GLOBAL ENTREPRENEURSHIP MONITOR Thailand Report 2013

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3 Foreword The 2013 edition of the annual Global Entrepreneurship Monitor (GEM) Thailand Report finds its completion with perfect timing. The business community, academics and policy makers agree that entrepreneurs of all kinds and the new ventures they establish increasingly play a critical role in the development and well-being of their societies. Most importantly, as we move toward the imminent implementation of the ASEAN Economic Community in 2015, we have witnessed the emergence of a landscape that will offer numerous opportunities for those who are able to effectively utilize their entrepreneurial skills and knowhow. As such, for the first time since the GEM project started 15 years ago, this year s GEM Thailand Report delivers a broad comparison of Thailand to the ASEAN countries Indonesia, Malaysia, Philippines, Singapore and Vietnam as to the East Asian Countries China, Japan, S. Korea and Taiwan. Bangkok University is honored to be Thailand s official representative and repeated contributor to GEM initiated worldwide collaborative study on entrepreneurial activity, particularly during this challenging and unpredictable period in history. With the scope, reach and influence of the global GEM project continuing to grow over the last 15 years, the project in Thailand has also embodied and demonstrated many of the same entrepreneurial characteristics and qualities that it measures, tracks and reports on across a broad range of people and societies. The GEM report contains valuable data that is intended for the better-informed decision making of government officials, policymakers, and business-people. Entrepreneurial business ownermanagers are recognized as the critical factor in the path to our successful future. Their ability to think and to act, in addition complemented with an entrepreneurial spirit, drives opportunities and fuels growth. The GEM Thailand Report 2013 delivers insight to factors influencing entrepreneurship, to links between entrepreneurship and national or regional economic performance, and the effects on economic growth at different stages of economic development. The GEM Thailand Report 2013 proudly stands as our country s contribution to the international research consortium and is distributed as free information for social knowledge and benefit worldwide. Somkid Jatusripitak, Ph.D. Chairman, Board of Trustees Bangkok University

4 Foreword Entrepreneurs are like artists who dream, create and inspire. And they begin with a blank canvas. Their art is our future. This statement of the GEM Team South Africa captures the spirit of our entrepreneurship education at Bangkok University, where we combine the importance of education with creativity and entrepreneurial thinking without which neither opportunities nor growths can be permanently maintained. Bangkok University and Global Entrepreneurship Monitor (GEM) Thailand have worked together to bring mutual benefits to academia, businesses and policy makers. A new finding enters into this year s GEM Report: Entrepreneurs in Thailand and around the globe experience a higher degree of subjective well-being than individuals who are not involved in entrepreneurial activities. In the third year at Bangkok University, the GEM Thailand Report for 2013 brings out a special edition showing entrepreneurial trends in Thailand over the last three years and comparing the entrepreneurial landscapes of several ASEAN and East Asian countries, brought together with creativity and entrepreneurial spirit by our faculty and many others involved in this project. Interesting topics to trigger your imagination and creativity are, among other things, entrepreneurial activities and aspirations, education and entrepreneurship, innovation and technology, opportunity versus necessity driven entrepreneurial activities, and as the special topic of the year entrepreneurship and well-being. Although the GEM Thailand Report 2013 is primarily about Thailand, it covers a regional Asian perspective and gives the opportunity to use the GEM data beyond Thailand across the globe. The insights gained from this project can surely fill our blank canvas and spark our dreams, creativity, and inspirations. Mathana Santiwat, Ph.D. President Bangkok University 4

5 Acknowledgements The 2013 GEM Thailand Report again would not have been possible without the kind support and contribution of several individuals and authorities. The GEM Thailand team would therefore like to thank those whose participation has made this report possible. The GEM national team of Thailand is especially grateful to Dr. Pichit Akrathit, Director of GEM, Thailand, for his relentless productive support throughout the GEM project in which he has been involved since its beginning in His guidance, supervision and dedication in several aspects are priceless. Furthermore, the GEM team is much obliged to the kind cooperation of Dr. Wutnipong Warakraisawad, Director of Administration at School of Entrepreneurship and Management (SEM), Bangkok University. He helped the GEM team with all administrative work and supported the collaboration with other units in Bangkok University. We really admire his generosity and calmness. Special thanks go to several supporters from the School of Entrepreneurship and Management: to Sahattaya Choochatpong, who helped during the interview process in the National Expert Survey 2013, and to Dr. Suchart Tripopsakul for his help in analyzing the data. The team would also like to express their gratitude to Bangkok University for the financial support and all staff for their kind assistance, especially the International Affairs Office. Our survey would be incomplete without the contribution of the national experts. Sincere thanks are given to all of them for the time they dedicated to share their viewpoints, experiences and practical stories. The Global Entrepreneurship Monitor Thailand team also would like to thank the individuals in Thailand who took the time to answer the APS survey questions. Special thanks go also to the Global Entrepreneurship Research Association (GERA) for their professional cooperation and to the GEM data team for their support throughout the processes. The GEM national team of Thailand hopes that this report will be a helpful source of information for both entrepreneurs and Thai authorities. We are glad if we can deliver informative insights for policy makers and if our data supports them in formulating policies related to entrepreneurial activities. The Global Entrepreneurship Monitor Thailand Team Bangkok University School of Entrepreneurship and Management

6 Contents Summary Introduction and Background Entrepreneurial Activities A Profile of Entrepreneurial Activities in Thailand Business Discontinuance Necessity- and Opportunity-Driven Entrepreneurship Sector Participation Age Distribution Gender Differences Educational Profile Entrepreneurial Perceptions and Societal Attitudes National Societal Attitudes Perceived Opportunities and Capabilities Fear of Failure International Orientation, Innovation and Well-being International Orientation and Market Expansion Innovation and Technology Entrepreneurship and Well-being Insights from National Experts: Assessment of Entrepreneurship Conditions in Thailand Entrepreneurial Framework in Thailand Thailand s Constraining Factors Recommendations for Thailand Conclusions and Implications References Appendix Appendix 1: Tables and Figures of GEM Data Appendix 2: Definitions of Main Measures

7 List of Tables Table 1: Stratification of the 2013 Thailand APS Sample... 3 Table 2: Total Entrepreneurial Activity (TEA) and Established Business Ownership (EST) in Thailand, by Region, Table 3: Gender Distribution of TEA and Opportunity vs. Necessity in Thailand by Region, Table 4: Educational Profile of the Entrepreneurs in Thailand, Involved in TEA and EST, and of the Male and the Female TEA and EST, Table 5: Societal Attitudes and Perceptions in ASEAN 6 + East Asian Countries, Table 6: Proportion of Firms with International Customers in ASEAN 6 + East Asian Countries, Table 7: The GEM Entrepreneurial Framework Conditions (EFCs) Table 8: Entrepreneurship Framework Conditions Main Indicators in ASEAN 6 + East Asian Countries, List of Figures Figure 1: Prevalence Rates of Activity at Different Stages of the Entrepreneurial Process in Percent, Figure 2: TEA and EST Rates in ASEAN Asian countries, Figure 3: Entrepreneurial Activity in Thailand, Figure 4: Business Discontinuance in ASEAN Asian Countries (Exited a Business in Past Year, Business did not Continue), in Percent, Figure 5: Reasons for Business Discontinuance in ASEAN Asian countries, Figure 6: Main Reasons for Business Discontinuance in Thailand by Gender, Figure 7: Opportunity-driven TEA in ASEAN 6 + East Asian Countries, by Gender Figure 8: Necessity-driven TEA in ASEAN 6 + East Asian Countries, by Gender Figure 9: Gender Distribution of TEA in Thailand, in Percent, Figure 10: Gender Distribution of Opportunity-driven TEA versus Necessity-driven TEA in Thailand, in Percent, Figure 11: Percentage of Sector Structure of Total Early-Stage Entrepreneurial Activity (TEA) and Established Business Activity (EST) in Thailand, Figure 12: Sector Participation, Percentage of Respondents within TEA in ASEAN 6 + East Asian Countries, Figure 13: Sector Participation, Percentage of Respondents within EST in ASEAN 6 + East Asian Countries, Figure 14: Age Distribution for TEA and EST by Age Groups in Thailand, Figure 15: Age Distribution for TEA in ASEAN 6 + East Asian Countries, Figure 16: Age Distribution for EST in ASEAN 6 + East Asian Countries, Figure 17: Gender Distribution of Early-stage Entrepreneurs (TEA) by Geographic Regions (unweighted average), Figure 18: Gender Distribution of Early-stage Entrepreneurs (TEA) in ASEAN 6 + East Asian Countries, Figure 19: Gender Distribution of Early-stage Entrepreneurs (TEA) in Thailand, Figure 20: Gender Distribution of Established Business Owners (EST) in Thailand, Figure 21: Gender Distribution of Early-Stage Entrepreneurs (TEA) in Thailand, by regions, Figure 22: Gender Distribution of Established Businesses (EST) in Thailand, by regions, Figure 23: Percentage of male population involved in TEA, by Region, Figure 24: Percentage of female population involved in TEA, by Region, Figure 25: Educational Profile of the Entrepreneurs in Thailand, Involved in TEA, Figure 26: Educational Profile of the Entrepreneurs in Thailand, Involved in EST,

8 Figure 27: Educational Profiles of Male versus Female Entrepreneurs in Thailand, Involved in TEA, Figure 28: Educational Profiles of Male versus Female Entrepreneurs in Thailand, Involved in EST, Figure 29: Educational Profile of the Entrepreneurs TEA and EST in ASEAN 6 + East Asian Countries, Figure 30: Societal Attitudes and Perceptions in Thailand, Figure 31: Perceived Opportunities and Perceived Capabilities / Skills to Start a Business, ASEAN 6 + East Asian Countries, Figure 32: Perceived Opportunities to Start a Business, by Gender and Region in Thailand, Figure 33: Perceived Capabilities / Skills to Start a Business, by Gender and Region in Thailand, Figure 34: Perceived Opportunities and Capabilities to Start a Business, by Gender, Figure 35: Entrepreneurial Intentions in ASEAN 6 + East Asian Countries, Figure 36: Entrepreneurial Intentions in ASEAN 3 + East Asian Countries Figure 37: Attitudes Towards Failure Worldwide, by Economic Development, Figure 38: Attitude Towards Failure in Percent, in ASEAN 6 + East Asian Countries, Figure 39: Attitude Towards Failure in Percent, by Gender and Region in Thailand, Figure 40: Attitude Towards Failure, by Gender in Thailand, Figure 41: Comparison of International Orientation of Start-ups, TEA and EST in Thailand, Figure 42: Proportion of firms with International and Domestic Customers in ASEAN 6 + East Asian Countries, Figure 43: International Orientation by Number of Employees, TEA Figure 44: International Orientation by Number of Employees, EST, Figure 45: Market Expansion Plans of TEA and EST, by Region in Thailand Figure 46: Innovativeness of Products for Customers in Thailand, Figure 47: Innovative Orientation (New Products) of TEA in ASEAN 6 + East Asian Countries, Figure 48: Innovative Orientation (New Markets) of TEA in ASEAN 6 + East Asian Countries, Figure 49: Technology-orientation of TEA and EST in Thailand, Figure 50: Businesses in Medium or High Technology Sectors in ASEAN 6 + East Asian Countries, Figure 51: Innovativeness in Products and Services for TEA in Thailand, Figure 52: Subjective Well-Being SWB, by Phase of Entrepreneurship in Thailand, Figure 53: Subjective Well-Being SWB, by Phase of Entrepreneurship in ASEAN 6 + East Asian Countries, Figure 54: Subjective Well-Being SWB and Entrepreneurship Motivations and Gender in Thailand, Figure 55: Subjective Well-Being SWB by Entrepreneurship Motivation in ASEAN 6 + East Asian Countries, Figure 56: Subjective Well-Being SWB by Gender in ASEAN 6 + East Asian Countries, Figure 57: Subjective Well-Being SWB and Entrepreneurship Motivations and Gender in Thailand, Figure 58: Entrepreneurship Public Institutional Profile in ASEAN, 2013 (1/2) Figure 59: Entrepreneurship Market Social Institutional Profile in ASEAN, 2013 (2/2) Figure 60: Most Positive National Sub-Conditions (Scores above 4) Influencing Entrepreneurial Activity in Thailand, Figure 61: Most Negative National Conditions (Scores below 2) Influencing Entrepreneurial Activity in Thailand, Figure 62: Trend : Increase of Financial Constraints, from NES Data in Thailand, Figure 63: Factors Constraining Entrepreneurship, from NES Data in Thailand, Figure 63: Factors Recommended for Entrepreneurship, from NES Data in Thailand,

9 Summary The GEM provides detailed information on the entrepreneurial spirit and the latest trends in entrepreneurial activities in Thailand. In anticipation of the ASEAN Economic Community (AEC) and the increasing importance of the greater Asian economy for Thailand, Thailand s entrepreneurs are placed into the context of the five ASEAN countries Indonesia, Malaysia, Philippines, Singapore, and Vietnam, in contrast with the four East Asian countries China, Japan, S. Korea and Taiwan. We believe that this report will be informative for policy makers as well as for the business and academic communities. The 2013 GEM Thailand Report describes the Thai entrepreneurial profile and discusses various aspects of entrepreneurial activities. Entrepreneurship plays a significant role in driving the overall economic health of a country, independent of the stage of economic development. Monitoring levels of entrepreneurial activity is therefore critical for countries striving for sustainable growth and prosperity. In many aspects GEM research illustrates that entrepreneurship in Thailand continues the trends noted in 2011 and 2012, some more positive than others. This report outlines changes in frequency and nature of Thailand s entrepreneurship, and highlights some trends through the years 2011 to Key Highlights 2013: Thailand has overall high entrepreneurship rates. A total of 46.3% of the population were engaged in entrepreneurial activities: 18.3% of the adult population (age 18-64) in early-stage entrepreneurship (TEA) 1, and 28% were established business owners (p.4). Female participation in entrepreneurial activities is declining for the third year in a row. Nevertheless, gender equality in entrepreneurship rates is still prevalent in Thailand with 9.2 women starting and running businesses versus 10 men. Similar rates can only be found in 6 countries around the globe (p. 16). TEA entrepreneurs are increasingly better educated than established business owners with one third of them holding a bachelor degree as their highest educational degree (p. 20). Over the last three years, opportunity-perception among the Thai population increased (p 27). Established business owners in Thailand show the highest percentage of businesses in the extractive sector with 23.5%, compared to the other Asian countries, (p. 12). Three special topics are covered in chapter 4 of the 2013 GEM Thailand Report: International Orientation and Market Expansion, Innovation and Technology, and Entrepreneurship and Well-being (p. 33). The customer base of Thailand s businesses is mainly within the country (p. 34); especially early-stage entrepreneurs show a low orientation for international and for new markets (p. 35). Thailand s established business owners experience higher well-being than the rest of the population (p. 41). Increasingly constraining is the lack of financial support for entrepreneurs as are supportive government policies and the appropriate educational system to enhance capacity for entrepreneurship in Thailand (p. 50). 1 Total early-stage entrepreneurial activity 1

