Entrepreneurs and their networks in MENA: an article and project using big data (and policy recommendations too!)

This is a snapshot of an article written in collaboration with Dr. Lotfi (working in Sousse, Tunisia) and Dr. Taha (working in Sanaa, Yemen), it is part of a special issue published in the International Journal of Business and Globalisation. If you would like to cite the information in this blogpost (e.g. too lazy to read the full article, or better yet all the articles in the special issue, but think we did great work) please cite:

Van Horne, C., Belkacem, L., & Al Fusail, T. 2013. “The composition of entrepreneurship networks in MENA: A comparative analysis” International Journal of Business and Globalisation. 11(4), 337-352.

Finally, our special issue and article are published! We started this journey almost two years ago now - an innocent request from Thomas Schott (our tireless leader) to collaborate with GEM teams working in MENA on entrepreneurs and their networks. This request was possible with a generous grant from the IDRC - or the Canadian International Development Research Centre (website in English) whose aim is "IDRC funds researchers in the developing world so they can build healthier, more prosperous societies". An initial meeting planned for Spring 2012 in Egypt, was move to Tunisia and then finally took place in Jordan.

Of course, being me I wrote about what we did each day and posted it on my blog. If you are curious of the dynamics of multi-national/cultural/disciplinary research, then it is worth a read. This was day 1 and if you are interested there are 4 more days to read :) http://uaestrategy.blogspot.ae/2012/06/idrc-paper-development-workshop-or.html

Each of the cross-country teams were given a topic (we gave our preferences) and my team looked at the general composition of the advisory networks around entrepreneurs operating in the MENA region and compared them across the 14 countries for which we had data. Table 1 illustrates the rich amount of data we had at our fingertips (APS stands for the GEM adult population survey):

Table 1: Composition of data used from 14 MENA countries

	Years of APS surveys with networks	Adults in APS	Networks surveyed	Networks around future-start-ups	Networks around start-ups	Networks around owner-managers
Algeria	2009, 2011	5427	2187	1106	765	316
Egypt	2010	2769	996	496	125	375
Iran	2009,2010,2011	10061	3291	1470	620	1201
Jordan	2009	2006	326	0	124	202
Lebanon	2009	2000	610	0	143	467
Morocco	2009	1500	477	0	109	368
Pakistan	2010, 2011	4009	1534	907	298	329
Palestine	2009, 2010	4072	1057	468	234	355
Saudi Arabia	2010	2000	278	14	177	87
Syria	2009	2002	309	0	85	224
Tunisia	2010	2001	643	328	39	276
Turkey	2011	2401	680	156	178	346
U.A.E.	2011	2021	254	40	119	95
Yemen	2009	2065	570	0	555	15
All countries		44334	13212	4985	3571	4656

Through statistical modeling we found that there was significant difference between entrepreneurs at various stages of venture development for network size and network diversity and that entrepreneurs with larger networks (number of advisers and more diverse (from different environments, e.g. private, work, professional advisers are more likely to launch their business in a short time.

However, most entrepreneurs (read the paper to see country and environment specific detail) operating in the region have narrow and shallow networks... (see Figure 2). Most articles might end there, but we had bigger ambitions with this project.

Figure 2: Diversity of the network around an entrepreneur in MENA region

A primary goal of this research was to develop policy recommendations for programs governments, NGOs and other organisations could develop to foster greater and more successful entrepreneurship in this region. These are our policy recommendations (again, read the other GREAT articles in the special issue for a more complete story) that are based on "big data" - the biggest data base available in the region in fact.

Policy recommendations

While further study into all aspects of entrepreneurship in the MENA region is needed, the roles of networks are an important concept to support given the findings of this paper. The following recommendations are drawn from the analysis of the data provided in the GEM APS and the literature on entrepreneurs and their networks.

1.      Local governments, supported by NGOs, private foundations and private companies, should provide an “entrepreneurial space” in community centers or places of worship – where future or new entrepreneurs could have access to information about the process to start a new venture and also come to seek advice from other budding entrepreneurs or advice from professionals who would donate their services.

