gem · 2020. 6. 21. · 2 3 gem global entrepreneurship monitor 2016-2017 kingdom of saudi arabia...

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor

ENTREPRENEURIAL AND BUSINESS ACTIVITY

ENTREPRENEURIAL ACTIVITIES’ CHARACTERISTICS

ENTREPRENEURS’ CHARACTERISTICS

INFORMAL INVESTMENT ACTIVITY

PERCEPTION OF THE QUALITY OF THE ENTREPRENEURSHIP ECOSYSTEM

Introduction

General overview

Temporal evolution

International position

Entrepreneurial employee activity

Introduction

Motivation for early-stage entrepreneurial activity

Sector of activity

Number of owners

Number of employees

Job-creation expectations

Innovation component

Introduction

Gender

Age and senior entrepreneurship

Provinces and regions within Saudi Arabia

Educational level

Work status

Income

Household

Typical profile of the entrepreneur in Saudi Arabia and its recent evolution


Introduction

Estimated proportion of adult population acting as informal investors

Estimated amount of informal investment

Informal investors’ characteristics

Relationship between informal investors and beneficiaries


View of entrepreneurial framework conditions

Synthetic view of the entrepreneurial ecosystem

Recent evolution of the entrepreneurial ecosystem in Saudi Arabia

International position of the Saudi Arabian entrepreneurial ecosystem

Main constraints and support element for entrepreneurship determined by Saudi Arabia’s experts in 2016

Main recommendations made by Saudi Arabia’s experts to improve the entrepreneurial ecosystem for 2016

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49

52

53

55

58

58

62

63

64

66

68

86

87

88

90

91

92

94

95

96

96

102

102

103

104

105

106

110

121

123

124

127

129

69

70

71

72

73

74

3.1

3.2

3.3

3.4

3.5

4.1

4.2

4.3

4.4

4.5

4.6

4.7

5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

5.9

5.10

6.1

6.2

6.3

6.4

6.5

6.6

7.1

7.2

7.3

7.4

7.5

7.6

03

04

05

06

07

Usage of recent technologies

Competitiveness

Internationalization

Seed capital invested

Main motive for business discontinuation in 2016

International position on main indicators for characteristics of early-stage entrepreneurial activities

4.8

4.9

4.10

4.11

4.12

4.13

132

134

TECHNICAL ANNEX

BIBLIOGRAPHY

INDEX

INDEXMBSC VICE CHAIRMAN FOREWORD GLOBAL ENTREPRENEURSHIP MONITOR. SAUDI ARABIA DIRECTOR FOREWORDAUTHORS & FOUNDING INSTITUTIONSBEYOND OIL: VISION 2030 AND THE ENTREPRENEURSHIP IMPERATIVEINTRODUCTION TO GEMGEM CONCEPTUAL FRAMEWORKDASHBOARD OF GEM INDICATORSEXECUTIVE SUMMARY

0406

081014161821

PERCEPTION OF SOCIETAL VALUES RELATED TO ENTREPRENEURSHIP

INDIVIDUAL SELF-PERCEPTIONS ABOUT ENTREPRENEURSHIP

General view

Perception of societal values related to entrepreneurship by gender, age group, educational level, involvement in business sector, potential entrepreneurship, and region

Temporal evolution


General view

Individual self-perceptions about entrepreneurship by gender, age group, educational level, involvement in business sector, potential entrepreneurship, and region

Temporal evolution


30

32

35

36

40

41

43

45

1.1

1.2

1.3

1.4

2.1

2.2

2.3

2.4

01 02

5

he future of Saudi Arabia is inextricably tied to the country’s ability to promote and support entrepreneurial activity. This is perhaps a bold statement for a country that still sits atop the largest share of the world’s identified oil reserves, but the T

government has long been aware that the oil cannot last forever. Histori-cally, this awareness has not consistently translated into concrete steps to achieve that transformation.

Vision 2030 changed that. By committing the nation to an economy that is not solely reliant on oil, and by laying out the specific initiatives and measures needed to achieve this, the government has for the first time created a complete blueprint for the long-term future of the country.

A significant element of the Vision revolved around job creation and spe-cifically support for SMEs and entrepreneurs in the Kingdom. This could not be more urgent. Saudi Arabia cannot sustain a competitive economy based on a labor-intensive, subsidized industrial sector. To compete in industry, we must increase automation, and automation does not create jobs.

A rounded, sustainable economy needs a high quality of entrepreneurial activity. And in this regard the Global Entrepreneurship Monitor Report for Saudi Arabia in 2016 creates both optimism for the future and a clear call to action.

What is most promising about the report’s findings is the strong entrepre-neurial streak that runs through the population. Young people in particu-lar are incredibly open to starting up a business of their own. This should not surprise the student of Saudi Arabian history – this was an entrepre-neurial country for centuries before oil, and that core spirit remains un-dimmed.

Yet is clear that institutional support for entrepreneurship needs to be overhauled if the nation is to harness the capabilities of its youth. Regula-tions around opening and funding a new business venture need to sup-port the establishment of new engines of job creation. Most importantly, we need to close the gap between the entrepreneurial aspirations of the population and the skills they acquire through their education.

Prince Mohammad bin Salman College of Business and Entrepreneur-ship (MBSC) was established specifically for this purpose. By creating a leadership school for the next generation, the College seeks to equip the young men and women entering the workforce with the skills they need to compete in an aggressive market for talent. It is the first institute of higher learning in the Kingdom to focus on entrepreneurship. It must not be the last.

The Babson Global Center for Entrepreneurial Leadership at MBSC has created in this report the most comprehensive profile of entrepreneur-ship in Saudi Arabia ever compiled. However, the true test of its value will lie in the extent to which it inspires all of us to foster the innate entre-preneurial drive of Saudi youth to their benefit and to the benefit of the nation as a whole.

Fahd Al RasheedMBSC Vice-chairman

4

MBSC Vice-Chairman

Foreword

7

nce again, Saudi Arabia is part of the Global Entrepreneurship Monitor (GEM) through Babson Global Center for Entrepre-neurial Leadership (BGCEL) at Prince Mohammad Bin Salman (MBSC) College of Business & Entrepreneurship. Saudi Arabia

Ignacio de la Vega, Ph.D.Chairman, Global Entrepreneur-ship Research Association Direc-tor, GEM Saudi Arabia BGCEL at MBSC, KAEC, KSA

joins a group of 66 countries that have participated in the 2016 report, the 18th consecutive Global Report that the GEM consortium has published as part of its ambitious research project founded in 1997 by Babson College and the London Business School. After the work conducted in Saudi Arabia in 2009 and 2010, we are very proud to present the GEM Saudi Arabia National Report in 2016.

GEM is a global consortium that in 2016 conducts research on 66 global economies, covering 82% of the world’s GDP and 71% of its population. GEM brings together over 400 researchers from across the globe and includes more than 100 institutions every year. The involvement of all these people and institutions makes GEM the largest study on entrepreneurship and en-trepreneurial activities in the world.

This document comes at a very significant moment for the country, with Sau-di Vision 2030 and the National Transformation Plan (NTP) already in the implementation stage. Our work reports some deterioration in the entrepre-neurial landscape and ecosystem in the last few years, a period marked by a significant slowdown in economic growth, highly influenced by the drop in oil prices.

The implementation of Saudi Vision 2030 and the NTP is perceived as pivot-al in diversifying the Kingdom’s economy and lessening its dependence on oil and other commodities to bring the Kingdom into the group of high-in-come, innovation-driven economies.

This shall be achieved by stimulating the growth of a vibrant entrepreneurial ecosystem, aligning the Saudi education system with market needs, creat-ing economic opportunities for Saudi entrepreneurs and small and medi-um-sized enterprises (SMEs), and fostering innovation and intrapreneurship among large corporations. The role of the recently appointed SME Authority will be of paramount importance in supporting most of these objectives.

We believe these efforts, along with other measures taken by the govern-ment, will have a strong and positive impact that will be reflected in upcom-ing GEM reports. The measures taken, along with Vision 2030, will strengthen the already-vibrant entrepreneurial ecosystem, which is already supporting the ambitious transformation of the Saudi economy by creating quality jobs, unlocking entrepreneurial innovation, developing opportunities for all, and generating collective and social wealth.

I would like to conclude with a special word of thanks to my colleagues who co-authored the report, Dr. Alicia Coduras, Dr. Mohammed Azam Roomi, and Mr. Osama Ashri. Their hard work and insightful knowledge have been para-mount in this research project. A special dedication also for Lockheed Martin and Babson Global, BGCEL’s stakeholders, whose generosity made this re-search possible, and to all the colleagues at Mohammad Bin Salman College of Business and Entrepreneurship (MBSC) at King Abdullah Economic City

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GEMSaudi Arabia

DirectorForeword

8 9


Ignacio de la Vega, Ph.D.Director, BGCELProfessor of Entrepreneurship, MBSC

Muhammad Azam Roomi, Ph.D.Dean, Executive and Continuing EducationProfessor of Entrepreneurship, MBSC

Osama M. AshriHead, Entrepreneurship and SME DevelopmentKing Abdullah Economic City

Alicia Coduras Martínez, Ph.D.Professor of Quantitative Methods and Applied EconomicsGEM Global Data Team, Institute Opinometre, Spain

AU

TH

OR

S

AUTHORING AND PARTNERING INSTITUTIONS

MBSCMBSC is a new, private higher education institu-tion for both, men and women, located in King Abdullah Economic City. It has been established through an international partnership between Emaar The Economic City, Babson Global (a wholly owned subsidiary of Babson College, USA), Lockheed Martin, and the MISK foundation.

MBSC aims to develop a new generation of transfor-mative leaders who think creatively and act boldly. The Kingdom needs more job creators and not just job consumers. MBSC is designed to fill this void by creating Entrepreneurs of All Kinds (EAK®).

The BGCEL at MBSCThe new Saudi Arabia GEM team is located at BGCEL at MBSC. The Center is owned and operated by Babson Global and was established with a gift from Lockheed Martin. The mission of BGCEL is to create a Saudi-based international source of research, entrepreneurship ed-ucation, case studies, conferences, outreach programs, and information about entrepreneurial leadership that promotes a sustainable entrepreneurial leadership cul-ture for business, government, and not-for-profit enter-prises in Saudi and the surrounding region.

Lockheed MartinLockheed Martin Corporation, as part of its offset pro-gram in the KSA, generously supports the activities of BGCEL at MBSC.

KAECKing Abdullah Economic City (KAEC) is the largest privately-funded new city in the world. Situated on the west coast of the Kingdom of Saudi Arabia, KAEC covers an area of 181 square kilometers of land, approximately the size of Washington DC. KAEC comprises King Ab-dullah Port, the Coastal Communities residential dis-tricts, the Industrial Valley and the Hejaz district, which includes the Haramain high speed rail station. The city is under development by Emaar, The Economic City, a publicly listed Saudi joint-stock company established in 2006.

AUTHORING AND PARTNERING INSTITUTIONS

© 2016 by BGCEL at MBSC and the Global Entrepreneur-ship Research Association

DISCLAIMERSAlthough GEM data were used in the preparation of this report, their interpretation and use are the sole responsibility of the authors. The authors would like to express their gratitude to all participating GEM 2016 national teams for their crucial role in con-ducting the GEM survey in their respective econ-omies. The usual disclaimer applies. The authors would like to extend special thanks to Jonathan Carmona, Alicia Coduras, and Forrest Wright for their contribution to the data-collection procedures and data analysis.

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor Beyond oil: vision 2030 and the entrepreneurship imperative

and services. Furthermore, among the ways to enable entrepreneurs and the SME sectors are “establishing additional business incubators, developing specialized training institutions and venture capital funds.” The ulti-mate objective is to support entrepreneurs in developing the required skills and networks that will help them to make their ventures successful.

The NTP 2020,³ a vehicle that helps in achieving Vision 2030, establishes strategic objectives with specific tar-gets to be achieved by 2020. It identifies and addresses challenges faced by government bodies in the economic and development sectors. According to the NTP 2020, there are two key targets pertaining to SMEs. The first is to increase the SME sector’s contribution to GDP from 20% to 21% by 2020 (and to 35% by 2030), and the sec-ond is to increase the percentage of employees working in the sector from 51% to 53%, as opposed to the total number of employees working in the private and public sectors.

4 Labor Force Survey 2016 (Second Quarter). Saudi Arabia’s General Authority for Statistics. 5 Navigating Saudi Arabia’s

Entrepreneurship Ecosystem. Osama M. Ashri. 2013.

5 Navigating Saudi Arabia’s Entrepreneurship Ecosystem. Osama M. Ashri. 2013.

Figure 1. SME Authority plans as part of Vision 2030

The demographic and economic landscapes have practical implications for entrepreneurship and SMEs. Saudi Arabia’s population is estimated at 31.7 million, with roughly 20 million Saudis. It is also estimated that almost 67% of this population is under the age of 34.4 The current unemployment rate is about 11.6% among Saudis. Saudi females represent only about 10% of the labor force and unemployment, whereas Saudi males represent 35.6%. Therefore, harnessing the vigor of this “youth bulge” toward entrepreneurship will make a sig-nificant contribution toward the economic progress of Saudi Arabia.5

WE WILL FACILITATE ACCESS TO FUNDING AND EN-COURAGE FINANCIAL INSTITU-TIONS TO ALLOCATE UP TO 20% OF OVERALL FUNDINGTO SMES

THE SME AUTHORITY PLANS TO:

REVIEW LAWSAND REGULATIONS

ENABLE YOUTH ANDENTREPRENEURS TO

MARKETTHEIR IDEAS AND

PRODUCTS

ESTABLISHADDITIONAL, NEW

BUSINESS INCUBATIONSSPECIALIZED TRAINING

INSTITUTIONS ANDVENTURE CAPITAL

FUNDS

REMOVE OBSTACLES

FACILITATE ACCESS

TO FUNDING

SUPPORT SMES INMARKETING AND

EXPORTING THEIRPRODUCTS AND

SERVICES

ENABLE NATIONALENTITIES TO

COLLABORATE WITHRELEVANT

STAKEHOLDERS

READY FOR THE FUTURE

Saudi Arabia’s economy is currently fac-ing major challenges and undertaking the most ambitious plan in its history to boost growth of nonhydrocarbons, fur-ther modernize the public sector, foster the entrepreneurial mindset among the Saudi population, stimulate SME activi-ty and growth, and attract more foreign investment into the country.

SMEs account for 99.7% of all Saudi enterprises1 but make a modest contribution of only 20% to the country’s GDP. Employees working in the SME sector represent 51% of the total employment in the country.

Table 1. Uniform SME definitions applied for the KSA

VISION 2030 AND THE ENTREPRENEURSHIP IMPERATIVE

BEYOND OIL:

Early this year, Saudi Arabia’s Vision 20302 was an-nounced as a transformation blueprint for achieving the Kingdom’s ambitious long-term goals. The vision is based on three main themes: (1) a vibrant society; (2) a thriving economy; and (3) an ambitious nation. The second theme states the need to leverage opportunities for creating economic value and systems for entrepre-neurs and SMEs. The vision aims to develop the required tools to “unlock [Saudi Arabia’s] promising economic sectors, diversify [its] economy and create job opportu-nities.”

The vision also underscores SMEs as “important agents of economic growth that create jobs, support innovation, and boost exports.” However, the vision documents also state that the SME sector in Saudi Arabia is not as strong a contributor to GDP as in developed economies. It high-lights that SMEs in Saudi Arabia face the challenge of complex policy and regulations, lack of access to fund-ing, and finding the necessary skills.