10 1. Introduction and Background Thailand consistently exhibits one of the highest entrepreneurship activity rates in the world. Its established business ownership rate is the second highest in global comparison. In 2013, 46.3% of the adult population in Thailand were involved in entrepreneurial activities, 18.3% were starting or running new businesses, and 28% were established business owners. In addition, one third of the adult population in Thailand is thinking about starting a new business within the next three years. Entrepreneurship provides job options for those who see opportunities and those who need a source of income. Entrepreneurs have impact on the economy as current and future employers, and as suppliers, customers, and service providers for other businesses, creating value and employment beyond their own enterprises. The Global Entrepreneurship Monitor (GEM) measures these entrepreneurial activities in a global context; defining entrepreneurship as any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by an individual, a team of individuals, or an established business (Bosma, Wennekers, & Amorós, 2012). In 2013, the Global Entrepreneurship Monitor (GEM) conducted its 15th annual survey of entrepreneurship around the world. GEM is the largest international research project that analyzes the propensity of the adult population of a country to participate in entrepreneurial activities and the conditions that enhance these entrepreneurship initiatives (Amorós & Bosma, 2014). The project aims to (1) measure differences in the level of entrepreneurial activity between countries, (2) determine how entrepreneurial activities influence economic growth, (3) uncover factors supporting and/or hindering entrepreneurial activity, and (4) suggest policies that may enhance entrepreneurship in general. The Global Entrepreneurship Monitor (GEM) research program was collaboratively founded in 1997 at Babson College in the United States and London Business School in the United Kingdom. The first study in 1999 covered 10 countries; in its 15th year in 2013, approximately 197,000 individuals across 70 economies participated in the GEM study, representing all regions of the world and a broad range of economic developmental levels. The samples in the GEM 2013 study represent an estimated 75% of the world s population and 90% of the world s GDP. The data is based on two main data sources, namely, the Adult Population Survey (APS) and the National Expert Survey (NES). The 2013 representative sample for Thailand totalled 2,372 adults for the APS and 36 samples for the NES. The GEM research methodology is standardized and, prior to each year s survey, approved by the Global Entrepreneurship Research Association (GERA). Therefore, the research results can be compared across the participating countries. With the information from the APS and NES, policy recommendations with regard to promoting entrepreneurship and its growth strategies are formulated for each individual country (Chapter 5 and Chapter 6). 2

11 APS (Adult Population Survey) The Thai APS is conducted by interviewing representative sample adults of years of age. The APS results represent the attitudes of non-entrepreneurs and individual entrepreneurs and their activities nationwide. The APS samples were randomly selected across all regions in the country: Greater Bangkok (including Bangkok itself, Nonthaburi, Samutprakarn and Patumthani), North, Northeast, East, Central and South. The stratification of the 2013 Thailand APS sample, both rural and urban areas, is illustrated in Table 1. The national team conducted the APS survey by telephone (fixed line) interviews in urban and by face-toface interviews in rural areas. The regional sampling frame is proportional to the actual population in both urban and rural areas. The survey results from the APS are covered in the Chapters 2 to 4. NES (National Expert Survey) The Thai NES samples comprised 36 experts from different age groups and from different entrepreneurial framework condition categories (EFCs). Out of these 36 experts, a minimum of 25 % were entrepreneurs or business owners. The NES is carried out via in-depth interviews with experts on nine EFCs. This qualitative information is based upon the experts informed judgment on the following conditions: entrepreneurial finance, government policies, government programs, entrepreneurship education, R&D transfer, commercial infrastructure, market entry regulations, physical infrastructure, and cultural and social norms, which can influence the overall climate for entrepreneurship in an economy. Its results help to identify fostering and constraining factors in relation to the development of entrepreneurship in the respective countries. The survey results from the NES are covered in Chapter 5. Beyond activities and aspirations of entrepreneurs and reasons for getting started, the 2013 results illustrate the colorful diverse nature of entrepreneurship in Thailand. Since the upcoming ASEAN Economic Community (AEC) will increase both interregional opportunities and competition, this report exposes Thailand in comparison to other countries in ASEAN: Indonesia, Malaysia, the Philippines, Singapore and Vietnam and to four more Asian countries: China, Japan, South Korea and Taiwan, all located in East Asia. In addition, it displays certain trends in Thai entrepreneurship over the last three years 2011 to In 2013, the GERA selected Entrepreneurship and Well-Being as a special topic of the year for the GEM study (Chapter 4). Table 1: Stratification of the 2013 Thailand APS Sample Area Urban Rural Total Respondents Greater Bangkok (Bangkok, Nonthaburi, Samutprakarn, Patumthani) North Northeast Central* South Total 1, ,372 *Note: Central covers the areas in the west, the east and the central part of Thailand excluding Greater Bangkok. Source: GEM 2013 Thailand Adult Population Survey 3

12 2. Entrepreneurial Activities 2.1. A Profile of Entrepreneurial Activities in Thailand The entrepreneurship phases in GEM are viewed as a process starting with (1) potential entrepreneurs mainly led by their beliefs, attitudes and intentions to start a business, over (2) nascent entrepreneurs who are just starting up, (3) young entrepreneurs running new (less than 3.5 year old) firms and (4) business owners of established enterprises (older than 3.5 years). The GEM study assesses this process at the different points in the enterprise s life cycle. The main measure of GEM is the Total Entrepreneurial Activity (TEA) rate. It consists of individuals aged years who are nascent or young entrepreneurs just started up or run a business not older than 42 months. Figure 1: Prevalence Rates of Activity at Different Stages of the Entrepreneurial Process in Percent, Source: GEM 2013 Thailand Adult Population Survey. The data in Figure 1 shows the prevalence rates of entrepreneurial activities at the different entrepreneurial stages for the years in percent. The GEM 2013 Thailand APS report shows a gradual decrease of earlystage entrepreneurial activity from 19.5% (2011) over 18.9% (2012) to 18.3% in Compared to the previous year, young businesses less than 3.5 years old decreased by 8% to 10.4% in The rate of nascent entrepreneurs even showed a steeper decline to 7.9%, a drop of 9.2%. The impact of the global financial crisis on entrepreneurship rates can be seen for those entrepreneurs with businesses older than three months but less than three and a half years (young entrepreneurs) who dropped significantly from 18.5% before the crisis in 2007 to 12.2% in 2011 and further to 10.4% in In contrast, the prevalence rate of established business owners, which had increased considerably in the last 8 years from 14.1% in 2005 to 30.1% in 2011, proves to be rather stable on a high level with 28.0% in Figure 2 outlines Thailand s TEA and established business ownerships rates in comparison with the ASEAN 6 (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) and the four East Asian countries China, Japan, South Korea and Taiwan. To simplify matters, South Korea will be named Korea in the process of this report. For details on specific countries, see Appendix 1, Table 2. 4

13 Figure 2: TEA and EST Rates in ASEAN Asian countries, 2013 Early-stage entrepreneurial activity (TEA) Established business ownership rate (EST) In % Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. Indonesia shows the highest TEA rate and a slightly lower, although nevertheless very high established business ownership rate. For the Philippines a high discrepancy can be seen between TEA entrepreneurs and established business owners, which suggests that many businesses do not enter the phase of becoming established businesses. This is also mirrored in the very high business discontinuance rate of more than 9% in the Philippines (see Chapter 2.2). Thailand s established business rate of 28% is the second highest in a global comparison. Only Uganda has more established business owners (36.1%). As Table 2 shows, Thailand s North ranks first in terms of TEA rate and the Northeast ranks first in terms of established business ownership (EST). Three major shifts can be seen compared to the previous year: (1) In Greater Bangkok, the TEA rate dropped by 30.1% from 12.7 % in 2012 to 8.8% in 2013; (2) in the North, the formerly highest established business ownership rate of the five regions (38.2%) dropped by 22.7% to 29.5%, which is still above the average of the country; and (3) in the South, the established business ownership rate dropped 21.6% from 35.6% in 2012 to 27.9% in Overall and as in previous years, the Greater Bangkok area is limping behind in entrepreneurship rates, regardless of the entrepreneurial stage. Table 2: Total Entrepreneurial Activity (TEA) and Established Business Ownership (EST) in Thailand, by Region, 2013 Area TEA Rate* 2013 (2012) EST Rate* 2013 (2012) Greater Bangkok (Bangkok, Nonthaburi, Samutprakarn, Patumthani) 8.8 (12.7) 16.7 (16.5) North 25.4 (18.5) 29.5 (38.2) Northeast 19.5 (24.7) 29.9 (31.7) Central 13.9 (14.4) 28.9 (24.8) South 16.8 (16.4) 27.9 (35.6) Total Average 18.3 (18.9) 28.0 (29.7) Note: * Weighting factor is applied in calculation. Source: GEM 2013 Thailand Adult Population Survey. 5

14 Trends in Thailand : Both early-stage entrepreneurial activities as the established business ownership rates slightly dropped from the year 2011 to Main contributors to this trend were women entrepreneurs. Female TEA dropped from 20% in 2011 t0 16.3% in 2013, whereas male TEA slightly increased. The decline of female established business owners is 9.5% from 29.3% (2011) t0 26.5% (2013), whereas male established entrepreneurs just decline slightly from 30.9% in 2011 to 29.6% on This trend is also mirrored in the business discontinuance rate which increased in 2013 (Chapter 2.2). For more details on the gender differences in the different business phases see Chapter 2.6. Figure 3: Entrepreneurial Activity in Thailand, in % Early-stage entrepreneurial activity (TEA) Established business ownership rate (EST) Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. 6

15 2.2. Business Discontinuance With businesses being newly started, naturally others close. Some individuals who sell or close their business might also re-enter into entrepreneurial activities. Discontinuance of businesses may be considered part of the entrepreneurial dynamics alongside total early-stage entrepreneurial activities and established businesses. Generally, the rate of business discontinuance declines as economic development increases. Factor-driven economies experience the highest rates of business discontinuance with an average of 12.6%. Efficiency-driven (average 4.2%) and further innovation-driven economies (average 2.8%) show lower rates of discontinuance. Thailand s business discontinuance rate in the past year was 3.7%, up from 2.7% in Of those, 73% exited their business, and the business itself did not continue. The highest number of business exits took place in Greater Bangkok (4.2%), and the least exited businesses were in the South (0.7%). GEM distinguishes businesses that were sold or exited and ceased to exist versus those that were sold or exited but continued by someone else. Compared to the other ASEAN and East Asian countries, the discontinuance rate where the business ceased to exist is comparatively high: in the past 12 months 2.3% of the Thai adult population have sold, shut down, discontinued or quit a business they owned and managed and the business was not continued by someone else (Figure 4). Figure 4: Business Discontinuance in ASEAN Asian Countries (Exited a Business in Past Year, Business did not Continue), in Percent, Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. Figure 5 shows the reasons, why entrepreneurs discontinued their businesses in ASEAN and East Asia. The 2013 GEM Global Report lists problems of obtaining finance and a not profitable business as the main reasons for a business to exit across most countries. This is also true for Thai businesses: 21.9% (2012: 19.7%) state a not profitable business and 20.4% (2012: 19.7%) affirm problems receiving finance, together accounting for 42.3% of the reasons. As in the previous years, a high number of entrepreneurs (34.7%) claimed having personal reasons for exiting, not only in Thailand, but also in Vietnam (35.3%) and Taiwan (39.1%). Personal or voluntary reasons for discontinuance might be prevalent especially in female entrepreneurs, often depending upon their education (Minniti & Naudé, 2010). In Thailand, the 2013 GEM survey results show, that 74% more female than male entrepreneurs exited their businesses. Often less educated women entrepreneurs tend to start businesses in times of restricted labor markets and weak economies, returning to the corporate sector when they perceive improved macroeconomic conditions. An opportunity to sell their business which is a reason for up to 13.8% of the discontinuing businesses in Malaysia, was not an option for Thai business owners (0 %). 7

16 Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan GLOBAL ENTREPRENEURSHIP MONITOR Figure 5: Reasons for Business Discontinuance in ASEAN Asian countries, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ASEAN 6 East Asian Countries Opportunity to sell Business not profitable Problems getting finance Another job or business opportunity Exit planned in advance Retirement Personal Reasons Source: GEM 2013 Thailand and Global Adult Population Survey. The main reasons stated by men and women in Thailand on why they discontinued their businesses were the same two years ago (2011): besides personal reasons the two main reasons to an equal proportion were problems getting finance and the business was not profitable ; this started to shift in 2012 and the gap intensified in Figure 6 shows the main reasons for business discontinuance in Thailand in 2013 by gender: Twice as many women or 26.8% of the female entrepreneurs ended their businesses due to unprofitability (versus 13.3% of the men), and 3.5 times more or 33.3% of the male entrepreneurs exited due to not getting finance (versus 8.9% of the women). Figure 6: Main Reasons for Business Discontinuance in Thailand by Gender, 2013 Main reasons for male entrepreneurs Main reasons for female entrepreneurs various other reasons, 16.7 Personal reasons, 23.3 various other reasons, 16.1 Problems getting finance, 33.3 The business was not profitable, 13.3 An incident, 13.3 Problems getting finance, 8.9 The business was not profitable, 26.8 An incident, 7.1 Personal reasons, 41.1 Source: GEM 2013 Thailand Adult Population Survey. 8

