Canadians aren’t accustomed to overachieving in global comparisons. Our national personality type tends to direct our focus on those rankings in which Canada is the lowly, loveable underdog. When we placed a meagre 14th in the most recent ranking of business competitiveness, for example, we gave ourselves a collective “Oops, sorry.”
It was refreshing this week to see a survey that places Canada virtually at the top of the world. The 2013 Global Entrepreneurship Monitor (GEM) pegs Canada in second place among 24 of our peer innovation-driven economies. With a “total early-stage activity” rate (the TEA, reflecting the percentage of working-age people either starting new businesses or involved in one that’s less than 42 months old) of 12.2, Canada ranks very closely behind the first-place United States. And for once, we kicked the butts of those pesky Scandinavian countries such as Finland and Norway that usually snag all the highest spots in international rankings.
The report also places Canada at or near the top in other metrics pertaining to entrepreneurialism. In qualitative survey questions such as “Do general media provide good coverage (of entrepreneurs)” and “Is entrepreneurship a good career choice,” Canada ranks first and second, respectively, among all countries.
The GEM focuses on the importance of entrepreneurship in promoting four key goals: Economic growth, job creation, sustainability and quality of life. The report is chock full of interesting charts, graphs and statistics, but of all of the fascinating results in the report, three were particularly intriguing.
The first was the provincial ranking of entrepreneurial-ism. Alberta was in top spot with a TEA score of 18.6 – almost 50 per cent higher than the United States (12.6), and nearly double the score of last-place Quebec (9.6). While it’s not quite statistically correct to compare national and sub-national rankings, the general conclusion is that Alberta is one of the most entrepreneurial places on Earth.
That comes as no surprise to Albertans. The GEM results reinforce findings from a separate Statistics Canada study. Its Survey of Innovation and Business Strategy, released in late March, explores the criteria by which firms make decisions on promoting workers. (Employees of firms that demonstrate innovation and creativity are called “intrapreneurs” in the GEM report.) In every part of the country, worker effort is the single most important criterion, but Alberta and Ontario outpaced the other provinces by a significant margin. Even more telling, virtually no employers in Alberta (0.7 per cent) use tenure as the sole means of promotion. Firms in B.C., Saskatchewan and Manitoba were seven times more likely to promote based on tenure.
The upshot is that effort and hard work – by both entrepreneurs and intrapreneurs – is rewarded in Alberta.
Another particularly intriguing point in the GEM report reflects some of Canada’s shortcomings. The report contained a supplementary survey of 42 experts from nine professions, called the National Experts Survey (NES). This group reported a generally positive environment for Canadian entrepreneurs. However, they did express some skepticism with the statement: “Canadian culture encourages entrepreneurship and entrepreneurial risk taking.” According to the experts, anyway, an appetite for entrepreneurial risk still isn’t part of our national DNA.
Lastly, an interesting finding had to do with perceptions of government support for entrepreneurs. According to the NES, governments appear to be all talk but little action around startups. “Canadian governments at both federal and provincial levels seem to articulate the importance of small firms, especially those with growth potential. However, programs are judged lack sufficiently specific priority for small growth firms,” write the authors of the report. Predictably, bureaucratic red tape continues to be a hindrance.
On balance, however, the 2013 GEM report is great news for Canada. Almost in spite of our cultural attitudes and government red tape, we are a nation of entrepreneurs. That’s not only something to celebrate, but an asset on which to capitalize. The willingness to act on a business plan, an innovative new product, or a niche service is the backbone of a growing economy. Even the world’s largest mega-corporations all started at the same place: An idea.
Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.