Imacs 2016 imecs 2016 Proceedings (Preliminary version) of the 4
SENIOR ENTREPRENEURSHIP IN CENTRAL AND EASTERN EUROPEAN COUNTRIES: GEM EVIDENCES
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- 300.Introduction
- 301.1 Literature review
- 302.2 Methodology and Data
- 303.3 Results and Discussion
- 3.1 Level of the entrepreneurial activity in CEE countries
- 3.2 Key drivers of entrepreneurial activity seniors in CEE and Europe
- 304.Conclusion
- 305.References
SENIOR ENTREPRENEURSHIP IN CENTRAL AND EASTERN EUROPEAN COUNTRIES: GEM EVIDENCES299.Anna Pilková, Ján Rehák, Zuzana JančovičováAbstract The paper examines level of the senior entrepreneurial activity at Central and Eastern European countries (CEE) based on regional comparative analysis of the senior inclusivity indices in Europe, USA and CEE countries and senior and youth inclusivity indices in Europe, USA and CEE countries both at early entrepreneurship stage entrepreneurial activity (TEA) and at stage of established business (EstBu). Further, based on Pearson´s correlation matrix, we analysed at which extent differences exist at the key drivers of the TEA of seniors in CEE countries and Europe. We exploit the Global Entrepreneurship Monitor (GEM) datasets for 2011-2014. The results show on one side much lower senior entrepreneurial activities in both stages of entrepreneurial process at CEE countries, and on the other side much higher early stage entrepreneurial activity of youth in CEE countries in comparison to Europa and USA. We also found out that there are no significant differences between key drivers of senior´s TEA at CEE countries and Europe. Key words: entrepreneurship, senior entrepreneurship, Global Entrepreneurship Monitor JEL Code: L26 300.IntroductionNowadays the world economy copes with many challenges. Among them, aging of population is one very serious issue. In Europe this issue is recognized as one of the most significant challenges together with geopolitical uncertainties, globalization and climate change. Aging of population in Europe started to be challenge for the last few decades. While in 1994, the median age of the EU´s population was 36,2 years in 20 years later it had risen by six years to 42,2 years. (Eurostat, 2015). According to Eurostat projections this trend will continue and during 2014 to 2080, the median age of the EU-28 population is projected to increase by 4.2 years to reach 46,4 years. Eurostat projections further foresee a growing number and share of elderly persons (aged 65 and over) with a particularly rapid increase in the number of very old persons (aged 85 and over). These trends already have and will continue to have both negative and positive implications. Negative implications are mainly older workforce, increased retirement age, which will have a higher demand for employment and increased pressure on social security systems. On the other hand there are also positive facts like growing population of healthy older people with the skills, financial resources and time. We can expect that these people will create new type of demand for products and services like life-long learning and they will have different lifestyle knowing as active aging. But they will need self-actualization and independence. Nevertheless, there are and will be the other diverse sociological effects with yet not fully known consequences. However, what is well known now that the elderly tend to suffer from the long-term unemployment, barriers in their recruitment like age discriminatory practices, lack of attractive employment options, perceived reduced mobility and flexibility in the workplace and higher labor costs which are expected in relation to this age of employees. One option to solve these problems is to develop and support senior entrepreneurship. Indeveloped economies this option has already attract an increasing amount of policy interest and research (Kautonen, 2013). However, this still is not the case as far as CEE (Central and Easter European) countries are concerned. Even in these countries current and mainly future situation in employment and aging of population is expecting to be more severe than in developed countries. According to Eurostat (2015) in 2080 in central, eastern and southern EU member states, there is likely to be a large reduction in population and in many of them median age is expected to be higher than the EU-28 average. Due to that, policy interest and academic research of senior entrepreneurship in CEE countries is inevitable. The main goal of this paper, based on GEM datasets, is focused on the following a/ to present status of senior entrepreneurship in CEE countries based both on regional comparative analysis of senior inclusivity index in Europe, USA and CEE countries and senior and youth inclusivity indices in Europe, USA and CEE countries; b/ to study at which extent differences exist among significant drivers of the entrepreneurial activity of seniors in CEE countries and Europe. 