Centre for Innovation and Entrepreneurship | CIE Blog

My apologies on announcing the winners of last week’s Peter Farrell Cup. Official press release or announcement coming soon. In the meanwhile, I couldn’t help building on the earlier blog post about fear of failure vs failure to start. It was nagging me to create this bubble chart based on the same GEM data with a few changes:

• Fear of failure and entrepreneurial intentions in the same chart as different axes
• Bubble area according to additional population data (since the GEM data is based at the individual level, not firm level)
• Color coded by GEM’s classification (Factor-driven economy: RED, Efficiency-driven economy: BLUE, Innovation-driven economy: YELLOW)

So, if one were to draw a linear regression line through the whole data set, then Australia would probably be middle of the road for the overall data. If you look at only the yellow bubbles (innovation-driven economies), then Australia tends to be towards the upper right, i.e., greater intentions to start (not bad), but higher fear of failure (not good). Does that mean that relative to the other innovation-driven economies, Australia is a country of “intentrepreneurs” or “wantrepreneurs”?

– This blog post first appeared on the CIE Blog.

Centre for Innovation and Entrepreneurship (CIE) | CIE Blog

There have been recent critiques about What’s Killing Australian Innovation (see our commentary on a recent talk by ASB Dean Alec Cameron, and related ABC radio interview). At this week’s TiECon Australia, TiE Sydney chapter president Dilip Rao commented that Australia is ranked 18th globally for having a ‘fear of failure’ (first being worst). Based on the GEM Global Report 2010, Australia actually shows up worse, ranked 16th out of 59 countries.While that sounds quite bad, the spread of the scores shows that Australia is nonetheless close to the average, and not that much different to, say, Germany (see figure below). The classic benchmark is the US, which is ranked 47, and still not close to being statistically significantly away from average (assuming a normal distribution).

Fear of Failure: Percentage of 18–64 age group with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business

Wait a second, but what’s this other variable, called “Entrepreneurial Intention”? Well, it’s defined as the “percentage of 18–64 age group (individuals involved in any stage of entrepreneurial activity excluded) who intend to start a business within three years” (p. 63 in the 2010 GEM report). Australia ranks poorly on this one as well (39/59) if you take the rankings at face value. Interestingly, the US ranks even lower than Australia here (44/59).

What the heck is going on?

My best guess, is that in some countries, entrepreneurship is not a choice, but a way of life. Almost everyone there has to hustle and bustle to feed their family. Meanwhile in the “Innovation-Driven Economies” it’s an optional career choice. So, focusing on the latter, what do we see?

Well, Australia ranks 6/23 on the fear of failure measure, but still very close to average for the group (US ranks 20/23 in this group). Australia also ranks 7/23 on the entrepreneurial intention measure, again still very close to average for the group (US ranks 11 in this group, worse than Australia!).

=> Claims that Australia has a fear of failure are NOT supported by THIS data
Yours truly,
The Centre for Innovation & Entrepreneurship

This post first appeared on the CIE Blog.