According to new data reported in the Global Entrepreneurship Monitor (GEM) United States 2022-2023 report released today by Babson College, entrepreneurship rose to record-breaking heights throughout the United States in 2022 with the total rates of entrepreneurship activity achieving 18% for women and 20% for men, the highest in GEM history.
The annual GEM U.S. report tracks entrepreneurship rates and characteristics, as well as attitudes and self-perceptions about starting businesses, across all gender, race/ethnicity, and age groups in the United States. The research aims to continually educate and inform policymakers, practitioners, and other audiences who are helping to shape the future of the business world. This year’s GEM report, which polled more than 2,000 U.S. adults in the summer of 2022, displays how the past year’s surge in entrepreneurial activity was driven by young entrepreneurs.
Select findings include:
• High overall entrepreneurship rates continue an upward trend that began in 2015 and only experienced a brief downtick during the first year of the pandemic.
• Adults aged 18-34 reported nearly twice the rate of entrepreneurial activity compared to those in the 35-64 age group.
• Organizations launched by younger entrepreneurs, women entrepreneurs, and innovative entrepreneurs also advanced greater social change and environmental sustainability with their businesses.
• A notable shift toward manufacturing and logistics (12% in 2020 to 19% in 2022), with women at the forefront of this manufacturing growth.
• Even as total entrepreneurship activity rose, the rate of established business ownership stagnated and business closures continued to increase (5.2% business closure rate, up from 2.9% in 2019).
“It’s remarkable to see this record-breaking entrepreneurial activity, especially among young people, women, and innovators, who are not only reshaping the business landscape, but also propelling significant social and environmental advancements,” said GEM U.S. Team co-leader and Babson College Entrepreneurship Professor Donna J. Kelley. “As we continue to navigate the ever-evolving business landscape, it will be important to continue to support and empower entrepreneurs, celebrate their achievements, and promote inclusive and sustainable entrepreneurship for a better future.”
The Future of Entrepreneurship Is Prioritizing Environmental and Social Impact
Among entrepreneurs and established business owners, over half (55%) of both entrepreneurs and established business owners have taken steps to minimize their business’s negative environmental impact. For entrepreneurs, women (56%), the 18-34 age group (62%), and innovators (70%) were more likely to take such actions. Steps to help the environment may include energy-saving measures, reducing carbon emissions, introducing more efficient machinery, taking care of solid waste generated, and using recyclable materials as well as environmentally sound means of transportation.
With regard to steps that maximize social impact, 55% of entrepreneurs and 43% of established business owners took such action in 2022. Women (60%), those age 18-34 (63%), and innovators/established business owners introducing new products to customers (70%), were most likely to indicate these actions. Examples of socially minded efforts may include: creating employment for young employed persons and other underserved segments of the labor market; incorporating social enterprises into the supply chain; ensuring a diverse workforce; prioritizing companies and/or suppliers that take action to respect human rights when buying a product or service; fighting against any form of child or slave labor; and investing in, or providing other support for social projects or organizations.
Once again, the conclusions remain clear: there is a growing awareness that every business has an environmental and social impact, and that the onus to act sustainably is on the entrepreneur.
Entrepreneurs Shift Toward Manufacturing
Other key findings of this year’s report include a shift from industries like finance, real estate, and business services (30% in 2020 to 16% in 2022) toward manufacturing and logistics (12% in 2020 to 19% in 2022). Women were at the forefront of this manufacturing growth, with nearly 18% of women beginning in manufacturing compared to 9% of men.
Jeff Shay, one of the authors of this year’s GEM U.S. report, commented “The pandemic has exposed the profound hurdles linked to offshore manufacturing, revealing the U.S.’s excessive dependency on foreign countries for the production of goods. This surge in domestic manufacturing can be attributed to both the escalating prospects and mounting pressure to produce within the American borders. Furthermore, the amplified interest in logistics could be traced back to the extensive media coverage highlighting the logistical predicaments witnessed in the USA during the pandemic, such as the sight of countless container ships idling at ports.”
As for women entrepreneurs at the forefront of the manufacturing growth:
“Since COVID, there’s been a shift in how women are thinking about entrepreneurship. Instead of focusing on low-entry barrier and low-margin local companies like service businesses, they’re creating businesses to make a difference in the world, and in doing so, women are starting manufacturing, wholesale, and retail businesses on a larger scale. We didn’t see this same shift for men. Technology may also be playing a role in this shift as it has become easier to sell and market products online,” said Candida Brush, a professor at Babson College and another author of this year’s report.
High Rates of Entrepreneurship Among Black People and Growing Rates Among Hispanic People
In addition, this year’s GEM report found high rates of entrepreneurship among Black people and growing rates among Hispanic people. Of the racial groups surveyed, Black people have the highest total entrepreneurship activity (35%), followed by Hispanic people (27%). The White population reports much lower rates of entrepreneurial activity (15%). However, despite greater positive views of entrepreneurship in the Black and Hispanic communities, White people remain more likely to be running established businesses.
Who Were the Entrepreneurs?
Women perceive entrepreneurship as a good career choice (78% versus 74% for men), although they were a little less likely to feel it is easy to start a business (64% versus 68% for men). Both genders continued to exhibit high confidence in their entrepreneurial capabilities (60% for women, 73% for men).
"There is a clear call for enhanced support for entrepreneurship, which necessitates increased investment in education, robust mentorship programs, and strategic collaborations with academic institutions fostering an entrepreneurial mindset," said Dr. Stephen Spinelli Jr., President of Babson College. "In a world grappling with ongoing challenges, entrepreneurial leaders possess the tools to effect transformative solutions. Through initiatives like GEM, we gain valuable insights from entrepreneurs and provide them with guidance as they shape the trajectory of tomorrow’s world."
The full Global Entrepreneurship Monitor (GEM) 2022/2023 U.S Report is available here.
About Babson College:
Babson College prepares and empowers entrepreneurial leaders who create, grow, and steward sustainable economic and social value everywhere. We shape the entrepreneurial leaders our world needs most: those with strong functional knowledge, skills, and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in organizations of all types and sizes. An international leader in entrepreneurship education recognized globally by U.S. News & World Report, our undergraduate, graduate, executive programs, and partnership opportunities are tailored to the needs of our world.
Global Entrepreneurship Monitor (GEM) is a consortium of national country teams, primarily associated with top academic institutions, that carries out survey-based research on entrepreneurship around the world. GEM is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs. GEM’s Adult Population Survey (APS) provides analysis on the characteristics, motivations, and ambitions of individuals starting businesses, as well as social attitudes toward entrepreneurship. The National Expert Survey (NES) looks at the national context in which individuals start businesses. GEM began in 1999 as a joint project between Babson College (USA) and London Business School (UK). The consortium has become the richest resource of information on entrepreneurship, publishing a range of global, national, and special topic reports on an annual basis.
|AVP, Communications/Marketing Strategy, Babson College|