%
12%
14%
16%
18%
8%
10%
6%
4%
2%
0%
Mex
ico
Turk
ey
Sout
h Ko
rea
Latv
ia
Ger
man
y
Gre
ece
Spai
n
Net
herl
ands
US
Isra
el
Finl
and
Slov
akia
Uni
ted
King
dom
Pola
nd
Switz
erla
nd
Ont
ario
Italy
Fran
ce
Hun
gary
Esto
nia
Swed
en
Chile
Cana
da
Port
ugal
Luxe
mbo
urg
Aust
ria
Aust
ralia
Slov
enia
9.19.5 9.8 9.8
10.6 11.0
2.4 2.7 3.0
4.55.2
6.1
7.3 7.4 7.58.0 8.0 8.2 8.4 8.7 8.7
11.3 11.3 11.4
14.2
18.6
19.6 19.8
S T R O N G E A R L Y - S T A G E E N T R E P R E N E U R P A R T I C I P A T I O N I N T H E T E C H N O L O G Y S E C T O R
Ontario performed well with respect to the participation of early-stage entrepreneurs in the technology sector in 2016, and while it sits slightly below Canada, it was ranked well above the median relative to comparator economies. The proportion of early-stage entrepreneurs active in the technology sector has also been growing in recent years. This suggests a dynamic technology sector where entrepreneurs see new business opportunities. This is an encouraging sign, particularly for technology-focused regions such as Toronto and Kitchener-Waterloo.
In comparison to early-stage entrepreneurs, there is a much lower proportion of established businesses in the technology sector. Ontario falls close to the median when compared to other OECD economies.
Figure 5.6: Technology and independence
Australia
AustriaCanada
Chile
Estonia
Finland
France
Germany
Greece
Hungary
Israel
ItalyKorea
Latvia
Luxembourg
Mexico
NetherlandsOntario
Poland
Portugal
Slovakia Slovenia
SpainSweden
Switzerland
Turkey
US
United Kingdom
20%
30%
40%
50%
60%
70%
10%
TEA: Percent operating in technology sector
TEA:
Per
cent
cite
d in
depe
nden
ce m
otiv
e as
reas
on
5%
I N C O M E O R I N D E P E N D E N C E ? H O W T E A P A R T I C I P AT I O N I N T H E T E C H N O L O G Y S E C T O R A N D R E A S O N S F O R O P P O R T U N I T Y- D R I V E N E N T R E P R E N E U R S H I P I N T E R A C T
At the early stages of entrepreneurship, there appears to be a correlation between the proportion of opportunity-driven entrepreneurs motivated by a desire for independence and the proportion of entrepreneurs participating in the technology sector. Ontario falls close to the trendline for comparator countries.
B E Y O N D T H E $ V A L U E 48
49 B E Y O N D T H E $ V A L U E
Figure 5.7: Technology and income
Australia
Austria
Canada
Chile
EstoniaFinland
France
Germany
Greece
Hungary
Israel
Italy
SouthKorea
Latvia
Luxembourg
Mexico
Netherlands
Ontario
Poland
Portugal
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
USUnited Kingdom
20%
30%
40%
50%
60%
10%
TEA: Percent operating in technology sector
TEA:
Per
cent
cite
d in
com
e m
otiv
e as
reas
on
5%
On the contrary, there is a negative relationship between the participation of opportunity-driven entrepreneurs motivated by a desire to increase income and the proportion of entrepreneurs operating in the technology sector. One potential explanation is that the technology sector could be home to a higher concentration of high-risk ventures in which people are less likely to shy away from lower incomes during the early stages. Ontario is very close to where the trendline would be, and has a smaller share of entrepreneurs that reported increased income as a motivation for engaging in entrepreneurship, even with the same rate of technology sector involvement as compared with the rest of Canada.
B E Y O N D T H E $ V A L U E 50
I N N O V AT I O N
GEM measures innovation by considering the delivery of new products and processes that constitute a value-add to the market. This is assessed along three dimensions:
+ The extent to which similar products or services are offered by competitors
+ The degree to which the products or services offered by a firm are new to markets
+ The use of new technologies
GEM measures these dimensions with the following questions in its adult population survey:
Will all, some, or none of your potential customers consider this product or service new and unfamiliar?
