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Posted at 01:30 PM ET, 11/14/2011

American entrepreneurs driven less by opportunity, more by necessity

Entrepreneurship activity declined slightly in recent years and, perhaps even more troubling, those who are launching new businesses are increasingly doing so out of necessity — not opportunity.


Entrepreneurship is increasingly pursued by those looking for steady income, rather than those aiming to improve on the salary they’re already making. (Justin Sullivan - GETTY IMAGES)
The Global Entrepreneurship Monitor, a nonprofit research consortium, on Monday released its latest National Entrepreneurial Assessment for the United States. The report showed that entre­pre­neur­ship activity among Americans dipped from 8.0 percent in 2009 to 7.7 percent last year, even though many respondents said economic conditions for new companies had actually improved over the course of the year.

“The picture of entrepreneurial activity in the U.S. painted by this report continues to exhibit elements of light and dark,” GEM researchers said in a joint statement. “While some improvements have occurred, the extent to which the economic downturn affected entrepreneurial activity remains unclear.”

Meanwhile, what is clear is that entre­pre­neur­ship is increasingly pursued out of necessity rather than opportunity. According to the study, in the United States, the percent of early-stage entre­pre­neur­ship activity that stemmed from individuals searching for some source of income rose from 23 percent in 2009 to 28 percent in 2010 — well above the worldwide average (20 percent) of necessity-driven entre­pre­neur­ship.

On the other hand, only 51 percent of businesses were created because entrepreneurs recognized an opportunity to maintain or improve their current income levels. That’s down from 55 percent in 2009 and short of the worldwide average (54 percent).

Among other interesting findings noted in the report:

• The gender gap among entrepreneurs is closing thanks to a slight increase in startup activity among women (up from 5.0 percent in 2009 to 5.6 percent last year) paired with a substantial drop in activity among men (down from 8.8 percent to 6.7 percent).

• Startups are more frequently centered around technology, with more than one out of 10 early stage entrepreneurs now active in technology (compared to just 1.7 percent in 2009).

• The Midwest enjoyed the greatest rebound in entre­pre­neur­ship since 2009, with the prevalence of early-stage entre­pre­neur­ship activity climbing from 13.0 percent to 15.2 percent in the heartland.

By  |  01:30 PM ET, 11/14/2011

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