As such, according to the vision, Saudi Arabia will strive to support SMEs and entrepreneurship by developing business-friendly regulations, driving access to funding, building international partnerships, and giving SMEs a greater share of government bids. The vision also em-phasizes larger roles for SMEs. To help realize this vital sector’s full potential, the SME Authority was recently es-tablished and is expected to review laws and regulations, remove obstacles, facilitate access to funding, and en-able entrepreneurs to market and export their products

1 Based on a presentation delivered by Mazen Aldawood, Deputy Governor of the SME Authority, on September 28, 2016.

2 For more information on Saudi Arabia’s Vision 2030, visit http://vision2030.gov.sa

3 More information on Saudi Arabia’s Vision 2030, visit http://vision2030.gov.sa/en/ntp

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The report positions Saudi Arabia’s economy as one that is “transition-ing” from “factor-driven” to “Efficien-cy-driven,” a position the KSA has held since 2012

Beyond oil: vision 2030 and the entrepreneurship imperative

We hope this introduction will help in contextualizing the survey results presented in this GEM report in terms of the characteristics, motivations, and ambitions of Saudi entrepreneurs, social perceptions of entrepreneurship, and the quality of the entrepreneurship ecosystem in Saudi Arabia.

The BGCEL at MBSC mission, to “establish a Saudi-based, international source of research, entrepreneurship education, case studies, conferences, outreach programs, and information about entrepreneurial leadership that promotes a sustainable entrepreneurial leadership culture for business, government, and not-for-profit enterprises,” will support the transformation outlined in Vision 2030 offering every year, through GEM, a detailed analysis of the evolution of the Saudi entrepreneurial ecosystem.

A G20 member and emerging economy, in 2015 Saudi Arabia’s real GDP was estimated at 597,291 million SAR, or some 159,278 million USD.6 The most recent Global Competitiveness Report (GCR) from the World Bank ranks Saudi Arabia’s economy 25th out of 144 countries involved. However, the report positions Saudi Arabia’s economy as one that is “transitioning” from “factor-driven” to “Efficiency-driven,” a position the KSA has held since 2012.7

According to the GCR, factor-driven economies are based on factor endowments such as low- skilled labor and natural resources, whereas efficiency-driven economies are more competitiveness-driven by higher education, efficient goods and labor markets, developed financial markets, the ability to leverage existing technologies, and a large domestic and foreign market. Such factors are instrumental in cultivating an entrepreneurship ecosystem.

Figure 2. Distribution of Saudi and non-Saudi popula-tion in the labor force (15 years and above) by gender

Non-SaudiMales

Saudi Males

Non-Saudi Females

Saudi Females

6 From Saudi Statistics Authority.

7 The GCR 2015-2016. Geneva: World Economic Forum.

15

Kingdom of Saudi Arabia

Table 2. Economies participating in the 2016 GEM surveys, grouped by region and economic development level

FACTOR DRIVEN EFFICIENCY-DRIVEN INNOVATION-DRIVEN

Introduction to GEM

Luxembourg

Netherlands

Portugal

Slovenia

Spain

Sweden

Switzerland

United Kingdom

Canada

United States

Austria

Cyprus

Estonia

Finland

France

Germany

Greece

Ireland

Italy

Egypt

Morocco

South Africa

China

Indonesia

Jordan

Lebanon

MalaysiaSaudi Arabia

Thailand

Turkey

Argentina

Belize

Brazil

Chile

Colombia

Ecuador

El Salvador

Guatemala

Jamaica

Mexico

Panama

Peru

Uruguay

Bulgaria

Croatia

Georgia

Hungary

Latvia

Macedonia

Poland

Slovak Republic

Australia

Hong Kong

Israel

Qatar

South Korea

Taiwan

UAE

Puerto Rico

Burkina Faso

Cameroon

Senegal

India

Iran

Kazakhstan

Russia

Africa

Asia & Oceania

Latin America & Caribbean

Europe

North America

14

2016-2017GEM Global Entrepreneurship Monitor

INTRO-DUC-TION TO GEM Opportunities, abilities to detect and seize them,

motivations, and attitudes toward entrepreneurship are part of the adult population survey along with the register of nascent, new, established, and exited entrepreneurial activities. Individuals are the target population of this complex survey, able to provide a wide range of indicators on potential and effective entrepreneurial activity. Thus, since 1999, GEM has been collecting, analyzing, and interpreting data across the world on the capacity of individuals to act entrepreneurially (i.e., proactively, innovatively, and responsibly) and about the context in which these activities occur.

GEM confirms that everywhere around the globe, there are opportunities for development to be seized, but their transformation into venturing depends on individual attributes (skills, intentions, fears, and others), social values, and the status of the entrepreneurship ecosystem (from access to finance to government policies and programs, as well as physical and professional infrastructure).

In 2016, 66 economies provided representative data to elaborate the GEM Global Report and the National Reports. These economies are shown in Table 2, organized by world regions and three economic groups as classified by the most recent GCR.

GEM is the most ambitious research project on entrepreneurship worldwide. It started as an initiative of two researchers (Michael Hay, London Business School, and Bill Bygrave, Babson College) in 1997, by asking a simple question: ”Why are some countries more entrepreneurial than others?”

GEM reports and analyses are based on data collected using two of its own information tools:

01. The adult population questionnaire (APS) applied as a survey for a representative sample of the populations aged 18–64 participating in the monitor each year.

02. the national experts’ survey (NES) designed to obtain subjective information on the status of nine entrepre-neurial framework conditions.

The aim to answer this and other questions uncovering the information gap around entrepreneurship evolved into a global survey conducted annually since 1999, which covers all the regions in the world (Africa, Latin America & Caribbean, Asia & Oceania, Europe, and North America). GEM examines nations’ entrepreneurial competitiveness. The 2016 GEM survey covered 66 economies, which provided a representative sample of the world’s population and of the world’s GDP.Saudi Arabia participated in GEM for the first time in 2009 and also appeared in the 2010 edition. Now,

in 2016, a renewed team based at MBSC has taken responsibility for assessing entrepreneurial activities and their context, providing information and diagnostics as a basis for giving support to the design of adequate actions to improve entrepreneurship’s effectiveness and socioeconomic impact.

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor GEM Conceptual framework

Individual attributes include demographic characteristics (gender, age, etc.), self-perceptions (perceived capabilities, perceived opportunities, fear of failure), and motives for starting a business (i.e., necessity vs. opportunity).

Entrepreneurial activity encompasses multiple phases of the business process (nascent, new business, established business (EB), discontinuation), potential impact (job creation, innovation, internationalization), and the type of activity (total early-stage entrepreneurial activity (TEA), social entrepreneurial activity (SEA), or employee entrepreneurial activ-ity (EEA)).

Operational definitions of the business phases and entrepreneurship characteristics are presented in Figure 3. The GEM survey is based on collecting primary data through an adult population survey of at least 2,000 randomly select-ed adults (18–64 years of age) in each economy. In addition, national teams collect expert opinions about components of the entrepreneurship ecosystem through an NES.

Figure 3. GEM Conceptual Framework

social, cultural, political,economic

Source: GEM Global Report 2015

Outcome (socio-economic

development)

Entrepreneurial activity:

By Phases:Nascent, new, established

By Impact:High growth, innovative,

internationalization

By Type:TEA. SEA, EEA

Entrepreneurial output (new jobs, new value added)

Entrepreneurialframeworkconditions

Social valuesabout

entrepreneurship

Nationalframeworkconditions

Basic requirements.

Efficiency enhancers.

Innovation &business

sophistication

Individualatributes

(psychological,demographic,

motivation)

The social, cultural, political, and economic contexts are represented through national framework conditions, which impact the advancement of society through three phases of economic development (factor-driven, efficiency-driven, and innovation-driven), and entrepre-neurial framework conditions, which are conceptualized as influencing entrepreneurial activity more directly. The latter consist of: entrepreneurial finance, govern-ment policy, government entrepreneurship programs, entrepreneurship education, research and development (R&D) transfer, commercial and legal infrastructure, internal market dynamics and entry regulation, physical infrastructure, and cultural and social norms.

Societal values about entrepreneurship include such aspects as how the society values entrepreneurship as a good career choice, whether entrepreneurs have high societal status, and the extent to which the media posi-tively represent entrepreneurship in an economy.

GEM CONCEPTUAL FRAMEWORK

the GEM survey was conceptualized with regard to the interdependency between entrepreneurship and economic development, in order to:

• uncover factors that encourage or hinder entrepre-neurial activity, especially those related to societal values, personal attributes, and the entrepreneurship ecosystem;

• provide a platform for assessing the extent to which entrepreneurial activity influences economic growth within individual economies;

• uncover policy implications for the purpose of en-hancing entrepreneurial capacity in an economy.

GEM’s conceptual framework depicts the multifaceted features of entrepreneurship, recognizing the proactive, innovative, and risk-responsible behavior of individuals, always in interaction with the environment In this respect,

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor Dashboard of GEM indicators

Characteristics of entrepreneurs• Gender

• Age and senior entrepreneurship

• Origin

• Educational level

• Income

• Country region

Informal investment activity• Estimated percentage of population

acting as informal investor

• Estimated amount of informal investment

• Informal investor characteristics and relationship with beneficiaries

Perceived quality of the entrepreneurship ecosystem

• Entrepreneurial finance

• Government policies: support and relevance; government policies: taxes and bureaucracy

• Government entrepreneurship programs

• Entrepreneurship education at school age and at postschool stage

• R&D transfer

• Commercial and legal infrastructure

• Internal market dynamics; internal market burdens or entry regulation

• Physical infrastructure

• Cultural and social norms

• Main perceived constraints for entrepreneurship

• Main perceived types of support for entrepreneurship

• Main recommendations to improve the entrepreneurial context collected

• Perceived opportunities

• Perceived capabilities

• Entrepreneurial intentions

• Fear of failure rate

Individual self-perceptions about entrepreneurship

• TEA

• EB ownership rate

• Business discontinuation rate

• EEA

Entrepreneurial activityindicators

This report features a detailed review of key entrepreneurship indicators for the KSA covering all the topics described in Figure 3 and especially those included in the entrepreneurial activity box, which are detailed in Figure 4. GEM Global and National Reports do the same for each participating economy, giving them a ranking on every indicator. Overall, this group of indicators may be viewed as a dashboard representing a comprehensive set of measures that collectively contribute toward the impact entrepreneurship has on a society and the extent to which society supports this activity. Highlighted in the report are, among others, the following measures:

DASHBOARD OF GEM INDICATORS

• Entrepreneurship as a good career choice

• High status for successful entrepreneurs

• Social preference between competitive and noncompetitive environments

• Media attention for entrepreneurship

• Ease of starting up in the country

• Business having solving social problems as principal aim

Perception of societal values related to entrepreneurship

• Motivational Index (ratio of TEA improvement-driven opportunity (IDO) to TEA necessity)

• Sector of activity

• Number of owners

• Number of employees

• Job-creation expectations

• Innovation component Usage of recent technologies

• Competitiveness

• Internationalization

• Seed capital invested

• Main motive for businesses discontinuation

Characteristics of entrepreneurial activities

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor Executive Summary

EXECUTIVE SUMMARY

SOCIETAL VALUES ABOUT ENTREPRENEURSHIP

Saudi Arabia shows a strong cultural affinity for entrepreneurship, except with respect to competitiveness. More than two-thirds of the working-age population believes that starting new businesses is a good career choice and that success earns social status and respect. A high proportion also feels that the media pay attention to new business creation, that it is easy to start new busi-nesses, and that many businesses aim primarily to solve social problems.

Compared with the years 2009 and 2010, the indicators on perceptions of societal values related to entrepre-neurship indicate that Saudi society has become slightly less competitive; marginally less prone to thinking that media support and create awareness of entrepreneurs’ success stories; and less convinced that those successful at starting a new business enjoy a higher level of status and respect.

Despite these changes over time, Saudi Arabia has one of the strongest profiles in its geographical zone of influence with regard to societal values about entrepreneurship. Thus, all its indicators on this topic are higher than GEM averages, with the excep-tion of competitiveness, because healthy entrepreneurial ecosystems need populations with a high degree of competitive spirit.

The 2016 GEM Saudi Arabia survey represents the third year that GEM has tracked rates of entrepreneurship across multiple phases and assessed the characteristics, motivations, and ambitions of entrepreneurs, as well as the attitudes of Saudi society toward this activity. The subsections below discuss selected major findings from the report.

Figure 4. Model of business phases and entrepreneurship characteristics represented in GEM


Potential Entrepreneur

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor Title of Section

MOTIVATION FOR EARLY-STAGE ENTREPRENEURIAL ACTIVITY

Most entrepreneurs in Saudi Arabia (92.3% in 2016) are opportunity-motivated, that is, they choose to pursue an opportunity as a basis for their entrepreneurial motivations rather than starting out of necessity. Earning greater indepen-dence appears to be the prevailing perceived benefit of starting up businesses in Saudi Arabia, save for in the very early stages of nascent activity.

A portion of entrepreneurs seeks to improve their situa-tion, either through increased independence or through increased income (as opposed to simply maintaining their income). GEM calls these individuals “improve-ment-driven opportunity” (IDO) entrepreneurs and offers an index called the Motivational Index to measure the proportion of entrepreneurs in this situation. This index is 40.8% for Saudi Arabia in 2016 and represents the percentage of entrepreneurs within the TEA stage who reported an IDO motive.

The TEA rate has increased by 6.7% since the year 2009, but the previous figures, along with the total rate of business discontinuation in the last 12 months (6.1% over the same population), suggest that the pace of business creation versus cessation is not very well balanced – that is, the Saudi Arabian market currently features a very high proportion of recently created businesses. This could be good news in terms of innovation and updat-ing the sector if the quality of a significant proportion of these activities is also high; however, it is more likely that high volatility reflects low-potential businesses unable to compete and survive in the market for long.

In addition to independent entrepreneurial activity, 4.9% of the same population is involved as “intrapreneurs,” that is, as entrepreneurs within a company or organiza-tion. Intrapreneurs currently leading new initiatives for their employers represent 4.5% of the same population, so most of the intrapreneurs are directly involved in these new developments. The intrapreneurial activity rate is lower than the average across innovation-driven countries, so there is still considerable room to intensify this modality in Saudi Arabia.

PHASES/TYPES OF ENTREPRENEURIAL ACTIVITY

In 2016, 25.8% of the Saudi population aged 18–64 years was considering the option of start-ing up a new business in the next three years. This rate of potential entrepreneurship is high, in line with the GEM average, but lower than the rates in most countries in Saudi Arabia’s zone of influence.

Saudi Arabia’s adult population shows a moderately high level of involvement in effective entrepreneurial activities. Thus, the TEA rate involves 11.4% of the adult population and is composed of 3.7% of nascent activities (active in the market for up to three months) plus 7.7% of new businesses (active in the market for 3–42 months). However, this scenario is not as positive as it seems at first sight, because the proportion of consolidated or established firms (those operating in the market for more than 42 months) is, proportionally speaking, quite low and in-volves only 2.3% of the same population.

SELF-PERCEPTIONS ABOUT ENTREPRENEURSHIP

Saudi Arabia’s adult population shows high levels of self-perception about entrepreneurship. Thus, 71.7% of the adult population know recent entrepreneurs, where-as 81.5% see good opportunities in starting up new businesses in the six months following the survey, 70.7% self- recognize being in possession of entrepreneurial skills, and only 41.9% feel constrained by fear of failure where becoming entrepreneurs is concerned. However, in Saudi Arabia, there is a significant difference between male and female prevalence for these positive indicators in favor of men.

According to these four indicators, the proportion of adults who know recent entrepreneurs has increased significantly since 2009 as well as the proportion of people identifying opportunities. At the other end of the scale, the percentage of self-recognized entrepreneurial skills has decreased, and the proportion of people fear-ing failure has increased.