301.1 Literature reviewIn spite of the fact that aging of population and issues connected to this process are serious, in general, there is still a shortage of research studies on this subject especially in CEE countries. On the other side research realized so far on this topic is very heterogeneous which reflex complexity of studied matters. As senior entrepreneurship is emerged topic various terms have been employed to describe this topic including “grey entrepreneurs,” “senior entrepreneurs,” “seniorpreneurs”, “third age entrepreneurs,” “elder entrepreneurs,” and “second career entrepreneurs.” (Seymour, 2002). Very often the term “senior entrepreneur” refers to an individual over 50 who owns a business regardless of its size. According to GEM categorization senior entrepreneur is an individual at age of 55-64 who is either nascent and new business owner (up to 42 months) or owner and manager of established business (more than 42 months). One of the most frequent research topics is relationship between age and entrepreneurial activity. Key findings are that the number of seniors starting new businesses is about a half compared to their younger counterparts (Hart et al, 2004; Kautonen, 2008). Lévesque and Minniti (2006) explain the age effect through the opportunity cost of time as an increasing function of age. This can be explained not only by different preferences of seniors but also by the other negative factors such as health issues and lower energy levels at the older age (Sing and DeNoble,2003). According to Kautonen (Kautonen, 2013; Kautonen et all, 2014) age has a direct effect on the probability of entrepreneurial behavior, being this effect different according to the kind of entrepreneurial preference. In these papers, three groups of mature individuals are defined according to their different entrepreneurial preferences: owner managers, self-employers and reluctant entrepreneurs. The results suggest that the probability of entrepreneurial behavior for the self-employers increases with age even for people in their 60s. By contrast, with owner-managers and reluctant entrepreneurs the function of probability of entrepreneurial behavior vs age shows an inversed U shape. Besides age there are the other identified factors that influence entrepreneurial activity of seniors such as human capital accumulated by seniors through their experience, knowledge and skills which support level of entrepreneurial activities (Botham and Graves, 2009). The sort of previous work experiences plays important role where entrepreneurial or managerial experience has a significantly higher influence on entrepreneurship (Weber and Schaper, 2004). However, accumulated human and intellectual capital of seniors reflects in their lower innovativeness in comparison to younger entrepreneurs (Kautonen, Down and South, 2008). The other very important studied topic is environment and its influence on senior entrepreneurship. In this respect formal institutions have been studied from the perspective of laws, policies and programs that aid or constrain entrepreneurial activity in this group. Studies suggest that well implemented programs and policies, focused on development of ventures, education or skills development have mostly positive effect on senior entrepreneurship (Botham and Graves, 2009). At the same time, constraining senior programs or generous and benevolent pension schemes have a negative influence on senior entrepreneurship (Kautonen, Down and South, 2008). Informal institutions such as cultural openness and positive attitude towards seniors in a society have a strong positive effect on the entrepreneurial activity in this age cohort (Kautonen, Tornikoski and Kilber, 2011). Ageism on the other hand, is argued to have a negative effect on senior entrepreneurship (Ting Zhang, 2008). From the perspective of motivation, age discrimination can have a positive effect on the determination of a senior individual to become an entrepreneur, through the challenge of the obstacles created by the society (Kilber et al., 2011). According to a study of Estrin and Mickiewicz (2011) both formal and informal institutions significantly influence senior entrepreneurship, especially in the former Communist countries of Central and Eastern Europe, and former Soviet Union countries. The transition economies lack certain formal institutions and even though there were many changes in the past decades in formal institutions there is a considerably higher level of corruption. In the informal insti tutions, they discovered that many transition economies still have social norms and conditions that are influenced by communism, and argue that these change slowly over time. This is the reason for a missing generation of senior entrepreneurs in these countries, so called generation gap. Wyrwich (2013) builds on these findings and confirms that socioeconomic heritage has an impact on the entrepreneurial propensity of seniors. 302.2 Methodology and DataAt the first stage we have analyzed level of inclusive entrepreneurship of seniors in Europe, USA and CEE countries applying own developed TEA and Established Business (EstBu) Indices (TEA Index Youth, TEA Index Seniors, EstBu Index Youth, EstBu Index Seniors). The calculation of inclusivity index is following: EIjk is the summary inclusivity index of individual category j of population (youth, seniors) for the country k,  is the inclusivity index in the year i, country k and n is the number of years where data for the country k were available:
is the inclusivity index (TEA or EstBu) in the year i, for particular category of population j in country k. For start-up business (up to 42 months is calculated as follows:
Where  – percentage of population 18 - 64 who are nascent or new business owners (up to 42 months businesses);  is percentage of population of particular category j (youth, seniors) in country k and year i. If we replace TEA for established business EstBuki (more than 42 months old) than is inclusivity index for established business for category j and country k and year i. Calculation principles are equal as for TEA.