17 2.3. Necessity- and Opportunity-Driven Entrepreneurship Different people may have different motivations to enter into entrepreneurial activity. For example, in some cases, the motivation to start a business may be based on necessity, if there are no better alternatives for work or other income sources. Others may be motivated to start a business by seizing an opportunity; motifs can be to reach higher income, to work with greater flexibility and independence. GEM identifies early-stage entrepreneurs according to their original motivation to start as opportunity-driven or necessity-driven. Most early-stage entrepreneurs can be classified into either of these two groups. The motivation why individuals start entrepreneurial activities has impact on the quality of the pursued business. GEM research consistently showed, that opportunity-driven businesses contribute more to an economy than those started out of necessity. Opportunity-based entrepreneurship reflects a voluntary career choice and is seen as a dynamic entrepreneurial activity. On average, opportunity-driven entrepreneurs are also better educated and hire more employees during the first years of their firm s life than necessity-driven entrepreneurs (Reynolds, Camp, Bygrave, Autio, & Hay, 2002). The 2013 APS Thailand survey reveals that for the Thai total entrepreneurial early-stage activity (18.3% of the adult population), more men and women started their businesses opportunity-driven than necessity-driven. 83% of male TEA (2012: 88%) and 74% of female TEA (2012: 78%) were opportunity-driven, whereas 14% of the men (2012: 12%) and 24% of the women (2012: 22%) started necessity-driven. A view at the regions in Thailand (Table 3) shows that opportunity perception is highest in the North for men (92.8%), but for women, the surprisingly highest is in Greater Bangkok (88.9%), followed by the North (87.4%). On the other hand, necessity-driven start-ups differ greatly throughout the regions: for male TEA between 5.8% in the North and more than four times higher in the Central region (26.9%). Female necessity-driven TEA shows an even greater spread ranging from 5.5% in Greater Bangkok up to 33.3% in the Northeast. Also the results for the South display a large amount of necessity-driven female TEA with 30.5%. This might be explained by the prevalence of a variety in working opportunities in Greater Bangkok. Table 3: Gender Distribution of TEA and Opportunity vs. Necessity in Thailand by Region, 2013 Area Greater Bangkok (Bangkok, Nonthaburi, Samutprakarn, Patumthani) Opportunitydriven early stage entrepreneurial activity (% of adult population) Necessitydriven early stage entrepreneurial activity (% of adult population) Male TEA Opportunity (%of TEA males) Female TEA Opportunity (%of TEA females Male TEA Necessity (%of TEA males) Female TEA Necessity (%of TEA females) North Northeast Central South Thailand (average) Source: GEM 2013 Thailand Adult Population Survey. 9

18 The country comparison of ASEAN 6 and East Asian countries shows that opportunity perception in ASEAN countries is on average higher than in the East Asian countries with the exception of the Philippines who have the lowest opportunity-driven TEA rates in the Asian region, both for male and female TEA (Figure 7). In terms of female opportunity perception, the ASEAN region is on par with the developed economies, where in general three out of four or more women entrepreneurs account for opportunity-driven TEA (Kelley, Brush, Greene, & Litovsky, 2013). Figure 7: Opportunity-driven TEA in ASEAN 6 + East Asian Countries, by Gender 2013 male TEA opportunity (% of TEA males ) female TEA opportunity (% of TEA females ) Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. In most countries, necessity-driven TEA is higher for women than for their male counterparts. The highest rate in the Asian region exists in the Philippines, where nearly half of the female business owners start out of necessity (Figure 8). In comparison, Thailand experiences one of the lowest rates of necessity-driven TEA, both for men and women. Singapore has the least necessity-driven TEA for men (9%) and for women (8%), followed by Malaysia. The East Asian countries experience considerably higher rates of necessity-driven TEA than Thailand. Figure 8: Necessity-driven TEA in ASEAN 6 + East Asian Countries, by Gender 2013 male TEA necessity (% of TEA males ) female TEA necessity (% of TEA females ) Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. 10

19 Trends in Thailand : Figure 9 displays that male TEA proves to be stable from 2011 to 2013, whereas female TEA rates dropped from a previously high rate of 20% of the adult population in 2011, which was even higher than the male TEA rate of 17.2% in 2011, to 16.3% in 2013 (-18.5%). Figure 9: Gender Distribution of TEA in Thailand, in Percent, TEA male TEA female Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. The general decline in female TEA rates can partly be explained by a drop in opportunity perception in the last years. Figure 10 shows, that in 2011, 14.5% of women were starting because they perceived opportunities, whereas in 2013, only 12.2% of the female population was opportunity-driven (-15.8%). On the other hand, necessity-driven TEA also declined, both for men and women. As in most countries across the globe, opportunity motivation is generally more predominant in all regions (Amorós & Bosma, 2014). Figure 10: Gender Distribution of Opportunity-driven TEA versus Necessity-driven TEA in Thailand, in Percent, TEA male TEA female TEA male TEA female opportunity-driven necessity-driven Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. 11

20 2.4. Sector Participation Thailand s industry sector participation of TEA and EST is displayed in Figure 11. It clearly indicates that consumer-oriented businesses such as retail trade, hotels and restaurants are the majority sectors for both TEA (61%) and EST (52%). It is noticeable that Agriculture, Forestry and Fishing accounts for 8% of the young businesses and is nearly a quarter (22%) of all established businesses, for both entrepreneurship phases the second largest sector. Manufacturing is the third largest business sector for start-ups (7%), whereas Wholesale Trade is No. 3 for established business owners with 7%. It can also be seen that more businesses are being started in the three sectors Information and Communication (4%), Financial Intermediation and Real Estate Activities (3%) and Personal / Consumer Service Activities (2%) than in established business owners (1% each). This might be because those business fields can easily be entered, and they might also be growing markets. However, their failure rates might also be higher, accounting for the difference between TEA and EST. Since Thailand is on the road from an efficiency-driven country to an innovation-driven country, where knowledge and innovation often in services, finance, and technology sectors are increasingly important, these sectors might be a sign of increased innovation-driven features in Thailand s businesses. Future GEM research will show if this trend persists and if the TEA entrepreneurs will enter the established business phase. Figure 11: Percentage of Sector Structure of Total Early-Stage Entrepreneurial Activity (TEA) and Established Business Activity (EST) in Thailand, 2013 TEA 4% 3% 1% 5% 2% 8% 1% 7% 3% EST 1% 1% 1% 5% 1% 22% 5% 5% 3% 61% 52% 7% 2% Agriculture, Forestry, Fishing Mining, Construction Manufacturing Utilization, Transport, Storage Wholesale Trade Retail Trade, Hotels & Restaurants Information and Communication Financial Intermediation, Real Estate Activities Professional Services Government, Health, Education, Social Services Personal/Consumer Service Activities Source: GEM 2013 Thailand Adult Population Survey. In general, most Thai entrepreneurs continue to be engaged in operating small scale and small scope new businesses. Examples are retailing, food services, laundry services, and accommodation renting. GEM summarizes the sectors into four main sectors: extractive sector (agriculture, forestry, fishing, and all mining), transformative sector (construction, manufacturing, transportation, communication, utilities, and wholesale), business services (finance, insurance, real estate, all business services), and consumer services (retail, motor vehicles, lodging, restaurants, personal services, health, education and social services, recreational services). This report uses the four main sectors for the geographic comparison of Thailand within ASEAN and East Asian countries. 12

21 Figure 12 and Figure 13 show the sector participation in the geographic region of ASEAN 6 and East Asian countries for respondents within TEA and within EST, respectively. Thailand shows the second highest percentage of participation in the extractive sector for TEA (8.7%) after Malaysia (13.5%) and the highest for EST (23.5%). On the other hand, participation in the business oriented services is comparatively low in Thailand with 7.7% for TEA and 3.3% for EST. Figure 12: Sector Participation, Percentage of Respondents within TEA in ASEAN 6 + East Asian Countries, Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries Extractive sector Transforming sector Business oriented services Consumer oriented services Figure 13: Sector Participation, Percentage of Respondents within EST in ASEAN 6 + East Asian Countries, Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries Extractive sector Transforming sector Business oriented services Consumer oriented services Source: GEM 2013 Thailand and Global Adult Population Survey. 13

22 2.5. Age Distribution Figure 12 shows the relative proportions of entrepreneurial activities among different age groups in Thailand. Young businesses, being in business for less than 42 months (TEA), have their highest ratio in the age group of and their next highest in the age group of years. These findings do not differ from previous years in Thailand and are prevalent in most economies in the GEM survey. Established business owners, running businesses older than 42 months (EST), have the highest ratio in the age group of years (35.4%). On average they have become younger than in the previous years, where the majority were in the age range of years (2011:32.1% / 2012: 32.4%). The high ratio of established business owners aged might be due to previously high TEA rates in the age group of and in general low discontinuance rates. In the age group of 18-24, already 3.3% account for established business owners. This is slightly lower than in the previous year (4.3%). Entrepreneurship rates decline significantly after the age of 54, both for TEA as for established business owners. The majority of entrepreneurial activities in the Thai adult population takes place between 25 and 54 years of age with a peak of 63.7% (2012: 58.5%) being engaged in entrepreneurship when they are between 35 and 44 years old. Figure 14: Age Distribution for TEA and EST by Age Groups in Thailand, 2013 in % TEA EST age Source: GEM 2013 Thailand Adult Population Survey. The comparison across ASEAN and East Asia shows that there is a similar age distribution for TEA for the ASEAN countries as well as for China and Taiwan, with peaks of early-stage entrepreneurial activity in the age of 25 to 44 years (Figure 15). By contrast, both Japanese and Korean early-stage entrepreneurs are on average older, showing the highest percentages of TEA in the age group of 35 to 44, followed by a high percentage in the age group of 45 to 54. Korea s early-stage entrepreneurs are on average the oldest in this comparison, with 66.5% being between 35 and 54 years compared to the youngest in Vietnam with 56.3% being between 18 and 34 years. Japan has the highest percentage (16.7%) of start-ups and young businesses where the owner is 55 years or older. A larger age distribution is seen in the age groups prevalent for established business owners (Figure 16). The three East Asian countries Japan, Korea and Taiwan show an extremely high proportion of established business owners in the age between 45 and 64 with Korea having the oldest established business owners (77.7%), followed by Japan (74.5%) and Taiwan (60.2%). Of the ASEAN countries, this age group is highest for Singapore (58.8%). Both Singapore and Japan have no established business owners in the age group of 18 to 24 (0%), and Taiwan has only 0.6% compared to Thailand, where 3.3% of the established business owners are between 18 and 24 years young. 14

23 Figure 15: Age Distribution for TEA in ASEAN 6 + East Asian Countries, 2013 % TEA age distribution Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries TEA TEA TEA TEA TEA Source: GEM 2013 Thailand and Global Adult Population Survey. Figure 16: Age Distribution for EST in ASEAN 6 + East Asian Countries, 2013 % EST age distribution Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries EST EST EST EST EST Source: GEM 2013 Thailand and Global Adult Population Survey. 15

24 2.6. Gender Differences One of Thailand s outstanding features in regards to entrepreneurship is an equal proportion of female and male entrepreneurs at all stages of business activity, from intending to start a business over starting up, sustaining it and finally becoming an established business owner. Only six countries in the world show similar rates of male and female entrepreneurship, three of them are in ASEAN: Indonesia, the Philippines, and Thailand. In most economies around the world, there are fewer women than men starting and running new businesses, but there are even fewer running mature ones (Kelley et al., 2013). Figure 17 shows the proportion of male to female earlystage entrepreneurs by geographic regions with only the Sub-Saharan Africa region showing a similar ratio as Thailand. In this region, the other three countries with entrepreneurial gender equality in TEA are Nigeria, Zambia and Botswana. Figure 17: Gender Distribution of Early-stage Entrepreneurs (TEA) by Geographic Regions (unweighted average), Latin America Middle East & Sub-Saharan & Caribbean North Africa Africa Asia Pacific & South Asia Europe - EU28 Europe - Non EU28 North America Thailand % of male population involved in TEA % of female population involved in TEA Source: GEM 2013 Thailand and Global Adult Population Survey. The Asia-Pacific & South Asia region showed a 14% TEA rates for the male population and an 11% rate for females. Broken down into the ASEAN 6 and the 4 East Asian countries, there are a total of three countries with a similar ratio of female to male TEA: Indonesia, Philippines, and Thailand with Indonesia showing the highest TEA rates, both for men and women (Figure 18). Female TEA in Thailand was 17.3% of the female adult population, and 18.0% of the male adult population was involved in TEA. On the other hand, the high level of female entrepreneurship rates in Thailand is accompanied by the fact that more than 70% of Thai women entrepreneurs operate as micro business owners. Positively seen, it shows the level and the ability of Thai women for self-employment; and negatively, it does not add to job creation for others in Thailand. In addition, Thailand and the Asian region also experience clear gender differences in necessity- and opportunity-driven TEA (Chapter 2.3). 16