2.      With the heavy reliance of private networks, and the often times extremely limited resources of pre-start-up and start-up entrepreneurs, professionals should be encouraged to provide pro-bono advice which could be made available to entrepreneurs at local community centers.

The networks used by entrepreneurs, especially in the MENA region are mainly from the private sphere, however, efforts made from local, national and international agencies could supplement these networks for additional entrepreneurial activity currently and in the future.

This was an amazing project and I look forward to continue working with these researchers and this data into the future. En'shallah we will!

IDRC paper development workshop or "Nerds at work to find solutions for some big problems" Day 5

Before I begin the last blog post (which is a little late I know) I want to thank the tireless coordinator, cheerleader and “research guide” Thomas Schott – he was the first to arrive and the last to leave – gave extra hours in the evening to ensure those of us who wanted to learn how to use Amos had the knowledge we needed to continue at home. Of course I use we in the sense of the group – I corrected an entire thesis once that used structural equation modelling, and so really had to understand it to make the right English edits, and that was enough for this lifetime J So that you Thomas for your efforts, your kind nature and your undying enthusiasm for the GEM project, MENA and your quest to be part of the bigger process of gaining understanding about entrepreneurship and the role of networks in this most important phenomenon.

We started the last day as we also did, with a group presentation (this time group 8 of 8) of their paper and preliminary results and then a discussion of the entire group with questions, recommendations and one or two nerd fights (which always ended with laughs and very good humour). Group 8 presented the role of networks on job growth – well the perception on the part of the entrepreneur on how many jobs he or she expects to create. Of course networks has an impact on this…

An entrepreneur’s network can roughly be defined as his or her “social capital” – which I tell students is like self-earned “wasta”. I came to the UAE almost three years ago knowing no one – and now I know a lot of people, in different industries and walks of life – through attending community events, volunteering, work, students, friends, etc. I have built my network which I use to learn about the environment in which I live and work – entrepreneurs do the same thing.

Back to the role of networks in expected job growth – use of professional (colleagues, etc.) and international (people living abroad or from abroad) seem to positively impact an entrepreneur’s expectation of job growth – why is another question and the team will work on that in the next while (manuscript due in September 2012!).

We also talked as a group about policy recommendations and how best to make them. Remember, we are all working on our respective GEM 2011 reports – these were the team leaders and members who attended the workshop – and our “sponsors” want/expect/need policy recommendations. One senior team leader reminded us that to write good policy we have to think like policy makers – what is the strategy, what is the vision, what is possible, what doesn’t cost an arm and a leg (ok, he didn’t mention the last item, but I know it is true in the MENA region especially).

We then did more spss training and I might have answered some student email while this was going on J

After our final delicious lunch (darn you Jordan and your excellent food, I gained weight last week!) each team presented a road map towards article completion in September. This represents our “contract” amongst the team members and with the larger group (and IDRC who funded this project). Because we need to publish our papers or it would be like we sang into the wind, it may be the most beautiful song every sung – but if it is not recorded it will have a very limited impact (e.g. none) on the world.

It was really nice that two of the people who mentioned on day 1 their lack of confidence in their English speaking skills, spoke for their groups. Smile and courage in action! It made me happy that the environment of the group and its positive atmosphere had allowed their confidence to grow …

Second to last we talked about forming a task force – made up of MENA researchers working in the MENA region on the subject of research into entrepreneurship. I hope something comes of it – but of course sustaining any taskforce requires funds – funds we lack. We will see though J And of course I will keep you all updated through this blog.

This was an amazing experience for me as a young professor (OK, not so young in age, but young in career) and I know that we all benefitted from it. It would be wonderful to repeat it – with PhD students and not necessarily on entrepreneurs’ networks, but on research in entrepreneurship in the MENA region. We need more understanding of it – we really do. On the last evening we went for coffee on a very nice street downtown and we saw a small scuffle of local teenagers (or young men) – of course I thought they wouldn’t be doing this if they were busy doing something else – but they might not feel prepared or able to do anything else – why? What can we do to help? What skills are they lacking? How can we best motivate them? What industries interest them most? See, there are way more questions than hours in a day – that is why we need to work together to come up with some understanding based on sound scientific research – kind of like building our house on stone and not sand.