At the second stage we applied correlation analysis using correlation matrix based on Pearson´s correlation coefficient in order to explore behavior between total early stage of entrepreneurial activity (TEA) and studied factors for each of under-developed groups of entrepreneurs. The studied factors are divided into four groups. The first group represents human capital and demographic variables: gender (except in women model which is binary variable: 0 for males and 1 for females; age of individual which is continuous variable in range 18 – 64 years, education where individuals reported their highest educational attainment. The second group contains social attitudes of people towards entrepreneurship and is measured by GEM variables high status to successful entrepreneurs where respondents indicated whether they agree that in their country successful new entrepreneurs possess high levels of status and respect (yes=1, no=0), entrepreneurship as a good career choice where the respondents were asked whether they consider starting a new business a desirable career choice (yes=1, no=0), media attention on entrepreneurship where the respondents were asked whether they often see stories in the public media or internet about successful new businesses (yes=1, no=0). The third group represents self-confidence in own knowledge, competencies and experiences measured by GEM variables perceived capabilities where individuals were asked whether they had the knowledge, skill and experience required to start a new business (yes=1, no=0); fear of failure where individuals were asked whether fear of failure would prevent them from starting a new business (yes=1, no=0); and knowing entrepreneurs where individuals were asked if they know personally someone who started a business in recent two years (yes=1, no=0). The fourth group is focused on GEM perception of business opportunities where individuals were asked if they believe in good opportunities for starting a business in the area where they live in the close future (yes=1, no=0). For each studied segment (youth, seniors) we merged all data disregarding the country and year elements and applied correlation matrix based on widely used Pearson´s correlation coefficient which measures a linear relationship between two variables. Key sources of data on which is our research based are individual Adult population surveys (APS) datasets of the Global entrepreneurship monitor (GEM) for four consecutive years 2011 – 2014 in Europe and Central and Eastern European countries (CEE) participated in GEM. Within APS each year representative sample at least 2,000 people has been interviewed at each country each year. Out of that datasets contains 15 408 respondents for seniors in CEE countries and 50 141 respondents for seniors in European countries. 303.3 Results and DiscussionIn our paper to study level of the entrepreneurial activity of seniors in CEE countries we applied comparative analysis based on countries and regions (Europe, USA, CEE) and age (seniors, youth and young adults) through inclusivity indices of seniors, youth and young adults both at the early stage of entrepreneurial activity (TEA index – businesses from 0 to 42 months age) and at the stage of established business (EstBu Index – businesses at age more than 42 months). We also studied significance of the key drivers of the TEA of seniors in CEE countries and the other European countries with aim to find out differences among these two regions. 3.1 Level of the entrepreneurial activity in CEE countriesOur analysis suggests (see Table 1) that seniors in CEE have the lowest level of entrepreneurial activities both at the early stage (TEA) and in the stage of established businesses (EstBu) in comparison to Europe and USA. This our finding for Europe is in line with those authors who found out that percentage of seniors starting new businesses is about a half compared to their younger counterparts (Further, et al, 2001; Hart et al, 2004; Kautonen, 2008). Lévesque and Minniti, 2006) but for CEE this ratio is only one third. The most entrepreneurially active are seniors in the USA. However, according to our comparative analysis in the USA are the less entrepreneurially active young people. In opposite while CEE countries have the less entrepreneurially active seniors as far as starting of businesses they are leaders in entrepreneurial activity of young population. But we have identified the common pattern valid for all compared regions: senior entrepreneurs have multiple higher Tab. 1: TEA and EstBu indices for youth and seniors in years 2011 – 2014