25 Figure 18: Gender Distribution of Early-stage Entrepreneurs (TEA) in ASEAN 6 + East Asian Countries, Indonesia Malaysia Philippines Singapore Vietnam Thailand China Japan Korea Taiwan ASEAN 6 East Asian Countries % of male population involved in TEA % of female population involved in TEA Source: GEM 2013 Thailand and Global Adult Population Survey. Trends in Thailand : In 2012, Thailand showed the highest rate of female entrepreneurs in the global comparison in GEM, with 12 women starting and running businesses versus 10 men. While the ratio of female to male entrepreneurs decreased to 0.92 in 2013, Thailand is still one of six countries with a nearly even proportion of man and women entrepreneurs. The decrease of female entrepreneurs can both be seen in TEA as in established business owners. In the three consecutive years , the TEA rates of male entrepreneurs remained stable, whereas female TEA rates decreased considerably by 18.5% from 20% in 2011 to 16.3% in 2013, below the male TEA rate. (Figure 19) Figure 19: Gender Distribution of Early-stage Entrepreneurs (TEA) in Thailand, in %%11 male TEA female TEA % of male population involved in TEA % of female population involved in TEA Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. Figure 20 shows, that the percentage of female established business owners decreased by 10% from 29.5% of the female population in 2012 to 26.5% in In the same year, the discontinuance rate of female entrepreneurs, where the businesses were not continued, nearly doubled from 1.8% in 2012 t0 3.4% in In the same time period, the discontinuance rate of male entrepreneurs increased only slightly from 1.2% (2012) to 1.6% (2013). 17

26 Figure 20: Gender Distribution of Established Business Owners (EST) in Thailand, in % 30.9 male EST female EST % of male population involved in EST % of female population involved in EST Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. Regional Gender Differences in Thailand Thailand s regions differ in women participation in entrepreneurial activities, both in TEA and EST. The Northeast of Thailand reports that more women than men in both stages are involved in entrepreneurship (Figures 21 and 22). The Northeast also shows the highest level of female established business owners (30.0%) in all five regions. The highest rate of early-stage entrepreneurship among all areas is prevalent in the North with 23.1% of the female population and 27.7% of the male population. There is a different pattern for established businesses: the highest percentages for men and women are found in the North (male: 32.5%; female 26.6%), followed by the South for men (30.7%) and by the Central region for women (28.0%). Figure 21: Gender Distribution of Early-Stage Entrepreneurs (TEA) in Thailand, by regions, 2013 Figure 22: Gender Distribution of Established Businesses (EST) in Thailand, by regions, Greater Bangkok North Northeast Central South Greater Bangkok North Northeast Central South % of male population involved in TEA % of male population involved in EST % of female population involved in TEA % of female population involved in EST Source: GEM 2013 Thailand Adult Population Survey. 18

27 Trends in Thailand : A continuing trend is the decline in female entrepreneurship in Thailand, both for established as for earlystage business owners. Where in 2012 still 12 women could be found to run a business compared to 10 men, the survey of 2013 reveals that only 9.2 women versus 10 men start and run a business. Especially female TEA has considerably decreased from 2011 to 2013 with the exception of the North of Thailand, where it increased consistently every year from 17.5% in 2011 to 18.7% in 2012 and further to 23.1% in 2013, a total of +32% (Figures 23 and 24). All other regions in Thailand show somewhat sharp declines in female TEA, especially for Bangkok (-50%) and the North (-23.4%) in the previous year. In two of the five regions, male TEA increased from 2011 to 2013 with the highest increase (+44.3%) in the North to a three-year high of 27.7% in After an initial increase, the Northeast is back to 18.0% male TEA rates in 2013, slightly above the rate of Bangkok and Central show a decrease of 5.4% and 10.5% respectively. After a sharp decline in male TEA from 2011 to 2012 (-50.8%) in the South, the region seems to recover and male TEA now accounts for 17.1% (+36.8% from 2012 to 2013), yet still lower than in 2011 when the South had the highest male TEA rate of all regions with 25.4%. Figure 23: Percentage of male population involved in TEA, by Region, Greater Bangkok North Northeast Central South Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. Figure 24: Percentage of female population involved in TEA, by Region, Greater Bangkok North Northeast Central South Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. 19

28 2.7. Educational Profile The general educational profile of the Thai adult population, both entrepreneurs and non-entrepreneurs, stemming from the 2013 GEM survey results, shows two peaks: 20.8% of the Thai population have finished high school (21.5% of male and 20.2% of female adult population) and 29.3% hold a bachelor degree (31.0% of male / 27.7% of female adult population). The third largest group with 16.2% of the adult population still states elementary school as their highest level of education with more women (19.6%) than men (12.7%). The effect of higher education on early-entrepreneurial activity is not certain. The possibilities of better employment opportunities that might be available in the market for those with higher education could even deter them from entrepreneurship; however, those with higher education might have additional knowledge, better experience, and better networks which could support their way into entrepreneurship. Looking at entrepreneurs only, the educational profile of entrepreneurs in Thailand (Table 4) shows a similar pattern for men and women with a slightly higher percentage of men having vocational training and more women having elementary school as their highest educational level. There is a difference for TEA and for established business owners. TEA entrepreneurs, regardless of gender, possess a higher educational level than established business owners. The percentage of bachelor degree holders is 35.5% for TEA versus 23.6% for EST. One third of the female TEA entrepreneurs rely on the educational background from a bachelor degree (33.5%), as do an even higher proportion of male TEA entrepreneurs with 37.5%. A high school degree is the second choice both for male (21.5%) as for female TEA (21.1%). There is a gender difference for established business owners with the majority of women relying on elementary school as their highest degree (27.1%), whereas the majority of men rely on a bachelor degree (28.1%). Table 4: Educational Profile of the Entrepreneurs in Thailand, Involved in TEA and EST, and of the Male and the Female TEA and EST, 2013 entrepreneurs (male and female) % of TEA % of EST male entrepreneurs female entrepreneurs entrepreneurs (male and female) male entrepreneurs female entrepreneurs Lower elementary school Elementary school Secondary school High school Vocational school (Por Wor Chor) Higher vocational school (Por Wor Sor / Por Wor Tor) Bachelor degree Master degree Doctoral degree Total Source: GEM 2013 Thailand Adult Population Survey 20

29 Trends in Thailand : Figure 25 shows that the percentage of early-stage entrepreneurs who hold a bachelor degree has increased considerably by 29.6% since In 2013 more than one third of the young business owners (35.5%) had a bachelor degree, followed by high school degree (21.6%). On the other hand, an elementary school degree was less prevalent, down 40% from 23.1% (2011) to 13.7% (2013). Figure 25: Educational Profile of the Entrepreneurs in Thailand, Involved in TEA, % of Thai entrepreneurs Lower elementary school Elementary school Secondary school High school Vocational school (Por Wor Chor) Diploma, Higher vocational school (Por Wor Sor / Por Wor Tor) Bachelor degree Master degree Doctoral degree Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. An entrepreneur sharing her experience with Master students in Entrepreneurship at BUSEM 21

30 A similar shift can be seen for established business owners, where entrepreneurs with an elementary school degree as their highest educational level decreased even further (-41.9%) from 40.3 in 2011 to 23.4% in 2013, although still accounting for nearly a quarter of all businesses. Again there was a huge increase of 80.2% for entrepreneurs with a bachelor degree from 13.1% (2011) to 23.6%, likewise accounting for a quarter of all businesses (Figure 26). Figure 26: Educational Profile of the Entrepreneurs in Thailand, Involved in EST, in % Lower elementary school Elementary school Secondary school High school Vocational school (Por Wor Chor) Diploma, Higher vocational school (Por Wor Sor / Por Wor Tor) Bachelor degree Master degree Doctoral degree Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. Regarding the two main changes over the 3 years from a gender perspective (Figure 27), male early-stage entrepreneurs with an elementary school degree more than halved to 8.5% in 2013, whereas female earlystage entrepreneurs saw a reduction of 29.3% from 27% in 2011 to 19.1% in 2011, still accounting for a fifth of all enterprises. 50% more male TEA entrepreneurs (37.5%) held a bachelor degree in 2013, and female TEA entrepreneurs increased 13.9% to 33.5% in Figure 27: Educational Profiles of Male versus Female Entrepreneurs in Thailand, Involved in TEA, in % Elementary school Bachelor degree Elementary school Bachelor degree TEA male TEA female Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. Male established business owners with elementary school degrees decreased by 40.7%, which was less intense than the decrease for early-stage male entrepreneurs. However, established women entrepreneurs with elementary school degrees decreased by 41.8%, a steeper decline than their early-stage counterparts experienced. Nearly half of all female established business owners (46.6%) left school with an elementary 22

31 school degree in This figure is down to a quarter (27.1%) in Male established business owners with a bachelor degree more than doubled (+116.2%), whereas the number of female established business owner with a bachelor degree grew slower (+41.4%) during the last three years (Figure 28). Figure 28: Educational Profiles of Male versus Female Entrepreneurs in Thailand, Involved in EST, in % Elementary school Bachelor degree Elementary school Bachelor degree EST male EST female Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. Since educational achievements can be linked to different types of businesses, especially regarding innovative types of entrepreneurial activity (Koellinger, 2008), the improvements in higher educational degrees from 2011 to 2013 nurture hope that innovativeness in general might increase. Innovation (Chapter 4) is regarded as one of the weak points in Thai entrepreneurs. An overall better educational background of both start-ups and young as well as established business owners can help to improve the overall quality of the businesses in Thailand. Also, results from the National Expert Survey 2013 (Chapter 5) revealed a lack of entrepreneurial education and a lack of Research & Development transfer to entrepreneurial activities. 23

32 In comparison to the ASEAN 6 and the East Asian countries (Figure 29), Thailand shows high prevalence rates in nearly all educational categories. This is mainly due to the high overall entrepreneurship rates in Thailand. A similar effect can also be seen for Indonesia and Vietnam; however the rate of higher educational degrees in these countries is scarce. Some secondary degrees are degrees up to elementary school. Established business owners in Thailand show the highest peak for secondary degree (28.1%), which includes high school and vocational school (Por Wor Chor). Post secondary degrees include bachelor degrees and higher vocational school (Por Wor Sor/Por Wor Tor), whereas graduate degrees include master and doctoral degrees. The comparison of the educational levels between countries is difficult because it does not take in to account the quality of the education. Also, as pointed out in the National Expert Survey, the educational degree also does not inform if the degree itself provided the urgently needed skills and capabilities for perusing entrepreneurial activities. Figure 29: Educational Profile of the Entrepreneurs TEA and EST in ASEAN 6 + East Asian Countries, 2013 % % of population aged 18-64, involved in either TEA or EST, classified by education Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries TEA some secondary degree TEA secondary degree TEA post-secundary degree TEA graduate experience EST some secondary degree EST secondary degree EST post-secundary degree EST graduate experience Source: GEM 2013 Thailand and Global Adult Population Survey. 24

33 East Asian Countries ASEAN 6 GLOBAL ENTREPRENEURSHIP MONITOR 3. Entrepreneurial Perceptions and Societal Attitudes Beliefs about the attractiveness of being an entrepreneur differ for individuals and across countries. Is starting a business seen as an attractive career choice or is it not? Does the society favour entrepreneurship when it comes to status and respect, and is there positive media coverage for entrepreneurs and their activities? The assessment of those national attitudes and perceptions delivers insight into individuals intention to enter entrepreneurship. Positive or negative perceptions about entrepreneurship as well as benefits from entrepreneurship strongly influence entrepreneurship rates. Besides questions regarding societal attitudes, the GEM Adult Population Survey also investigates individual self-perceptions. Are they aware of good opportunities for starting a business? Do they believe in their own skills and do they perceive to have the experience for starting-up? Do they fear to fail and would this deter them from exploiting perceived entrepreneurial opportunities? 3.1. National Societal Attitudes It is not only economic and geographic factors that influence societal attitudes, but also individuals cultural and social backgrounds. Table 5 displays great differences in the societal attitudes across ASEAN and East Asia. In Thailand, most people (79.5%) prefer an equal standard of living, which includes factors such as income, quality and availability of employment, quality and affordability of housing, amongst others. This is in sharp contrast to other countries such as Malaysia, where only 35.4% have this preference. Three quarters of the Thai population believe that entrepreneurship is a good career choice. Across the countries this attitude is highest in the Philippines (84.9%) and lowest in Japan, where the majority of the population does not believe that entrepreneurship is a good career choice (31.4%). Most cultures (except Malaysia) agree that entrepreneurs enjoy a high status and respect in their respective country. Media attention for entrepreneurship, which indicates high visibility and attractiveness of entrepreneurship, is considered positive in Thailand (77.2%), ranging from 62.2% in Malaysia to 87.1% in Taiwan across ASEAN and East Asia. Table 5: Societal Attitudes and Perceptions in ASEAN 6 + East Asian Countries, 2013 Country People prefer an equal standard of living Entrepreneurship as a good career choice High status to successful entrepreneurs Media attention for entrepreneurship Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan * * Note: This question was optional and therefore not included by Taiwan Source: GEM 2013 Thailand and Global Adult Population Survey. 25

34 Trends in Thailand : Figure 29 shows that overall the societal attitudes and perceptions of the adult population (aged 18 to 64) in Thailand towards entrepreneurship were declining from 2011 to With the exception of entrepreneurship as a good career choice the decline is accelerating in the last year: 11.6% less people prefer an equal standard of living in 2013 compared to 2011, when nearly 90% of the adult population in Thailand preferred to have the same standard of living. Media attention for entrepreneurship was 8.1% less likely to be noticed compared to However, the high status that is perceived for successful entrepreneurs, only declined by 5.3% and entrepreneurship as a good career choice is rather stable over the three years (-3.2%). Compared on a global scale, Thailand s national societal attitudes and perceptions are relatively high. The average perception in efficiencydriven countries is 67.8% for entrepreneurship as a good career choice, 67% for high status to successful entrepreneurs, and 61.4% for media attention for entrepreneurship. A detailed comparison to specific countries can be found in Appendix 1, Table 1 (Entrepreneurial Attitudes and Perceptions in the GEM Economies in 2013, by Economic Development) Figure 30: Societal Attitudes and Perceptions in Thailand, % % of adult population in Thailand People prefer an equal standard of living High status to successful entrepreneurs Entrepreneurship as a good career choice Media attention for entrepreneurship Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. 26

