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Family business and the entrepreneurial ecosystem

By Jonathan Levie - Posted on 5 November 2015

Professor Jonathan Levie of the Hunter Centre for Entrepreneurship and author of the Global Entrepreneurship Monitor Scotland 2014 report puts the spotlight on family business and entrepreneurial behaviour, and how the entrepreneurial ecosystem in Scotland can help those without a family business background 

The latest Global Entrepreneurship Monitor survey looked at entrepreneurship in Scotland, analysing the entrepreneurial attributes of individuals and the factors that underpin them. Our survey found that people in Scotland with a family business background are more likely to feel they have the skills to start a business, are more likely to see opportunities for starting a business, and are less likely to fear failure. People who worked in a business belonging to a parent are twice as likely to be trying to start a business of their own or running their own new business than those with no family business background.

What it also shows is that these fledgling entrepreneurs don't simply wait around to take over the reins and follow the existing path but instead are keen to often take a new path - they are twice as likely as other people to start a new business from scratch. Often, this new business is a way for them to prove themselves as future family business leaders and sometimes their new business venture can save the family firm in some way (where perhaps it was in danger of failing due to lack of innovation).

They are often more inclined to think creatively and perhaps prove themselves by improving the family business, reinventing it or doing something altogether different.

It makes sense that those from an entrepreneurial background and who have grown up surrounded by entrepreneurial role-models are themselves entrepreneurial; for those without that background, there are thankfully other things which can influence them in that direction. Many of the attributes that distinguish early-stage entrepreneurs from others are not easily altered by government policy - as well as family business background, these are attributes like age, gender, household income, education level, and migrant status. However, areas where policy might be able to influence are: knowing a start-up entrepreneur, perceiving opportunities, and perceived media reporting of successful new businesses.

So our research for the Global Entrepreneurship Monitor shows that to help those without that family business background, Scotland's entrepreneurial ecosystem needs to be well connected to ensure that aspiring entrepreneurs can find the contacts, advice and funding they need.

In 2014, the Scottish Government announced a new Scottish Framework and Action Plan for Women's Enterprise, with £50,000 for an Investing Women initiative and £35,000 to help establish five new women's enterprise ambassadors to act as role models and mentors for start-up and growth businesses, inspiring, motivating and connecting with female entrepreneurs. The Scotland CAN DO Action Framework was also launched in 2014, setting out in detail current investment priorities for the Scotland CAN DO strategy for becoming a world-leading entrepreneurial and innovative nation.

The REAP Scotland report was released in July 2014, proposing a focus on five key themes to boost innovation-driven entrepreneurship in Scotland: effective communications, skills for growth, access to finance, the role of universities and role models.

These are certainly good ideas to get those from a non-entrepreneurial background aware of entrepreneurship initiatives. The challenge now is to mobilise all stakeholders in Scotland’s entrepreneurial ecosystem to take action to implement them and boost the quantity and quality of entrepreneurship in Scotland.

Are you in a family business and taken an innovative path? What support was there for you? Or are you an entrepreneur who has taken advantage of mentors or support groups to progress your idea? What more do you think can be done to support entrepreneurship?

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