Right now, are there many, few, or no other businesses offering the same products or services to your potential customers?
How long have the technologies or procedures used for this product or service been available? Less than a year, between one and five years or longer than five years?
I N D I C AT O R S
“Product differentiation” refers to the proportion of businesses that offer products that no other competitors offer.
“New market combination” refers to the proportion of businesses who indicate that they are introducing new products to new markets.
“Products new to all customers” reflects the proportion of entrepreneurs who are producing products that are new to all customers.
“New technology” refers to technology that has been available for one to five years.
“Very latest technology” refers to technology that has only been available for less than one year.
51 B E Y O N D T H E $ V A L U E
Figure 6.1: New products: Share of early entrepreneurs offering products that are new to the market
45%
35%
40%
30%
20%
25%
15%
10%
5%
0%
Port
ugal
Swed
en
Hun
gary
Slov
akia
Mex
ico
Aust
ria
Esto
nia
Ger
man
y
Net
herl
ands
Spai
n
Switz
erla
nd
Isra
el
Luxe
mbo
urg
Latv
ia
Cana
da US
Gre
ece
Ont
ario
Pola
nd
Uni
ted
King
dom
Sout
h Ko
rea
Aust
ralia
Finl
and
Slov
enia
Fran
ce
Italy
Turk
ey
Chile
5.7 5.98.0
10.1 10.7 11.0 11.3 11.6 12.3 12.5
17.1 17.1 17.6 17.9 18.0 18.0
30.6
37.5
43.3
13.9 14.1 14.1 14.4 14.5 15.4 15.6 15.6 15.6
Note: % of total respondents who answered “don’t know” or “refused”: 2.3% (not included in chart total)
Figure 6.2: New products: Share of established business offering products that are new to the market
40%
35%
25%
30%
20%
15%
10%
5%
0%
Aust
ria
Spai
n
Mex
ico
Port
ugal
Latv
ia
Swed
en
Ger
man
y
US
Gre
ece
Slov
akia
Switz
erla
nd
Finl
and
Pola
nd
Es
toni
a
Slov
enia
Hun
gary
Ont
ario
Uni
ted
King
dom
Fran
ce
Net
herl
ands
Aust
ralia
Sout
h Ko
rea
Isra
el
Cana
da
Luxe
mbo
urg
Italy
Chile
Turk
ey
7.1 7.8 7.97.0
2.3 2.8 2.83.8 4.1 4.2 4.4 4.7 4.7 4.9 5.6
6.78.1 8.4 8.7 8.7 8.7
11.4 11.613.1
19.1
13.7
37.238.9
Note: % of total respondents who answered “don’t know” or “refused”: none
B E Y O N D T H E $ V A L U E 52
Figure 6.3: Unique products: Share of early entrepreneurs offering products no other business offers
18%
14%
16%
12%
8%
10%
6%
4%
2%
0%
Mex
ico
Pola
nd
Aust
ria
Sout
h Ko
rea
Port
ugal
Slov
enia
Fran
ce
Cana
da
Slov
akia
Finl
and
Latv
ia
Ger
man
y
Isra
el
Net
herl
ands
Chile
Switz
erla
nd
Swed
en
Spai
n
Gre
ece
Italy
Luxe
mbo
urg
Ont
ario
Hun
gary
Turk
ey
Uni
ted
King
dom
Esto
nia
US
Aust
ralia
11.3 11.512.3 12.3 12.7
15.3
16.7
7.9 7.9 8.1 8.5 8.9 9.2 9.5 9.710.4 10.5 10.6 10.6 10.9 10.9
4.55.2 5.5 5.9 6.0
7.2 7.4
Note: % of total respondents who answered “don’t know” or “refused”: none
Figure 6.4: Unique products: Share of established businesses offering products no other businesses offer
14%
12%
8%
10%
6%
4%
2%
0%
Pola
nd
Latv
ia
Slov
akia
Ger
man
y
Gre
ece
Italy
Mex
ico
Aust
ria
Sout
h Ko
rea
Port
ugal
Switz
erla
nd
Esto
nia
Net
herl
ands
Spai
n
Cana
da
Sl
oven
