It is difficult for policymakers to make informed decisions without having the right data. Global Entrepreneurship Monitor (GEM) fills this void. GEM is the only global research source that collects data on entrepreneurship directly from the source – entrepreneurs!
The data collection engine powering GEM research is composed of two complementary tools - the Adult Population Survey (APS) and the National Expert Survey (NES). GEM’s APS analyses the characteristics, motivations and ambitions of individuals starting businesses, as well as social attitudes towards entrepreneurship. The NES looks at the national context in which individuals start businesses.
Alicia Coduras is the NES Coordinator and also a member of the GEM Saudi Arabia National Team. In the following Q and A interview, she highlights the NES’ unique characteristics and features.
In short, what is the NES?
GEM argues that entrepreneurship dynamics can be linked to conditions that enhance (or hinder) new business creation. It identifies 12 factors that are believed to have a significant impact on entrepreneurship, which are known as the Entrepreneurial Framework Conditions (EFCs). The purpose of the NES is to assess the status of the EFCs in each economy at a given point in time.
Can you share some of the NES’ unique features?
The NES is designed for surveying experts who assess the average state of these EFCs. We assess 9 EFCs but offer 12 summary variables.
The survey is administered to a minimum of 36 carefully chosen experts in each economy (minimum sample is four experts by EFC). They are asked to respond to a series of statements on a Likert scale, rating them from completely false to completely true. GEM creates a NES Global Individual level file using all the data collected by teams. This results is a subjective but well-founded diagnosis of the average state of the context for entrepreneurship.
It is important to bear in mind that the NES is also a flexible tool. Every year GEM adds one or two new blocks of items to measure latent concepts of special interest. For example, in 2020 experts provided evaluations on entrepreneurs and governments’ first reactions to the COVID-19 lockdowns in participating countries. In 2021, GEM added blocks respectively on women’s entrepreneurship, ease of getting finance and the impact of the pandemic on digitalisation, the business environment, businesses models and the government response.
What are the 12 EFC summary variables?
They are as follows:
- Financial environment related with entrepreneurship
- Government concrete policies, priority, and support
- Government policies bureaucracy, taxes
- Government programs
- Entrepreneurial level of education at Primary and Secondary
- Entrepreneurial level of education at Vocational, Professional, College and University
- R&D level of transference
- Professional and commercial infrastructure access
- Internal market dynamics
- Internal market burdens
- General physical infrastructures and services access
- Cultural, social norms and society support
Can you share background on how the survey is conducted?
Each expert must complete the entire questionnaire regardless of the condition for which he/she was selected. Most of the experts are able to give opinions on all items of the questionnaire and 25% of the experts must be active as entrepreneurs or established businesspeople.
The questionnaire is structured in blocks of items that are constructs measuring a latent concept. Applying a principal component analysis (PCA) to each block of items and using the total sample of experts from all countries provides the 12 latent variables.
Can you provide an overview of GEM’s National Entrepreneurship Context Index (NECI)?
The NECI is tabulated from the arithmetic mean of these 12 components. It is a composite indicator that represents the average state of the entrepreneurial environment conditions of a country or territory in which it has been measured. Like all the variables that form part of the NES questionnaire, it is measured on a Likert scale of 0-10 points, so that the higher the value, the better the average state of conditions. It does not need to be a weighted average because its components have been previously weighted when Principal Component Analysis is applied. Since 2018, GEM offers a ranking where you can see the positions that countries occupy on an annual basis, thus allowing observation of evolution over the years.
With GEM, the number of countries varies annually. There are frequently new countries taking part in our research and sometimes other teams will not participate in a given cycle due to various circumstances. Each country that consistently participates can track the evolution of its NECI value and compare itself with other key countries that are stable within the project. This is in part why the index is such a valuable tool for policymakers and other stakeholders in a given economy’s entrepreneurial ecosystem.
The content included in this article is based in part on an internal training session led by Alicia Coduras in March 2021. A subsequent article on GEM’s APS will be published soon.
Interested in forming a team in your country so you can leverage the NES and GEM’s other research tools? Learn more at this link.