entrepreneurship, innovation, and competitiveness professor michael j. enright enright, scott &...

© Copyright Michael Enright, 2015 1

Entrepreneurship, Innovation, and Competitiveness

Professor Michael J. Enright

Enright, Scott & Associates

University of Hong Kong

Hong Kong Institute for Economics and Business Strategy

Astana Economic Forum, 2015

2015-05

© Copyright Michael J. Enright , 2015 This presentation is incomplete without the spoken commentary.

Please do not duplicate, store, or transmit in any form without the permission of the author.


ESA and Competitiveness

• Professor Michael Enright helped design and then managed the Competitive Advantage of Nations Project at Harvard Business School in the 1980s

• ESA undertook the first competitiveness project in a developing country based on the CAON methodology (1992-94)

• ESA has undertaken detailed national, regional, and local competitiveness assessments in 20 countries all around the world

• ESA has made major methodological enhancements over the years to focus on the practical aspects of improving competitiveness

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The Competitiveness Imperative

• The global economy is a tough environment and it promises to become only tougher in the future.

• Many of today’s problems have arisen because individuals, companies, and nations have tried to borrow, rather than earn their prosperity.

• More and more countries are entering international competition in more and more industries.

• Globalization and the rise of the “Flat World” are making enhanced competitiveness vital for all nations.

• The simple fact is that individuals, companies, and nations have to improve their competitiveness if they are to achieve a prosperity that is sustainable.

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Our Approach to Competitiveness

1. Generate a proper overall competitiveness index

2. Use data and benchmarks creatively

3. Bring business into the frame

4. Organize the pieces into a useful framework

5. Develop strategies and policies appropriately

• The steps can be used individually or together

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What is Competitiveness About?

• “Competitiveness equals productivity. Productivity should be the central goal of economic policy.” - Michael Porter

• “Productivity isn’t everything, but in the long run it is almost everything.” - Paul Krugman

• “Competitiveness is the set of institutions, policies, and factors that determine the level of productivity of a country.” – WEF

• A New Competitiveness Index, The ESA Productivity Competitiveness Index (EPCI)TM

– GNI / Pop(15-64) with highest value scaled to 100– One year snapshot and 3 year rolling average– Coverage 172 countries 1990-2014– Simple, performance only, measures productivity

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ESA Competitiveness Index, EPCI1, 2014

Country Rank Index Country Rank Index

Norway 1 100.00 Singapore 13 46.71

Switzerland 2 80.37 Austria 14 46.40

Luxembourg 3 65.90 Netherlands 15 46.01

Qatar 4 65.77 Germany 16 45.07

Australia 5 63.30 Belgium 17 44.58

Macao 6 62.48 Iceland 18 42.32

Denmark 7 60.69 France 19 42.21

Sweden 8 60.11 Ireland 20 41.45

Kuwait 9 55.11 Japan 21 41.24

United States 10 51.91 United Kingdom 22 38.30

Canada 11 47.89 Israel 23 36.87

Finland 12 47.09 New Zealand 24 36.03

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Source: Enright, Scott & Associates


ESA Competitiveness Index, EPCI1, 2014

Country Rank Index Country Rank Index

Estonia 36 17.29 Montenegro 70 6.82

Czech Republic 38 16.46 Belarus 73 6.58

Slovak Republic 41 15.35 Azerbaijan 74 6.54

Latvia 42 14.73 Macedonia 96 4.27

Lithuania 46 13.86 Ukraine 104 3.61

Russia 47 12.63 Armenia 110 3.38

Croatia 48 12.62 Georgia 111 3.34

Poland 52 11.66 Moldova 122 2.20

Kazakhstan 54 11.05 Uzbekistan 128 1.85

Romania 63 8.44 Kyrgyz Republic 142 1.18

Turkmenistan 69 6.99 Tajikistan 145 1.08

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ESA EPCI1, Kazakhstan Rank

20

14

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13

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12

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06

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01

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00

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99

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94

0

20

40

60

80

100

120

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54616366

73717678

8793

104102108

114115106104105105

9591

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Comparison EPCI1 and WEF Values, 2014

0 20 40 60 80 1000

20

40

60

80

100

EPCI1

No

rma

lize

d W

EF The WEF index

does not come close to matching actual productivity measures

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WEF = EPCI1 line



Comparison EPCI1 and WEF Ranks, 2014

0 20 40 60 80 100 120 140 1600

20

40

60

80

100

120

140

160

EPCI1

WE

F

The WEF ranks differ from the productivity- based ranks by an average of 17 positions out of 135

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WEF Rank “Too Low”

WEF Rank “Too High”


Using Data and Benchmarks Creatively

• Competitiveness reports are extremely useful as sources of data– WEF, IMD, CASS, IFC, WB KEI, HF, FI, UBS, Mercer, GEM, etc.

• But one must use the right comparisons and benchmarks– Versus the “world’s best” is relevant for only a few countries– Need to use the right benchmarks and sequencing

• ESA benchmarks – Past performance /Comparators / Competitors / Customers – What countries can we learn the most from?