ia
Ont
ario
Chile
Finl
and
Uni
ted
King
dom
US
Luxe
mbo
urg
Isra
el
Swed
en
Fran
ce
Turk
ey
Aust
ralia
Hun
gary
0.91.6 1.6
2.2 2.2 2.4 2.53.0 3.0
3.6 3.8 3.9 4.1 4.2 4.24.6 4.7
5.2
6.0
7.1 7.2 7.3 7.4 7.6 7.6
12.3
8.38.0
Note: % of total respondents who answered “don’t know” or “refused”: none
53 B E Y O N D T H E $ V A L U E
O N TA R I O ’ S E A R LY- S TA G E E N T R E P R E N E U R S O F F E R U N I Q U E P R O D U C T S A N D S E R V I C E S
Ontario’s early-stage entrepreneurs measure up well in offering unique products and services, and place above their Canadian counterparts. However, Ontario’s edge over Canada is diminished when it comes to measuring established businesses’ perceptions of how
innovative their products are. One interpretation could be that while many Ontario entrepreneurs are able to develop new products and services and to distinguish themselves from competitors early on, they—or their unique products and services—do not necessarily thrive into the long term. Among established businesses, this could also point to room for growth in the areas of research and development (R&D) and commercialization.
Figure 6.5: Cutting edge: Share of early-stage entrepreneurs who use the very latest technology (available less than one year) in their products
30%
25%
15%
20%
10%
5%
0%
Latv
ia
Pola
nd
Mex
ico
Swed
en
Finl
and
Net
herl
ands
Aust
ralia
Tu
rkey
Ger
man
y
US
Uni
ted
King
dom
Isra
el
Aust
ria
Hun
gary
Sout
h Ko
rea
Switz
erla
nd
Esto
nia
Spai
n
Ont
ario
Port
ugal
Chile
Luxe
mbo
urg
Cana
da
Fran
ce
Gre
ece
Italy
Slov
akia
Slov
enia
16.918.0
19.5
23.1
27.0
28.7
15.7
12.312.8
14.6
3.64.6 5.1
6.16.9
7.79.1 9.4 9.6 9.8 10.0 10.0 10.3 10.3 10.4 10.4 10.5
11.9
Note: % of total respondents who answered “don’t know” or “refused”: 1.8% (not included in chart total)
B E Y O N D T H E $ V A L U E 5 4
Figure 6.6: Paradigm shifts: Share of early-stage entrepreneurs using the very latest technology (available less than one year) over time
18%
16%
12%
14%
10%
8%
6%
4%
2%
0%2013
7.87.1
3.7
6.7
2014
Ontario
Canada
12.0 12.2
2015
16.9
12.3
2016
Figure 6.7: Riding the trend: Share of early-stage entrepreneurs using new technology (available one to five years) over time
30%
25%
15%
20%
10%
5%
0%2013
22.022.4
27.5
21.7
2014
Ontario
Canada
18.8 18.9
2015
24.4
27.1
2016
55 B E Y O N D T H E $ V A L U E
Figure 6.8: The old guards: Share of early-stage entrepreneurs using no new technology (available one to five years) over time
80%
70%
50%
60%
40%
30%
20%
10%
0%2013
70.270.568.8
71.5
2014
Ontario
Canada
69.2 68.8
2015
58.860.6
2016
O N TA R I O E N T R E P R E N E U R S ’ T E C H A D O P T I O N R E M A I N S S TA G N A N T
After experiencing an increase in the early-stage entrepreneurs using the very latest technology from 2014 to 2015, Ontario’s rate remained virtually at the same level between 2015 and 2016. However, Canada’s level has risen as compared to last year, which indicates an increase in use of the very latest technology among entrepreneurs in other provinces and territories in Canada.