Source: GEM 2011-2014, Authors entrepreneurial activity at the established business stage, which is perceived as more profitable and productive as far as income and job creation is, than their young counterparts. Indirectly it confirms that young people are less risk averse as far as starting new business is but many of them (particularly youth) are not able to overcome the first stage barriers and stop their business within the first 42 months. Among CEE countries Hungary has the highest entrepreneurial activity of seniors at both stages. Slovakia has the lowest TEA of seniors while Russia has the lowest senior entrepreneurial activity index at the established business stage. Gap between level of senior entrepreneurial activity at CEE countries, Europe and USA asks for further investigation. But no doubt that former regime heritage has impact on this gap. 3.2 Key drivers of entrepreneurial activity seniors in CEE and EuropeOur findings from the first stage analysis challenge question about key drivers of the entrepreneurial activity of seniors at the early stage (TEA). We studied four groups of potential drivers and their significance for TEA at CEE and Europe. According to our results (Table 2) in CEE seven out of 10 factors have a statistically significant correlation with TEA. If we compare results for Europe (table 3) and CEE one of our key finding is that there are no differences in significance of the key studied drivers for CEE and Europe but one related to high status in society which appeared to be significant only in Europe but negatively related to TEA. That means that the likelihood of a person being engaged in early-stage entrepreneurial activity, on average, decreases with high status in society. In general social attitudes towards entrepreneurship (second group of studied factor) are not significant in CEE and Europe for seniors. This is very important finding as social attitudes are interconnected with cultural factors and these are closely related to entrepreneurial environment. From this perspective social attitudes indirectly influence TEA. However, entrepreneurial environment is a key factor that fundamentally influences the entrepreneurial activity (Holienka, 2013). Table 2 Correlation matrix CEE model 
Source: GEM 2011-2014, Authors * Correlation is significant at the 0.05 level (2-tailed); ** Correlation is significant at the 0.01 level (2-tailed) Table 3: Correlation matrix: European model 
Source: GEM 2011-2014, Authors * Correlation is significant at the 0.05 level (2-tailed); ** Correlation is significant at the 0.01 level (2-tailed) In the first group that represents human capital and demographic variable, all three factors are significant for TEA both at CEE and Europe. Factor age shows that the likelihood of a person being engaged in early-stage entrepreneurial activity, on average, decreases with age (r = -0.0578 and -0.0601). Significance of age in our finding is in line with many research works which confirm that being entrepreneurs is not a typical for a specific age group (Isele & Rogoff, 2014 etc.) but decrease with age. As far as education is those seniors who have higher education are more likely engaged in early-stage entrepreneurial activity (r = 0.0817 and 0.0824). Our evidence on importance of education for entrepreneurial activities in CEE and Europe is in line with other GEM research that indicates that education plays a major role in entrepreneurial activity. The more educated the person, the more likely that person is to start and develop sustainable business (Singer et al., 2015). As expected males are more likely engaged in TEA than females (r = -0.0763 and -0.0696). Importance of gender at entrepreneurial activities is broadly studied and empirical evidences confirms that gap still persists in venture creation and ownership activity even its positive narrowing is evidenced (Kelly et al., 2015). In the third groups of factors as expected, confidence in one’s own skills, lacking fear of failure and knowing a successful entrepreneur are positively related to engagement in TEA both at CEE (r=0.1799; r=-0.0647;r=0.1126) and Europe (r=0.1748; r= -0,1937; r=0,1441). The fourth group which measure perceiving opportunities to start own business is also positively related to engagement in TEA both in CEE and Europe (r= 0,0736 and r=0.0857). Our finding that all variables in the third and fourth groups of factors refer positively to TEA both at CEE and Europe is in line with many research studies and findings related to general populations (Shane, 2003, Singer et al.2015). 