35 3.2. Perceived Opportunities and Capabilities Opportunity-perception is an important trigger in venture creation and relates positively to the uptake of entrepreneurial activity. It reflects the percentage of individuals who believe that there are opportunities to start a business in the area where they live. In addition, perceived capabilities reflect the individuals who believe that they have the necessary skills, knowledge and experience to start a new venture. 45.3% among the Thai APS sample perceive opportunities to start-up and a similar amount of Thais (44.4%) also perceive to have the capability to do so (Figure 31). Opportunity perception is relatively high in Thailand compared to ASEAN and East Asian countries; with the Philippines leading the ranking (47.9%), followed by Indonesia (46.7%) and Thailand (45.3%). Similarly, Thailand showed the fourth highest number in regards to perceived capabilities to start-up (44.4%), just after are perceived by the Philippines with 68.4%, Indonesia with 62.0% and Vietnam with 48.7%. Japan has the lowest rate of opportunity perception with only 7.7%. This is by far the lowest number, not only in comparison to other ASEAN and East Asian countries, but also on a global scale. Same accounts for the perception of their capabilities, ranking last on a global scale with 12.9%. Contradicting previous findings, that the perceived capability to have the necessary skills to start a business is generally higher in developing countries than in highly developed countries (Xavier, Kelley, Kew, Herrington, & Vorderwülbecke, 2013), this is not true in a regional comparison across ASEAN and East Asia. Singapore, Japan, and Korea, who are all innovation-driven countries, have a comparatively lower perception of their own capabilities. Figure 31: Perceived Opportunities and Perceived Capabilities / Skills to Start a Business, ASEAN 6 + East Asian Countries, 2013 in % Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 perceived opportunities perceived capabilities East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. 27

36 The perception of seeing opportunities is similar for male and female respondents and differs only slightly across the five regions. A majority of 54% of men and 47.9% of women in Central see more opportunities, whereas Greater Bangkok and the North see less (Figure 32). Women in the North have the lowest opportunity perception with 33.5%. Figure 32: Perceived Opportunities to Start a Business, by Gender and Region in Thailand, 2012 % Greater Bangkok North Northeast Central South perceived opportunities (male) perceived opportunities (female) Source: GEM 2013 Thailand Adult Population Survey. On average, women have lower perceptions of their entrepreneurial capabilities than men (Kelley et al., 2013) with Thailand being no exception (Figure 33). It is only in the South where slightly more women believe to have the capabilities to start up, although the level itself is the lowest of all regions with 30.7% of men and 31.7% of women believing in their own capabilities. Figure 33: Perceived Capabilities / Skills to Start a Business, by Gender and Region in Thailand, 2012 % Greater Bangkok North Northeast Central South perceived capabilities (male) perceived capabilities (female) Source: GEM 2013 Thailand Adult Population Survey. 28

37 Trends in Thailand : The last three years increasingly seem to stimulate individual attitudes towards entrepreneurship. Opportunity perception increased 18% for men to 48.8% and 15.3% for women to 42.9% (Figure 34). The perception of their capabilities increased for women from 35.9% to 41.0% (+14.2%) versus a smaller increase of 3.4% for men. These figures might reflect the change in education as described in Chapter 2.7 where a larger amount especially of female entrepreneurs have a higher level of education than they had three years ago. Better educated and talented individuals will not be afraid to put their skills to work and start new ventures, create new ideas, products and services. Interestingly, perceived opportunities and capabilities by females increased strongly from the year 2011 to 2012 and dropped slightly to a lower level in This tendency might be one stepping stone that has led to lower female start-up rates in 2013 than in previous years. Figure 34: Perceived Opportunities and Capabilities to Start a Business, by Gender, in % male perceived opportunities female perceived opportunities male perceived capabilities female perceived capabilities Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. The intention to start a business in the non-entrepreneurial Thai population has grown to 23.5% after hitting a low in the previous year (19.0%). Nearly a quarter of the Thai population consider starting a business within the next three years. In ASEAN 6, the population in the Philippines, Indonesia and Vietnam shows the highest intentions to start-up (Figure 35). However, these numbers need to be leveraged with the high discontinuance rate of nearly 10% in the Philippines (Chapter 2.2), and the overall lower TEA and EST rates, especially in Vietnam and the Philippines (Chapter 2.1). The link between an intention to start a business in the next three years and an actual start-up effort to do so remains questionable. Figure 35: Entrepreneurial Intentions in ASEAN 6 + East Asian Countries, 2013 In % Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. 29

38 Trends in Asia : Entrepreneurial intentions reflect the entrepreneurial tendencies in a country, the acceptance of entrepreneurship as a potential career and the population s overall entrepreneurial spirit. A three year comparison can only be conducted for the 3 ASEAN countries Malaysia, Singapore and Thailand, because the Philippines, Vietnam and Indonesia did not participate in previous GEM surveys. All countries with the exception of China show an increase in entrepreneurial intentions from 2011 to Similar to Thailand, most countries experienced an increase from 2012 to in 2013 (Figure 36). China is the only country in the region which experiences a tremendously large drop of -61.2% in entrepreneurial intentions from the comparatively high level of 42.8% in 2011 to a rather normal level of 16.6% in The two countries with the highest increase are Singapore (+73.5%) and Japan (+86.8%), although the increase in Japan occurred on the lowest level of all Asian countries. For a detailed overview on all countries regarding perceived opportunities, perceived capabilities and entrepreneurial intentions see Appendix 1, Table 1. Figure 36: Entrepreneurial Intentions in ASEAN 3 + East Asian Countries in % Malaysia Singapore Thailand China Japan Korea Taiwan ASEAN East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. 30

39 Algeria Angola Botswana Ghana India Iran Libya Malawi Nigeria Philippines Uganda Vietnam Zambia Argentina Bosnia Brazil Chile China Colombia Croatia Ecuador Estonia Guatemala Hungary Indonesia Jamaica Latvia Lithuania Macedonia Malaysia Mexico Panama Peru Poland Romania Russia Slovakia South Africa Suriname Thailand Uruguay Belgium Canada Czech Republic Finland France Germany Greece Ireland Israel Italy Japan Korea Luxembourg Netherlands Norway Portugal Puerto Rico Singapore Slovenia Spain Sweden Switzerland Taiwan Trinidad & Tobago United Kingdom USA GLOBAL ENTREPRENEURSHIP MONITOR 3.3. Fear of Failure In many economies high fear of failure rates exist concurrent with low opportunity perception. Therefore, fear of failure is seen as a constraining factor for venture creation. In the last years, Thailand showed extremely high fear of failure rates compared to other countries. In 2013, Thailand s fear to failure rate is the fifth highest on a global scale. 49.3% of those Thai adults who see opportunities also fear to fail. Although decreasing over the years, this percentage draws Thailand on one level with Greece. Figure 37 shows that a higher fear of failure rate is only prevalent in Angola (63.7%), Vietnam (56.7%), Israel (51.8%) and in Japan (49.4%). For the details on all countries see Appendix 1, Table 1. Figure 37: Attitudes Towards Failure Worldwide, by Economic Development, 2013 % 70.0 Fear of failure rate, assessed for those seeing opportunities factor-driven economies efficiency-driven economies innovation-driven economies Source: GEM 2013 Global Adult Population Survey. Kelley et al (2013) found that women generally have higher fear of failure rates than men. As Figure 38 shows, this is also true for all ASEAN countries and Taiwan, whereas China, Japan and Korea show slightly lower rates for women than for men. Figure 38: Attitude Towards Failure in Percent, in ASEAN 6 + East Asian Countries, Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries male female Source: GEM 2013 Thailand and Global Adult Population Survey. 31

40 With the exception of the North, women in Thailand experienced higher fear of failure than men across the country. The highest fear rates for women were found in the Northeast (68.3%) and in Bangkok (61.9%), whereas men showed the highest rates in the North (56.5%) and the Northeast (55.7%). Especially in Southern Thailand and in Bangkok, women experienced a considerably higher fear of failure rate than their male counterparts, although the rates in the South were lower than in the other regions (Figure 39). Figure 39: Attitude Towards Failure in Percent, by Gender and Region in Thailand, Greater Bangkok North Northeast Central South fear of failure (male) fear of failure (female) Source: GEM 2013 Thailand Adult Population Survey. Trends in Thailand : Regardless of opportunity perception, 60.9% of the Thai population reported a fear of failure, the second highest rate recorded across the globe in In total, this rate dropped 10% by 2013 to 54.8%. The attitude towards failure differs greatly by gender. Women experienced considerably higher fear of failure rates than men. For men the fear to fail dropped 12.3% and for women only 7.6% in the three years. 9.1% more women than men stated the fear to fail in 2011 with the gender gap widening over the three years to 15.6%. However, the tendency for a decreasing fear of failure rate for both genders, although with a different speed, is a positive sign regarding the potential to increase the numbers of new venture creation. Figure 40: Attitude Towards Failure, by Gender in Thailand, % fear of failure average fear of failure male fear of failure female Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. 32

41 4. International Orientation, Innovation and Well-being 4.1. International Orientation and Market Expansion International Orientation The majority of Thai entrepreneurs are doing business within the local Thai market. 93% say that their customers do not stem from outside the country. Only a small percentage of entrepreneurs (5.3%) state to have up to 25% of international customers with early-stage businesses being more international than established businesses. From the early-stage entrepreneurs, 7.2% have a weak international orientation with 1% to 24% of their customers coming from outside Thailand. Only 1.8% of TEA entrepreneurs have a strong international orientation with more than 25% of their customers come from abroad. Established business owners in general tend to be even less international: Only 3.7% have more than 10% of their customers from outside Thailand and 1.2% more than 25%. Figure 41 displays that start-ups in Thailand show slightly more internationalisation than the average TEA entrepreneur, whereas the degree of being international is lower for established business owners. Figure 41: Comparison of International Orientation of Start-ups, TEA and EST in Thailand, % 98% % 94% % 90% 88% % Start-ups TEA EST no customers outside country 1-25% of customers outside country 25-75% of customers outside country % of customers outside country Source: GEM 2013 Thailand Adult Population Survey. Comparing the ASEAN 6 countries, only Indonesia is less internationally oriented with nearly all businesses operating within the country (Figure 42). In countries like Malaysia, Philippines or Vietnam, a quarter of all entrepreneurs have a weak international orientation versus 5.3% in Thailand. The East Asian countries show higher internationalization than the ASEAN countries with the exceptions of China (17.4% strong international orientation) and Singapore, which certainly is the huge exception within the ASEAN countries in terms of international orientation. 33

42 East Asian Countries ASEAN 6 Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan GLOBAL ENTREPRENEURSHIP MONITOR Figure 42: Proportion of firms with International and Domestic Customers in ASEAN 6 + East Asian Countries, % 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% ASEAN 6 No customers outside country East Asian Countries 1-25% of customers outside country Source: GEM 2012 Thailand and Global Adult Population Survey. Interestingly, Thailand is stronger internationally oriented than China. (Table 6). Thailand has a total of 1.7% of businesses with more than 25% of customers outside the country versus China with 0.8%. However, except Indonesia, other Asian countries have a higher number of entrepreneurs in the categories with higher international orientation, topped by Singapore with 36% of enterprises >25% of international customers and followed by Taiwan with 20%. Table 6: Proportion of Firms with International Customers in ASEAN 6 + East Asian Countries, 2013 Country No customers outside country 1-25% of customers outside country 25-75% of customers outside country % of customers outside country Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan Source: GEM 2013 Thailand and Global Adult Population Survey. 34

43 Market Expansion Plans With the upcoming ASEAN Economic Community (AEC) international orientation and market expansion plans will be an important task for many business owners besides being prepared for more competitive markets. Clearly, there is a correlation between size of business and international orientation. One reason for the high number of Thai entrepreneurs who do not have international customers could be their smallness. The majority of the business owners do not employ someone. Two third of early-stage (62.7%) and established businesses (64.8%) in Thailand operate without employees; one third (TEA: 31.4% / EST: 30.3%) employ up to five people. More than six employees up to 19 employees are prevalent in only 4.5% of the early-stage and 3.4% of the established businesses, and only 1.4% of TEA and of EST employ 20 or more people. Figures 43 and 44 show that an international orientation clearly grows when businesses employ more people, both for TEA and EST. Especially early-stage businesses with more than 20 employees are extremely internationally oriented, with 66.6% of them reporting a strong international orientation (more than 25% of customers outside the country). The size of a business, measured by numbers of employees, is an indicator for international orientation. Larger enterprises or enterprises with more employees tend to have more customers outside Thailand. As a result, growth of an existing business might give entrepreneurs a more international orientation. Figure 43: International Orientation by Number of Employees, TEA 2013 Figure 44: International Orientation by Number of Employees, EST, businesses with 1 to 5 employees businesses with >5 employees businesses with >20 employees businesses with 1 to 5 employees businesses with >5 employees businesses with >20 employees No customers outside country 1 to 25% of customers outside country 25 to 75% of customers outside country 75 to 100% of customers outside country Source: GEM 2013 Thailand Adult Population Survey. 59.3% of early-stage and 76.3% of established businesses do not plan to expand their markets. Around a quarter of all enterprises (25.3% of TEA / 22.5% or EST) intend to undergo some market expansion, yet without making use of new technologies. Only 1.3% of the established businesses will expand their markets to some extent including the use of new technologies. However, none of the established business owners has plans for a profound market expansion. On the opposite, 14.1% of TEA enterprises plan a market expansion with the use of new technologies, and at least 1.3% intend to do so profoundly. 35

44 There are differences across the regions in Thailand in terms of firms with market expansion plans (Figure 45). Both Greater Bangkok (68.2%) and the South (70.2%) show the highest percentage of enterprises that do not have any market expansion plans. These two regions plus Central are also the regions without any business plan for a profound expansion. Outstanding in terms of either profound or technology-oriented market expansions are both the North and the Northeast. In the North, more than half of all businesses (54.5%) intend to expand their markets, although 36.4% will do so without using new technologies. A total of 18.2% of the businesses in the North and 19.1% in the Northeast expect to expand their markets profoundly and technology-oriented. Growing opportunities might be the neighbouring countries in the North and the Northeast, like Laos, Myanmar and Cambodia, whereas Greater Bangkok and Central have a more in-country geographical position. Interestingly, the South, despite neighbouring Malaysia - although with a lot smaller border than the borders in the North and the Northeast, is by far the least expansion-oriented region in Thailand with a total of 29.8% of businesses who intend to expand their markets, thereof 8.5% using new technologies (Greater Bangkok: 31.8%, North:54.5%, Northeast 37.6%, Central: 40%). Figure 45: Market Expansion Plans of TEA and EST, by Region in Thailand Greater Bangkok (Bangkok, Nonthaburi, Samutprakarn, Patumthani) North Northeast Central South No market expansion Some market expansion (new technologies) Some market expansion (no new technologies) Profound market expansion Source: GEM 2013 Thailand Adult Population Survey. 36