24 25


INDUSTRY-SECTOR PARTICIPATION

Like most countries, Saudi Arabia highly concen-trates activity in the consumer-oriented service sector (78.8%). However, a significant proportion of businesses are involved in the transforming sector (16.2%), notwithstanding a slight decline following a peak in 2010. The business-service sector (4.8%) shows a certain deficit against what would be expected, given the need for business infrastructure to serve the other two major sectors. Finally, the extractive sector (0.2%) is the weakest of the four – innovation in this area is key to recovering its dynamism and maximiz-ing the value of Saudi Arabia’s natural resources.

JOB CREATION PROJECTIONS

With few exceptions, entrepreneurial activities in Saudi Arabia are initiated by an independent entrepreneur or by very small entrepreneurial teams. Thus, over half of all activity, especially EBs, is accounted for by a single individual.

As with the number of owners, entrepreneurial activity comprises firms and businesses with few employees. However, in Saudi Arabia, early-stage entrepreneurial ac-tivity is better positioned than other economies because the percentage of early-stage entrepreneurial activity with no employees is very low. Currently, 36.6% of activi-ties have more than five employees.

These factors condition the mean size of new and established firms and businesses and the job creation projections for the next five years. Thus, in 2016, 59.5% of TEA entrepreneurs expect to create between one and five job positions in five years, 29.6% expect to create between six and 19 jobs, and 10.9% expect to create 20 or more jobs.

INNOVATION

The presence of an innovation component in early-stage businesses and EBs has been increas-ing between 2009 and 2016 in Saudi Arabia. From the point of view of competitiveness, this result is very desirable, but a proper evaluation must still consider whether the innovation component is competitive only within the country or also at international level – the “innovation” may simply be the discovery of a local

INTERNATIONALIZATION

In Saudi Arabia, the export intensity of ear-ly-stage entrepreneurial activities has improved significantly between 2009 and 2016. In 2009, only 5.3% of entrepreneurial activities were non-active in internationalization, whereas by 2016, this figure had risen to 33.5%, but what is relevant is that in 2009 only 12.4% of entrepreneurial activities exported 25% or more of their production, whereas this figure is 48.7% in 2016. Established firms, by contrast, have become unambiguously more insular: the percent-age of nonactive firms has increased significantly, from 41.6% in 2009 to 79% in 2016. It appears that export-in-tensive businesses are struggling to establish themselves over the longer term.

niche. The 2016 results indicate that around 65.3% of new ventures feature an innovation component. This percentage increases to 87.3% among EBs, but the high volatility among these firms in recent years, along with the increasing proportion of early-stage entrepreneurial activities with an innovation component, may explain this result.

Executive Summary

Based on the respective populations of men and women in Saudi Arabia, the male rate of participation in TEA is 12.9%, and the female rate 9.7%. Men are proportionally more involved in TEA in Saudi Arabia. Thus, taking the TEA rates of involvement as bases for calculation, 61.4% of entrepreneurs are men, and 38.6% are women. Al-though participation in TEA has been increasing across both genders, women have been rapidly closing the gap since 2009.

A large proportion of the entrepreneurial population over the past three years has comprised people aged 23–42. The range for potential entrepreneurs is even wider, around a slightly higher mean. Unsurprisingly, established owner-managers were older than entrepre-neurs in 2016, with a mean age of around 43 years. Final-ly, the mean age of owner-managers who abandoned a business activity in 2016 was 37.33 years, a result that indicates, like others obtained on this subject, that most business exits were not due to retirement.

The typical early-stage entrepreneur is a man whose age has increased moderately (from around 31 to 33.5 years) in recent years, who has a university degree, whose annual income is some-what lower than it was in 2009 and 2010, who works for his business full time, and who lives in a household that has declined slightly in size, from almost six people in 2009 to five in 2016.

PROFILE OF SAUDI EARLY-STAGE ENTREPRENEUR

26 27


27

Considered globally, the Saudi Arabian entre-preneurial ecosystem is weak and has become weaker in several critical indicators in the last seven years. In the final evaluation, we need to dis-count the impact of the oil crisis, geopolitical turbulence, and macroeconomic deterioration to fully understand the reasons for this evaluation. On the other hand, Saudi Arabia shows considerable room for growth, well-trained younger generations, an empowered SME Authority, and strong transformation plans outlined in Vision 2030 and the NTP.

The aim of this report is to inform academics, educators, policy makers, and practitioners about the multidimensional nature of entrepre-neurship around the world. Improvements and stability in GEM measures from year to year can demonstrate the value of long-term commit-ments by policy makers and public and private stakeholders in effecting changes and providing the resources required to build more supportive entrepreneurship ecosystems. It is GEM’s goal to improve and extend knowledge about entrepreneur-ship and guide decisions that can lead to the conditions needed for entrepreneurship to thrive.

ENTREPRENEURSHIP ECOSYSTEM

GEM teams assess the quality of their entrepreneurship ecosystems through an NES. Overall, physical infrastruc-ture, factors having a positive impact on senior entre-preneurship, internal market dynamics, and social and cultural norms received the highest ratings. Conditions scoring lowest were entrepreneurship education in pri-mary and secondary school, R&D transfer, government entrepreneurship programs, entrepreneurship education after the school stage, and commercial and professional infrastructure.

Among the 66 economies participating in GEM 2016, Saudi Arabia ranks as follows for the 12 main entrepre-neurial framework conditions evaluated by GEM experts:

46

39

31

52

60

60

58

64

32

46

24

34

Framework condition

Financing for entrepreneurs

Government policies: support and relevance

Government policies: taxes and bureaucracy

Government entrepreneurship programs

Entrepreneurial education at school stage

Entrepreneurial education at postschool stage

R&D transfer

Commercial and legal infrastructure

Internal market dynamics

Internal market burdens or entry regulation

Physical infrastructures

Cultural and social norms

Rank

26

PERCEPTION OF SOCIE-TAL VALUES RELATED TO ENTREPRENEURSHIP

2828

30 31

Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor PERCEPTION OF SOCIETAL VALUES RELATED TO ENTREPRENEURSHIP

Saudi Arabia shows a strong cultural affinity for entrepreneurship, except with respect to competitiveness. More than two-thirds of the working-age population consider starting new businesses to be a good career choice and that success earns social status and respect. Also, a high proportion perceive media to pay attention to new business creation, that it is easy starting new businesses, and that many businesses aim primarily to solve social problems.

Societal attitudes indicate how entrepreneurship is re-garded in an economy. A society’s culture, history, policy, and business environment, along with many other fac-tors, can influence its view of entrepreneurship, which in turn can affect entrepreneurial ambitions and the extent to which this activity will be supported.

GEM assesses the extent to which people consider entrepreneurship to be a good career choice, whether they feel that entrepreneurs are accorded high status, to what extent there are positive representations of entre-preneurs in the media, to what extent residents in Saudi Arabia think that their society has (or lacks) a preference for competitive environments, how easy they think it is to start up a business in their country, and to what

extent they think businesses often take solving social problems to be their primary objective.

Results for 2016 indicate that most of Saudi Arabia’s adult population strongly prefers living in a non-compet-itive environment (79.8%). However, a very high propor-tion also considers that starting a new business is a desirable career choice (81.3%), that those successful in starting a new business enjoy a high level of social status and respect (78.7%), that public media and the Internet give good coverage of successful new business-es (75.9%), and that it is easy to start a new business (73.8%). The Saudi adult population also includes a high proportion (61%) of people who perceive businesses often to have solving social problems as their primary objective.

Figure 5.Perception of societal values related to entrepreneurship in Saudi Arabia: percentage of positive responses within the 18–64-year-old population to key questions related to this topic

Most people would prefer that everyone had a similar standard of living

Most peopleconsider starting a new business desireable careerchoice

Those successful at starting a new business have a high level of status and respect

It is easy to start a business

You will often see businesses whose primary objective is solving problems

you will often see stories in the public mediaand/ or internet about successfulnew business

GENERAL VIEW1.1

32 33


People aged 25–44 are somewhat less inclined to

think that in Saudi Arabia, those successful at start-

ing new businesses enjoy a high level of status and

respect, to think that one often sees stories in the

public media and/or Internet about successful new

businesses, and to perceive that businesses are of-

ten primarily aimed at solving social problems.

AGE GROUP

People involved in the business sector are signifi-

cantly more likely to agree with the proposed so-

cietal values related to entrepreneurship in Saudi

Arabia, save for people’s preference for a similar

standard of living.

BUSINESS SECTOR

People who are not potential entrepreneurs tend

to think somewhat more than potential entrepre-

neurs that in Saudi Arabia, most people consider

starting a new business to be a desirable career

choice and that it is easy to start a business. Po-

tential entrepreneurs, on the other hand, are more

likely to think that in Saudi Arabia, one will often

see businesses that have solving social problems

as their primary aim.

POTENTIAL ENTREPRENEURSHIP

The region where the highest proportion of adults

feel that most people would prefer everyone to en-

joy a similar standard of living is the Dammam re-

gion, whereas, the Western Province, especially the

Madinah and Makkah regions show the lowest pro-

portions. In other words, these latter two regions

are likely to be the most competitive in the coun-

try, the former the least.

Jeddah and Riyadh are the cities and regions

where a higher proportion of the population thinks

that in Saudi Arabia, most people consider start-

ing a new business to be a desirable career choice.

However, in these regions, fewer people think that

one often sees stories in the public media and/or

on the Internet about successful new businesses.

Compared with other regions, adults from Jeddah

and Madinah are less prone to affirm that those

successful at starting new businesses enjoy high

levels of status and respect.

Adults from Madinah and Makkah are less likely to

perceive that it is easy to start a business in Saudi

Arabia.

Finally, Dammam stands out because a high per-

centage of its people affirm that businesses often

aim primarily to solve social problems.

REGION


Although the perception of societal values related to entrepreneurship is very high in the adult population of Saudi Arabia, it is interesting to note several subtle differences that occur by gender, age, educational level, involvement in the business sector, potential entre-preneurship, and region. These differences, which are relevant from the standpoint of public-policy design and understanding the entrepreneurial ecosystem, are summarized here (also see Table 3):

PERCEPTION OF SOCIETAL VALUES RELATED TO ENTREPRENEURSHIP BY GENDER, AGE GROUP, EDUCATIONAL LEVEL, INVOLVEMENT IN BUSINESS SECTOR, POTENTIAL ENTREPRENEUR-SHIP, AND REGION

1.2

Women tend to perceive Saudi Arabia’s society as

somewhat more competitive than do men.

Women perceive Saudi Arabia’s society as some-

what more favorable toward entrepreneurship as a

professional choice than do men.

Men are somewhat more prone than women to

think that in Saudi Arabia, one often sees stories in

the public media and/or Internet about successful

new businesses.

Women perceive Saudi Arabia’s businesses as

somewhat more aimed at solving social problems

than men do.

GENDER

32

34 35


Saudi Arabia has participated in GEM previously, in 2009 and 2010. Comparing the indicators on perception of societal values related to entrepreneurship from these years with the current figures, this society has clearly become less competitive: seven years on, many more people believe that most of their compatriots would pre-fer everyone to have a similar standard of living.

The proportion of the population who think that in Sau-di Arabia most people consider starting a business to be a good professional choice is the same as it was in 2009, after a small increase in 2010. The proportion of the pop-ulation agreeing that one often sees stories in the public media and/or Internet about successful new businesses has decreased marginally. One final relevant issue is the decrease of 13.6% in the proportion of the population thinking that in Saudi Arabia, those successful at starting a new business enjoy a high level of status and respect. The evolution of this indicator is not desirable, as poten-tial entrepreneurs benefit from social encouragement in taking the decision to start up new businesses.

Figure 6. Temporal evolution of indicators on perception of societal values related to entrepreneurship1.3 TEMPORAL

EVOLUTION


Male

Female

81.4

78.0*

79.9

79.6

80.2

88.2*

76.3

92.7*

73.6

89.8*

72.3

83.1*

59.3

71.3*

79.4

80.9

82.6*

76.9

77.6

80.7

75.1

78.3

75.5*

69.5

57.5

70.9*

79.9

83.1*

78.8

78.6

78.2*

73.0

74.1

73.4

55.9

67.4*

18–24 years

25–34 years

35–44 years

45–54 years

55–64 years

79.

80.8

78.8

78.7

83.3

80.6

78.1

78.9

82.3

87.9*

81.4

79.4

93.3*

65.8*

66.4*

82.9*

86.2*

79.8

65.2

74.5

69.3*

87.6

86.8

74.4*

85.0

70.4*

76.7*

82.1

84.7

81.3

77.9

73.3

78.0

65.2*

55.9*

55.2

59.9

85.2*

59.6

58.4

85.5*

78.2

77.4

87.7*

83.8*

79.1

77.8

82.4

79.3

68.2*

84.5

76.9

81.2

71.4

54.3*

78.8*

72.2

72.3

78.0*

77.7*

70.6*

61.4

67.7

56.6

50.6*

79.8

82.1

81.6

80.6

81.3

84.3

75.4

78.3*

80.2

79.3

83.7

70.9*

72.4*

81.9

82.1

72.1

75.6

71.1

76.7

72.3

65.9

57.7*

58.4*

65.0

69.1

No secondary

Some secondary

Secondary degree

Postsecondary

Grad. experience

Jeddah

Riyadh

Dammam

Madinah

Makkah

Not in bus. sector

Yes in bus. sector

Not potential ent.

Yes potential ent.

most peoplewould prefer

that everyone had a similar standard of

living

most people consider

starting a new business a desirable

career choice

those succes-sful at starting a new business

have a high level of status and respect

you will often see stories in

the publicmedia or

Internet aboutsuccessful new

businesses

it is easy tostart a

business

you will often see busines-

ses thatprimarily aimto solve social

problems

(%)(%)(%)(%)(%)(%)

Categories for:

gender, age,

education,

involvement in

business sector,

in potential e- ship, and region

7

Table 3. Perception of societal values related to entrepreneurship by gender, age group, educational level, involvement in business sector, and region (% positive response)

In my country ...

*Differences between categories are significant at the 95% confidence level with p<0.025 for chi-square tests.

2016

2010

2009

0.0% 10.0%2 0.0% 30.0%4 0.0% 50.0%6 0.0% 70.0% 80.0%9 0.0% 100.0%

Most people consider starting a new business a desireable career choice.

Most people would prefer that everyone had a similar standard of living.

You will often see stories in the public media and/or internet aboutsuccessful new business

Those successful at starting a new business have a high level of status and respect.

36 37


7

10

8

25

9

3

1

64

Note: GEM Lebanon did not ask any of these questions, whereas GEM Turkey did not ask the first, about standard of living.

Preference for similar living standard

E-ship good career choice

Successful e-ship good status

Media as echo of successful e-ship


Figure 7 shows the rates for populations of countries of the geographical zone around Saudi Arabia giving a pos-itive answer about questions on societal values related to entrepreneurship, along with those for the USA, the efficiency-driven nations group, and GEM 2016.

The UAE and Saudi Arabia are the populations where people are most perceived, by a notable margin, as preferring a similar standard living for everybody. Indeed, something of a paradox seems to be at work in these two countries, as elsewhere this indicator tends to be dominated by at least one favorable indicator of entre-preneurship. By contrast, Iran and Jordan are the most competitive countries in the zone, with perceptions in Jordan aligning with those in the USA.

All the populations of countries in the zone show high rates of people considering entrepreneurship to be a good career choice, except for Jordan, where the rate is significantly lower. Notably, in all of these Middle Eastern countries – again, except for Jordan – entrepreneurship is viewed as a good career choice at a higher rate than in the USA.

In all the populations of the countries in the zone, large proportions (generally around 80%) of the population perceive that successful entrepreneurs are accorded high social status and respect, except for in Morocco, where the rate is significantly lower at just under 60%. Iran exhibits the most prominent indicator by far.

Well over 70% of the adult populations of Saudi Arabia and Jordan consider that their respective media portray successful entrepreneurship. Among the countries of the zone, only the UAE shows a higher rate agreeing with this proposal. The other populations show more mod-erate results. The lowest rate is that of Iran, at slightly under 60%.

