This is according to the Entrepreneurial Ecosystems around the Globe and Company Growth Dynamics report, presented at this year’s World Economic Forum (WEF) currently underway in Dalian, China.
“We believe the report will have a meaningful impact on entrepreneurs, investors and government policy-makers, as they help shape entrepreneurial ecosystems and drive growth within regional and global economies,” said Michael Drexler, senior director of the World Economic Forum United States.
A survey of over 1000 entrepreneurs was completed from around the globe by the WEF in collaboration with Stanford University, Ernst and Young and Endeavor.
The aim was to better understand how successful entrepreneurial companies accelerate access to new markets and become scalable, high-growth businesses.
“Entrepreneurs are key drivers of economic and social progress. Rapidly growing entrepreneurial enterprises are often viewed as important sources of innovation, productivity growth and employment,” said the report.
Since small and medium sized business account for 97 per cent of all jobs in emerging economies, governments are trying to actively promote entrepreneurship through various forms of support.
The three pillars of accessible markets, human capital and funding are therefore critical to governments as well.
“Government policy that reinforces and builds up these three pillars will increase the likelihood of a vibrant ecosystem emerging over time. There is a scaling imperative for each ecosystem as it is a small number of high-growth companies that will contribute most to aggregate economic growth in a region,” said George Foster, a co-author of the report as well as a Stanford University graduate.
The report is said to also highlight opportunities and challenges that entrepreneurs face when partnering up with large corporations.
Corporations tend to neglect partnership opportunities when emerging small businesses are viewed as possible threats to their market share. This then stalls or prevents expansion into new markets for both parties.
Entrepreneurs on the other hand hold an optimistic view that partnering with large corporations will drive their growth potential despite the possibility that there may be differences in culture, decision making and management.
“Our involvement in co-developing this report highlights that the pathway to economic growth is predicated on understanding how entrepreneurial organisations scale beyond the early start-up years,” said Maria Pinelli, global vice-chairman of Strategic Growth Markets at Ernst and Young.