This corresponds to a plateau in the level of early-stage entrepreneurship in Ontario between 2015 and 2016, while the level for Canada as a whole increased. Although this could be explained by the confidence interval alone, it could be that growth in other provinces’ early-stage entrepreneurship was related to use of the very latest technology. Further research may be warranted to explore the relationship between new business formation and technology use.
While Ontario lags behind Canada on the use of cutting-edge technology, it is comparable to Canada in terms of the use of new technologies among early-stage entrepreneurs. This could point to room for improvement in translating research and development into commercial applications.
B E Y O N D T H E $ V A L U E 56
Figure 7.1: Growing when young: Share of early-stage entrepreneurs who expect high job growth
40%
30%
35%
25%
20%
15%
10%
5%
0%
Gre
ece
Mex
ico
Spai
n
Swed
en
Aust
ria
Net
herl
ands
Cana
da
Finl
and
Ont
ario
Luxe
mbo
urg
Port
ugal
Ger
man
y
Italy
Isra
el
Fran
ce
Sout
h Ko
rea
Slov
enia
Slov
akia
Aust
ralia
Esto
nia
Uni
ted
King
dom
Switz
erla
nd
Pola
nd
Chile
Latv
ia
Hun
gary US
Turk
ey
6.2 6.4 7.09.0
10.411.8 12.3 13.2 13.6 14.6 15.1 15.6 16.5 17.4 17.5 17.9 18.4 18.5 19.3
21.322.7 22.8
24.9 25.326.8
28.530.1
40.4
J O B C R E AT I O N
In GEM’s adult population survey, Ontarians were asked about how many jobs they expected to create:
Not counting owners, how many people, including both present and future employees, will be working for this business five years from now?
I N D I C AT O R S
“High job expectations” indicate that early-stage entrepreneurs or business owners/managers expect to hire for more than 10 jobs or over 50 percent of current jobs within the next five years.
Note: % of total respondents who answered “don’t know” or “refused”: 22% (not included in chart total)
57 B E Y O N D T H E $ V A L U E
Figure 7.2: Change in growth expectations: How the share of early-stage entrepreneurs with high job growth expectations changed over time
Figure 7.3: Growing when old: Share of established business that expect high job growth
25%
20%
10%
15%
5%
0%2013
20.821.8
19.018.0
2014
Ontario
Canada
19.5
21.0
2015
13.6
12.3
2016
16%
12%
14%
10%
8%
6%
4%
2%
0%
Gre
ece
Italy
Spai
n
Switz
erla
nd
Mex
ico
Swed
en
Ger
man
y
Port
ugal
Aust
ria
Fran
ce
Cana
da
Sout
h Ko
rea
Isra
el
Net
herl
ands
Esto
nia
Finl
and
Uni
ted
King
dom
Luxe
mbo
urg
Latv
ia
Pola
nd
Ont
ario
Aust
ralia
Slov
enia
Slov
akia
Chile US
Hun
gary
Turk
ey
3.0 3.1 3.4 3.7 3.9 4.0 4.2 4.34.8 5.2
0.7 0.91.4
1.9 2.0 2.2 2.2 2.3 2.6 2.9
5.46.3 6.5 6.6 6.9 7.0
9.2
16.1
Note: % of total respondents who answered “don’t know” or “refused”: 1.7% (not included in chart total)
58B E Y O N D T H E $ V A L U E
M O D E S T J O B C R E AT I O N E X P E C TAT I O N S C O U L D P O I N T T O A L A C K O F A S P I R AT I O N T O S C A L E U P
High job expectations among early-stage entrepreneurs are a measure of the growth aspirations of entrepreneurs and can act as a barometer for measuring intent to scale. In some cases, this indicator can also point to the potential future economic impact of an entrepreneurial venture. Ontario outperforms Canada in this area, although both fall below the median relative to comparator countries. For instance, Australia sits above the median and the US is ranked second.
