Majority of new businesses have ‘no aspiration for growth’

A majority of Irish entrepreneurs are setting up businesses that are "not particularly innovative and have little or no aspiration for growth", a report published yesterday by Minister for Enterprise Richard Bruton states.

The Global Entrepreneurship Monitor found the number of people who aspire to be entrepreneurs in Ireland is well below the average across the EU and OECD, despite the fact that the need for entrepreneurship here is "greater than ever.

The study – by Paula Fitzsimons, of Fitzsimons Consulting, and Dr Colm O'Gorman, professor of entrepreneurship at DCU– says that "the prevalence of early stage entrepreneurs in Ireland is at historically low levels and is half of what it is in the United States".

“The proportion of people in Ireland who are early stage entrepreneurs has fallen (6.1 per cent in 2012 from 7.3 per cent in 2011) and Ireland’s ranking against other countries has declined. Ireland is now ranked 18th among the OECD countries, 14th of the EU-27 countries,” it states.

Under the heading "impact of entrepreneurial activity", the report says "the majority of entrepreneurs are setting up new businesses that are in low technology sectors, are not particularly innovative and have little or no aspiration for growth".

Positive note
On a more positive note, it says "a small number of new businesses, however, will have a disproportionate economic impact due to their ability to exploit newer technologies, their high degree of innovation, their greater export orientation and their aspirations for growth".

The report says the recession “has had a very severe negative impact” on the number of people in Ireland recognising new business opportunities in their local area (26 per cent). This is well below the level recorded here in 2007 (46 per cent) and is less than the OECD and EU averages, at 33 and 31 per cent respectively, for last year.

It found that just 45 per cent of Irish people consider entrepreneurship to be a good career choice and the same number believe they have the skills to establish a business (above the OECD and EU averages).

Fear of failure (at 41 per cent) was found to be less of a deterrent to entrepreneurs in Ireland than in many other nations, with women here (46 per cent) more anxious about business failure than men (37 per cent).

The study, which surveyed 2,000 people and was supported by Enterprise Ireland and Forfás, found the rate of new business owners was 2.3 per cent among the adult population in 2012, which it says suggests that 19,000 people started new businesses in Ireland last year. A year earlier, the rate was 3.1 per cent, which would have meant more than 25,000 people were involved in starting a new firm.

The chairman of the Government’s Entrepreneurship Forum , Seán O’Sullivan, said Ireland had long been a place “full of dreamers and doers and that’s essentially what entrepreneurship is, a blend of the two”.

“If we can field world-class rugby players, artists, and scientists, why can’t we also field world-class, fast-growing indigenous businesses,” he said.