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Assessing the entrepreneurship process: an application of the data envelopment analysis

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Abstract

Entrepreneurship, which is referred to as the most determinant factor in economic development, has been scrutinized throughout this study. Apart from the indisputable applicability of various statistical methods in the different fields of science, this paper attempts to find the roots of the inefficient steps of entrepreneurial activities using a nonparametric and linear model named data envelopment analysis (DEA). The present article tries to identify the distinct phases during the process of running a business from start to output(s). Following this objective, three basic and different steps were found in the process of launching a business. First is the step of converting from attitude to action. This step focuses on the efficiency of entrepreneurship when attitudes help people to become entrepreneurs. Second, this step includes all entrepreneurial activities which finally bring innovative products and services, generate jobs, provide conditions for exports, etc. Third, this step focuses on the effect of entrepreneurship on the gross domestic product (GDP) per capita, as a final output in the business market. To sum it all up, this paper used a new term named “entrepreneurship overall efficiency” to assess the efficiency of entrepreneurship attitude that focuses on the effect of entrepreneurial attitudes on the final output of an entrepreneurship system namely GDP per capita. The data used throughout this study is collected from the dataset gathered by Global Entrepreneurship Monitor (GEM) in the year 2018. As the most important outshot raised from this research, it is worth noting that the parallel assessment of all four computed stages during an entrepreneurship process will provide an idiosyncratic opportunity to researchers and policymakers to identify the obstacles in economic growth.

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Notes

  1. Decision-making unit (DMU) is a specified unit (e.g., organization, firm, entity, company, hospital, an individual) which is taking input(s) and after doing determined processes, creates output(s). In addition, making decisions to change in inputs and outputs are of its abilities which are mainly carried out by directors. For example, by considering a country as a DMU, it can be said that individual factors (such as entrepreneurial attitude, individual entrepreneurial abilities) and environmental factors (such as financial support and government policies in context of entrepreneurship) are the main inputs and, furthermore, economic status can be considered the output caused by the entrepreneurial inputs.

  2. According to Zbierowski (2011), efficiency is the proportion of the sum of weighted outputs to the sum of weighted inputs.

  3. The Global Entrepreneurship Monitor considers individuals between the ages of 18 and 64 years as the study population.

Abbreviations

GEM:

Global Entrepreneurship Monitor

DEA :

data envelopment analysis

GDP:

gross domestic product per capita

TEA :

total early-stage entrepreneurial activities

EB :

established businesses ownership

WEF :

World Economic Forum

NFCs :

National Framework Conditions

SMEs :

small and medium enterprises

EFCs :

Entrepreneurial Framework Conditions

DMU :

decision-making unit

BCC:

Banker, Charnes, and Cooper

CCR :

Charnes, Cooper, and Rhodes

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Acknowledgements

We are grateful to the reviewers for their wonderful comments and suggestions throughout the review process. Additionally, we highly wish to thank our family for encouraging us during this research.

Availability of data and material

The reports and dataset on individual and environmental factors affecting the entrepreneurship status, released by the Global Entrepreneurship Monitor (GEM), and the data relating to the Gross Domestic Product (GDP) per capita calculated in the year 2018 have been used throughout this study.

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Authors and Affiliations

  1. UNESCO Chair Professor Emeritus, Shiraz University, Shiraz, Iran

    Nezameddin Faghih

  2. School of Mathematics, Statistics, and Computer Science, University of Tehran, Tehran, Iran

    Ebrahim Bonyadi

  3. Faculty of Entrepreneurship, University of Tehran, Tehran, Iran

    Lida Sarreshtehdari

Authors
  1. Nezameddin Faghih
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  2. Ebrahim Bonyadi
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  3. Lida Sarreshtehdari
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Contributions

Nezameddin Faghih: The main ideas behind the paper have been developed by him and also he acted as the supervisor trying to improve the structures of this article.

Ebrahim Bonyadi: Conceptualization; methodology; software (including R programing language, and SPSS); validation; formal analysis; data curation; writing—original draft; writing—review and editing; supervision; project administration.

Lida Sarreshtehdari: investigation; resources; formal analysis; writing—original draft; visualization; project administration.

Corresponding author

Correspondence to Ebrahim Bonyadi.

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Faghih, N., Bonyadi, E. & Sarreshtehdari, L. Assessing the entrepreneurship process: an application of the data envelopment analysis. J Glob Entrepr Res 11, 311–327 (2021). https://doi.org/10.1007/s40497-021-00289-8

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