304.ConclusionSenior Entrepreneurship is one option to solve implication of aging population. In academia, there is an evident growth in research interest on this topic and policy makers are looking for formulation and implementation of relevant policies to support senior entrepreneurial activity. However, these policies should be based on relevant research results, too. In our paper, studying the level of senior entrepreneurship at CEE countries, we found out that this is much lower than in Europe and USA even those countries complain about lower level of starting businesses by seniors in comparison to youth. This finding is on one side contribution to the existing research, which is mostly focused on developed economies but on the other side raises further research questions of importance to study senior entrepreneurship in these regions from historical, cultural and contextual points of view. However, there are other interesting findings of our research, which are based on the identification of common significant drivers of entrepreneurial activity of seniors in CEE countries and Europe. These findings could contribute to formulation of senior entrepreneurship model which is still missing and asks for further empirical studies both at CEE country level and in Europe. This model may give an answer to the question what could work and what will not work for senior entrepreneurs in terms of the support of their activities in studied regions. Acknowledgment This work was supported by the Slovak Research and Development Agency under the contract No. APVV-14-0647. 305.ReferencesBotham, R. - Graves, A. The grey economy: How third age entrepreneurs are contributing to growth, [online], London: NESTA Research report, 2009, [15.2.2015] available: http://www.nesta.org.uk/library/documents/third-age-entrepreneurs-report.pdf Estrin, S. - Mickiewicz, T. Entrepreneurship in Transition Economies: The Role of Institutions and Generational Change; in: The Dynamics of Entrepreneurship, ed. Maria Minniti, Oxford: Oxford University Press, 2011, ISBN 978-0-19-967244-8 EUROSTAT. People in the EU: who are we and how do we live? European Union, 2015, Printed in Luxembourg, ISBN 978-92-79-50328-3 Hart, M. – Anyadike-Danes, M. – Blackburn, R. Spatial differences inEntrepreneurship: A Comparison of Prime Age and Third Age Cohorts. Belfast: Economic Research Institute of Northern Ireland, 2004. Holienka, M. (2013). Evaluation of Entrepreneurial Environment in Slovakia: Comparison of Selected Initiatives. Comenius Management Review 7 (1) p. 31 – 45 Kautonen, T. (2008). Understanding the older entrepreneur: Comparing Third Age and Prime Age entrepreneurs in Finland. Journal of Business Science and Applied Management 3 (3): 3-13. Kautonen, T. Senior Entrepreneurship. A bacground paper for the OECD Centre for Entrepreneurship, SMEs and Local Development. OECD, 2013. Kautonen, T. - Down, S. - South, L. (2008). Enterprise support for older entrepreneurs: the case of PRIME in the UK. International Journal of Entrepreneurial Behaviour and Research. ISSN 1355-2554, vol. 14, no. 2, p. 85 – 101. Kautonen, T. - Down, S. - Minniti, M. (2014). Ageing and entrepreneurial preferences. Small Business Economics, 42(3), 579–594. Kautonen, T. – Tornikoski, E. – Kilber, E. Entrepreneurial intentions in the third age: the impact of perceived age norms, Springer: Small Business Economics Vol. 37, DOI 10.1007/s11187-009-9238-y, 2011 Kilber, E. – Wainwright, T. – Kautonen, T. – Blackburn, R. (Work) Life after work: Understanding barriers to older entrepreneurship in London; [online] Štokholm, v 56th Annual ICBS World Conference, 2011 [20.1.2015] available: http://sbaer.uca.edu/research/icsb/2011/263.pdf Levesque, M. – Minniti, M. (2006). The effect of aging on entrepreneurial behaviour. Journal of Business Venturing 21(2): 177-194 Seymour, N. (2002), Starting Up After 50, Available: http://files.eric.ed.gov/fulltext/ED476585.pdf Ting Zhang. Elderly Entrepreneurship in an Aging US Economy. Singapore: World Scientific Publishing, 2008. Wainwright, T. – Kilber, E. (2013). Beyond financialization: older entrepreneurship and retirement planning. Journal of Economic Geography 14(4): 849-864. Weber, P. – Schaper, M. (2004). Understanding the Grey Entrepreneur. Journal of Enterprising Culture 12(2): 147-164. Wyrwich, M. (2013). Can socioeconomic heritage produce a lost generation with regard to entrepreneurship? Elsevier, Journal of Business Venturing 28, 667–682. Contact Anna Pilková Comenius University in Bratislava, Faculty of Management Odbojárov 10 820 05 Bratislava anna.pilkova@fm.uniba.sk Ján Rehák Comenius University in Bratislava, Faculty of Management Odbojárov 10 820 05 Bratislava jan.rehak@fm.uniba.sk
Comenius University in Bratislava, Faculty of Management Odbojárov 10 820 05 Bratislava Zuzana.jancovicova@st.fm.uniba.sk
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