1.4 INTERNATIONALPOSITION

Figure 7. Saudi Arabia: inter-national position with respect to indicators on perception of societal values related to entrepreneurship

36


3838

40 41

Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor INDIVIDUAL SELF-PERCEPTIONS ABOUT ENTREPRENEURSHIP

INDIVIDUAL SELF-PERCEPTIONS ABOUT ENTREPRENEURSHIP BY GENDER, AGE GROUP, EDUCATIONAL LEVEL, INVOLVEMENT IN BUSINESS SECTOR, POTENTIAL ENTREPRENEURSHIP, AND REGION

2.2 The assessment of individual self-perceptions about entrepreneurship according to gender draws out a clear distinction between Saudi Arabian women and men.

A significantly lower percentage of women respond positively about knowing recent entrepreneurs, seeing entrepreneurial opportunities, and feeling they have sufficient knowledge, skills, and experience to start up small businesses.

They also show a higher rate of fear of failure as an obstacle to entrepreneurial initiatives. This indicator, of a lack of individual risk-taking culture among women, the most pronounced of the four questions explored by gender, deserves further study to determine its causes and correct it in the medium term. Otherwise, it will be more difficult for women’s entrepreneurship to progress and make a significant contribution to Saudi Arabia’s economic development and innovation.

In terms of age, the percentage of positive responses about knowing recent entrepreneurs does not vary by age, while as age increases, the percentage of positive responses about seeing opportunities tends to decrease smoothly, and people aged 45–54 years show the highest rate of individuals deeming themselves as having entrepreneurial skills. Finally, fear of failure tends to increase with age.

Adult populations with very low and very high levels of education are those that exhibit higher rates of knowing recent entrepreneurs, suggesting a split between necessity- and opportunity-driven entrepreneurial activity in Saudi Arabia. This impression is ratified by higher rates of perceived opportunities among people with the lowest and highest educational attainments alike. Fear of failure increases as educational level decreases, thus indicating that education helps to prevent this problem.

People involved in any stage of business show significantly higher rates of positive response on knowing recent entrepreneurs, on perceived opportunities, and on self-perception about possession of entrepreneurial skills and the experience of starting up a small business. Both groups – those involved and those not involved in business – show a similar level of fear of failure as an obstacle to starting up.

Potential entrepreneurs show lower rates of self-perception about entrepreneurship than those that have no intention of starting up businesses in the short term. This result, although unexpected, is justified by the composition of the potential entrepreneurs group, in which one

In Saudi Arabia, 71.1% of working-age adults personally know someone who started a business in the last two years (see Figure 8). This result suggests an entrepreneurially active scenario, even if the businesses that result may be of dubious quality – although 81.5% of the same population see good opportunities around them for starting a business, 41.9% would be constrained from starting a business due to fear of failure. Nonetheless, 70.7% of working-age individuals feel they have the knowledge, skills, and experience required to start a business.

Figure 8. Percentages of positive responses for population aged 18–64 when questioned on self-perceptions about entrepreneurship

GENERAL VIEW2.1

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%

90,00%

Do you know someone

personally who started a business

in the past two years?

71.70%In the next six

months, will there be good

opportuniues for starting a business in the area where

you live?

81.50%Do you have the knowledge, skill, and experience

required to start a new business?

70.70%Do you have the knowledge, skill, and experience

required to start a new business?

41.90%

%18

-64

popula

tion

Saudi Arabia’s adult population shows high levels of self-perception about entrepreneurship, which constitutes a positive starting point for developing entrepreneurial activity. However, the good disposition and entrepreneurial characteristics of a population are not enough to garner significant levels of contribution to the economy from the entrepreneurial sector. There are many other factors analysed and evaluated across this report that also influence the achievement of such a goal.

42 43


Comparing the indicators on individual self-perception about entrepreneurship for 2009 and 2010 with the current figures reveals significant changes.

The percentage of the population knowing recent entrepreneurs has increased by 30.5 percentage points in seven years, thus suggesting considerable progress in entrepreneurial activity in Saudi Arabia during this period.

The rates for perceived opportunities likewise show an increasing trend – more moderate, but still significant at 14.9 percentage points – across the same period.

This result suggests that in the past, the population acquired entrepreneurial skills by experience and imitation, whereas more recently an entrepreneurial education has been slowly implemented in some colleges and universities, and is beginning to deliver results.

Finally, the rates of fear of failure remain quite stable, showing a small increase of 3.3 percentage points between the years 2009 and 2010. These results are all shown in Figure 9

Figure 9. Temporal evolution of indicators on individual self-perception about entrepreneurship.

2.3 TEMPORAL EVOLUTION

201620102009

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

In the next six months, will there be good opportuniues for starung a business inthe area where you live?

Do you know someone personally who started a business in the past two years?

Would fear of failure prevent you from starung a business?

Do you have the knowledge, skill, and experience required to start a new business?

%18-64 POPULATION

The share of population that self-recognizes the possession of entrepreneurial skills decreased between 2009 and 2010 by around six points; six years later, it appears to have recovered somewhat, but is still below 2009 levels.


finds a significant proportion of women, young individuals, and other profiled individuals who are less likely to know other entrepreneurs, less experienced in perceiving opportunities, and less skilled in new business creation.

Finally, the regional perspective indicates that the populations of Dammam, Riyadh, and Jeddah regions show high percentages of people knowing recent entrepreneurs, whereas those rates are significantly lower for Madinah and Makkah. On the one hand, this result suggests the existence of relevant territorial differences in entrepreneurial activity in Saudi Arabia, at least over the last two years. On the other hand, all regions studied show relatively high rates of positive response about perceived opportunities.

(the rate is dramatically higher in Dammam region), whereas the fear of failure is more extensive in Makkah, Riyadh, and Jeddah than it is in Madinah or Dammam regions. Based on these results, Makkah seems to be the less entrepreneurial region of the group, despite the high level of opportunity perception among its adult population. All these results and the previous ones are summarized in Table 4.

Table 4. Individual self-perception about entrepreneurship by gender, age group, educational level, involvement in business sector, and region (percentage positive response)

*Differences between categories are significant at the 95% confidence level

with p<0.025 for chi-square tests.

Questions related to individual self-perception about entrepreneurship

Male

Female

18–24 years

25–34 years

35–44 years

45–54 years

55–64 years

No secondary

Some secondary

Secondary degree

Postsecondary

Grad. experience

Jeddah

Riyadh

Dammam

Madinah

Makkah

Not in bus. sector

Yes in bus. sector

Not potential ent.

Yes potential ent.

Categories for: gender, age, education, involvement in business sector, in potential e- ship, and region

74.7*

68.1

69.3

86.9*

73.9*

64.2

63.1*

75.1*

71.9

74.5*

67.7

76.8*

67.8

69.8

76.6*

84.0*

72.8

77.1

83.1*

53.0

49.6

86.1*

75.8

79.5

93.7*

83.4*

75.3

83.7

82.2

80.2

81.5

77.0

88.0

81.6

81.8 7

9.6

87.2

85.4*

76.2

78.9

86.3*

80.4

32.5

53.3*

41.4

45.0

39.7

45.9*

47.1*

41.2

42.6

40.1

31.2*

48.0

46.4

44.5

34.3*

30.0*

42.7

45.0

27.5*

39.9*

50.0

67.1

93.0*

71.8*

66.1

77.7*

62.2

67.6

69.6

86.1*

72.9

65.1

78.0*

68.9

77.1*

68.5

72.0*

70.7

70.5

65.9*

78.8

70.5

Do you know someone personally

who started a business in the past two

years?

In the next six months, will

there be good opportuniues

for starung a business in

the area where

you live?

Do you have the knowled-ge, skill, and experience required to

start a new

business?

Would fear of failure prevent

you from starung a business?

44 45


2.4 INTERNATIONAL POSITION

Saudi Arabia, Lebanon, and the UAE stand out significantly among the countries of the target zone as the countries with higher proportions of population knowing recent entrepreneurs. These proportions are also significantly higher than the efficiency-driven countries and GEM averages, and even higher than the US as well. Egypt is notable for its very low rate, less than half of Saudi Arabia’s.

The Saudi Arabian population has the highest proportion of people (81.5%) that see good opportunities to start up businesses over the next six months – that is, from July to December 2016. The UAE, Iran, and Jordan exhibit the lowest proportions (between 25 and 35%).

All countries in the region show substantial proportions of people deeming themselves skilled enough to start up their own businesses. Saudi Arabia peaks at 70%, whereas Egypt and Jordan exhibit lower proportions (just under 50%).

Fear of failure in the Middle Eastern zone is lowest in Qatar and Egypt, at slightly over 30%, which is lower than in the USA. This figure peaks at 50% in the UAE. Saudi Arabia is in an intermediate position, with 41% of the adult population considering failure as an obstacle to becoming entrepreneurs.Overall, Saudi Arabia and Lebanon are notable for having self-perceptions of entrepreneurialism that far exceed, relatively speaking, their fear of failure. From this observation, one might infer a more optimistic outlook – realistic or otherwise – in these countries.

INDIVIDUAL SELF-PERCEPTIONS ABOUT ENTREPRENEURSHIP2016

Do you know someone personally who starteda business in the past

two years?

In the next six months, will there be good

opportuniues for starting a business in the

area where you live?

Do you have the knowledge, skill,

and experience required to start a new business?

Would fear of failure prevent you from

starting a business?


2016-20172016

48 49

Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor ENTREPRENEURIAL AND BUSINESS ACTIVITY

GENERAL OVERVIEW3.2

Saudi Arabia’s adult population shows a moderately high level of involvement in entrepreneurial activities (see Table 5). At the time of the survey, slightly more than a quarter of this population manifested the intention to start up a new business activity in the next three years, 3.7% were starting up a new business not older than three months, and 7.7% were consolidating a business older than three months but created less than 42 months previously. Thus, as of July 2016, 11.4% of Saudi Arabia’s adult population was involved in early-stage entrepreneurial activity.

Saudi Arabia’s TEA indicator is moderately high in the international ranking as shown in Section 3.4. But the real contribution of entrepreneurial activity to a country’s economy is a matter not only of quantity, but also – and especially – of quality. That is why knowing the characteristics of entrepreneurs and entrepreneurial activities is critical to making a proper diagnostic on the effective contribution of any TEA rate to national GDP. These characteristics are analyzed with respect to Saudi Arabia in Chapters4 and 5.

ACTIVITY AT EACH PHASE OF BUSINESS CREATION AND DEVELOPMENT

PERCENTAGES OF SAUDI ARABIA’S POPULATION AGED 18–64 INVOLVED IN EACH PHASE

25.8% 3.7% 7.7% 3.7+7.7=11.4% 2.3% 6.1%

Potential Nascent New(Baby)

TEA(Total)

Establishes Discon-tinuation

One symptom of the shortcomings in the business process in Saudi Arabia is the low rate of EBs, which engage only 2.3% of the adult population (versus 7.7% in new businesses).

This figure suggests high volatility either during or following the consolidation process, estimated to last 3.5 years, of entrepreneurial initiatives.

Table 5. Saudi Arabia’s 2016 results on entrepreneurial activity through the phases of business

As stated in the report’s introduction, one of the principal aims of GEM is to provide detailed information about the results of entrepreneurial activity in any target territory. GEM understands entrepreneurial activity as the core of a complex process (see Figure 11) that begins with individuals’ or groups of individuals’ entrepreneurial intention and continues with successive phases of effective business start-up (nascent activity), business consolidation (new or baby activity), business development and persistence (established activity), and business discontinuation (activity exited from the market). This chapter provides results of all these phases for Saudi Arabia in 2016.

Figure 11. Business phases

INTRODUCTION3.1


Potential Entrepreneur

50 51


Entrepreneurship is considered a key factor

in ending poverty in all its forms everywhere.

But making it work properly for this purpose

is not simple. Thanks to GEM, the study of

the determinants of entrepreneurial activity

reveals the complexity and diversity of

entrepreneurial contexts and the spread

of its results in terms of start-up initiatives,

its economic value, and its contribution

to countries’ sustainability and economic

development. In addition, recent reflections

on how entrepreneurial activity can

contribute more towards achieving these

goals are revealing new and important

elements that had not been taken

into account so far.

For example, according to Professor Ha-

Joon Chang of Cambridge University

(UK): “Many people believe that the lack

of entrepreneurship is one of the main

causes of poverty in developing countries.

However, anyone who is from or has lived for

a period in a developing country will know

that developing countries are teeming with

entrepreneurs. In contrast, most citizens of

rich countries have not even come near to

becoming an entrepreneur. They mostly

work for a company, doing highly specialised

and narrowly specified jobs, implementing

someone else’s entrepreneurial vision.

The upshot is that people are far more

entrepreneurial in the developing countries

than in the developed countries. Moreover,

even those people who are running

businesses in the richer countries need not

be as entrepreneurial as their counterparts

in the poorer countries. For developing-

country entrepreneurs, things go wrong all

the time. Compared to the richer countries,

we have far more people in developing

countries (in proportional terms) engaged in

entrepreneurial activities.

On top of that, their entrepreneurial skills are

much more frequently and severely tested

than those of their counterparts in the rich

countries.

But these more entrepreneurial countries are

the poorer ones. Why? The discussion so far

shows that what makes the poor countries

poor is not the lack of raw individual

entrepreneurial energy, which they in fact

have in abundance. It is their inability to

channel the individual entrepreneurial

energy into collective entrepreneurship. In

the richer countries, enterprises co-operate

with each other a lot more than do their

counterparts in poorer countries.

Even at the firm level, entrepreneurship

has become highly collective in the

rich countries. Today, few companies

are managed by charismatic visionaries

like Edison or Gates, but by professional

managers. If effective entrepreneurship

ever was a purely individual thing it has

stopped being so, at least for the last century.

The collective ability to build and manage

effective organisations and institutions is now

far more important than the drives or even

the talents of a nation’s individual members

in determining its prosperity. Unless we reject

the myth of heroic individual entrepreneurs

and help them build institutions and

organisations of collective entrepreneurship,

we will never see the poor countries grow out

of poverty on a sustainable basis.”


In other words, a significant part of the population starts up only to discontinue soon after. In 2016, whenever someone was in the process of personally withdrawing from a business, this coincided with the failure of the business itself 44.8% of the time (Table 6).

These figures suggest that the pace of business creation versus destruction is

The ratio between the TEA rate and the potential entrepreneurship rate roughly indicates how readily entrepreneurial intentions are transformed into entrepreneurial activities. (Both measurements refer to a three-year period.) The value of this indicator for Saudi Arabia in 2016 is 0.44 (see Table 7), which is rather low – a rate closer to 1 would indicate more effective entrepreneurship. Another interesting rough indicator of the recent impact of businesses’

not well balanced – that is, the Saudi Arabian market currently features a very high proportion of recently created businesses. This could be good news in terms of innovation and renewal if the quality of a significant proportion of these activities is also high; however, it is more likely that high volatility reflects low-quality businesses unable to compete and survive in the market for long.

Table 6. Detailed figures on businesses’ discontinuation in Saudi Arabia 2016

Table 7. Relevant rates derived from the results of the business creation and development model

destruction is the ratio between the percentage of nascent activity and the percentage of effective business discontinuation (see Table 7, final column). The value of this ratio for Saudi Arabia in 2016 is 1.37 (see Table 7), which indicates that more businesses started up than exited altogether. The problem for Saudi Arabia, then, is not so much short-term business mortality but rather longer-term mortality that results in a small EB sector.

