Comparing Entrepreneurial Climates of Germany and India: More Similarities
8.4 Empirical Results
Below, we compare Germany and India on the following entrepreneurial climate dimensions: financial climate, public policy towards new firms and entrepreneur- ship, entrepreneurship education, new firm’s access to technology, business opportu- nities and entrepreneurial inclinations, infrastructure, entry barriers, social attitudes and entrepreneurial reward systems. The test results for the questions that identify major similarities and differences are given in Tables 8.1 and 8.2. For reasons of brevity, barring few exceptions, we report test results for only those questions that are consistent in both years.
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Table8.1Summaryofmajordifferences(GermanyandIndia) Climate:H0:G=IWilcoxonrank-sum 20012000 zProb>|z|zProb>|z| FinancialclimateVenturecapitalistssupport3.67300.00025.34900.0000 FinancialclimateGovernmentsubsidizesnewfirms2.91300.00363.03900.0024 PublicpolicyCompetentgovernmentagencies2.87900.00403.46600.0005 PublicpolicyPriorityfornationalgovernment2.09000.03662.03400.0420 PublicpolicyPriorityforlocalgovernment2.76300.00572.98000.0029 PublicpolicyManyGovernmentprograms6.68900.00003.92500.0001 PublicpolicyScienceparks5.47400.00005.20100.0000 EducationHighLevelofbusinesseducation−2.35200.0187−3.44100.0006 AccesstechnologyTransferfrompublicresearch2.89900.00371.95800.0503 BusinessopportunitiesEasyinformationonopportunities3.34300.00083.33900.0008 BusinessopportunitiesManyareexperiencedinstartingnew businesses−4.49100.0000−3.58100.0003 BusinessopportunitiesManyreacttoopportunities−5.21100.0000−3.00700.0026 InfrastructureGoodphysicalinfrastructure7.35100.00007.74800.0000 InfrastructureAccesstoutilitiesinamonth5.42500.00005.66000.0000 InfrastructureCommunicationsaccesscheap4.30900.00003.61800.0003 InfrastructureCostofbasicutilitiesaffordable3.17200.00153.51100.0004 Notes:Resultsofthefirststepofthetestprocedure.H0isrejectedforalltheabovevariables.
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8.4.1 Financial Climate
The major differences in the opinions of experts with respect to financial climate are as follows: firstly, there are more public subsidies for promoting firm creation and firm growth in Germany compared to India, secondly, venture capital markets are perceived to be more active in Germany than in India. However, private individuals other than the founder entrepreneurs are considered to be an important source of private financial support for new firms in both the countries.
8.4.2 Public Policy and Entrepreneurship Programs
The experts in Germany opine that support for new firms has a higher priority at national and local government levels in Germany than the experts in India. Fur- thermore, the public policy measures for encouraging entrepreneurship are more numerous in Germany. Science parks and business incubators provide greater sup- port for new firms and employees working for government agencies are more competent and effective in their support for new firms in Germany than in India.
However, there are some similarities as well. In both the countries, government poli- cies like public procurement are not oriented towards new firms. Taxes pose a heavy burden on new firms. Governmental regulations are not considered to be consistent and predictable in either of the countries.
8.4.3 Basic and Entrepreneurship Education
Strikingly, the experts in India have a stronger belief about the business and manage- ment education in India than their counterparts in Germany. In both the countries, teaching at primary and secondary education levels is not considered to be encourag- ing creativity, self sufficiency and personal initiative. It is also believed that general education neither provides adequate instruction in market economy principles nor adequate attention to entrepreneurship and new firm creation.
8.4.4 Access to Technology
In comparison to India, technology, science and knowledge are believed to be more efficiently transferred from public research centers and universities to new firms in Germany. Furthermore, both have a science and technology base that allows them to support creation of world class new technology based ventures. However, in both the countries, new and growing firms have lesser access to research and technological facilities relative to large established firms.
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Table8.2Summaryofmajorsimilarities(GermanyandIndia) Climate:H0:G=IWilcoxonsigned-rank 20012000 zProb>|z|zProb>|z| FinancialclimatePrivatefinancialsupport3.20000.0014−0.85900.3901 PublicpolicyGovernmentfavorsnewfirms−5.25000.0000−2.87100.0041 PublicpolicyTaxesnoburden−3.05400.0023−4.36400.0000 PublicpolicyRegulationsappliedconsistent−2.17700.0295−4.24300.0000 EducationCreativity,self-sufficiency−5.92100.0000−6.33300.0000 EducationMarketeconomics−7.23900.0000−7.28800.0000 EducationAttentiontoentrepreneurship−7.58400.0000−9.06500.0000 AccesstechnologyFornewfirms−4.93600.0000−4.85900.0000 AccesstechnologySupportforventurecreation2.70800.0068−0.11500.9081 BusinessopportunitiesMoreopportunitiesthanpeople2.35700.01843.31300.0009 BusinessopportunitiesIncreasedinlast5year6.76500.00008.68700.0000 SocialattitudesWelfaresystemsencourage entrepreneurship−7.20800.0000−7.33300.0000 RewardsystemsPeoplecangetrichbynewventures3.20700.00133.35400.0008 RewardsystemsStoriesinmediaonentrepreneurs3.34900.00086.32500.0000 RewardsystemsNewfirmsonlyifnojobs2.49600.0126−2.01200.0442 Notes:Ifthenullhypothesisinthefirststepcouldnotberejected,thesecondsteptestsifexpertsinboththecountries havepositiveornegativeimpressions.
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8.4.5 Business Opportunities and Entrepreneurship Inclination of People
It is easier to get access to information required to evaluate business opportunities in Germany than in India. With a strong public policy commitment to entrepreneur- ship, this is very much expected. In Germany very less number of people are opined to have experience in managing a small business and starting a small business.
Moreover in the opinion of the experts, people in Germany are not inclined to react quickly to opportunities to start new businesses. On an average, India appears to be better when compared to Germany on entrepreneurial inclination. Experts in both the countries agree that there are more opportunities for entrepreneurship available than people who take advantage of them. They also feel that in the last five years such opportunities have considerably increased.
8.4.6 Infrastructure
Germany is markedly different to India on this dimension. Availability of excellent physical infrastructure makes Germany very conducive to new venture formation.
Inexpensive and advanced communication facilities are available and it is possible to obtain these facilities faster in Germany. Moreover, the experts in Germany opine that new firms can normally afford the cost of basic utilities. It is possible for new firms in Germany to get access to utilities like gas, water and electricity in about a month. On the contrary, the experts in India opine that infrastructure is very poor and is not conducive to new firm formation.
8.4.7 Social Attitudes
We find that the social security and welfare systems in both the countries are not conducive to entrepreneurship in the opinion of the experts. These systems do not provide encouragement for people to take initiative and be self sufficient. Younger people believe that they should not depend too heavily on the government. The social attitudes on personal initiative and individualism in Germany and India are remarkably similar.
8.4.8 Entrepreneurial Reward Systems
In both the countries, creation of new ventures is considered an appropriate way to become rich, indicating that these countries are slowly moving away from
8 Comparing Germany and India 119 inhibitions associated with entrepreneurial intentions. The media often tell stories about successful entrepreneurs. People think that individuals start new firms only if they do not find regular jobs; however, the opinion of experts is not consistent as is seen inTable 8.2.