Relatively low rates of growth aspiration among early-stage firms in Ontario could point to barriers to scaling within the province’s entrepreneurial ecosystem, to a relative lack of motivation or confidence to scale among Ontarian entrepreneurs, or to a higher concentration of new businesses with limited scaling potential. This merits further investigation as well as policy attention to unlock latent growth entrepreneurship potential in the province.
Businesses do not necessarily exist along a spectrum from small to large, and success is contextual; running a small business with no significant growth plans and a prioritization of self-employment could be considered success depending on the motivation of the entrepreneur. However, on a larger scale, a low overall rate of growth expectation may be concerning given the potential of growth entrepreneurship to contribute to employment and GDP. A low growth aspiration could perpetuate a scale-up gap in Ontario, restricting the positive economic impacts associated with high-growth firms.
However, owners of established businesses in Ontario are more optimistic than in comparator economies, displaying relatively higher growth aspirations, even while absolute levels remain low. Ontario sits above the median among comparator countries, and its ranking is comparable to economies such as Australia. Ontario also significantly outperforms Canada, which falls well below the median. This could point to a more stable and supportive business environment for existing businesses in Ontario, compared to other regions.
H O W S E C T O R A L P A R T I C I P AT I O N A N D C O N F I D E N C E I N S K I L L S I N T E R A C T W I T H J O B C R E AT I O N E X P E C TAT I O N S
Figure 7.4: Growing a service company: Share of consumer service firms and expectation of job growth for early-stage entrepreneurs
80%
60%
65%
75%
70%
55%
Cons
umer
se
rvic
e fi
rms
45%
50%
40%
35%
30%5% 10% 20%15% 30% 35% 40%25%
Growth aspirations
Mexico
Greece
Spain
Sweden
AustriaFinland
Italy
France
SloveniaAustralia
United Kingdom Switzerland
EstoniaPoland
Latvia
US
Chile
Turkey
South Korea
Germany
OntarioPortugal
Netherlands
Canada
Israel
SlovakiaLuxembourg
Hungary
59 B E Y O N D T H E $ V A L U E
60B E Y O N D T H E $ V A L U E
Figure 7.5: Growing a secondary sector company: Share of secondary sector firms and expectations of job growth for early-stage entrepreneurs
35%
25%
30%
% o
f ear
ly-s
tage
bus
ines
ses
oer
ing
cons
umer
-orie
nted
ser
vice
s /
% o
f ear
ly-s
tage
bus
ines
ses
with
hig
h jo
b ex
pect
atio
ns (1
0+ jo
bs/o
ver 5
0% in
5 y
ears
)
20%
15%
10%5% 10% 20%15% 30% 35% 40%25%
% of early-stage businesses operating in the secondary sector / % of early-stage businesses with high job expectations (10+ jobs/over 50% in 5 years)
Mexico
Greece
Spain
Sweden
Austria
Finland
Italy
France
Slovenia
Australia
United Kingdom
Switzerland
EstoniaPoland
Latvia
US
Chile
TurkeySouthKorea
GermanyOntarioPortugal
Netherlands
Canada
Israel
Slovakia
Luxembourg
Hungary
The sectoral composition of a country’s entrepreneurship ecosystem appears to be related to expectations of job growth. For instance, countries reporting a higher number of early-stage firms in the consumer-oriented services sector have lower expectations of job growth on average. Ontario enjoys a higher than average expectation of job growth compared to its percentage of consumer-oriented services. In contrast, as a country’s proportion of early-stage firms in the secondary sector (e.g. manufacturing) increases, so do job creation expectations. Ontario fits this trend, with a lower level of early-stage firms in the secondary sector and lower job creation expectations.
This may be explained by the fact that secondary sector firms are generally more likely than service-based firms to produce mass market goods, creating higher potential for growth. Economic activity in the secondary sector tends to be more prevalent in countries with lower labour costs, which appears to be borne out by Figure 7.5. However, as firms across sectors increasingly adopt labour-saving technologies, these trends may shift.