Discontintuation Business continued in other hands

Business continued but changed its

main activity

Business exited the market completely

6.1% (100%) 2.6% (42.1%) 0.8% (13.3%) 2.7% (44.8%)

DISCONTINUATION OF BUSINESSES’ COMPOSITION

PERCENTAGES OF SAUDI ARABIA’S POPULATION AGED 18–64 INVOLVED IN EACH PHASE

11.4/25.8=0.44 3.7/2.7=1.37

TEA/ potential e-ship Nascent activity/ exited activity

ABSTRACT FIGURES (NO UNITS OF MEASUREMENTS)

RATES

52 53


INTERNATIONALPOSITION3.4

Save for Jordan, Saudi Arabia shows the lowest rate of potential entrepreneurship among the countries of its geographical zone; it is somewhat lower than the efficiency-driven countries’ average and is aligned with GEM’s 2016 average.

Taking into consideration that entrepreneurial intention is partly driven by necessity, this is not a bad result – note, for example, the low rate in the USA, despite the country’s entrepreneurial cultural background.

The nascent activity rate in Saudi Arabia is very close to Jordan’s and Qatar’s rates. It is somewhat higher than the UAE’s and Morocco’s rates, and lower than those of the other nations compared in the graph, along with the efficiency-driven nations and the GEM average.

The rate of new activity is lower than in Lebanon, roughly on a par with Egypt, Iran, and Turkey, and exceeds the USA rate and the GEM average. The TEA rate of Saudi Arabia is the fifth highest of the sampled countries; it falls under the efficiency-driven nations’ average, whereas it is close to the US rate and GEM average.

The big difference between the Saudi Arabian and US rates is their composition: in Saudi Arabia, there is more new activity, whereas in the US there is more nascent activity.

Finally, established activity in Saudi Arabia shows a very low rate and is aligned with the rates of Jordan, the UAE, and Qatar. These low rates reflect high volatility; the remaining countries are more stable in this regard. Lebanon stands out as the most active and balanced country of the zone: the nascent rate is lower than the new rate, and the new rate is lower than the established rate.


Potential e-ship

Nascent

New

TEA

Established

Figure 13. Saudi Arabia: international position with respect to indicators of business development

EGYPT

TEMPORAL EVOLUTION3.3Figure 12 shows the temporal evolution of the main indicators that make up the effective business-creation process. The lack of information about the years 2011–2015 prevents the extraction of precise conclusions, but several broad trends may be observed.

The TEA rate appears as following an ascendant line during the period, nurtured by different compositions of entrepreneurial activity: in 2009 and 2010, nascent activity was higher, whereas in 2016, new activity became dominant. Each time nascent activity increases and the resulting businesses survive, new activity increases the following year, and if these new businesses survive consolidation, established activity subsequently increases. But here we can see the EB rate following a decreasing line, indicating that the business development model is not working properly in Saudi Arabia, despite the increase in the TEA rate. New activity

Nascent activity Established activityDiscontinuation

TEA

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Year 2016Year 2010Year 2009

Figure 12. Temporal evolution of main indicators of business development in Saudi Arabia

54 55


ENTREPRENEURIAL EMPLOYEE ACTIVITY3.5Entrepreneurship is a complex phenomenon, and over time GEM has progressed in measuring it. Since, nowadays, it is acknowledged that to be human is to be entrepreneurial, employee entrepreneurship – as developed at private companies and public agencies – is increasingly considered in addition to independent entrepreneurship. This contribution is called “intrapreneurship” and constitutes a critical complement of innovation, diversification, and growth in any organization. Intrapreneurship flourishes especially when organizations are managed under a horizontal system instead of a vertical one, because this allows the establishment of communication and interchange flows between the different hierarchical levels of the company or agency. In this way, employees in different positions can channel their ideas, proposals, projects, and concerns in favor of their organization.

GEM has provided annual indicators related to intrapreneurship since 2013. Those corresponding to Saudi Arabia for 2016 are shown in Table 8.

According to the results, 5.2% of the population aged 18–64 and working as an employee have carried out some intrapreneurial activity within their organization over the past three years. Based on the population of employees rather than the total population, this figure translates to 12.3%.

Since the implementation of intrapreneurship produces significant changes in staff motivation, innovation, productivity, competitiveness, and other aspects that impact positively on any company or organization, the currently unobtrusive figures in Saudi Arabia suggest that there is plenty of room for increase in this modality.

In 2016, 4.9% of the total Saudi Arabian population, representing 11.4% of the employed population, is involved in intrapreneurial activities of some sort, which suggests that the phenomenon is continuing to develop positively from a low historical base, since even until recently, intrapreneurship was not encouraged. The remaining figures in Table 8 show that most intrapreneurs are also leading their intrapreneurial activity.

INTRAPRENEURSHIP RATESActive as intrapreneur in past three years (Base: Adult population*)

Active as intrapreneur in past three years (Base: Employment Population*)

Active as intrapreneur now (Base: Adult population)

Active as intrapreneur now (Base: Employment population)

Active and leading as intrapreneur in past three years ( Base: Adult population)

Active and leading as intrapreneur in past three years ( Base: Employment population)

Active and leading as intrapreneur now ( Base: Adult population)

Active and leading as intrapreneur now ( Base: Employment population)

*Base adult population= total population aged 18-64 in Saudi Arabia

** Base employed population= total employed population aged 18-64 in Saudi Arabia

5.2%

12.3%

4.9%

11.4%

4.7%

10.9%

4.5%

10.5%


Table 8. Intrapreneurship indicators for Saudi Arabia in 2016

All the compared countries except the UAE show rates of effective business discontinuation (business definitively exits the market) exceeding rates of discontinuation where the business continues in other hands (Figure 14). This indicates significant volatility in the zone. The UAE and Morocco show lower overall levels of volatility/discontinuation, closer to the rate observed in the USA, which may be accounted for by relatively high economic development and stability.

Discontinuation (Total)

Business continues in other hands

Business exited the market

EGYPT

Figure 14. Saudi Arabia: international position with respect to detailed indicators on business discontinuation

ENTREPRENEURIALACTIVITIES’ CHARACTERISTICS

58 59

Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor ENTREPRENEURIAL ACTIVITIES’ CHARACTERISTICS

when they continue a family business, or when they engage in developing projects, etc.

The literature on this topic indicates that opportunity entrepreneurship tends to be more valuable to economies because it usually makes more relevant contributions in terms of innovation, productivity, and competitiveness. However, it is not recommended that conclusions be drawn on the basis of motivation alone, because analysts must also evaluate the market development level, the sector, the businesses’ size, and many other variables that complete the picture of early-stage entrepreneurial activities. What may represent a big opportunity in the market of a developing country may not appear so attractive in the market of a developed country, or in the global market generally.

Saudi Arabia is a developing country full of contrasts. The proportion of opportunity-driven early-stage activities is very high and has followed a positive trend in recent years, whereas the rates of necessity-driven entrepreneurship and entrepreneurship driven by other motives have decreased (see Figure 15). It is true that the internal market offers great opportunities for new businesses and that there is considerable room for opportunity entrepreneurship, but the high volatility detected around established firms suggests a contradiction between these high rates of opportunity activity and the quality of the new businesses created. This may reflect, for example, an environment that is relatively hostile to new businesses: Saudi Arabia’s ease-of- doing-business ranking in 2016 was 96, according to the World Bank.

Figure 15. Distribution of motivation for early-stage entrepreneurial activity in Saudi Arabia – recent evolution

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Year 2016Year 2010Year 2009

Tota

l TE

A

11.8% 9.6% 7.5%

89.5%92.3%

0.9% 0.2%

85.4%

2.8%

As discussed in previous sections, it is the quality of entrepreneurial activity, rather than the quantity, that determines its effective contribution to economic and social development. GEM provides a comprehensive set of indicators that characterize entrepreneurial activities captured by observation. Analysis allows us to assess their strengths and weaknesses; it also provides valuable information for the orientation and design of public policies, training activities, strategic plans in the private sector, and any other mechanism that may favor the development of the entrepreneurial sector.

The following sections offer detailed results on the following aspects: entrepreneurship motive; sector of activity; number of owners; number of employees; job creation expectations; innovation component; use of recent technologies; competitiveness; internationalization; seed capital invested; and discontinuation motive for exited businesses.

INTRODUCTION4.1

4.2 Motivation is one of the determinants of the quality of businesses resulting from early-stage entrepreneurial activity. GEM classifies early-stage entrepreneurial initiative as motivated by necessity, opportunity, or other motives.

Potential entrepreneurs are driven by necessity when they have no better choices of work to develop their professional career or when they need to survive by creating their own job activity. By contrast, potential entrepreneurs are driven by opportunity when they detect a niche in the market, when they have and develop an original idea, or when they are able to develop an innovation. Potential entrepreneurs are classified as being motivated by other causes when they are driven by a mixture of necessity and opportunity,

MOTIVATION FOR EARLY-STAGE ENTREPRENEURIAL ACTIVITY

60 61


In 2009, most Saudi Arabian entrepreneurs with opportunity-driven motives involved in new or established stages of business stated that they chose to pursue an opportunity to gain greater independence, whereas those involved in nascent stages were more likely to report seeking increased personal income (see Table 9).

In 2010, the proportion of entrepreneurs seeking more personal income grew, whereas EB owner-managers remained focused on greater independence. In 2016, nascent and established entrepreneurs stated in higher proportions than new entrepreneurs that they had chosen to pursue an opportunity to gain greater independence. Thus, roughly speaking, greater independence appears to be the prevailing perceived benefit of starting up businesses in Saudi Arabia, save for in the very early stages of nascent activity.

As discussed above, among opportunity entrepreneurs, a portion seeks to improve their situation, either through increased independence or through increased income (as opposed to simply maintaining their income). GEM calls these individuals IDO entrepreneurs. To assess the relative prevalence of IDO entrepreneurs versus those motivated by necessity, in 2015 GEM created the Motivational Index. This index stands at 40.8% for Saudi Arabia in 2016 and represents the percentage of entrepreneurs within the TEA stage that reported an IDO motive. Compared internationally, this indicator helps to describe the quality of national TEA rates.

Table 9. Main incentive to pursue opportunities by types of entrepreneurs – recent evolution


Figure 16. Distribution of motivation for early-stage entrepreneurial activity in Saudi Arabia – recent evolution by gender

The motivation for early-stage entrepreneurial activity by gender shows fairly insignificant differences in behavior between male and female entrepreneurs. Opportunity is the predominant motivation for both groups – in 2009, for women, it was the only motivation – and as of 2016 has converged to an almost identical proportion, just above 90%. Necessity entrepreneurship is much less common and somewhat more prevalent for men, except in 2010, when the necessity rate reached 12.2% for women.

%12.3

%85.2

%2.5

%100.0

%8.1

%90.4

%8.5

%91.2

%0.4

%6.1

%93.9

%1.5

%12.2

%87.8

63

Figure 18. Distribution of the number of owners for Saudi Arabia businesses at different stages of activity in 2016

Figure 19. Average number of owners for early-stage and EB activities – recent evolution in Saudi Arabia

With few exceptions, entrepreneurial activities are initiated by an independent entrepreneur or by very small entrepreneurial teams. As observed in previous sections, this is probably one of the main issues preventing entrepreneurial activity from having a significant impact on countries’ economies.

The situation in Saudi Arabia is no different. The distribution of the number of owners for nascent businesses, new businesses, TEA businesses, and EBs (see Figure 18) shows a high concentration of activities started by a sole entrepreneur at every stage. New entrepreneurial activity is the category that shows more favorable rates of entrepreneurial teams – of two, four, six, seven, or more owners – whereas nascent activity shows the best rates for entrepreneurial teams of three and five members. But the fact remains that well over half of all activity, especially EBs, is accounted for by a single individual.

Figure 19 shows the average numbers of owners for TEA and EB activities and their recent evolution in Saudi Arabia. The situation is not improving: it is worse in 2016 than in 2009 and 2010. In 2009, TEA owners exhibited the highest average; this translated into a higher average in 2010 for EBs, only for both markers to subsequently decline by the 2016 survey, suggesting a deteriorating trend. The lack of complementary, powerful, and well-balanced entrepreneurial teams has a negative impact on the quality and extent of the entrepreneurial activity itself, so policies aimed at reversing this trend may be necessary.

NUMBER OF OWNERS4.4

59.4%

55.1%

56.6%

74.1%

14.4%

17.7%

16.4%

10.9%

14.9%

9.8%

11.5%

5.7%

5.0%

8.1%

7.1%

5.1%

4.4%

3.3%

3.7%

1.1%

0.0%

1.4%

0.9%

0.0%

0.0%

1.0%

0.7%

0.0%

0.0%

0.3%

0.2%

2.0%

0.0%

0.0%

0.0%

1.1%

1.9%

3.2%

2.8%

0.0%

SU

BB

TEA

EB

ENTREPRENEURIAL ACTIVITIES’ CHARACTERISTICSKingdom of Saudi Arabia

62


4.3 SECTOR OF ACTIVITY

GEM considers four large sectors by which to classify all types of business activities captured by the monitor: extractive, transforming, business-oriented service, and consumer-oriented service sectors.

Figure 17 shows the distribution of TEA activity and established-business (EB) activity by sector in the years 2009, 2010 and 2016. Like most countries, Saudi Arabia highly concentrates activity in the consumer-oriented service sector. But it is relevant that a significant proportion of businesses are involved in the transforming sector, notwithstanding a slight decline following a peak in 2010. The business-service sector shows a certain deficit against what would be expected, given the need for business infrastructure to serve the other two major sectors; furthermore, entrepreneurial activity in this sector has decreased across the analyzed period. Finally, the extractive sector is the weakest of the four – innovation in this area is key to recovering its dynamism and maximizing the value of Saudi Arabia’s natural resources.

Figure 17. TEA and EB activities by sectors – recent evolution in Saudi Arabia

64 65


65

Table 11. Average number of employees for nascent and new entrepre-neurial activity and for established firms in 2016

Figure 20. Early-stage entrepreneurial activities and EBs by current number of employees – recent evolution

% E

B BU

SIN

ESS


As with the number of owners, entrepreneurial activity is made up of firms and businesses with few employees. However, in Saudi Arabia, early-stage entrepreneurial activity is better positioned compared with other economies in the region, because the percentage of early-stage entrepreneurial activity with no employees is very low. Currently, 36.6% of activities have more than five employees (see first chart of Figure 20). That said, the figures for the year 2016 are the “worst” of all the three years available: in 2009, this proportion was 60.5%. Therefore, it appears that job creation in entrepreneurial activities has followed a negative trend – though this does not necessarily speak to the quality of the activities themselves, which may be less labor-intensive or have a longer gestational period.

For established or consolidated activity, the employment figures have evolved more positively. In 2009, 58.3% of established firms had more than five employees; in 2016, 73.8% did (see second chart of Figure 20). One explanation for this result is that the consolidated sector could have been adding entrepreneurial activities with higher average numbers of employees in the years before 2016. An additional argument is that, as can be seen in Table 11, entrepreneurial activities of Saudi Arabia tend to create jobs as they consolidate – in other words, their size tends to increase as they gain market relevance.

Table 10 shows additional results on the number of owners: female-led businesses tend to have a lower number of owners. Those with a postgraduate education are much more likely to form entrepreneurial teams. This latter observation is backed up by high-income earners being most likely to form entrepreneurial teams.

Table 10. Average number of owners for early-stage entrepreneurial activity in 2016 by gender, educational level, and income level

NUMBER OF EMPLOYEES4.5

66 67


Table 13. Complementary indicators on expectations of job creation for early-stage firms and EBs – recent evolution

Complementary results shown in Table 13 lead to the same conclusions: expectations of high growth in job creation have decreased drastically between 2009 and 2016, especially among entrepreneurs.

The average number of jobs expected to be created shows a strongly decreasing

trend for entrepreneurs, whereas it decreased for established firms between 2009 and 2010, and recovered somewhat in 2016. The average number of expected employees is very much lower for entrepreneurial firms than for established firms, but since entrepreneurial activities have fewer employees, any significant increase becomes a large change in percentage terms.