45 4.2. Innovation and Technology Entrepreneurs and Innovation Innovative ideas spark new markets and strong economic growth, while the repetitive reliance on well-known ideas ultimately stalls and crashes. (Hal Gregerson, INSEAD Business School) Job growth expectations, market expansion plans and their realization certainly are important drivers for entrepreneurship in the medium-term. The often less visible innovation-orientation of entrepreneurs is necessary as an underlying structure to be successful in the long-term. Innovation is needed to foster new business models by defining new or improved services, products or processes and is crucial to social advancement. Entrepreneurship on the other hand is about value creation, and an entrepreneur can create value with more or less innovation and can therefore either be distinguished as an innovator or as a reproducer (Aldrich & Kenworthy, 1999). Innovators enter the market with significantly different routines and competencies from reproducers who add little or no new innovative knowledge to existing markets. Thai entrepreneurs in general pursue to reproduce products and services, also known as a me too approach in their entrepreneurial activities (Figure 46). Only 7.3% of early-stage and 5.6% of established entrepreneurs state that no other business offers the same products, meaning that their products are new or unique. Some new or unique product is only offered by 9.8% of TEA or 8.1% of EST. Bhide (2000) found that 88% of the world s entrepreneurs succeeded through the exceptional execution of an ordinary idea, meaning that they will transfer something existing and execute it exceptionally well. However, the other 12% succeeded by executing on an unusual or extraordinary idea, which usually is their own. In this latter case, entire new industries might be created. Those often disruptive new ideas create change and fuel economic growth (Yu & Si, 2012). Figure 46: Innovativeness of Products for Customers in Thailand, 2013 in % TEA EST product new to all customers product new to some customers no other business offers the same product Source: GEM 2013 Thailand Adult Population Survey. Figure 47 shows that Thai TEA entrepreneurs have the highest perception of product novelty in the ASEAN countries, followed by the Philippines (55.1%) and Vietnam (50.9%). In general, the level of innovation, measured in percentage of having a new product or service for all or some of the customers and being new in the market with few or no other competitors, increases with the level of economic development. The largest proportion of both indicators is seen in North America and the European Union. Thailand is situated in Asia Pacific & South Asia within economies that are normally characterized for their high degree of innovative products like Japan, Korea or China. The results of the survey show, that Thailand is more innovative than the average region with a high number of TEA businesses (58.8%) that state that their products and services are new to all or some customers, putting it in third place behind Taiwan (71.7%) and China (62.7%). 37

46 Figure 47: Innovative Orientation (New Products) of TEA in ASEAN 6 + East Asian Countries, 2013 %TEA: product new to all or some customers Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. Innovation in the APS is regarded from two perspectives: being innovative in products and being innovative in entering new markets. In the global comparison (GEM 2013 Global Report), the Asia-Pacific & South Asia Region on the one hand has the highest innovation in TEA for new products, but also the lowest innovation in TEA for new markets, where entrepreneurs offer their products in markets where there are no or only few competitors offering the same product. The highest level of innovation in new markets is experienced in North America and the Non- European Union countries. Figure 48 shows that in the ASEAN countries the percentage of TEA entrepreneurs who enter new markets with no or little competition is comparatively higher than in the East Asian countries. Thailand is in a medium range within ASEAN with 38.6%, with the Philippines (48.4%) leading the region, and Vietnam (24.4%) lagging behind. Figure 48: Innovative Orientation (New Markets) of TEA in ASEAN 6 + East Asian Countries, 2013 %TEA new market: few/no businesses offer the same product Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. 38

47 Innovation and Technology The well-known statement innovation is more than technology is obsolete as soon as we look at economies, who generally measure innovation by R&D investment, intellectual property generation, and STEM (science, technology, engineering, and mathematics) education. In Thailand, most enterprises, both TEA and EST, operate their businesses in sectors that use no or only low technologies (Figure 49). Below 2% define their businesses as hi-tech or medium-tech enterprises. Early-stage businesses are more technology-oriented with 15.4% using latest technology (younger than one year) and 34.6% using technologies that were newly introduced less than five years ago. Figure 49: Technology-orientation of TEA and EST in Thailand, 2013 % of TEA % of EST very latest technology (newer than 1 year) new technology new technology ( 1 to 5 years) business in no/low technology sector hi-tech/low-tech business in medium/high technology sector Source: GEM 2013 Thailand Adult Population Survey. In a comparison to the other ASEAN countries and with the exception of Singapore, Thailand has the highest percentage of businesses that operate in the medium or high technology sector, both in TEA and EST (Figure 50). Although these levels are relatively low (TEA 1.6%; EST: 1.5%) compared to the developed countries Singapore, Japan, Korea and Taiwan, they slightly outnumber China s TEA (1.4%) and are a basis to be built upon for the future. Figure 50: Businesses in Medium or High Technology Sectors in ASEAN 6 + East Asian Countries, 2013 % of TEA % of EST Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan Korea Taiwan ASEAN 6 East Asian Countries Source: GEM 2013 Thailand and Global Adult Population Survey. 39

48 Trends for Innovativeness in Thailand A development in the last three years that needs attention is the drop in innovativeness regarding customers and competitors for early-stage entrepreneurs. 14.7% of TEA entrepreneurs stated in 2011, that their products were new to all customers. This means that their products and services had a unique selling point (USP). One year later, only 10.4% and in 2013 only 9.8% of TEA entrepreneurs did so, which reflects a total decline of 33.3% in USP for at least some customers the products are already familiar. In the same time, the tendency to enter competitive markets in early-stage entrepreneurial activities increased. 9.9% of TEA stated that they had no competitors in 2011, down to 8.6% in 2012 and 7.3% in This means that a growing number of businesses in TEA (+26.3%) are operating in markets where at least some competitors offer the same products. If both trends, less novelty products and more competitors for products, continue and do so especially for start-ups and young businesses, profitability and sustainability of these businesses might suffer and finally lead to a higher proportion of entrepreneurs not being able to enter into the next business phase: becoming established business owners. Figure 51: Innovativeness in Products and Services for TEA in Thailand, % product new to all customers no other business offers the same product Source: GEM 2011 Thailand Adult Population Survey, GEM 2012 Thailand Adult Population Survey, GEM 2013 Thailand Adult Population Survey. 40

49 4.3. Entrepreneurship and Well-being Taking happiness seriously, Bhutan had introduced the goal of Gross National Happiness (GNH) rather than Gross National Product (GDP): A story of exploration and progress since the King of Bhutan in 1972 declared the goal of happiness over the goal of wealth. Happiness in Bhutan became more than a feeling, it became a policy-making principle. Other nations, like China, are also in favour of a harmonious society. However, many people probably believe that happiness is rather something to be pursued individually than a matter of national policies, since happiness seems to be very subjective. Subjective well-being is related to how people experience the quality of their lives, and it comprises both emotional reactions and cognitive judgements (Diener, 2000). The survey questions, using five-point likert scales, from 1 Strongly Disagree to 5 Strongly Agree, were: 1. In most ways, my life is close to my ideal. 2. The conditions of my life are excellent. 3. I am satisfied with my life. 4. So far I have obtained the important things I want in life. 5. If I could live my life again, I would not change anything. The average from the five-point likert scale (1 to 5) is 3.0, which is set as a baseline in the following figures to see the deviation from the average. Any values below average or <3.0 therefore are negative, values above average or >3.0 positive. Many people agree that societies should foster happiness of their citizens. The primary overall conclusion that entrepreneurship is a good career choice is drawn by 76.1% of the Thai entrepreneurs and 73.8% of the non-entrepreneurs. Although we cannot infer that entrepreneurship itself makes someone happy, there is little doubt that starting and owning a business is associated with a stronger sense of well-being and happiness. In fact, as Figure 52 shows, established business owners rate their wellbeing nearly three times higher as TEA entrepreneurs, whereas the non-entrepreneurs are below the line of feeling subjective well-being (-0.02). Figure 52: Subjective Well-Being SWB, by Phase of Entrepreneurship in Thailand, Non Entrepreneurs Established business ownership 0.17 Early-stage entrepreneurial activity (TEA) population Baseline is the average (3.0) Source: GEM 2013 Thailand Adult Population Survey. Well-being is very much affected both by societal values and practices as by institutional context. This leads to an expectation of considerable differences in reported well-being across nations and cultures. As Figure 53 shows, subjective well-being (SWB) differs already in the six ASEAN countries with Thailand and (to a higher degree) Singapore being the only two countries where all entrepreneurs, both TEA as EST, reported higher well-being rates. Indonesia s and (to a high extent of 0.31) Malaysia s established business owners report a 41

50 East Asian Countries ASEAN GLOBAL ENTREPRENEURSHIP MONITOR higher SWB. All East-Asian countries, with the exception of established business owners in China, showed strong negative values in well-being, especially for TEA business owners. Korea reports the lowest average scores of subjective well-being with for TEA and for established business owners. Figure 53: Subjective Well-Being SWB, by Phase of Entrepreneurship in ASEAN 6 + East Asian Countries, 2013 Established business ownership Early-stage entrepreneurial activity (TEA) Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan S. Korea Taiwan Baseline is the average (3.0) Source: GEM 2013 Thailand and Global Adult Population Survey. A key relationship for SWB comes through working conditions and work life balance. Work not only provides a livelihood but also a source of meaning feeling needed and being able to contribute. One of the aspects of the labor market in terms of well-being is whether individuals are able to find a job at the time when they are looking for one. However, when at work, the quality of life at work is also crucial. Job quality today is considered more than the combination of pay and the hours of work and incorporates, amongst others, also work autonomy. In this respect, self-employed value their independence and flexibility, because they themselves can influence their quality of work, although they often do worse on many other job dimensions, including income, hours of work and job security. Nevertheless, they often report higher levels of overall job satisfaction than the employed do. This was found to be true in OECD countries, in American and European data (Blanchflower & Oswald, 2004), and in data from the United Kingdom, Germany and Switzerland (Benz & Frey, 2008). The motivation that drives people to start their businesses also influences their subjective well-being. Figure 53 accounts for these motives by distinguishing between entrepreneurs who were pushed into their activity out of necessity and those who chose to start a business to pursue an opportunity. Opportunity-driven entrepreneurs in Thailand rate their well-being positively high (0.07) versus necessity-driven entrepreneurs with a slightly negative SWB of In addition, female TEA business owners (0.09) rate their SWB 4.5 times higher than their male counterparts (0.02). A comparison of Thailand versus the other ASEAN and East Asian countries shows that necessity-driven entrepreneurs in general experience negative SWB with the exception of Singapore. In Singapore, both opportunity- and necessity-driven entrepreneurs likewise show a positive SWB (Figure 55). Again, in the East Asian countries the perception of subjective well-being is highly negative even for those entrepreneurs who 42

51 East Asian Countries ASEAN GLOBAL ENTREPRENEURSHIP MONITOR started because they saw an opportunity. One exception is Taiwan, where opportunity-driven TEA entrepreneurs were slightly positive in their SWB. Figure 54: Subjective Well-Being SWB and Entrepreneurship Motivations and Gender in Thailand, 2013 TEA female 0.09 TEA male TEA Necessity TEA Opportunity Baseline is the average (3.0) 0.07 Source: GEM 2013 Thailand Adult Population Survey. Figure 55: Subjective Well-Being SWB by Entrepreneurship Motivation in ASEAN 6 + East Asian Countries, 2013 TEA Necessity TEA Opportunity Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan S. Korea Taiwan Source: GEM 2013 Thailand and Global Adult Population Survey. 43

52 East Asian Couries ASEAN GLOBAL ENTREPRENEURSHIP MONITOR Since well-being is influenced by societal values and practices as by institutional context, it seems apparent that gender differences are also prevalent when it comes to subjective well-being in a country comparison. With the exception of China, all Asian countries show higher scores in subjective well-being for female TEA entrepreneurs than for male TEA, though not all of them perceive their well-being as positive (Figure 56). Female TEA in the five countries Malaysia, Singapore, Philippines, Thailand, and Japan show positive female SWB rates with the highest positive perception in Singapore (0.39). Japan shows the highest discrepancy in SWB between female and male TEA with females being positive (0.14) and males showing the highest negative score of all countries with Interestingly, China is the only country in the comparison with lower female TEA scores (-0.32) than their male counterparts (-0.25). Figure 56: Subjective Well-Being SWB by Gender in ASEAN 6 + East Asian Countries, 2013 TEA female TEA male Indonesia Malaysia Philippines Singapore Thailand Vietnam Japan S. Korea Taiwan China Baseline is the average (3.0) Source: GEM 2013 Thailand and Global Adult Population Survey. To strengthen the opinions provided by the APS, the NES included four questions to inquire information about how national conditions in Thailand support work-life balance of individuals and of entrepreneurs (Figure 57). The perception of the national experts corroborates the findings from the APS with a high positive perception of the appearance of subjective well-being of entrepreneurs. Figure 57: Subjective Well-Being SWB and Entrepreneurship Motivations and Gender in Thailand, 2013 The general conditions (economic, social, political, cultural ) allow people to perfectly harmonize personal and working life 0.47 Existing labor regulations allow people to perfectly harmonize personal and working life 0.08 Entrepreneurs usually appear as more satisfied with their working life than non-entrepreneurs 0.82 Entrepreneurs usually appear as more satisfied with their personal life than non-entrepreneurs Baseline is the average (3.0) Source: GEM 2013 Thailand National Expert Survey