• ESA takes the benchmarks and compares across a huge range of variables to find the gaps, opportunities, advantages, disadvantages

• ESA then prepares a detailed, country-specific, step-by-step roadmap to achieve improvement

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Use Data and Benchmarks CreativelyA Sequenced Approach to Development

Status Quo Step 1 Step 2 Step 3 Step 40%

20%

40%

60%

80%

100%

P6P5P4P3P2P1

ESA Index

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Change to match P2

Change to match P3

Change to match P4

Change to match P5


© Copyright Michael Enright, 2015 132015-05

Bring Business and Industry Into the FrameImportance-Performance Competitiveness Analysis TM

2Good performance,

but not so beneficial

1Leverage, market,

exploit, further develop

3Poor performance, but does not matter

much

4Fix, mitigate,

overcome

Importance

Per

form

ance

Low

Low

High

High

“Importance-Performance Competitiveness Analysis” and “IPCA” are both trademarks of Enright, Scott & Associates, Ltd.



IPCATM Australia Architectural Services

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Importance

Per

form

ance

1.00 4.00 7.001.00

4.00

7.00

4.90 4.90

4.504.504.70

5.004.90

4.50

4.90

4.404.60

3.10

5.50

4.504.25

4.40

5.00

3.10 3.00

4.40

5.40

4.704.60

3.80

4.504.78

4.00

4.895.004.70

5.40

4.90 4.90

3.44

2.89

4.56

3.44

4.103.78

4.33

2.67

3.80

4.604.80

4.11

3.22

4.40

3.33

4.004.30

4.60

3.22

4.104.00

4.504.404.11

4.674.89

4.56

4.224.004.00

4.504.80

4.40

3.30

4.003.75

5.50

4.00

3.50

4.80

3.20

4.404.44


Organize the Pieces into a Useful Framework

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CompetitiveIndustries/Activities

PotentialIndustries/Activities

Supranational Cluster FirmNational Industry

Source: Michael Enright

Competitiveness is not additive. No single level can make a nation, region, or city competitive, any single level can make it uncompetitive.

This is what the standard approaches miss.


So how do we improve productivity?

• Get more people employed in carrying out existing activities

• Carry out existing economic activities more efficiently (learning, better methods, better equipment, better organization, etc.)

• Add more value in existing goods and services (higher quality, more knowledge embedded, better branding, better logistics, etc.)

• Develop new goods and services that meet customer needs

• Etc.

• For many countries improving productivity means leveraging the knowledge-innovation-creative economy

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The Knowledge-Innovation-Creative Economy

• Generates value through developing and leveraging knowledge, IP, and intangible assets

• The K-I-C economy includes– Science and technology-based business– Innovative service sectors / Creative and cultural industries– Use of advanced technology in “low-tech” and “mid-tech” industries– Brand development– Improved processes– New business models / marketing, distribution, management systems

• Any industry can be knowledge-intensive, innovative, creative

• Those that leverage the K-I-C economy benefit from the “Flat World,” those that don’t face difficult price competition

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Entrepreneurship and the K-I-C Economy

• Entrepreneurs (and intrapreneurs) do the work of the K-I-C economy

• They combine new products, or new services, or new ways of doing things with productive resources and market demand

• Entrepreneurship involves the epitome of the K-I-C economy

• Entrepreneurial activities are the most knowledge-intensive, innovative, and creative activities carried out by the firm

• This is why the factors that influence entrepreneurship are so crucial to developing a K-I-C economy, enhancing productivity, and improving competitiveness

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The GEM Report

• An extremely valuable perspective on competitiveness

• Related to the original Competitive Advantage of Nations Study at Harvard Business School (1990)– Focus on attitudes towards entrepreneurship and innovation– Use of factor-driven, efficiency-driven, innovation-driven, (wealth-

driven) stages of development

• Related to IFC Ease of Doing Business, WB Knowledge Economy– Basic requirements /Efficiency enhancers– Knowledge and innovation economy

• Adds variables specifically related to entrepreneurship obtained through extensive surveys– Early-state entrepreneurial activity– Entrepreneurial employee activity– Social entrepreneurial activity

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Question: Do GEM indices match productivity measures?

0 20 40 60 80 1000

20

40

60

80

100

EPCI1

No

rmal

ized

GE

M F

ram

ewo

rk

Co

nd

itio

ns A composite GEM

Framework Conditions Index does not match productivity measures

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GEM = EPCI1 line



0 20 40 60 800

20

40

60

80

EPCI1

No

rmal

ized

GE

M f

ram

ewo

rk

Co

nd

itio

ns

A composite GEM Framework Conditions Index based rank differs from a productivity based rank by an average of 16 positions out of 69

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Question: Do GEM indices match productivity measures?


Question: Is the “stages of development” model useful to separate countries?

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Question: Is all entrepreneurial activity a good thing?

0 20 40 60 80 1000

20

40

60

80

100

EPCI1

No

rmal

ized

GE

M E

arly

Sta

ge

En

trep

ren

euri

al A

ctiv

ity

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GEM = EPCI1 line



Conclusions

• Competitiveness is crucial to national economic development

• Competitiveness means being more productive, so competitiveness should be measured by productivity

• The knowledge-innovation-creative economy is all about improving productivity

• Entrepreneurs (and intrapreneurs) do the work of the knowledge-innovation-creative economy

• The GEM report provides a unique and valuable source on a critical contributor to competitiveness

• There are opportunities to re-organize GEM data for better effect

• We like our own overall approach to competitiveness

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For more information contact

© Copyright Michael J. Enright, 2015 This presentation is incomplete without the spoken commentary.

Please do not duplicate, store, or transmit in any form without the permission of the author.

Michael EnrightEnright, Scott & Associates

Phone: 852-3101-8650

Fax: 852-3101-9635

[email protected]

2015-05 © Copyright Michael Enright, 2015 28

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