61 B E Y O N D T H E $ V A L U E
Figure 7.6: Being good at growing: Relationship between the belief in entrepreneurial skills and expectations of job growth for early-stage entrepreneurs
30% 40% 50% 60%
South Korea
Latvia
Luxembourg
Mexico
Netherlands
Ontario
Poland
Portugal
SlovakiaSlovenia
SpainSweden
Switzerland
Turkey
US
United Kingdom
10%
20%
30%
Australia
AustriaCanada
Chile
Estonia
Finland
FranceGermany
Greece
Hungary
Israel
Italy
% of early-stage businesses operating in the secondary sector / % of early-stage businesses with high job expectations (10+ jobs/over 50% in 5 years)%
of e
arly
-sta
ge b
usin
esse
s o�
erin
g co
nsum
er-o
rient
ed s
ervi
ces
/ %
of e
arly
-sta
ge b
usin
esse
s w
ith h
igh
job
expe
ctat
ions
(10+
jobs
/ove
r 50%
in 5
yea
rs)
There seems to be a relationship between confidence in knowledge/skills to start a business and a region’s expectation of job growth. Despite a high level of confidence in knowledge and skills, however, both Ontario and Canada exhibit a lower than expected level of job growth expectations, even controlling for sector composition. This supports the conclusion that there are other barriers to growth in Ontario and Canada, or a lower level of motivation or confidence to scale.
B E Y O N D T H E $ V A L U E 62
E X P O R T S
In GEM’s adult population survey, respondents were asked:
What percentage of your annual sales revenues will usually come from customers living outside your country? Is it:
+ More than 90 percent
+ More than 75 percent
+ More than 50 percent
+ More than 25 percent
+ More than 10 percent, or
+ 10 percent or less?
I N D I C AT O R S :
A “high level of exports” refers to businesses or early-stage entrepreneurs with more than 50 percent of a customer base that is outside of the country.
63 B E Y O N D T H E $ V A L U E
Figure 8.1: International outlook: Share of early-stage entrepreneurs with more than 50 percent of customers from outside Canada
4%
3%
3.5%
2%
2.5%
1.5%
1%
0.5%
0%
Spai
n
Mex
ico
Fran
ce
Ger
man
y
Sout
h Ko
rea
Finl
and
Swed
en
Italy US
Net
herl
ands
Pola
nd
Uni
ted
King
dom
Slov
akia
Hun
gary
Slov
enia
Switz
erla
nd
Esto
nia
Turk
ey
Gre
ece
Latv
ia Po
rtug
al
Aust
ralia
Luxe
mbo
urg
Chile
Aust
ria
Isra
el
Ont
ario
Cana
da
2.8
3.9
o.4 o.4 o.5 o.5 o.5o.6
o.7 o.8 o.81.0 1.0 1.0 1.1
1.2 1.21.3 1.4 1.4
1.5 1.51.6 1.6
1.71.8
2.3
2.7
O N TA R I O A N D C A N A D A A R E T O P P E R F O R M E R S I N E X P O R T S
According to GEM data, Canada and Ontario are the two top performing economies among comparator countries when it comes to exports (in percentage of customers). They compare well with Australia and Israel, which are exemplars of entrepreneurial
E X I T S
In GEM’s adult population survey, respondents were asked:
Have you, in the past 12 months, sold, shut down, discontinued, or quit a business you owned and managed, any form of self-employment, or selling goods or services to anyone?
― Did the business continue its business activities after you quit?
― What was the most important reason for quitting this business?
economies relying on market reach. This indicator does not, however, reflect gross exports and does not capture export diversity; notably, a majority of non-Canadian customers are likely to be in the US.
Note: % of total respondents in Ontario who answered “don’t know” or “refused”: 2.4% (not included in chart total)
B E Y O N D T H E $ V A L U E 6 4
Exit reason is problems
Exit reason is an incident (2%)Exit reason is
retirement (8%)
Exit reason is exit was planned in advance (1%)
Exit reason is opportunity to sell (12%)
Exit reason isanother job orbusiness opportunity (12%)
Exit reason isfamily or personal reasons (17%)
Exit reason isgovernment/tax policy/bureaucracy (6%)
Exit reason is business
Figure 9.1: If there were 100 businesses: Share of respondents who have exited a business by exit reason
L A C K O F P R O F I T A N D B A R R I E R S T O A C C E S S I N G F I N A N C E A R E A M O N G T O P R E A S O N S F O R E X I T S
The top three reasons for exiting a business in Ontario, from early-stage ventures to established businesses, include: a business not being profitable, family or personal reasons, and problems in obtaining finance. This could point to the precarity of entrepreneurship, and potentially—though not definitively—to limited capital.
