The Best Country for Entrepreneurs Is …
Americans tend to think of themselves as very entrepreneurial.
After all, there’s Silicon Valley — home of Google, Facebook and Apple – and
the rise of legendary entrepreneurs such as Steve Jobs, Bill Gates and
Mark Zuckerberg. Many more want to join their ranks: Sixty-six percent of
American millennials want to start their own businesses, according to a recent
Bentley University study. And deeper in the collective American consciousness
lives the ingenuity and business acumen of the likes of Henry Ford and Thomas
Edison, inventors who changed the world.
To those who study nation branding, this entrepreneurial bent is
a strong part of America’s brand, or the image it projects to the world. Peter
Hirshberg, CEO of The Re:Imagine Group and a former Apple executive, notes that
the U.S. offers an “opportunity promise” to people around the globe, a promise
that includes “a deep streak of individual liberty.”
But does the rest of the world put America at the top for
innovation, startup activity, and all things entrepreneurial? A report this
year from Wharton marketing professor David Reibstein reveals how 60 countries,
including the U.S., are viewed by citizens around the globe on several issues,
such as their perceived readiness for entrepreneurs. The report and
interactive website, “Best Countries,” was compiled in collaboration with the
Wharton School, BAV Consulting, and U.S. News & World Report.
Nation Branding: It Matters to the Bottom Line
Reibstein and his colleagues surveyed more than 16,000 global
citizens — a mix of the general population, the business world, and academia —
on 65 different national attributes. The attributes were then grouped into nine
sub-rankings: Entrepreneurship as well as Adventure, Citizenship, Cultural
Influence, Heritage, Movers, Open for Business, Power, and Quality of Life.
Statistical weighting was then applied based on the correlation between the sub-rankings
and the countries’ per capita GDP (based on purchasing power parity, or PPP) to
arrive at the final rankings.
Why should countries pay attention to what individuals think of
them? Because their national economy, in part, depends on it. “Countries absolutely experience an economic impact resulting
from their brand Twitter ,” says
Reibstein. How people worldwide perceive a nation can have a significant effect
— either positive or negative — on its foreign trade, foreign direct
investment, and tourism.
If a country wants to improve its brand overseas, a public
relations campaign is not enough. It must work to achieve real changes at home.
Reibstein compares this to the way a company builds its brand “by making sure
the experiences people have with their products are good ones.” Hirshberg
agrees, “You want your brand to be consistent with reality.”
Nowhere did the connection between a nation’s brand and economic
return show up more clearly than in the Entrepreneurship sub-ranking, according
to Reibstein. Of the nine sub-rankings, it correlated the most closely with GDP
PPP, at 17.4%. By contrast, some sub-rankings had a much lower correlation: Heritage,
for example, only scored 3.2%. “Lots of people have perceptions about nations
and their heritage,” observes Reibstein. “Heritage is important and it
contributes a little bit to a country’s economy, but entrepreneurship
contributes a lot.” He notes that the study found that entrepreneurship “has a
very strong relationship with foreign direct investment and with exports.”
Drilling down into the study’s Entrepreneurship sub-ranking
reveals that 10 types of questions fed into measuring perceptions of a
country’s readiness for entrepreneurs. The survey probed the extent to which
people felt a country was connected to the rest of the world, had an educated
population, was entrepreneurial in nature and was innovative. Additionally, did
the country appear to possess easy access to capital, a skilled labor force,
technological expertise, transparent business practices, a well-developed
infrastructure and a well-developed legal framework?
Country Perceived As the Most Ready for
Entrepreneurs
When all is said and done, the top nation for entrepreneurs
isn’t the United States. It’s Germany.
Germany grabbed the top spot for perceived readiness for
entrepreneurs (and also took the overall title of Best Country). Japan came in
second, and the U.S. came next. In fourth and fifth place were the U. K. and
Canada. The Best Countries report characterizes these five as “well-established
economies that have the resources to support new endeavors, both legally and
financially.” Furthermore, Reibstein says that the top 10 (which included
Sweden, the Netherlands, Australia, Singapore, and Denmark) taken together
account for a large portion (31%) of the world’s GDP.
Germany scored well on perceptions of all 10
entrepreneur-related attributes measured, notably earning a perfect 10 for
“well-developed infrastructure” and a near-perfect 9.8 for “educated
population.” The Best Countries e-book, a companion to the
report, notes that Germany has long been friendly to small- and medium-sized
enterprises, the so-called ‘Mittelstand.’ While these businesses continue to be
recognized worldwide for precision manufacturing, since Chancellor Angela
Merkel’s election in 2005 “both the public and private sectors have focused
more on innovative technologies and web-based enterprises.” For example, Berlin
is now home to “Silicon Allee” with hundreds of new startups. (Notably, it
would not have been dubbed “Silicon Allee” had America’s Silicon Valley not
become world-famous first.)
Additionally, Germany’s nation-branding influences perception,
according to Reibstein. “When you think about Germany, you think of great
engineering. And for technology and innovation, you think ‘well, you’ve got to
have great engineers.’”
Volkswagen has long traded on the public perception that Germany
equals great engineering. For example, its 2014 Super Bowl ad, viewed by
millions of Americans and others around the world, featured the idea that
“every time a VW vehicle hits 100,000 miles, a German engineer gets his wings.”
