17 Jun 2020

GSOM SPbU experts: Global Entrepreneurship Monitor in Russia showed a record increase in the number of new companies in Russia before the pandemic

The Graduate School of Management of St. Petersburg University (GSOM), with the support of Sberbank, presented the full version of the national report Global EntrepreneurshipMonitor (GEM) Russia 2019-2020. In 2019, in Russia, the number of people involved in the creation and management of new companies amounted to 9.3% of the total able-bodied population. This figure is a record for Russia for the entire duration of Russian participation in study (since 2006).


In other countries, this figure ranges from 4-5% in Italy, Poland, Pakistan and Japan to 35% in Chile and Ecuador. In the BRICS countries, the number of people who have attempted to create and manage a new business also varies. For example, in Brazil  23% of the working age population are early-stage entrepreneurs, in India this number is 15%, in China —  8.7%. Whether the coronavirus pandemic will negatively affect the indicators of entrepreneurial activity or, to the contrary, provoke a sharp positive trend, will be shown in the report on the results of the 2020 monitoring.


“From the results of the national part of the study, we see that in 2019 the growth of entrepreneurial activity in Russia has literally set a record. Over the year, the number of those who believe that there are ample opportunities in their region to create their own business has grown. These changes are positive, but the indicator is still quite low (only 30%) when discussing the impact of the small business sector on the country's economy. It will be even more interesting to look at the results of a study of entrepreneurial activity after the pandemic. During past crises, the proportion of those who created new businesses in countries with an average level of economic development not only did not decrease, but also grew, primarily due to the increase in those who were forced to become entrepreneurs in conditions of unemployment,” said Olga Verkhovskaya, GEM Project Manager in  Russia, Associate Professor, Graduate School of Management, St. Petersburg University.


The number of people whose business has existed on the market for more than 3.5 years has not changed, this figure is 5.1%.


In 2019, in Russia entrepreneurs have more often created a business than closed one. 3.4% of the employable population ceased to be entrepreneurs, with most of these businesses ceasing to exist, and only a fifth continued to function with other owners. 80% of those who closed their business in 2019 explained their decision with financial problems and unfavorable external factors.


The main motive for creating business remains the need to maintain income levels. 78% of respondents agreed that entrepreneurial activity makes it possible to earn under conditions of limited other job availability, while 69% associate entrepreneurial activity with the possibility of high earnings and financial well-being. A quarter of the respondents became entrepreneurs by following the example of their older relatives.


In 2019, the number of those who plan to start a business in the next three years has increased. It amounted to 9.8% of the population, which is 4% higher than last year.


In 2019, the share of Russian companies that have consumers abroad has doubled, now amounting to 14.4%. In addition, assessments of the business prospects of early entrepreneurs have changed significantly. 30.2% of respondents said that their businesses had high growth potential, which is twice as much as last year.


In June 2020, the full version of the GEM Russia 2019-2020 national report will be presented. In 2019, two thousand Russian citizens took part in the survey.


The Global entrepreneurship monitor analyzes various aspects of entrepreneurial activity, including the involvement of the population in the creation and management of both new companies that have existed on the market for less than 3.5 years and those firms that have managed to pass this milestone; motives for starting a business and the reasons why companies close; the attitude of the population towards entrepreneurship and the level of entrepreneurial intentions; and plans of entrepreneurial firms for further development.


Since the creation of the project in 1997, 110 countries have taken part in it. In Russia, for 14 years, the project has been implemented by a research group of the Graduate School of Management, St. Petersburg State University, and since 2018, with the support of Sberbank.


“The Global Entrepreneurship Monitoring Project demonstrates important indicators of the global economy — entrepreneurial activity and the reasons for its fluctuations. We see a significant increase in the number of people who want to create their own business. Accordingly, the demand for managerial competencies is growing. Modern management is a set of knowledge and tools for solving non-standard tasks, for managing business and teams — i.e. a set of competencies required for employees of large corporations, as well as for private entrepreneurs and startups. The task of business education in general and the Graduate School of Management of St. Petersburg University (GSOM), in particular, is to provide the necessary management tools for leaders at all levels at all stages of their career and business development. World-class scientific and practical research, modern knowledge transfer techniques and online technologies allow future managers and entrepreneurs to obtain managerial competencies that correspond to the most pressing market challenges,” commented Olga Dergunova, Deputy President and Chairman of the Management Board of VTB Bank, Director of the Graduate School of Management, St. Petersburg State University.