The Entrepreneurial Climate in Canada: The Entrepreneur's Viewpoint

Article excerpt

Introduction

Entrepreneurial firms are vital to the growth and continued health of the Canadian economy. According to the Canadian Foundation for Investor Education (CFIE, 2004), small and medium sized enterprises (SMEs), proportionally, make up a larger part of the Canadian economy than they do in the US, Britain, and most other Western nations. In fact, the SME sector accounts for roughly 50% of GDP and over half of total employment (CFIE, 2004). However, a larger proportion of these companies also fail when compared to other countries, particularly the United States (CFIE, 2004). Moreover, there is some data to suggest that Canada is not as entrepreneurial as it could or should be, and is lagging behind other countries, including the United States, in developing the right climate for entrepreneurial development (Minniti and Bygrave, 2003; Riverin, 2002).

The study examines the entrepreneurial climate in Canada, from the entrepreneurs' perspective, in an attempt to delineate the factors and issues surrounding entrepreneurial activity in Canada and to determine whether or not Canada offers a nutrient-rich environment for entrepreneurial development.

Literature Review

It has been argued that before there can be entrepreneurship there must be the potential for entrepreneurship (Kreuger and Brazeal, 1994). Moreover, Shapero (1981) suggests that potential entrepreneurs are critical to a resilient self-renewing economic environment. But, how is entrepreneurial potential created and supported? It has been suggested that from our contexts we learn our beliefs, attitudes, and assumptions about the world and that we do so from our earliest days to adulthood (Katz, 1992; Scott and Twoney, 1988). Evidence suggests individuals learn about entrepreneurship and basic beliefs about starting a business within a social and cultural context (Kreuger, 1993; Peterson and Roquebert, 1993). Indeed, researchers have found that the psychological aspects of the individual, including personality traits, predispose people to entrepreneurial behavior (Bygrave and Hofer, 1991). However, it has also been established that while personality may predispose individuals to entrepreneurial activity, factors in the external environment may be more determinant in terms of whether or not a person undertakes such an activity (Gartner, 1989; Gibb, 1993).

Moore's (1986) model of the entrepreneurial process suggests that the external environmental is critical in realizing the potential for entrepreneurship. In short, it can serve as an accelerator or inhibitor of entrepreneurial development within a nation. Some of these environmental factors include a society's cultural values, presence of role models and government policy. While Timmons and Spinelli (2004) have found that entrepreneurial development is based on three things--people, opportunity, and resources--they suggest, like Moore, that these three constructs are embedded in a massive external infrastructure: society, government, culture, economy, legal issues, business environment, education, technology, and banking. In particular, they argue that an individual's personal values and aspirations (e.g., to start a business) are shaped by environmental conditions. Reynolds (1992) concurs by suggesting that entrepreneurial activity does not occur in a vacuum. Instead it is deeply embedded in a cultural and social context. Bygrave (1998) has also found that the external environment surrounding the individual can affect, positively or negatively, entrepreneurial development.

Shapero (1981, 1982) suggests that entrepreneurs emerge from a "nutrient-rich" environment. These nutrients must include social and cultural support, information and tacit knowledge, as well as tangible resources. He argues that such "seedbeds" can establish fertile ground for potential entrepreneurs to seize and exploit opportunities. Kreuger (2000) suggests that perceived social norms, perceived resource availability, and the existence of role models affect entrepreneurial intent. …