Government support for opportunity entrepreneurs vital

WHAT makes some entrepreneurs grow their businesses and employ hundreds, or even thousands, of people? Knowing this is crucial for all governments keen to drive economic growth.

Not all entrepreneurs go on to make it big. In fact, nearly one in 10 (or as many as three in 10 in some emerging markets) start businesses out of necessity, because they are unable to find work.

Subsistence entrepreneurship is typically low on productivity and innovation. While valuable to individuals, these types of operations - such as roadside stalls - are unlikely to expand or employ many people besides immediate family. For economic development, it is important to focus on "opportunity entrepreneurs" instead. These are people who start businesses to exploit a potential opportunity. They are likely to grow their business faster, employ more people, and introduce innovation that could help fill important gaps in the market, while boosting productivity in the economy. The only problem is that opportunity entrepreneurs form a very small proportion of those starting up businesses in any economy. According to one UK study, they made up only 6 per cent of entrepreneurs, but accounted for over 50 per cent of net job creation in the UK between 2002 and 2008.