53 5. Insights from National Experts: Assessment of Entrepreneurship Conditions in Thailand 5.1. Entrepreneurial Framework in Thailand Entrepreneurial activity is shaped and influenced by a distinct set of factors, referred to as Entrepreneurial Framework Conditions (EFCs) in the National Expert Survey (NES). These factors include infrastructure and education, institutions and their programs, as well as underlying and stimulating factors like innovation, labor market efficiencies, higher education and training, and technological readiness. The features expected to have an important impact on entrepreneurial activities are described in the nine Entrepreneurial Framework Conditions (EFCs) in Table 7. The National Experts Survey delivers important qualitative information about the state of conditions in each country, based upon the informed judgment of national experts on a broad set of items summarized in the EFCs. The NES provides insight into ways how these entrepreneurial framework conditions either foster or constrain the entrepreneurial climate, entrepreneurial activity and development in the particular country. In addition, experts give valuations on other topics related to additional entrepreneurship conditions, such as women entrepreneurship, and the special topic of the year 2013 Entrepreneurship and Well-being. Table 7: The GEM Entrepreneurial Framework Conditions (EFCs) Entrepreneurial Finance The availability of financial resources, equity, and debt, for new and growing firms, including grants and subsidies. Government Policy The extent to which government policies, such as taxes or regulations) are either size- neutral or encourage new and growing firms. Government Entrepreneurship Programs The extent to which taxes or regulations are either size-neutral or encourage new and growing firms. Entrepreneurial Education The extent to which training in creating/ managing new, small or growing business entities is incorporated within the education and training system at all levels. There are two sub-divisions primary and secondary school entrepreneurship education and training; and post-school entrepreneurship education and training. R&D Transfer The extent to which national research and development will lead to new commercial opportunities, and whether or not these are available for new, small and growing firms. Commercial and Legal Infrastructure The presence of commercial, accounting and other legal services and institutions that allow or promote the emergence of small, new and growing business entities. Entry Regulations There are two sub-divisions market dynamics, i.e. the extent to which markets change dramatically from year to year; and market openness, i.e. the extent to which new firms are free to enter existing markets. Physical Infrastructure Ease of access to available physical resources communication, utilities, transportation, land or space at a price that does not discriminate against new, small or growing firms. Cultural and Social Norms The extent to which existing social and cultural norms encourage, or do not discourage, individual actions that might lead to new ways of conducting business or economic activities which might, in turn, lead to greater dispersion in personal wealth and income. 45

54 East Asian Countries ASEAN 6 GLOBAL ENTREPRENEURSHIP MONITOR Each of the nine entrepreneurial framework conditions consists of several statements. The experts assessed the national conditions by responding to these statements on a Likert scale from completely false (1) to completely true (5). From the scale 1 to 5, the most positive sub-conditions are considered those which scored between 4 and 5, the most negative those between 1 and 2. The results in Table 8 are combined conditions out of several individual questions and provide a more detailed overview on the framework conditions for the ASEAN 6 + East Asian Countries plus the average of the whole region. On a scale from 1 to 5 with an average of 3.0; lower numbers represent more negative and higher numbers more positive conditions. The most negative condition of each country is marked in red and the most positive condition in green. It is apparent that education at the primary and secondary level is the weakest point in most countries of ASEAN and Asia, including Thailand (2.3). It is true for the majority of the economies around the world, that education of entrepreneurship at the most basic levels (primary and secondary education) is regarded as unfavourable. In contrast, physical infrastructure is one of the strongest conditions for most countries, including Thailand (4.1). Indonesia and Philippines score below average in national policies and regulations. The Philippines and Korea have their strongest conditions in the internal market dynamics. Taiwan is the only country in the region with a stronghold in finance (3.7). Table 8: Entrepreneurship Framework Conditions Main Indicators in ASEAN 6 + East Asian Countries, 2013 Likert scale 1 to 5 with an average of 3.0 Country 1 2a 2b 3 4a 4b 5 6 7a 7b 8 9 Indonesia Malaysia Philippines Singapore Thailand Vietnam China Japan * * * * * * * * * * * * Korea Taiwan Average * Japan did not participate in the 2013 NES 1 Finance 4a Education Prim. & Second. 7a Entry Regulation Market Dynamics 2a Nat. Policy General Policy 4b Education Post-School 7b Entry Regulation Market Openness 2b Nat. Policy Regulation 5 R&D Transfer 8 Physical Infrastructure 3 Government Programs 6 Commercial and Legal Infrastructure 9 Cultural and Social Norms Source: GEM 2013 Thailand and Global National Expert Survey. For the Entrepreneurship Institution Profile of Thailand, the other five participating ASEAN countries Indonesia, Malaysia, Philippines, Singapore, and Vietnam are illustrated in Figures 57 and 58. The results are split into two figures to facilitate visualization: EFCs related to public institutional issues, and those related to market-social institutional issues (Figures 58 and 59). Thailand scores low in nearly all EFC s that relate to public institutional topics. After Vietnam (1.97 out of 5), Thailand ranks lowest in primary and secondary school entrepreneurship education (2.28 out of 5), and comparatively low to the other countries in finance (3.0 out of 5), national policies (2.38 out of 5) and governmental programs (2.43 out of 5). In market and social institutional subjects, Thailand ranks higher with physical and services infrastructure (4.08 out of 5) and internal market dynamics (3.71 out of 5). 46

55 Figure 58: Entrepreneurship Public Institutional Profile in ASEAN, 2013 (1/2) Finance and Entrepreneurship Entrepreneurship Education: Post School National Policies - General Thailand Indonesia 2 Malaysia 1.5 Philippines Singapore Vietnam Entrepreneurship Education: Primary / Secondary National Policies - Regulation Governmental Programs Source: GEM 2013 Thailand and Global National Expert Survey. Figure 59: Entrepreneurship Market Social Institutional Profile in ASEAN, 2013 (2/2) R&D Transfer Cultural and Social Norms Commercial & Professional Infrastructure Thailand Indonesia Malaysia Philippines Singapore Vietnam Physical and Services Infrastructure Internal Entry Regulations Market - Dynamics - Market Dynamics Internal Market - Openness Entry Regulations - Market Openness Source: GEM 2013 Thailand and Global National Expert Survey. Note: Values of group-level indicators of economic development are based on averaging the Z-scores (standardized values) 47

56 To receive a more detailed picture which conditions have positive or negative impact, the framework conditions were broken down to the individual sub-conditions. Figure 60 shows the most positive conditions for Thailand, three of them ranked No.1 with a score of 4.25 out of 5: (1) Consumers like to try out new products and services, (2) men and women have the same level of knowledge and skills to start a new business, and (3) successful entrepreneurs have a high level of status and respect. Further positive conditions mentioned are: the perception that the entrepreneur is a competent and resourceful individual; the prevalence of affordable and fast to implement utilities; support from family and friends for start-ups, and an overall good opportunity perception. Figure 60: Most Positive National Sub-Conditions (Scores above 4) Influencing Entrepreneurial Activity in Thailand, 2013 Scale of scores from 1 to 5, where 1 = completely false and 5 = completely true consumers like to try out new products and services men and women have the same level of knowledge and skills to start a new business successful entrepreneurs have a high level of status and respect most people think of entrepreneurs as competent, resourceful individuals new and growing firms can afford the cost of basic utilities (gas, water, electricity, sewer) it is not too expensive for a new or growing firm to get good access to communications (phone, Internet, etc ) a new or growing firm can get good access to communications (telephone, internet, etc ) in about a week the creation of new ventures is considered an appropriate way to become rich most of young adults that become entrepreneurs have been helped to start up by their families, close relatives or friends there are plenty of good opportunities for the creation of new firms new or growing firms can get good access to utilities (gas, water, electricity, sewer) in about a month 4.06 Source: GEM 2012 Thailand National Expert Survey. 48

57 Despite having many very positive results regarding entrepreneurship conditions in Thailand, there are things to grouse about as well. Most pressing and an issue of increasing concern was corruption. This topic was considered as most negative (Figure 61) with the sales of goods protected through intellectual property rights, scoring a low This condition grew worse from 1.64 in 2012 to 1.29 in Concerning IPR Intellectual Property Rights, two conditions follow: new and growing firms can trust that their patents, copyrights and trademarks will be respected with a score of 1.74, and the perception that the IPR legislation is not efficiently enforced (1.84). The last condition that is rated extremely negative refers to the lack of knowledge how to start and manage high-growth businesses (1.86). Figure 61: Most Negative National Conditions (Scores below 2) Influencing Entrepreneurial Activity in Thailand, 2013 Scale of scores from 1 to 5, where 1 = completely false and 5 = completely true the illegal sales of 'pirated' software, videos, CDs, and other copyrighted or trademarked products is not extensive 1.29 new and growing firms can trust that their patents, copyrights, and trademarks will be respected 1.74 the Intellectual Property Rights (IPR) legislation is efficiently enforced 1.84 many people know how to start and manage a high-growth business 1.86 Source: GEM 2013 Thailand National Expert Survey. 49

58 Financial support Education and training Government policies Lack of information Market Openness Work force features Capacity for entrepreneurship Corruption Government programs Access to physical infrastructure GLOBAL ENTREPRENEURSHIP MONITOR 5.2. Thailand s Constraining Factors On first sight, Thailand seems to do well in terms of entrepreneurial activities and aspirations, overall entrepreneurship rates, female entrepreneurship, and new venture creation. Nevertheless there are two sides of a coin and despite those positive results, there are factors deterring new entrepreneurs from entering the market and hindering small businesses to grow. All these factors are quoted as constraining factors in Figure 63. The most outstanding topic is the lack of financial support, quoted by nearly 70% of all respondents. The issue of financial support or the lack of it has gained more importance in the last three years, increasing from 52% in 2011 to 64.7% in 2012, and now to 69.7% in 2013, a total increase over the years of 34% (Figure 62). Figure 62: Trend : Increase of Financial Constraints, from NES Data in Thailand, 2013 % Source: GEM 2013 Thailand National Expert Survey. The subsequent four constraining factors cited by the Thai NES sample were (2) education & training (31.0%), (3) government policies (30.72%), (4) lack of information (22.5%), and (5) market openness (19.8%). In the last three years the Top 3 constraining factors did not change: financial support was always ranked No. 1, whereas education & training and government policies were either ranked No. 2 or No. 3 with slightly varying percentages. Government policies seem to have improved over the three years or were regarded less of a constraint from rank No. 2 in 2011 and 2012 with 40% and 38.2% respectively to rank No. 3 in 2013 with 30.7%. On the other hand, education & training, which in 2011 was ranked No.5 constraining factor with 28%, leapt to No.2 constraining factor in 2012 with 38.2% and remained rank No. 2 in 2013 with 31.0%. Figure 63: Factors Constraining Entrepreneurship, in Percent, from NES Data in Thailand, Source: GEM 2013 Thailand National Expert Survey. 50

59 Government policies Education and training Financial support Information: all responses related to this issue Government programs Market Openness Capacity for entrepreneurship R&D transfer Cultural and social norms Corruption GLOBAL ENTREPRENEURSHIP MONITOR The constraining factor financial support might also be growing due to pressures from the political situation in Thailand, as cited by many respondents. Besides having problems to access funding at all or to access appropriate amounts of funding, (be it investment funds, general capital, or start-up equity and debt financing) respondents also cited financial problems in the domestic economy and market, the political stability influencing finance, the global economic downturn and here especially the downturn of the stock exchange market as constraining factors. Where education and training was quoted as a constraining factor, experts mentioned the lack of entrepreneurial learning in the education system. The public educational sector is not set up to create entrepreneurs, and the educational system stifles creativity and also does not support leadership. Rural communities in Thailand in general lack access to education. Lack of government policies and red tape where government policies were involved received the highest number of remarks. In addition interviewees commented that more government policies are needed to support entrepreneurial activities, that the existing government policies are inadequately related to entrepreneurship in Thailand and that the government support should be valid and not just on paper Recommendations for Thailand Following the most prevalent three constraining factors financial support, education and training and government policies, it is natural that recommendations from the NES survey also revolved around those issues. It could therefore be implied that the most prevalent constraining factor financial support would receive the most recommendations from the NES experts. As portrayed in Figure 63, aspects such as government policies and education and training were widely cited as recommendation factors. Apparently there are either more ideas how to improve government policies or the educational system or there are fewer solutions at hand on how to improve financial support for entrepreneurs. The top three recommendation factors of the NES sample are: (1) government policies (64.4%), (2) education and training (61.6%) and (3) financial support (40.9%). General improvement of available information (29.1%) and government programs (26.1%) follow as (4) and (5) respectively. Compared to the previous year, the increased emphasis on the first two factors shows, that despite lower perceived constraints in these two topics (Chapter 5.2) specific recommendations can be presented for particular fields that need improvement for entrepreneurship in Thailand. Figure 64 : Factors Recommended for Entrepreneurship, in Percent, from NES Data in Thailand, Source: GEM 2013 Thailand National Expert Survey. 51

60 The recommendations for government policies from NES experts cover a wide range of topics, including: to develop supportive policies, particularly specialized skills required by entrepreneurs, to reduce the minimum wages in order to reduce operational costs, because this will attract and support new venture creation, to reduce government regulations in general, to raise awareness for government policies in rural communities, to emphasize a two-way communication between government and entrepreneurs, to reduce the constraints stemming from the limitations of foreign ownership rates in businesses, tax incentives, reduction of taxes, to arrange useful exhibitions for start-ups, to encourage and facilitate frequent seminars among entrepreneurs to speed up responses to entrepreneurs from the government sector, to simplify and standardize requirements and processes for business visas and work permits for foreigners. Other suggestions were to staff governmental agencies and government affiliated organizations who are supposed to support entrepreneurship, with real entrepreneurs as entrepreneurs-in-residence or as coaches. An often quoted recommendation to fundamentally improve the field of education and training was to implement more entrepreneurial training at earlier school stages and to improve the existing education system in a way that individuals are taught the ability to think critically and entrepreneurial, to do so as leaders and not as followers and finally, to develop a risk-taking culture through school and university education. A revised school curriculum should also nurture a hands-on attitude and activities, increasing students creativity and improve the teaching styles and teachers skills. Furthermore, recommendations related to seminars that train entrepreneurship skills, deliver easy to access knowledge in investment fields, and initiate a fostering community of entrepreneurs as mentors to give guidance to new start-ups or new entrepreneurs. Regarding financial support, general funding problems need to be addressed to ensure the accessibility to finance for entrepreneurs. Improvements are needed in start-up repayable funding, in venture capital funding and microfinancing, in debt financing and more accessible public funding. Recommendations are also to implement lower interest rates for longer periods of time and tax breaks by government banks. An improvement could also stem from the launch of real Venture Capital firms that are managed by real venture professionals to fund early stage, innovative start-ups. Here tax incentives and other promotional incentives should be offered on top of those that are currently already provided by the National Innovation Agency, for more innovative businesses, not only for technological innovation as provided by the NIA, but also for business model innovation. 52