GEM collects information to estimate the expectations of early-stage entrepreneurial activities and established firms about job creation in the coming five years, beginning in the year of the report. Figure 21 shows these results for Saudi Arabia in the years 2009, 2010, and 2016. The first chart is for early-stage entrepreneurial activity, and the second is for established firms.

These results, compared with those of the previous section, on the current number of employees, are positive but vary in intensity depending on the year and the business stage. Thus, Table 12 shows that the differences between the proportions of expected jobs in five years and current jobs in percentage points are 0% or negative for no job creation or for the lower category of job creation (one to five jobs) and positive for higher job creation categories, except in 2010 for 20 or more jobs in entrepreneurial firms. Roughly speaking, entrepreneurs were more optimistic than established managers about job creation in 2009, but the situation changed drastically from 2010, from which point they showed more divergent expectations. Since 2009, both for entrepreneurs and for established firms, the proportion of firms expecting job creation of 20 or more positions has been strongly decreasing. However, as of 2016, EB managers seem more optimistic about moderate job creation of six to 19 positions, whereas entrepreneurs seem less optimistic across the board.

JOB-CREATION EXPECTATIONS4.6

% E

B BU

SIN

ESS

Figure 21. Early-stage entrepreneurial activities and EBs by expected number of employees in five years – recent evolution

Table 12. Differences in percentage points: expected employees-current employees for early- stage and established firms – recent evolution

68 69


Another important feature by which to assess the quality of entrepreneurial and established firms is the age of the technologies used to produce their goods or services. GEM estimates what proportion of businesses use the very latest (<1 year old), new (1–5 years old) and non- new technology (>5 years old). The results for 2009, 2010, and 2016 are shown in Figure 23. These paint a mixed picture, and owing to the absence of results from 2011 to 2015, it is difficult to draw a firm conclusion, but overall there seems to have been a regression in the use of latest/new technology following a peak in 2010. This is especially true of established firms: in 2016, a remarkable 86.6% employed no new technology.

Figure 23. Age of technologies used by early-stage businesses and EBs to produce goods or services – recent evolution

USAGE OF RECENT TECHNOLOGIES4.8


INNOVATION COMPONENT4.7GEM assesses the presence of an innovation component in early-stage firms and EBs by asking owner-managers how many (potential) customers they think consider the product/service they offer to be new or unfamiliar. The distributions of responses to this question and their recent evolution are shown in Figure 22. The higher the percentage of responses for the category “none,” the higher the presence of innovative products/services.

The presence of an innovation component in early-stage businesses and EBs has been increasing between 2009 and 2016. From the point of view of competitiveness, this result is very desirable, but a proper evaluation of whether the innovation component is competitive only within the country or also at the international level is required – the “innovation” may simply be the discovery of a local niche. The 2016 results indicate that around 87% of EBs, a sector that is not proportionally very large, exhibit an innovation component. The high volatility among consolidating businesses and EBs in recent years, along with the increasing proportion of early-stage entrepreneurial activities with an innovation component, may explain this result.

An innovation component is frequently associated with businesses developing new technologies, but in the case of Saudi Arabia, innovation is scarcely related to sectors with a high technological level (see Table 14). Thus, in Saudi Arabia, the innovation component of businesses appears mostly to reflect new products and services for consumers rather than technological innovation.

This situation has remained unchanged during the period 2009– 2016. In order to foster international competitiveness, therefore, policies focused on encouraging R&D may be advisable.

% T

EA B

USI

NES

S

% E

B BU

SIN

ESS

Table 14. Technological levels of early-stage businesses and EBs – recent evolution

Figure 22. Presence of innovation component in early-stage businesses and EBs and their recent evolution (how many (potential) customers consider the product/service new or unfamiliar?)

No/low technologies

Medium technologies

70 71


In today’s global context, internationalization is a relevant factor in assessing the quality of business activities. GEM estimates entrepreneurial and established firms’ internationalization by asking owner-managers about the approximate percentage of their sales outside the country, otherwise known as export intensity. The results are shown in Figure 25.

Export intensity has undergone a considerable amount of change between 2009 and 2016. In 2009, only 5.3% of entrepreneurial activities were nonactive in internationalization, whereas by 2016, this figure had risen to 33.5% – and yet, taking into account the other proportions, overall they seem to have become more outward-oriented, notwithstanding a marked decline in 2010. Established firms, on the other hand, have become unambiguously more insular: the percentage of nonactive firms has increased significantly, from 41.6% in 2009 to 79% in 2016. It appears that export-intensive businesses are struggling to establish themselves over the longer term.

INTERNATIONALIZATION4.10

Figure 25. Export intensity for early-stage businesses and EBs – recent evolution


Innovative firms, save for those in the energy/mining sector, which is dominated by commodity prices, tend also to be more competitive. GEM roughly estimates the competitiveness of entrepreneurial and established firms by measuring the proportion of businesses that consider there to be many, few, or no firms offering the same products/services in their target markets (see Figure 24). The conclusions to be drawn from these results are nuanced. The findings below may indicate a decline in competitiveness in Saudi Arabia, to the extent that businesses are failing to innovate new products, or that innovation is not being rewarded. On the other hand, sometimes highly competitive, mature markets can also be characterized by substantial numbers of competitors whose innovations are incremental rather than absolute. For the time being, however, it appears that the former conclusion is more likely to apply to Saudi Arabia.

Figure 24. Competition faced by early-stage businesses and EBs in their target markets – recent evolution (how many businesses offer the same products/services?)

COMPETITIVENESS4.9

72 73


MAIN MOTIVEFOR BUSINESS DISCONTINUATION IN 2016

4.12 In 2016, one-quarter of discontinued businesses closed and exited the market because they were not profitable. Another quarter were sold to be continued in other hands. Problems obtaining finance scuppered 18.2%, whereas 11.5% were abandoned because the owner- managers found another type of job. The remaining 20% were cases of planned exits, owing to retirement or family/personal reasons.

Figure 27. Main motive for business discontinuation in Saudi Arabia in 2016


SEED CAPITAL INVESTED

4.11Seed capital invested to start a business is another indicator of its quality. Table 15 shows the average results in Saudi Arabian Riyals (SAR) of seed capital needed to start up nascent and new entrepreneurial businesses in the years 2010 and 2016.9 The figure has decreased somewhat from 2010 to 2016, especially for new businesses. However, the average is a non- robust statistical measure, very much affected by outliers or cases with extreme values. It is more realistic, for this variable, to look at the medians. The median of seed capital for nascent firms is currently 100,000 SAR, whereas it was almost 137,000 in 2010.

In the case of new firms – those that are in the consolidation process – the median was almost 121,000 SAR in 2010, whereas in 2016 it was 60,000 SAR. In addition to this decline, another worrying trend is the increase in the amount of seed capital invested by entrepreneurs themselves relative to that sourced from outside investors – in the case of nascent entrepreneurs, this proportion has almost doubled between 2010 and 2016. Entrepreneurs are nowadays facing larger struggles to raise the funds they need.

In order to discover early-stage entrepreneurs’ sources of funding, GEM Saudi Arabia 2016 asked nascent and new entrepreneurs which sources of funding they used. The next graph shows the positive response for each category of entrepreneurs.

At the nascent stage, entrepreneurs most commonly use family members as the main financing channel, whereas at the new stage, banks and other financial institutions are most commonly used. This result is consistent with the academic literature on entrepreneurial financing.

9 The data for 2009 are not included because it cannot be compared with the data for 2010 and 2016.

Figure 26. Financial channels used by Saudi Arabian nascent and new entrepreneurs to access seed capital and operational funds in 2016

Table 15. Average seed capital needed to start up nascent and new businesses, and average funds invested by entrepreneurs themselves to start up nascent and new businesses (in SAR)

75


Figure 29. TEA by sector

Most entrepreneurial activities are started in the consumer-oriented sector in all countries. Entrepreneurial activity in the extractive sector is minimal, except in Turkey and Egypt; in Saudi Arabia, only 0.2% of entrepreneurs are involved in this sector. Activity in the transforming sector is greater than in business services in all countries compared except Qatar. Rates of entrepreneurialism in the business services sector are very low in Saudi Arabia, Jordan, Morocco, Lebanon, and Egypt. Qatar has the most balanced range of entrepreneurial activity, similar to that observed in the USA.

Except in the case of Iran, the average number of owners of early-stage activity businesses is low, at around two individuals. This result reflects the micro-dimension of most new businesses and of EB, with the dramatic exception of the USA.

TEA ExtractionsTEA Transforming

TEA Business ServicesTEA Consumer-oriente d


74

2016-2017

INTERNATIONAL POSITION ON MAIN INDICATORS FOR CHARACTERISTICS OF EARLY-STAGE ENTREPRENEURIAL ACTIVITIES

4.13Saudi Arabia and Qatar show the lowest rates of entrepreneurship by necessity in the geographical zone, and they are also below the USA rate and below that of the efficiency-driven nations and GEM averages. This seems to reflect the high levels of national wealth, derived from oil, distributed to citizens.

By contrast, in Lebanon, Iran, and Egypt, many more people are driven to entrepreneurship by necessity, for want of other sources of income.

Figure 28. Entrepreneurship motive

TEA opportunity TEA necessity

74

GEM Global Entrepreneurship Monitor

76 77


The innovation component, measured as the proportion of businesses offering products or services new to all customers, is more evident in early-stage activities than in established activities for all compared countries and zones except Turkey.

The UAE is the country with the highest proportion of entrepreneurial activities with an innovation component, whereas Iran and Saudi Arabia are the countries with the lowest proportions of new businesses exhibiting an innovation component. However, Saudi Arabia’s position is not far from the USA’s position, nor is it far from the efficiency-driven countries and GEM averages.

Figure 31. Proportions of early-stage entrepreneurial activities with any jobs now or in five years, expectations of more than 19 jobs in five years, and high job expectations within TEA

% 18-64 pop: TEA any jobs now or in 5 years

% 18-64 pop: TEA expects more than 19 jobs in 5 years

% within TEA: High job expectauon (10+ jobs and over 50% in 5 years)


Figure 30. Average number of owners for early-stage businesses (TEA) and EBs

The proportion of adults involved in early-stage entrepreneurial activities with employees is low. The highest proportions correspond to Lebanon and Turkey, at around 15%. The lowest proportions are in Morocco and the UAE, at below 5%. Saudi Arabia occupies an intermediate position.

The proportions of moderate job creation from entrepreneurial activities are low for all countries, and the expectations of high job creation are almost non-existent.

TEA EB

78 79


Figure 33. Competitiveness component: presence in early-stage entrepreneurial activities and in EBs

The use of very new technologies, measured as the proportion of businesses using technologies only available for less than a year previously to make their products or provide their services, is more present in early-stage activities than in established activities for all compared countries and zones. Morocco and Lebanon are the countries with the highest proportion of entrepreneurial activities using the latest technologies, whereas Iran, Turkey, and Saudi Arabia are the countries with the lowest proportions of new businesses reporting this feature.

% within TEA: No businesses offer same product

% within EB: No businesses offer same product


Figure 32. Innovation component: presence in early-stage entrepreneurial activities and in EBs

% within TEA: Product new to all customers

% within EB: Product new to all customers

The competitiveness component, measured as the proportion of owner-managers reporting that no other businesses offer the same products or services, is more present in early-stage activities than in established activities for all compared countries and zones except Qatar. Egypt and Lebanon are the countries with the highest proportion of entrepreneurial activities with the competitiveness component, whereas the UAE and Saudi Arabia are the countries with the lowest proportions of new businesses and EBs exhibiting the competitiveness component.

80 81


Figure 35. Internationalization: presence in early-stage entrepreneurial activities and in EBs

% within EB: No revenue from outside country

% within TEA: Export: 1–25% of revenue from outside country




Figure 34. Use of very recent technologies: presence in early-stage entrepreneurial activities and in EBs

Exporting is not always easy or considered by early-stage entrepreneurs, depending on the type of business they start up. That is why the incidence of exports representing more than 25% revenues earned by entrepreneurial and even EBs in the geographical zone is very low. It is more common to find moderate proportions of businesses exporting between 1% and 25% of their product. Lebanon, Turkey, Morocco, and the UAE show higher proportions of early-

stage activities exporting in this range – the UAE stands out for its dominance of moderate export over no export activity, as does the USA.Among EBs in Saudi Arabia, as in Iran, Egypt, and Morocco, a large majority derive no revenues at all from export activity. (Some reversal of this characteristic might be anticipated in Iran, following the recent easing of international sanctions.) Only in the UAE, Lebanon, and the USA does the proportion of businesses earning moderate export revenues exceed those earning none.

% within TEA: Uses very latest technology (only available since last year)

% within EB: Uses very latest technology (only available since last year)

82 83


Exit was planned in advance

Family or personal reasons

Retirement

incident

Government /tax policy/ bureaucracy


Figure 36 includes graphs showing the proportions of business discontinuations for each of the reasons contemplated by GEM. Countries have been ordered from least to highest prevalence of each reason.

Figure 36.

Within the target geographical zone, Saudi Arabia, Qatar, and Lebanon stand out as having the highest proportions of entrepreneurs exiting the market because they found another job opportunity.

In Saudi Arabia, exits were planned in advance in a relatively high number of instances, mainly due to retirement. Family or personal reasons for exiting were more common in Turkey and Qatar; incidents were a much more prevalent reason in Lebanon, indicating the country’s political instability; Egypt and Jordan show higher proportions of exits due to government policies, bureaucracy, or taxes (exceeded only, and by a surprisingly large margin, by the USA).

Oppurtunity to sell

Business not profitable

(%) Main reason for business discontinuation

Problems getting finance Another job or business opportunity

The UAE and Saudi Arabia stand out regarding the prevalence of exits because there was an opportunity to sell the business. Jordan and Morocco stand out as the countries with the most cases of exits because the business was not profitable. In Turkey and Morocco, obtaining finance was the greatest problem.

ENTREPRENEURS’ CHARACTERISTICS

86 87


GENDER5.2Table 16 shows male and female participation in early-stage entrepreneurial activity (TEA), taking as a base the total adult population on the one hand and the male and female adult populations on the other. Men are proportionally more involved in TEA in Saudi Arabia. Thus, taking the TEA rates of involvement as bases for calculation, 61.4% of entrepreneurs are men, and 38.6% are women. Over the total adult population, male participation is 59.1% higher than female activity ((7 / 4.4 x 100) – 100).

Based on the respective populations of men and women in Saudi Arabia, the male rate of participation in TEA is 12.9%, and the female rate 9.7%. This rate is composed of both nascent (up to three months in the market) and new (from three to 42 months in the market) activity, and it should be noted that women make up a higher proportion of nascent entrepreneurs than do men. Evidently, women are significantly increasing their presence as entrepreneurs in Saudi Arabia’s market (see also Figure 37), which is good news for social and economic development. The entrepreneurship of men and women alike is motivated much more by opportunity than by necessity – especially among women, whom we would expect to be better “provided for” in Saudi Arabian society . Another conclusion to be drawn from Figure 37 is that although participation in TEA has been increasing across both genders, women have been rapidly closing the gap since 2009

Table 16. Participation in early-stage entrepreneurial activity by gender in Saudi Arabia

ENTREPRENEURS' CHARACTERISTICS

INTRODUCTION5.1

One of the strengths of the GEM project is that it interviews the populations themselves (instead of collecting data from secondary sources or business registers), thereby providing the opportunity to collect information on specific characteristics of entrepreneurs, owner-managers, informal investors, intrapreneurs, and the rest of the adult population.

This information provides, year on year, a standardized profile of the protagonists of the entrepreneurial phenomenon, helping researchers, policy makers, media, and other agents interested in the field to follow its evolution.

This chapter is devoted to showing the personal characteristics of Saudi Arabian entrepreneurship in 2016.