Of course, the 2015 Volkswagen emissions scandal put a dent in the “brand
promise” both of that company and German engineering in general. The full
effects are yet to be seen.
Tom Lincoln, director of the Wharton Nation Brand Conference to
be held in Philadelphia in October 2016, cites the American high-end
razor-subscription startup Harry’s as a company that associates itself with
Germany to suggest its products are top-of-the-line. “Harry’s advertises that
their razor blades are German-engineered, and they promote the fact that they
have a German factory,” he says. “Whether or not the Germans actually make
better razor blades than other countries is not the point. The company counts
on customer expectations that German engineering may lead to a better shave.”
The Rising Sun Rises to Second Place
Both Hirshberg and Lincoln were somewhat surprised that Japan
was perceived as entrepreneurial enough to earn second place. Lincoln says that
to him, Japanese business means “large conglomerates like Sony and Toyota … a
corporate culture, not an entrepreneurial culture.” Hirshberg agrees and adds
that a big component of entrepreneurship is diversity, which Japan is notorious
for not fostering. In contrast, “if you look at the U.S., you go to an
incubator here, a startup there, you find as many people from India or China as
you do from the United States,” he says. “When you get talent from around the
world, you tend to get the best people.”
Lincoln notes, however, that Japan is renowned for its
innovative robotics industry, which likely contributes to the perception of
entrepreneurship. (Japan ranked a perfect 10 for “innovative,” and 9.8 for
“entrepreneurial.”) Some of Japan’s astonishingly human-like robots have made
headlines in recent years, and the country possesses the second-largest number
of industrial robots used in manufacturing, according to a recent Huffington
Post article. (Korea had the most.)
Personal experience of a nation can affect perceptions too.
Reibstein recalls taking his children along on a business trip to Japan a
number of years ago, and he saw how his American kids’ experience with the
transportation alone altered how they viewed their home country. “We would
get on the Tokyo subway, and the subway was so cool. It showed you where you
were, and didn’t have graffiti all over it, and was totally on time,” Reibstein
says. Upon arriving back in the U.S., they were greeted by the news that the
shuttle bus that was supposed to take them to their luggage wasn’t working. “It
was pretty amazing, the stark difference of how everything ran so precisely [in
Japan] … And the same thing is really true of Germany. So I think that helps
lead to some of these global perceptions.”
But for Reibstein, looking back a little further in history
really explains the widespread perception of Japan as highly entrepreneurial.
“Think about cars — the innovation in cars — where that came from. And
technology, and basically, electronics. It was all coming at that time, from
[firms like] Sony and Mitsubishi, in the 1990s.” Moreover, these revolutionary
products were known to come from Japan and were associated in people’s minds
with that country. Hirshberg notes, “Your entrepreneurs and your products are
really good ambassadors for what you’re doing [as a nation].”
Reibstein also sees the whole thing as quite circular. “The
products coming out of countries — that are known to come out
of those countries — help contribute to the perception of that country as
innovative. And the more we tend to think of these countries as innovative
based on their products, the more we want to invest in their businesses and buy
products from them.”
He points to the case of Israel as a reverse example. Israel was
tagged the “Startup Nation” in the 2009 internationally bestselling book of the
same name, and it is home to a “huge tech industry,” Reibstein says. Yet the
country only ranked 21st in global perceptions of entrepreneurship. Reibstein
speculates that this is because many innovative products coming out of Israel
are deliberately not identified as such due to political
controversies. “I think it’s because of the nation’s brand, that [some
companies say] ‘I don’t want my product identified with being Israeli, because
that will hurt my sales’… I think it’s some of their own doing.”
America: The Land of Big Ideas … or Big Macs?
Initially, Reibstein did not expect the U.S. to receive only a
third-place ranking. But he found that while America scored at or near the top
in many entrepreneurial attributes (it was a 10 in “provides easy access to
capital” and “connected to the rest of the world), it fell down on the job when
it came to perceptions of transparent business practices.
Another area where the U.S. got a mediocre score — and it’s an
important category — was having a skilled labor force. Reibstein believes this
perception stems from the widely reported lackluster performance of American
students in math and science. According to the Organisation for Economic
Co-operation and Development, which sponsors the Program for International
Student Assessment, the U.S. most recently placed only 35th in math and 27th in science
out of 64 countries.
What about America’s most well-known products? Are they viewed
as innovative? On the high-tech side, we have the iPhone, Google search engine,
and other Silicon Valley brainchildren such as Tesla’s electric cars. “As Tesla
grows, I think it will be a huge contributor to the perception of
entrepreneurship within the United States,” says Reibstein.
He asserts, though, that when many people think of America’s
contributions to the world, what may be more likely to pop into their minds is
McDonald’s, Starbucks or Coca-Cola. Or perhaps Hollywood movies. None of these
are closely associated with entrepreneurship internationally. “I think the
United States is often viewed as a consuming nation rather than a creating
nation.”
“Now while I say that we are number three on this list, there
are 57 countries ranked below us,” Reinbstein adds. “Clearly the United States
is right up there.”
http://knowledge.wharton.upenn.edu/article/entrepreneurial-country-world/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2016-06-16
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