OLDER ENTREPRENEURS AN UNTAPPED FORCE FOR ECONOMIC STABILITY
The number of older adults who are self-employed outweighs that of young adults, suggesting that people of 50 years and older still have a significant role to play in economies around the world—this according to a new Global Entrepreneurship Monitor (GEM) Special Report on Senior Entrepreneurship (pdf).
This new report, co-sponsored by Babson College, Universidad del Desarrollo, Universiti Tun Abdul Razak, and Korea Enterprise Foundation, draws on data collected between 2009 and 2016 on entrepreneurial activity in 104 countries. The sample comprises 1,540,397 adults aged 18 to 80 years old across five regions of the world, including sub-Saharan Africa (SSA), Middle East and North Africa (MENA), South East Asia (SEA), Latin America and the Caribbean (LAC), and the European culture countries (ECC).
“Entrepreneurial success and prosperity has no age limits,” said Mike Herrington, Executive Director of GEM. “While the traditional perception of entrepreneurship is that it is a young person’s endeavor, the data are showing us that, in many aspects, older people are a significant entrepreneurial force. But this segment is largely an overlooked and undervalued resource.”
According to the report, 18 percent of adults between the ages of 50 and 64 and 13 percent between the ages of 65 and 80 are self-employed compared to just 11 percent of adults between the ages of 18 and 29. Eighteen percent of “middle-aged” entrepreneurs (aged 30 to 49) are self-employed. Yet entrepreneurship programs and support are, by and large, geared towards younger segments. The report suggests that specialized support for older entrepreneurs could help unlock benefits for economic stability—especially in economies where senior entrepreneurship is underrepresented.
Regionally, senior entrepreneurship, in terms of both entrepreneurial intention (the percentage of the adult population who intend to start a business within the next three years) and early-stage entrepreneurial activity (those who have started and are running a business that is less than 42 months-old), is highest in Sub-Saharan Africa (35 percent/19 percent), Latin America and the Caribbean (27 percent/14 percent), and MENA (23 percent/7 percent) and lowest in the ECC (six percent/four percent). Just 14 percent of seniors in South East Asia report entrepreneurial intentions and nine percent are actually engaged in an early-staged venture. These numbers are consistent with GEM findings that entrepreneurship levels are typically higher in factor-driven economies where the types of businesses started often require lower skills and less money to get off the ground.
According to Thomas Schøtt, Professor of Entrepreneurship at the University of Southern Denmark and lead author of the report, senior entrepreneurs bring with them a host of benefits—economic, social, and environmental—that the report labels “golden dividends”. These include relieving pressure of an aging population on the state and job creation.
“Every older adult who is self-employed is less likely to place a financial burden on society and to contribute to the economy of that country through the payment of taxes and by remaining economically active. Additionally, senior entrepreneurs are marginally more likely than their younger counterparts to employ more than five people so they are not only creating jobs for themselves but for others as well,” said Schøtt.
Additional economic benefits come from the fact that seniors who act as informal investors also tend to invest considerably more money compared to younger adults. Almost two thirds (63 percent) of older business angels invest more than the median of all investments. And elderly entrepreneurs across all phases of entrepreneurial activity report substantially higher levels of satisfaction with both their life and their job, compared to elderly routine employees. This translates into better health and fewer demands being placed on social service/entitlement programs.
Schøtt said that these findings have particular significance for economies struggling with the perceived burden of an aging population.
“With approximately 16 percent of the world’s population 55 or older, the issues of entrepreneurial activity at these more advanced ages directly affect more than a 1.2 billion people,” he said. “The world is beginning to understand how senior entrepreneurs with their wealth of work and life experience, deep networks, and eagerness to remain productive are a huge untapped resource. It is time that we stop thinking about this demographic as a liability and instead recognize them as assets, and work across sectors to help break down barriers to unleash their potential. It is imperative for governments to create innovative, inter-agency frameworks to marshal resources, catalyze strategic thinking, prioritize new policy, and create actionable research to advance this movement.”
- Older individuals have the lowest confidence in their own ability to start and run a business, but risk-willingness is highest amongst older age groups.
- Older adults are slightly more likely to be social entrepreneurs than entrepreneurs in the other three age groups. This suggests that people may retire from jobs as employees or as self-employed, but may continue to pursue ventures with a social or community objective. This is an interesting finding, as social entrepreneurship is often associated with young changemakers who are idealistic in nature.
- Gender has an influence on senior entrepreneurial behavior. Entrepreneurial intentions are lowest among senior women compared to the other three age groups, with fewer than seven women expressing the intention to start a business for every ten men in this age group. Older people report the widest gender gap in terms of early-stage entrepreneurial activity, with only six women engaged in start-up activity for every ten male entrepreneurs in this age group.
About the Global Entrepreneurship Monitor (GEM)
The Global Entrepreneurship Monitor (GEM) was initiated in 1999 as a joint venture of Babson College and the London Business School. Starting with 10 participating economies, the project expanded to include 73 economies in its 2014 survey. The latest survey spans 62 economies. GEM is the largest and most developed research program on entrepreneurship in the world. GEM is unique because, unlike most entrepreneurship data sets that measure newer and smaller firms, GEM studies the behavior of individuals with respect to starting and managing businesses. GEM academic teams in each participating economy are members of an exclusive research project that provides access to the collective knowledge of some of the world’s most renowned researchers and institutions involved in entrepreneurship research. At a time in history when individual entrepreneurial activity may hold the key to transforming the global economy and discouraging ingrained economic disparity in countries with minimal economic opportunity, GEM data has influenced national economic policies and continues to expand its collaborative role. Global sponsors of the research include Babson College (lead sponsor) in the United States, Universidad Del Desarrollo in Chile, Universiti Tun Abdul Razak in Malaysia, and Tecnológico de Monterrey in Mexico. For more information, follow GEM on Twitter.
About Babson College
Babson College is the educator, convener, and thought leader for Entrepreneurship of All Kinds®. The top-ranked college for entrepreneurship education, Babson is a dynamic living and learning laboratory where students, faculty, and staff work together to address the real-world problems of business and society. We prepare the entrepreneurial leaders our world needs most: those with strong functional knowledge and the skills and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in a common purpose to make a difference in the world, and have an impact on organizations of all sizes and types. As we have for nearly a half-century, Babson continues to advance Entrepreneurial Thought & Action® as the most positive force on the planet for generating sustainable economic and social value.