88 89


Comparing these results with those of 2009 and 2010 (see Figure 38), we see few substantial changes aside from increases in the ages of established owner-managers and exited owner- managers. The mean ages of the other groupings remain quite stable.

Senior entrepreneurship in Saudi Arabia, measured as the proportion of the population aged 50–64 involved in TEA, was at a rate of 5.2% in 2016. This percentage comprises 1.2% nascent entrepreneurs (operating in the market up to three months) plus 4% new entrepreneurs (operating in the market between three and 42 months). Also, the senior TEA rate can be divided into 4.8% opportunity-driven and 0.4% necessity-driven cases. Thus, taking the senior TEA rate as our base (100%), we can say that in 2016, 23.5% of senior entrepreneurs were nascent, and 76.5% were new; 91.5% started up because of an opportunity, and 8.5% started up out of necessity.

Figure 38. Mean ages for various entrepreneurial groupings in Saudi Arabia – recent evolution

Other features of senior entrepreneurs are that in 2016, 82.7% were men, and 17.3% women. Their mean age was 54.16 years, with a standard deviation of 2.4 years. Among them, 14.6%started up in the transforming sector, 12.3% in the business services sector, and 73.1% in the consumer-oriented sector.


Figure 37. Recent evolution of main indicators related to early-stage entrepreneurial activity by gender

Table 17. Mean ages for various entrepreneurial groupings in Saudi Arabia in 2016

Over the past three years, people resident in Saudi Arabia have been becoming entrepreneurs, on average, at around the age of 33 (see Table 17). However, the standard deviation of this mean is over eight years, and so a large proportion of the entrepreneurial population over the past three years has comprised people aged 23–42. The range for potential entrepreneurs – people who are considering starting up over the next three years – is even wider, around a slightly higher mean. Unsurprisingly, established owner-managers were older than entrepreneurs in 2016, with a mean age of around 43 years (standard deviation = 9.20 years). Finally, the average age of owner-managers who abandoned a business activity in 2016 was 37.33 (standard deviation = 9.97 years), a result that indicates, like others obtained on this subject, that most business exits were not due to retirement.

AGE AND SENIOR ENTREPRENEURSHIP5.3Collective Mean age (years) Age SD (years)

All population aged 18-64

35.11

36.38

33.53

33.44

33.47

42.80

37.33

10.60

10.96

8.67

8.71

8.69

9.20

9.97

Potential entrepreneurs

Nascent entrepreneurs

New entrepreneurs

TEA entrepreneurs

EB owner-managers

Exited business owner-managers

90 91


EDUCATIONAL LEVEL5.5GEM classifies those involved in entrepreneurial and business activities according to five educational categories: none (the respondent did not finish any official educational program), some secondary (the respondent finished at least primary studies), secondary (the respondent finished the school stage), postsecondary (the respondent obtained a professional or university degree), and graduate experience (the respondent holds a postgraduate diploma or doctorate).

Figures 41–45 show these distributions and their recent evolution among the populations involved in potential entrepreneurship, nascent entrepreneurship, new entrepreneurship, TEA, and established activity.

Figure 41. Recent evolution of educational levels among Saudi Arabia’s potential entrepreneurs

A similar phenomenon can be observed in the educational-level distribution for nascent, new, and TEA entrepreneurs (see Figures 42I, 43, and 44). Also, the distribution for established owner-managers looks similar, though in this case secondary education has become the prevailing educational level. More research is necessary to determine the reason for the overall decline in educational levels among Saudi Arabian entrepreneurs. One factor may be the increased rate of female participation in TEA, as women in general have less access to education. The decline may also be impacting negatively on the quality of entrepreneurial activities – a high level of volatility has certainly been observed, with a relatively low proportion of start-up businesses ultimately becoming established.

The distribution of educational level for potential entrepreneurs changed positively from 2009 to 2010 (see Figure 41) – that is, this class of entrepreneurs became better educated – but had regressed by 2016, with a much higher proportion reporting only some secondary education and a relative decline in those holding postgraduate qualifications.

Figure 43. Recent evolution of educational levels among Saudi Arabia’s new entrepreneurs


Figure 42. Recent evolution of educational levels among Saudi Arabia’s nascent entrepreneurs

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

PROVINCES AND REGIONS WITHIN SAUDI ARABIA5.4In this section, Figure 39 shows the distribution of early-stage entrepreneurial activities within Saudi Arabia according to the most populous zones of the country.

The distribution of nascent and new entrepreneurial activity (see Figure 40) suggests that Jeddah, Madinah, and Makkah regions are becoming attractive start-up locations for potential entrepreneurs, while Riyadh and Dammam are regions where the majority of recent entrepreneurial activity is currently in the consolidation process – in particular, there is a striking disparity between nascent and new activity in Dammam

The distribution of nascent and new entrepreneurial activity (see Figure 40) suggests that Jeddah, Madinah, and Makkah regions are becoming attractive start-up locations for potential entrepreneurs, while Riyadh and Dammam are regions where the majority of recent entrepreneurial activity is currently in the consolidation process – in particular, there is a striking disparity between nascent and new activity in Dammam

Riyadh’s region has the highest TEA rate – in 2016, 20.5% of adult population were involved in an early-stage entrepreneurial activity – followed at some distance by Jeddah and Dammam, where the rates were more than 50% lower. The lowest participation in TEA was observed in Makkah region, at a rate of just 5.7%.

Figure 39. Regional prevalence of early-stage entrepreneurial activity within Saudi Arabia in 201610

Figure 40. Regional distribution of nascent and new entrepreneurial activity within Saudi Arabia in 2016

10 Data from previous years are not available for regional analyses because the sample sizes were too small to obtain sufficient repre-

sentativeness by region.

TEA 16

92 93


Figure 46. Recent evolution of the work-status distribution for Saudi Arabia’s potential entrepreneurs

Figure 49. Recent evolution of the work-status distribution for Saudi Arabia’s early-stage entrepreneurs (TEA)

Figure 47. Recent evolution of the work-status distribution for Saudi Arabia’s nascent entrepreneurs

Figure 50. Recent evolution of the work-status distribution for Saudi Arabia’s established owner-managers

Figure 48. Recent evolution of the work-status distribution for Saudi Arabia’s new entrepreneurs


WORK STATUS5.6GEM also classifies the portion of the population involved in entrepreneurial and business activities by their work status. This variable is summarized in six categories: working full or part time, part time only, retired or disabled, homemaker, student, not working or other, and, since the year 2010, self-employed. (In 2009, no distinction was made for the self-employed, who were recorded simply as working either full or part time.)

The distribution of work status for potential entrepreneurs shows a relatively high spread – naturally enough, since these are people planning on starting up from diverse current situations. Generally speaking, as entrepreneurs move through the different stages of activity, culminating in operating an EB, an increasing number report being self-employed, as we would expect; furthermore, aside from at the potential stage, the proportion of entrepreneurs reporting themselves as self-employed has increased at all stages during the period 2009– 2016.

Figure 44. Recent evolution of educational levels among Saudi Arabia’s TEA entrepreneurs

Figure 45. Recent evolution of educational levels among Saudi Arabia’s established owner- managers

94 95


HOUSEHOLD5.8Finally, GEM surveys the size of the households of persons involved in all stages of the entrepreneurial process, as well as those of established owner-managers. Comparing the results for 2009, 2010, and 2016, the most significant observation is that established owner- managers tend to live in larger families (see Figure 56). Overall, though, household size seems to have decreased across all categories in the period 2009–2016, which tallies with general demographic trends such as slower population growth.

Figure 56. Average size of households of potential, nascent, new, and early-stage entrepreneurs, and established owner-managers – recent evolution

Figure 55. Recent evolution of income distribution among Saudi Arabia’s established owner- managers


INCOME5.7Additionally, GEM classifies those involved in entrepreneurial and business activities by their income level. This variable is summarized in three categories: lower 33rd percentile, middle 33rd percentile, and upper 33rd percentile. Figures 51–55 show the distribution of income for potential, nascent, new, and TEA entrepreneurs, and established owner-managers. All the pictures are very similar and show a significant change between 2010 and 2016, because in 2009 and 2010, the distributions were highly concentrated in the upper third percentile and highly polarized between a large powerful economic class and a small, non-powerful economic class, whereas currently the distributions consist of three consecutively decreasing proportions, with the greatest amount of entrepreneurial activity nowadays accounted for by the lowest earners.

Figure 51. Recent evolution of income distribution among Saudi Arabia’s potential entrepreneurs

Figure 53. Recent evolution of income distribution among Saudi Arabia’s new entrepreneurs

Figure 52. Recent evolution of income distribution among Saudi Arabia’s nascent entrepreneurs

Figure 54. Recent evolution of income distribution among Saudi Arabia’s early-stage entrepreneurs (TEA)

This reversal seems to reflect a new wave of young innovators in Saudi Arabia spurred on by a range of government-backed initiatives including diverse business incubators and accelerator programs – apparently, one no longer has to be such an economic “insider” to start up

96 97


Figure 58 shows the percentage of each 18–64 population age category involved in early-stage entrepreneurial activities in each territory. Lebanon reports the highest proportion of young population involved in early-stage entrepreneurial activities, while the UAE and Morocco report the lowest rates. In the UAE, entrepreneurial activity is significantly more developed among people aged between 45 and 54, while in the rest of the territories, most entrepreneurs are aged between 25 and 44. Saudi Arabia shows a balanced distribution, with more participation among young people and moderate levels of participation among mature individuals.

Figure 57. TEA by gender (2016), ordered by TEA female Figure 58. TEA by age (2016), ordered by TEA 18–64


TYPICAL PROFILE OF THE ENTREPRENEUR IN SAUDI ARABIA AND ITS RECENT EVOLUTION

INTERNATIONAL POSITION

5.9

5.10

This section describes the typical profile of the early-stage (TEA) entrepreneur of Saudi Arabia and its recent evolution. Table 18 shows the typical early-stage entrepreneur is a man whose age has become moderately higher (from around 31–33.5 years) in recent years, who has a university degree, whose annual income is substantially lower than it was in 2009 and 2010, who works full time in his business, and who lives in a household that has declined slightly in size, from almost six persons in 2009 to five in 2016

Table 18. Typical profile of the early-stage entrepreneur of Saudi Arabia – recent evolution

This section describes the international position of Saudi Arabia’s TEA by gender, age group, work status, educational level, and annual income. Countries of the geographical and cultural area of influence of Saudi Arabia, plus the USA and the efficiency-driven countries and GEM averages, represent the international context here.

The results in Figure 57 show that female entrepreneurial activity is proportionally lower than male activity in all the territories compared. Lebanon is the country that shows the highest rate of female activity, and Jordan the lowest. Saudi Arabia shows an intermediate position on this indicator, close to the GEM average and below the efficiency-driven countries average.

98 99


Figure 61 classifies the proportions of populations aged 18–64 involved in early-stage entrepreneurial activities according to three categories of income level: lower third, middle third, and upper third. Except for Morocco, Lebanon, Egypt, and Saudi Arabia, all the distributions show the highest proportion of early-stage entrepreneurs in the highest income percentile. Meanwhile, the relative distributions across all three categories in Saudi Arabia and Iran are strikingly similar. To an extent, a correlation between entrepreneurial activity and high income levels may indicate the success of the activity itself; on the other hand, a higher proportion of early-stage entrepreneurs reporting lower levels of income may indicate a more dynamic scenario in which less “privileged” innovators are finding it easier to attain the nascent stage.


Figure 60. TEA by educational level (2016), ordered by TEA graduate experience

Figure 61. TEA by annual income level (2016), ordered by TEA highest 33% percentile

Figure 60 classifies the proportions of populations aged 18–64 involved in early-stage entrepreneurial activities according to four categories of educational level: some secondary, secondary, postsecondary, and graduate experience. The distributions for Jordan, Qatar, Iran, Turkey, and Lebanon exhibit the highest proportions of entrepreneurs with graduate experience, while in the UAE, Morocco, Saudi Arabia, and Egypt, the proportion of graduate entrepreneurs has less weight. The educational level of entrepreneurs is one of the factors that determine the development of innovative and successful entrepreneurial activities, so it is desirable that a large proportion of nascent entrepreneurs show positive attributes. Somewhat worryingly, Saudi Arabia displays a uniquely inverse trend, wherein entrepreneurialism is concentrated among those with lower educational levels.

Figure 59 classifies the proportions of populations aged 18–64 involved in early-stage entrepreneurial activities according to three work-status categories: working, not working, or studying/retired. Except in Morocco and Saudi Arabia, the distributions show significant rates of people who are either not working or studying/retired yet are involved in entrepreneurial activities. This is normal, as the businesses of nascent entrepreneurs may not have yet become operative at the time of survey. In Morocco and Saudi Arabia, however, a relatively higher proportion of early-stage entrepreneurs are already working.

Figure 59. TEA by work status (2016), ordered by TEA working

TEA Working

TEA Some secondary degree

TEA secondary degree

TEA Not working

103

Kingdom of Saudi Arabia INFORMAL INVESTMENT ACTIVITY

Most individuals who affirmed that they had acted as informal investors also provided the approximate amount of their investment. All of them provided this information in 2009, followed by 97.74% in 2010 and 98.25% in 2016. The results in Table 19 show the average amounts of informal funds in SAR and USD along with their respective standard deviations, medians, and modes. The most robust indicator is the median, as the average is affected by extreme values (whether low or high).

The mode – that is, the amount most frequently invested – remained the same between 2009 and 2010, and underwent a pronounced increase between 2010 and 2016.

Table 19. Estimated percentage of adult population acting as informal investors and TEA in Saudi Arabia – recent coevolution

ESTIMATED AMOUNT OF INFORMAL INVESTMENT6.3

So, in terms of medians, the average individual contribution of informal investors increased slightly from 2009 to 2010 and very significantly from 2010 to 2016.

To estimate roughly the impact of informal funds on early-stage entrepreneurial activity financing in the period 2014–2016, GEM Saudi Arabia raises the sample results to the population as shown in Table 20.

Table 20. Estimated percentage of adult population acting as informal investors and TEA in Saudi Arabia – recent coevolution

*Note: these results constitute a rough approximation, as they are calculated under the imprecise assumption that in each of the three years the number of investors was the same and the medians remained constant. Also, one should bear in mind that the results are based on a sample and under an estimation error at 95% of confidence. Nonetheless, the result is a realistic, if rough, approximation of the impact of informal funds on entrepreneurship financing.

102


GEM generates unique data on informal investment – that is, funds provision to entrepreneurs by family, relatives, friends, work colleagues, neighbors, strangers, or any other informal financing channel. The literature on financing for entrepreneurs identifies this as the most critical source of funds for entrepreneurs at the start-up stage, so it is relevant to monitor informal investment activity by estimating the proportion of the adult population acting as informal investors, the average amount they invest, the relationship between informal investors and their beneficiaries, and other details.

INTRODUCTION6.1

GEM estimates the participation of Saudi Arabia’s adult population in informal investment, taking as an indicator the percentage of individuals that answer positively, at a given moment, the question: “Have you, in the past three years, personally provided funds for a new business started by someone else, excluding any purchases of stocks or mutual funds?”

The results for the years 2009, 2010, and 2016 are shown in Figure 62 along with the TEA rates. The percentage of people who declared that they had acted as informal investors in the past three years was relatively low in 2009, increased substantially the following year, and decreased somewhat between 2010 and 2016. It is important to show the informal investment and entrepreneurial activity rates together, because usually the amount of informal investment is coherent with the amount of the activity it supports – hence the large jump in entrepreneurial activity alongside the large jump in the informal investors’ percentage between 2009 and 2010.

Figure 62. Estimated percentage of adult population acting as informal investors and TEA in Saudi Arabia – recent coevolution

ESTIMATED PROPORTION OF ADULT POPULATION ACTING AS INFORMAL INVESTORS

6.2

RELATIONSHIP BETWEEN INFORMAL INVESTORS AND BENEFICIARIES

6.5

GEM provides a description of the relationship between informal investors and their beneficiaries. The results in Figure 63 show the distributions of the different categories of relationship in 2009, 2010, and 2016.