61 6. Conclusions and Implications There is always a better way. (Thomas A. Edison) The GEM Thailand Report 2013 highlights the nature of entrepreneurship and entrepreneurial dynamics in Thailand, embedded in the geographic region of ASEAN and Asia. This report summarizes the role of entrepreneurial attitudes as well as societal national attitudes as important indicators of potential entrepreneurs and support for this activity. Entrepreneurial Attitudes and Entrepreneurial Activity The data from the 2013 Adult Population Survey revealed that Thailand s total early-stage entrepreneurs rate slightly decreased in the last three years to 18.3% as did the established business ownership rate to 28.0% of the Thai sample. The TEA is comprised of nascent and new-business ownership (owner-manager firms). Thailand s TEA rate is third highest in the regional context of the six ASEAN and the four East Asian countries. Thailand s established business ownership of 28% was among the highest of the participating countries in the 2013 GEM survey, and was also No.1 within the geographic region. Venture creation in Thailand resulted from the perception of opportunities rather than starting up out of necessity. The entrepreneur always searches for change, responds to it, and exploits it as an opportunity (Drucker & Drucker, 2007). With these words, Peter F. Drucker summarizes the entrepreneurial climate in Thailand, where the motivation that drove people to start-up businesses is seen as an opportunity rather than running a firm out of necessity. This motivation also positively influences their perception of subjective well-being. Self-employed tend to value their independence and flexibility and the possibility to have influence on both by improving their own job quality. In Thailand, especially established business owners experience a high level of subjective well-being. Framework Conditions for Entrepreneurship Thailand s national experts in the NES brought up subjects that need to be addressed and changed. We hope that this GEM Thailand Report 2013 brings new insights to other experts in fields such as finance, government and education to help them respond to needs highlighted by the experts and to exploit opportunities in their fields of expertise. The mutual goal is to achieve an improvement in the framework conditions for entrepreneurship in Thailand. It is important to understand that the entrepreneurial climate can be significantly improved by small changes. However, a critical element is that these small changes will only lead to sustainable results if the three main constraining factors are addressed and rectified to an acceptable level. These key constraints are: Financial support; Government policies; and Education and training. Key elements for Thailand to move forward in the stage of development to become an innovation-driven economy are to make better use of knowledge and innovation. Research & Development needs to be streamlined with entrepreneurial activities to increase the potential to create novelties in products and services. Education and training initiatives should focus on increasing entrepreneurial skills and an overall entrepreneurial culture in Thailand. 53

62 The analysis of framework conditions provides experts insights in relation to fostering conditions for entrepreneurship in Thailand. On the other hand, these experts also cited constraining factors which deterred Thai entrepreneurs in starting and operating businesses. They suggested recommendation factors which could help to enhance entrepreneurial activity. Financial constraints were a major concern in starting, operating and exiting businesses in Thailand. Education and training from primary to high-school level were largely rated as poor and being in need of improvement. Despite consecutive findings about positive internal market dynamics and physical infrastructure in Thailand, there is also a growing negative perception of increasing corruption within the country. Transparency International s Corruption Perceptions Index scores countries on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean). In the last three years, corruption consistently increased in Thailand, scoring it 35 in 2013, which is equivalent to a rank of 102 out of 177 countries, down from rank 80 in 2011 and rank 88 in 2012 (Transparency_International, 2013). "The Corruption Perceptions Index (CPI) 2013 demonstrates that all countries still face the threat of corruption at all levels of government, from the issuing of local permits to the enforcement of laws and regulations," said Huguette Labelle, Chair of Transparency International. The CPI 2013 offers a warning for Thailand that the abuse of power, secret dealings and bribery continues to ravage its society. If corruption is coming top down, it is having a massive impact on the economy. Unless brought under control, corruption will continue to negatively affect entrepreneurship development in Thailand. Government policies should be a two-way communication between government agencies and entrepreneurs, responding to and be supportive for the specialized skill set that is needed for entrepreneurial activities. Besides hard facts like standardizing and simplifying processes, these policies should also try to improve entrepreneurial soft skills the capacity for entrepreneurship - within the country. All stakeholders involved should take Thomas A. Edison s words that there is always a better way seriously. Considering that financial constraints have increased, it is of particular importance not to maintain the existing patterns of financial support, but to find a better way and provide small but sustainable improvements in all constraints of entrepreneurship. Conditions may not be ideal in all aspects, but in the geographic comparison that this report delivers, Thailand s starting point ahead of the ASEAN Economic Community AEC is also a good basis to trail further. However, the challenges which entrepreneurs are facing need to be addressed and resolved because they could otherwise weaken Thailand s economy. To be an entrepreneurial society can give Thailand further advantages and add value to many aspects. Having an entrepreneurial mindset is a wonderful tool to use because it might help to solve what seem to be ongoing unsolvable problems. 54

63 References Aldrich, H. E., & Kenworthy, A. (1999). The accidental entrepreneur: Campbellian antinomies and organizational foundings. Variations in organization science: In honor of Donald T. Campbell, Amorós, J., & Bosma, N. (2014). Global entrepreneurship monitor 2013 global report. Recovered on February, 28, Benz, M., & Frey, B. S. (2008). Being Independent is a Great Thing: Subjective Evaluations of Self Employment and Hierarchy. Economica, 75(298), Bhide, A. (2000). The origin and evolution of new businesses: Oxford University Press. Blanchflower, D. G., & Oswald, A. J. (2004). Well-being over time in Britain and the USA. Journal of public economics, 88(7), Bosma, N., Wennekers, S., & Amorós, J. E. (2012) Extended Report: Entrepreneuris and Entrepreneurial Employees Across the Globe. (GERA / GEM). Diener, E. (2000). Subjective well-being: The science of happiness and a proposal for a national index. American psychologist, 55(1), 34. Drucker, P. F., & Drucker, P. F. (2007). Innovation and entrepreneurship: Practice and principles: Routledge. Kelley, D., Brush, C., Greene, P., & Litovsky, Y. (2013). GEM 2012 Women's Report: (GERA / GEM). Koellinger, P. (2008). Why are some entrepreneurs more innovative than others? Small Business Economics, 31(1), Minniti, M., & Naudé, W. (2010). What Do We Know About The Patterns and Determinants of Female Entrepreneurship Across Countries&quest. European Journal of Development Research, 22(3), Reynolds, P. D., Camp, S., Bygrave, W., Autio, E., & Hay, M. (2002). Global Entrepreneurship Monitor GEM 2001 Summary Report. London Business School and Babson College. Transparency_International. (2013). Corruption Perception Index Xavier, S., Kelley, D., Kew, J., Herrington, M., & Vorderwülbecke, A. (2013). Global Entrepreneurship Monitor (GEM) 2012 Global Report: (GERA / GEM). Yu, X., & Si, S. (2012). Innovation, internationalization and entrepreneurship: A new venture research perspective. Innovation: Management, policy & practice, 14(4),

64 Perceived Opportunities Perceived Capabilities Fear of Failure* Entrepreneurial Intentions ** Entrepreneurship as a Good Career Choice High status to Successful Entrepreneurs Media Attention for Entrepreneurship GLOBAL ENTREPRENEURSHIP MONITOR Appendix Appendix 1: Tables and Figures of GEM Data Appendix 1 Table 1: Entrepreneurial Attitudes and Perceptions in the GEM Economies in 2013, by Economic Development Economies Stage 1: Algeria factor driven (includes transition Angola countries to phase 2) Botswana Ghana India Iran Libya Malawi Nigeria Philippines Uganda Vietnam Zambia Stage 2: efficiency driven (includes transition countries to phase 3) Average (unweighted) Argentina Bosnia Brazil Chile China Colombia Croatia Ecuador Estonia Guatemala Hungary Indonesia Jamaica Latvia Lithuania Macedonia Malaysia Mexico Panama Peru Poland Romania Russia Slovakia South Africa

65 Perceived Opportunities Perceived Capabilities Fear of Failure* Entrepreneurial Intentions ** Entrepreneurship as a Good Career Choice High status to Successful Entrepreneurs Media Attention for Entrepreneurship GLOBAL ENTREPRENEURSHIP MONITOR Economies Stage 2: Suriname efficiency driven (includes transition Thailand countries to phase 3) Uruguay Stage 3: innovation driven Average (unweighted) Belgium Canada Czech Republic Finland France Germany Greece Ireland Israel Italy Japan Korea Luxembourg Netherlands Norway Portugal Puerto Rico Singapore Slovenia Spain Sweden Switzerland Taiwan Trinidad & Tobago United Kingdom USA Average (unweighted) * Fear of failure assessed for those seeing opportunities ** Intentions assessed among non-entrepreneur population + These questions were optional and therefore not included by all economies Source: GEM 2013 Global Report 57

66 Nascent Entrepreneurship Rate New Business Ownership Rate Early-stage Entrepreneurial Activity (TEA) Established Business Ownership Rate Discontinuation of Businesses Necessity-driven (% of TEA) Improvementdriven Opportunity (% of TEA) GLOBAL ENTREPRENEURSHIP MONITOR Appendix 1 Table 2: Entrepreneurial Activity and Perceptions in the GEM Economies in 2013 by Economic Development Economies Stage 1: Algeria factor driven (includes transition Angola countries to phase 2) Botswana Ghana India Iran Libya Malawi Nigeria Philippines Uganda Vietnam Zambia Total Stage 2: efficiency driven (includes transition countries to phase 3) Argentina Bosnia Brazil Chile China Colombia Croatia Ecuador Estonia Guatemala Hungary Indonesia Jamaica Latvia Lithuania Macedonia Malaysia Mexico Panama Peru Poland Romania Russia

67 Nascent Entrepreneurship Rate New Business Ownership Rate Early-stage Entrepreneurial Activity (TEA) Established Business Ownership Rate Discontinuation of Businesses Necessity-driven (% of TEA) Improvementdriven Opportunity (% of TEA) GLOBAL ENTREPRENEURSHIP MONITOR Economies Stage 2: Slovakia efficiency driven (includes transition South Africa countries to phase 3) Suriname Thailand Uruguay Total Stage 3: innovation driven Belgium Canada Czech Republic Finland France Germany Greece Ireland Israel Italy Japan Korea Luxembourg Netherlands Norway Portugal Puerto Rico Singapore Slovenia Spain Sweden Switzerland Taiwan Trinidad & Tobago United Kingdom USA Total Source: GEM 2013 Global Report 59

68 Appendix 2: Definitions of Main Measures Entrepreneurial Attitudes and Perceptions Perceived Opportunities Perceived Capabilities Entrepreneurial Intention Fear of Failure Rate Belief: Entrepreneurship as Desirable Career Choice Belief: High Status Successful Entrepreneurship Belief: Media Attention for Entrepreneurship Percentage of age group who see good opportunities to start a firm in the area where they live Percentage of age group who believe to have the required skills and knowledge to start a business Percentage of age group (individuals involved in any stage of entrepreneurial activity excluded) who intend to start a business within three years Percentage of age group with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business Percentage of age group who agree with the statement that in their country, most people consider starting a business as a desirable career choice Percentage of age group who agree with the statement that in their country, successful entrepreneurs receive high status Percentage of age group who agree with the statement that in their country, they will often see stories in the public media about successful new businesses Entrepreneurial Activity Nascent Entrepreneurship Rate New Business Ownership Rate Total Early-Stage Entrepreneurial Activity (TEA) Established Business Ownership Rate (EST) Necessity-Driven Entrepreneurial Activity: Relative Prevalence Improvement-Driven Opportunity Entrepreneurial Activity: Relative Prevalence Percentage of age group who are currently nascent entrepreneurs, i.e., actively involved in setting up a business they will own or co-own; this business has not paid salaries, wages or any other payments to the owners for more than three months Percentage of age group who are currently an owner-manager of a new business, i.e., owning and managing a running business that has paid salaries, wages or any other payments to the owners for more than three months, but not more than 42 months Percentage of age group who are either nascent entrepreneurs or owner-managers of a new business (as defined above) Percentage of population who are currently owner-managers of an established business, i.e. owning and managing a running business that has paid salaries, wages, or any other payments to the owners for more than 42 months Percentage of those involved in TEA (as defined above) who are involved in entrepreneurship because they had no other option for work Percentage of those involved in total early-stage entrepreneurial activity (as defined above) who (i) claim to be driven by opportunity, as opposed to finding no other option for work; and (ii) who indicate the main driver for being involved in this opportunity is being independent or increasing their income, rather than just maintaining their income Entrepreneurial Aspirations Growth Expectation Early-stage Entrepreneurial Activity: Relative Prevalence New Product / Innovation Oriented Earlystage Entrepreneurial Activity: Relative Prevalence International Orientation Early-stage Entrepreneurial Activity Percentage of age groups who are either nascent entrepreneurs or owner-managers of a new business (as defined above) AND expect to employ at least five employees five years from now. Percentage of total early-stage entrepreneurs (as defined above) who indicate that their product or service is new to at least some customers. Percentage of total early-stage entrepreneurs (as defined above) who indicate that at least 25% of the customers come from other countries. 60

69 H H H H 61

70 62