June 23, 2005--The number of people in the U.S. involved in entrepreneurial activities declined by 20%, or some 4 million persons, from 2003 to 2004, according to a recent study by the Entrepreneurship Research Institute of Florida International University.
The drop was driven largely by an estimated 1.4 million fewer men aged between 18 and 34 who were involved in companies younger than three and a half years old, with another 1.4 million fewer men aged between 35 and 54 in those companies. The reoprt also found that 0.9 million fewer women aged between 18 and 34 involved in young companies, leaving a total of about 18 million persons engaged in start-ups.
The study attributed the decline in entrepreneurial activity to "A change in perceptions of events in the immediate personal context of these individuals' discouraged them from pursuing new firms as a career option."
The study also measured a person's "Personal Entrepreneurial Context" via their responses to interview questions on three issues -- "personal knowledge of others who are starting a business," "having the skills to pursue a start-up," and "perceiving good opportunities for starting a business where one lives."
There was a strong correlation between PEC and involvement in start-up activity, with about 30 times more involvement in start-ups amongst those who scored highest in the index, as compared to those who scored the lowest.
Dr. Paul Reynolds, author of the study, served as the Coordinating Principal Investigator of the Global Entrepreneurship Monitor program from 1998 to 2004, when he moved to the ERI.
The study set the above results in context of a rise in entrepreneurial activity in the US from 1993 to 2001, when there was a reversal and participation in start-ups fell by some 28% between 2001 and 2004.