Close family remained in first position in 2016, followed by other relatives, friends or neighbors, work colleagues (which increased significantly), and strangers. Overall, the most pronounced trends have been the decrease in funding from friends and neighbors and the increase in funding from work colleagues. There has been a moderate increase in funding from strangers, perhaps reflecting the rise of crowdfunding and new private financing channels.

Figure 63. Distributions of categories of relationships between informal investors and early-stage entrepreneurs – recent evolution

In 2009, the most frequent type of relationship between informal investors and beneficiaries was friends or neighbors, followed by close family and other relatives. In 2010, close family took first position, followed by friends and neighbors, while the proportions of other relatives, work colleagues, and strangers increased slightly.


105


104


6.4 INFORMAL INVESTORS’ CHARACTERISTICS

This section describes the personal characteristics of informal investors in Saudi Arabia from the results shown in Table 21.

Most informal investors work full or part time. A high proportion of them – and, since 2009, an increasing one – know entrepreneurs that started up businesses in the last two years. In 2009, the proportion of informal investors seeing good opportunities to start up in the zone where they live was close to 46%, while in 2010 and

Table 21. Main indicators on informal investors’ characteristics – recent evolution

*Note: the basis of calculating these indicators is the total sample of informal investors in each year.

Most informal investors are male, but female participation has been increasing moderately during the period 2009–2016. Informal investors also show an increase in mean age, from around 30 to around 40 years. In 2009 and 2010, most of them belonged to the highest third of income earners, while in 2016, most belonged to the lowest third of income earners. In terms of the educational level of informal investors, the trend has been away from a predominantly postsecondary education toward lower levels of secondary education, a result that is coherent with their lower levels of income.

2016, this percentage had increased to more than 82%. The proportion of informal investors involved in early-stage entrepreneurial activities increased from 12.4% to 16.1% across the period, while the proportion involved in EBs increased between 2009 and 2010, from 6.1% to 10.7%, only to decrease to 4.7% in 2016.

AgeMean age andstandard deviation 29.9 (8.5) years 33.1 (9.1) years 39.6 (10.6) years

Gender

73.0 67.2 65.4Male (%)

Annual income

Educational level

31.0 17.1 72.9Lowest 33% percentile

2.0 5.1 16.1Middle 33% percentile

67.0 77.8 11.0Highest 33% percentile

1.1 2.4 5.7None (%)

6.7 11.2 41.3Some secondary (%)

31.1 37.0 29.7Secondary (%)

59.0 45.5 22.2Postsecondary (%)2.1 3.9 1.2Graduate experience (%)

Work status (reduced)89.9 69.6 95.7Works full time or part time (%)

7.9 24.9 1.9Not working (%)

64.9 65.2 77.2Knows recent entrepreneurs (%)

46.1 82.0 83.6Sees good opportunities (%)12.4 15.5 16.2Involved in TEA (%)6.1 10.7 4.7Involved in EB (%)

27.0 32.8Female (%) 34.6

Characteristic 2009 2010 2016

2.2 5.6 2.4Retired/student (%)

106 107


Figure 65. Estimated average funds invested by informal investors – average in USD (2016)


6.6 INTERNATIONAL POSITIONFigure 64 shows that the proportion of Saudi Arabia’s population committed to informal investment is eclipsed only by Iran’s. However, looking at Figure 65, which shows the average funds (USD) provided by informal investors, one can see that the average for Saudi Arabia is the third highest of the group, while the average for Iran is the second lowest; thus, proportionally speaking, the impact of informal investment in Saudi Arabia is higher than it is in Iran. Qatar and Turkey have lower rates of involvement than Saudi Arabia, but substantially higher – in Qatar’s case, much higher – average investment amounts. Morocco appears at the bottom of the ranking by both measures.

Figure 64. Estimated percentage of population acting as informal investors (2016)

110 111

Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor PERCEPTION OF THE QUALITY OF THE ENTREPRENEURSHIP ECOSYSTEM

Table 22 Saudi Arabian experts’ assessment on financing for entrepreneurs

7.1 GENERAL VIEW OF ENTREPRENEURIAL FRAMEWORK CONDITIONS

An entrepreneurship ecosystem represents the combination of conditions that shape the context in which entrepreneurial activities take place. GEM assesses the following entrepreneurship conditions: financing, government policies, taxes and bureaucracy, government programs, school-level entrepreneurship education and training, postschool entrepreneurship education and training, R&D transfer, access to commercial and professional infrastructure, internal market dynamics, internal market burdens, access to physical and services infrastructure, and social and cultural norms.

NESs provided data on these conditions. A representative sample of experts from Saudi Arabia assessed a wide set of blocks of items for each entrepreneurship condition using Likert scales of 1 (completely false) to 9 (completely true) to evaluate each proposed statement. Average scores and standard deviations of these evaluations are presented in Tables 22–31. Standard deviations provide a measure of the experts’ degree of agreement when carrying out the assessment. The lower the standard deviation, the higher the agreement among experts about the statement’s status.

112 113


Saudi Arabian experts’ assessment of government programs for entrepreneursTable 24


Saudi Arabian experts’ assessment of government policies, taxes, and bureaucracy for entrepreneursTable 23

114 115


Saudi Arabian experts’ assessment of R&D transfer around entrepreneursTable 26


Saudi Arabian experts’ assessment of entrepreneurial education and trainingTable 25

116 117


Saudi Arabian experts’ assessment of Internal Markets statusTable 28


Table 27 Saudi Arabian experts’ assessment of commercial and professional infrastructure for entrepreneurs

118 119


Saudi Arabian experts’ assessment of social and cultural norms statusTable 30


Table 29 Saudi Arabian experts’ assessment of physical infrastructure and services status

120 121


7.2 SYNTHETIC VIEW OF THE ENTREPRENEURIAL ECOSYSTEM

The blocks of items above are summarized as synthetic indicators that provide the average status of the entrepreneurial framework conditions, using a principal-components factorial technique. The average results for these indicators are summarized in Figure 66. The indicators have been ordered from highest to lowest average score.

Taking into consideration that the scale for evaluating these concepts has nine points, where 1 = highly insufficient and 9 = highly sufficient, the entrepreneurial ecosystem for Saudi Arabia offers ample improvement potential, except for physical infrastructure, where the experts agree that Saudi Arabia is well developed. At the other end of the scale, the average score for factors having a negative impact on the level of senior entrepreneurship is over 5, but this indicator worsens as its score increases, so the status of this condition is not good but rather insufficient.

Most components of the Saudi Arabian entrepreneurial basic ecosystem exhibit some weaknesses, except for physical infrastructure. The experts’ evaluations for some ecosystem framework conditions are around the middle of the scale, five points: senior entrepreneurship, internal market dynamics, cultural and social norms, and government policies on taxes and bureaucracy. Others are between three and four points, and the lowest-graded, R&D transfer and school-level entrepreneurship education, are below three points.


Table 31 Saudi Arabian experts’ assessment of factors influencing senior entrepreneurship status

123

7.3 RECENT EVOLUTION OF THE ENTREPRENEURIAL ECOSYSTEM IN SAUDI ARABIACompared with 2009, when a GEM report was produced in the Kingdom, all the basic entrepreneurial conditions evaluated in 2016 show decreases in their average scores except those referring to government programs, physical infrastructure, and cultural and social norms (see Table 32). The conclusion is that the Saudi Arabian entrepreneurial ecosystem has become somehow weaker as regards some critical indicators in the last seven years. We need to discount the impact of the oil crisis, geopolitical turbulence, and macroeconomic deterioration in the final evaluation to understand the reasons for this evaluation fully.

Table 32. Temporal evolution of average scores for indicators on basic entrepreneurial framework conditions in Likert scales of five points* (1 = highly insufficient, 5 = highly sufficient) for Saudi Arabia

PERCEPTION OF THE QUALITY OF THE ENTREPRENEURSHIP ECOSYSTEMKingdom of Saudi Arabia

122


If Saudi Arabia wants to foster qualified entrepreneurial activity, most of the key elements that constitute its entrepreneurial framework ecosystem must greatly improve. New strategies and actions from the public and private sectors must be gradually implemented to improve the current scenario. The authorities behind this strategy design must take into consideration the interactions existing between all these elements. Thus,,

The work of the SME Authority, which recently announced in a media interview that it has 130 programs in the pipeline, will be critical to improving the Saudi ecosystem’s framework conditions.

• For the status of factors having a negative impact on the level of senior entrepreneurship, the scale must be read as 1 = highly sufficient and 9 = highly insufficient, because the statement has an increasingly negative impact as the score increases.

Figure 66. Averages for indicators on entrepreneurship ecosystem in Saudi Arabia, GEM 2016

individual actions will not solve the challenges; an integral, holistic approach needs to be considered as a means of working on the ecosystem as a whole. Finally, since most of the actions will yield long-term results due to their nature and complexity (entrepreneurial education in schools, the re-education of the population about entrepreneurial values, and the transfer of knowledge and experience from senior to young people), action needs to be taken soon

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor PERCEPTION OF THE QUALITY OF THE ENTREPRENEURSHIP ECOSYSTEM

To summarize, the average status of Saudi Arabia’s entrepreneurial framework conditions is lower but not very far from the average status of the GEM and Middle East and North Africa ecosystems. The weakest elements are entrepreneurial education, R&D transfer, commercial infrastructure, and governmental programs for entrepreneurs, while the strongest elements are the physical infrastructure and internal market dynamics.

Figure 67. Average status of Saudi Arabia’s ecosystem compared with the Middle East and North Africa and GEM ecosystems

7.4 INTERNATIONAL POSITION OF THE SAUDI ARABIAN ENTREPRENEURIAL ECOSYSTEM

GEM groups the participating countries using two broad criteria, so that each can be compared using synthetic indicators in the entrepreneurial ecosystem. The first criterion is geographic, and the second is dependent on their level of competitiveness following the GCR ranking. Saudi Arabia belongs to the geographical region of the Middle East and North Africa, and to the efficiency-driven nations GCR group, which represents countries at the second stage of competitiveness, that is, economies that are driven by the efficient management of their resources but have not reached the degree of competitiveness driven by innovation (which is the highest one).

Figure 67 shows the position of Saudi Arabia’s ecosystem with respect to the average of countries integrating both the Middle East and North Africa group and the GEM 2016 group.

• Saudi Arabia is below the Middle East and North Africa averages regarding entrepreneurial finance, government policies (support and relevance), government entrepreneurship programs, school-level entrepreneurship education, post-school entrepreneurship education, R&D transfer, commercial and legal infrastructure, cultural and social norms, and factors having a positive impact on the level of senior entrepreneurship.

• Saudi Arabia is aligned with the GEM average on government policies relating to taxes and bureaucracy.

• Saudi Arabia shows a score somewhat better than the average for the Middle East and North Africa on physical infrastructure.

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7.5Every year, GEM experts from each country identify and mention three main constraints and three main sources of support for entrepreneurship. Their comments are analyzed and assigned to one of 20 possible topics. Table 33 shows the distribution of these topics treated as multiresponse variables. Once ordered from low to high percentages, it is possible to determine which topics have been most cited by experts. The result is a qualitative approximation to topics that should be prioritized for design policies and measures to improve the context in which entrepreneurial activity takes place.

For the year 2016 and Saudi Arabia, the main topics considered as constraints for entrepreneurship are those relating to government policies, financial support, cultural and social norms, entrepreneurial education and training, commercial infrastructure, and political, institutional, and social context (see Table 33).

Similarly, the main topics considered as sources of support for entrepreneurship are those relating to government programs for entrepreneurs, capacity for entrepreneurship of the population, government policies, internal market openness, and entrepreneurial education and training (see Table 33).

Although it may seem contradictory, it is to be expected that some topics should appear as simultaneously both supportive and constraining. That is the case for government policies and entrepreneurial education and training. Experts identify some good policies and some educational programs for entrepreneurship, but they also identify bad or insufficient policies, along with the need for specific entrepreneurship education.

MAIN CONSTRAINTS AND SUPPORT ELEMENTFOR ENTREPRENEURSHIP DETERMINED BY SAUDI ARABIA’S EXPERTS IN 2016


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Figure 68 shows the position of Saudi Arabia’s ecosystem with respect to the average of countries included both in the efficiency-driven group and in the GEM 2016 group. The picture is very similar and just shows that the weakest Saudi Arabia factors are, on average, in the worst condition compared with efficiency-driven countries’ averages, while others are aligned with the general situation of this group of competitiveness.

Figure 68. Average status of Saudi Arabia’s ecosystem compared with efficiency-driven nations and GEM ecosystems

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MAIN RECOMMENDATIONS MADE BY SAUDI ARABIA’S EXPERTS TO IMPROVE THE ENTREPRENEURIAL ECOSYSTEM FOR 2016

7.6Additionally, GEM experts provide three recommendations to improve the entrepreneurial ecosystem. The topics identified after analyzing their opened responses are those shown in the distribution in Table 34. Thus, for 2016, the experts recommend an overall focus on designing and implementing measures relating to government policies, financial support, entrepreneurial education and training, government programs, and commercial infrastructure (see Table 34).

Table 34. Topics cited by GEM experts from Saudi Arabia to make recommendations to improve the entrepreneurship ecosystem for 2016


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Table 33. Topics cited by GEM experts from Saudi Arabia as main constraints and support for entrepreneurship in 2016

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Table 35 shows all constraints and support detailed elements mentioned in the interviews by Saudi experts (NES) and the recommendations they offered to foster entrepreneurial activity in the Kingdom.

Table 35. Summary of GEM Saudi Arabian experts’ opened responses (2016) on constraints, support, and recommendations about the entrepreneurship context

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Table 36. Saudi APS and NES fieldwork sheet

APS vendors’ informationTOP-LEVEL MENA, Market Research ProviderKSA Office: Office N 412, 4th Floor, Burj Elmamlka El Tojari, Elmalk Fahd St., Jeddah [email protected]

Monitored byOPINOMETRE INSTITUTE, LLSAv. de Josep Tarradellas, 8, 08029 Barcelona, Spain http://es.opinometre.com

TECHNICAL ANNEX

The Saudi Arabia GEM survey is based on collecting primary data through an Adult Population Survey of a randomly selected sample of adults, representative of the 18- to 64-year-old Saudi population in terms of gender and geographical distribution. In addition, the KSA national team collected expert opinions about components of the entrepreneurship ecosystem through an NES. Table 36 shows the APS and NES fieldwork sheet, including the technical details regarding the sampling and methodology applied to these surveys for 2016.

TECHNICAL ANNEX

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Kingdom of Saudi Arabia2016-2017GEM Global Entrepreneurship Monitor BIBLIOGRAPHY

BIB

LIO

GR

AP

HY Ashri, O.M. (2013). Navigating Saudi Arabia’s

Entrepreneurship Ecosystem. Independent research project.

Doing Business 2017: Equal Opportunity for All. World Bank.

Kelley, D., Singer, S., Herrington, M. (2016). Global Entrepreneurship Monitor 2015/2016 Global Report. Babson College, Babson Park, MA, United States; Universidad del Desarrollo, Santiago, Chile; Universiti Tun Abdul Razak, Malaysia; Tecnológico de Monterrey, Mexico

Labor Force Survey (2016) (Second Quarter). Saudi Arabia’s General Authority for Statistics.

Scott-Jackson, W. et al. (2015). Building GCC National Talent for Strategic Competitive Advantage (Effective Nationalization). Oxford Strategic Consulting.

The Global Competitiveness Report 2015–2016. Geneva: World Economic Forum.

Relevant web sites and web documents:http://vision2030.gov.sa/sites/default/files/NTP_En.pdfvision2030.gov.sa/download/file/fid/417

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