2016.01.08 Bumblebee Economics

Over the almost two decades I have lived in California, the climate for starting up companies in Denmark has changed dramatically. Once a tech startup was looked at with some suspicion; now any self-respecting town seems to have a tech incubator.

Supposedly, looking at the societal prerequisites - rules and regulations - Denmark is now the country perceived among the easiest for starting a company.

When adding up the factors of desire for professional independence, culture, and self efficacy - the idea that you actually can succeed at what you start - Denmark scores at the same level as the US in the 2015 Amway Entrepreneurial Index, which on the global scale is "a little more entrepreneurial than average". The data covers a broad but not complete selection of countries.

The really entrepreneurial spirits seem to be in South America and East Asia with the exception of Japan. The places people really don't think about starting something is most of Europe (particularly Eastern Europe) and Russia.

The result of the entrepreneurial spirit is partly reflected by the speed with which these Asian economies are catching up to (or moving beyond) the industrialized parts of the world - which seems to have lost steam in comparison ref this Harvard Business Review article from the spring of 2015.

The Amway report is interesting in illuminating both the desire for professional independence as well as the perception that one can actually "pull it off." In e.g. the UK there is a greater belief that starting a company is feasible than the desire to do so - in Korea the picture is the reverse; some would love to but don't think they are able to.

It is quite fascinating to see the spreads in both desires and efficacy. There is a difference in thinking one can do something but not having a desire to try it compared to really wanting to do something but not trusting oneself to have the skills. To which degree is this a culturally induced assessment of own capabilities vs. a realistic estimate of how daunting it may be to get a company going?

When looking at the perception of how business friendly the local economy is there certainly is an overlap between the peoples who don't think they can pull it off and their perception of how cumbersome it may be in their society to start a business.

It is, however, questionable if people's perceptions of how difficult it is to start a business are accurate. While the Amway report has Denmark in the lead by a wide margin, The World Bank ranks the country as number 29 among countries where it is easy to start - albeit it ranks as number 3 once you are up and running. (Amway ranks South Africa no.2 - The World Bank ranks it 120! Meanwhile Portugal is seen as an abysmal place to start anything in the Amway survey - and ranked no 13 by the World Bank.)

It could be more difficult in Denmark than the Danes think, but because they have a skewed perception they try and may succeed. In other countries - e.g. Portugal - they may wrongly believe that it is very hard and because they believe this, they may not think they can succeed and, hence, don't try.

While I can't say that I understand how Amway or The World Bank do the math, it seams that zeitgeist is influential. A combination of how the press writes about successes and failures, knowing somebody who has succeeded or failed, and a cultural component of fear of failure/standing out from the norm can have a huge impact on forming tomorrow's economies.

Unless you believe you can fly, why would you start flapping your wings?