I N D I C AT O R S
+ “Exit” refers to an owner’s exit followed by the business being continued by others.
65 B E Y O N D T H E $ V A L U E
C O N C L U S I O N
This report sought to take a closer look at Ontario’s entrepreneurs, focusing on how individual entrepreneurs operate in a complex ecosystem with
numerous overlapping factors affecting their motivations, aspirations, experience, and success. On the whole, GEM results show that Ontario is performing well in matters of advancing entrepreneurship, and that Ontarian entrepreneurs view the province as a good place to start and build their ventures. In particular, participation in early-stage entrepreneurship is strong among younger Ontarians, which is an improvement from past results.
There are some areas, however, where Ontario falls short, and where policy attention may therefore be needed—notably, women participation in entrepreneurship and the growth aspirations of entrepreneurs. More research is needed to empirically assess these and other trends explored in this report, and more importantly, to develop evidence-based strategies and programs to address them.
Understanding the perspectives of entrepreneurs can help us understand the levers that will allow Ontario—and Canada as a whole—to continue to promote a culture of innovation, build awareness of entrepreneurship as a career choice, and ultimately support diverse and successful entrepreneurs.
The Brookfield Institute will continue to investigate Canada’s innovation ecosystem from the perspective of entrepreneurs, drawing on a range of data sources and insights.
B E Y O N D T H E $ V A L U E 66
E N D N O T E S
1. Office of Economic Policy, Ontario Ministry ofFinance. (2017). Ontario Fact Sheet November2017.
2. Small Business Branch, Innovation, Science andEconomic Development Canada. (2016).Key Small Business Statistics.
3. Fitzsimons, P., and O’Gorman, C. (2017).Entrepreneurship in Ireland 2016 (GEM).
4. Global Entrepreneurship Monitor. (2017).Global Report 2016/2017. The Centre forInnovation Studies.
5. Schwab, K. (2016). The Global CompetitivenessReport 2016-2017. World Economic Forum.
6. Koellinger, P., Minniti, M., and Schade, C. (2007).“I think I can, I think I can”: Overconfidence andentrepreneurial behaviour. Journal of EconomicPsychology.
7. Bosma, N., Coduras, A., Litovsky, Y., andSeaman, J. (2012). GEM Manual: A report on thedesign, data and quality control of the GlobalEntrepreneurship Monitor. GEM Spain.
8. Langford, C. H., and Josty, P. (2017).2016 GEM Alberta Report. The Centrefor Innovation Studies.
9. Aghion, P., Akcigit, U., Hyytinen, A., andToivanen, O. (2017). Living the American Dreamin Finland: The Social Mobility of Inventors.Accessed November 2nd, 2017.
10. 10 Wong, P. K. , Ho, Y. P., and Autio, E. (2005).Entrepreneurship, Innovation and EconomicGrowth: Evidence from GEM data. SmallBusiness Economics 24(3), p335-350.
67 B E Y O N D T H E $ V A L U E
S P O N S O R S
S P E C I A L T H A N K S
We would also like to thank Keenan Mathura, Designer, and Jacky Au Duong, Special Projects Coordinator at Ryerson University’s Centre for Communicating Knowledge for their tireless work in creating a visual identity to bring this report to life, as well as Annalise Huynh for her visualization guidance.
Finally, we'd like to express our gratitude to our communications team, including Coralie D'Souza and Erin Hesselink, as well as the team at FIZZZ Design Corp., who were invaluable in the creation and roll-out of this report.
68 B E Y O N D T H E $ V A L U E