I will keep you updated with paper links as they happen – and if you would like to donate money to start the task force I will put you in touch with the right people J 

P.S. - Thank you Nadia and the IDRC - without your funding and efforts this would not have happened - thank you for setting an example of what rich countries need to do to create sustainable solutions for the great challenges the MENA region faces.

IDRC paper development workshop or "Nerds at work to find solutions for some big problems" Day 4

Second to last day and still no photos, sorry ... maybe I will ask someone to send me one of the dozen or so group photos we took last night!

I have forgotten to mention something that I actually tweeted - we are doing a lot of SPSS training (sigh) but it provides very good opportunities for nerd jokes (and yes, it is a great way to make the most of the rich and wonderful data we have and it is one of the best ways we have to test theory, test hypotheses and maybe even start to build some theory for the MENA region). OK, back to the nerd jokes, which are funnier than you may think (and really this is such a funny group, I laugh so much (maybe to hide the pain of SPSS).

OK, the joke already - in statistics things are "significant" when the relationship between the variables means that something is there and not just by chance or randomness (don't think that is a word, but you know what I mean). BUT - relevance means researchers should care about it - or it is interesting (e.g. UAE is a smaller country than Saudi Arabia) - so, kind of a running joke is about things being "significant, but not relevant". Hmmmmmm - ok, maybe you have to be there to get it, but really, in context and in that room sitting around that big table it is super funny!

But, what did we discuss today - well in the morning it was the impact of networking on the innovativeness of entrepreneurs - e.g do they offer products and services that others don't, that are new to the market, etc. By the way - UAE is tops on innovativeness for MENA countries... but really, it has more to do with the fact that we have more opportunity driven entrepreneurship than necessity driven entrepreneurship (no one needs to start a business to eat in the UAE, we are very very lucky that way). And still with all that, when compared with the rest of the world, the UAE is kind of low ...

The literature tells us that networks support innovation, because we have access to more information and therefore should be better informed of what is going on in the market and have more opportunities to hear about or see opportunities... but how are networks good and how could governments and NGOs working in the region support these networks.

Not surprisingly, when entrepreneurs mainly seek out advice with their family or close network - innovation is not often a result. Not surprising, our family and friends mainly (unless they live overseas or something) see and hear what we see and hear - so no really "new" or "novel" information.

I kind of had more moments of reflection today - because MENA entrepreneurs (in general) don't really take advantage of the "network" effect as much as other places - but why? Is it that the advice given by workplace, professional and market actors worse or of poorer quality than in other parts of the world - hmmmm, maybe.

Or, could it be that entrepreneurs in the region (in general) are not able to turn advice (or information) into knowledge or action because THEY do not have the necessary  education, skills or experience needed to turn information into knowledge into value (OK - my PhD thesis might have been on a very similar theme, but I think I am right).

But - good news, governments can more easily improve the skills of entrepreneurs than the professional, banking and regulatory system in their countries!

One last aside for this shorter than normal blogpost (I am super tired) - when we talk about MENA, we really cannot ignore God - most of the residents and entrepreneurs are Muslim and practising - and I think an understanding of that (especially for non - Muslim researchers like myself) is important for understanding the phenomenon of entrepreneurship.

Now, this was a private discussion and not in any way part of the official agenda for the meeting (said to reassure my secular Canadian readers), but this is my blog, so I will let you know about it!

We talked about the role that God plays in life, many in the West seem to believe that Muslims believe that God dictates all, but not exactly. We realised that we all (in the mini-discussion) come from traditions where we say that God helps those who help themselves – I think in the MENA region we can’t ignore God and religion in any phenomenon.

Finally, another last thing (reread my notes and realised I wanted to talk about this). Innovativeness is most linked (in a significant way) to the existence of an international network. In other words, the use of international networks has a significant and relevant affect on the innovativeness of entrepreneurial firms and the goods and services they offer. We tested this with the data a couple of ways, first we used a complex model, which was the same result of the simpler model and reflected the observations I have made through interviews and contacts with entrepreneurs in the UAE (and Dr. Victor had the same observation).

So, we may use many different methods to arrive at the same understanding - sometimes in research all roads do seem to lead to Rome.

À demain!