According to media reports, a recent study by the Global Entrepreneurship Monitor (GEM) names Auckland as the OECD’s most entrepreneurial city. With all due respect, I beg to differ.
I could not find any recent reports by GEM specifically identifying Auckland as the most entrepreneurial OECD city, however I did locate a July 2008 paper exploring the hypothesis, proposed by the work of Prof. Richard Florida and others, that “world cities” attract creative people and enterprises and are hence more entrepreneurial. Whilst I respect the idea that “creative class” and creative cities engender more entrepreneurial dynamism, I’m concerned by one or two shortcomings in the GEM methodology that seem to cloud some of the conclusions in the recent paper.
Firstly the GEM research questions subjects about their perceptions of entrepreneurial behaviours and opportunities and gives these values overly significant weighting, as opposed to assessing and reporting on actual levels of entrepreneurial activity. Furthermore it is assumed that regions with large numbers of aspirant or early stage entrepreneurs equates to economic success, when this is not neccessarily the case. An area with established and profitable businesses may be more economically successful than a region with many start-ups. The study is also a wee bit vague on defining exactly what a “world city” is. Finally, the research excludes a number of cities where high value technology entrepreneurship thrives such as Wellington, Adelaide, San Francisco and Taipei, for example.
Notwithstanding these shortcomings, it is a shame that the GEM research has not received funding in New Zealand over the last three years. The data is useful as a benchmarking tool and the methodology should be made more widely available so that excluded cities could make their own comparisons. It is unfortunate that no New Zealand data is available beyond 2005, hence we cannot be sure of what the current position might be. What we do know however, looking at the data up until 2005, is that when we include non-OECD cities, Auckland ranks similarly to Santiago, Buenos Aires and Bangkok in terms of “early stage entrepreneurial activity”. Is that really the company we want to keep? In other words, high levels of entrepreneurial activity do not neccessarily equate to high economic returns. But there’s worse news.
When we consider the data on prevalence rates of entrepreneurial activity by city versus national figures, Auckland actually demonstrates levels less than that of New Zealand as a whole -at least according to the research.