Experts from the Graduate School of Management at St Petersburg University: the global entrepreneurship monitor shows a record increase in the number of new businesses in Russia before the pandemic

GEM Russia 2019

In other countries, this figure ranges from 4–5% in Italy, Poland, Pakistan and Japan to 35% in Chile and Ecuador. In the BRICS countries, the number of people who have attempted to set up and run a new business also varies. For example, in Brazil 23% of the working age population are early-stage entrepreneurs, in India this number is 15% and in China 8.7%. Whether the coronavirus pandemic will affect the indicators of entrepreneurial activity will be shown in the results of the 2020 monitoring.

The results of the national part of the study shows that in 2019 the growth of entrepreneurial activity in Russia has literally set a record.

Olga Verkhovskaia, GEM Project Manager in Russia, Associate Professor, the Graduate School of Management, St Petersburg University

‘Over the year, the number of those who believe that there are ample opportunities in their region to set up their own business has grown. These changes are positive, but the indicator is still quite low (only 30%) to be indicative of the impact of the small business sector on the country's economy. It will be even more interesting to look at the results of the study of entrepreneurial activity after the pandemic. During past crises, not only did the proportion of those who set up new businesses in countries with an average level of economic development not decrease, but it also increased. This was primarily due to the increase in the number of those who were forced to become entrepreneurs in conditions of unemployment,’ noted Olga Verkhovskaia, GEM Project Manager in Russia, Associate Professor, the Graduate School of Management, St Petersburg University. The number of people whose business has existed on the market for more than 3.5 years has not changed. This figure is 5.1%.

In 2019, in Russia, entrepreneurs more often set up businesses than closed them down.

3.4% of the working-age population ceased to be entrepreneurs, with most of their businesses ceasing to exist and only one fifth of them continuing to function with other owners. 80% of those who closed down their businesses in 2019 explained that their decision was due to financial problems and unfavourable external factors.

The main motive for setting up one’s own business remains the need to maintain income levels. 78% of respondents agreed that entrepreneurial activity makes it possible to earn in the conditions when other job offers are limited. While 69% associate the possibility of high earnings and financial well-being with entrepreneurial activity. 25% of respondents became entrepreneurs following the example of their older relatives.

In 2019, the number of those who planned to set up their own business in the next three years increased. It amounted to 9.8% of the population, which is 4% higher than last year.

In 2019, the share of Russian companies that had consumers abroad more than doubled. This indicator amounted to 14.4%. Additionally, assessments of the business prospects of early entrepreneurs changed significantly. 30.2% of respondents said that their businesses had high growth potential, which is twice as much as in 2018.

The Global entrepreneurship monitor analyses various aspects of entrepreneurial activity. These include: the involvement of the population in setting up and running new businesses that have existed on the market for less than 3.5 years and those companies that have managed to pass this milestone; motives for starting a business and the reasons why companies close down; the attitude of the population towards entrepreneurship and the level of entrepreneurial intentions; and plans of entrepreneurial firms for further development.

Since 1997 when the project was created, 110 countries have taken part in it. In Russia, for 14 years, the project has been implemented by a research group of the Graduate School of Management at St Petersburg University. Since 2018, it has also been supported by Sberbank.

‘The Global Entrepreneurship Monitor Project demonstrates important indicators of the global economy: entrepreneurial activity and the reasons for its fluctuations. We see a surge in the number of people who want to set up their own businesses. Accordingly, the demand for managerial competencies is growing. Modern management is a set of knowledge and tools for solving non-standard tasks, and for running businesses and managing teams. It means that it is a set of competencies required for employees of large corporations, as well as for private entrepreneurs and start-ups. The task of business education in general, and the Graduate School of Management at St Petersburg University in particular, is to provide the necessary management tools for leaders at all levels and at all stages of their career and business development. World-class scientific and practical research, modern knowledge transfer techniques and online technologies make it possible for future managers and entrepreneurs to acquire managerial competencies that correspond to the most pressing market challenges,’ says Olga Dergunova, Deputy President and Chairman of VTB Bank Management Board, Director of the Graduate School of Management at St Petersburg University.