Entrepreneurship in Canada ranks 2nd in world, report says

Canada is second only to the U.S. in levels of entrepreneurial activity, beating most G7 countries and much of the developed world.

That's the conclusion of the Centre for Innovation Studies in Calgary, which researched the state of entrepreneurship in Canada for the international Global Entrepreneurship Monitor in London.

Canada's level of entrepreneurship is on a par with Australia, with about 13 per cent of the working-age population involved in early-stage entrepreneurial activity, according to Peter Josty, executive director of the Centre for Innovation Studies.

"The Canadian environment and culture for entrepreneurship is healthy. Entrepreneurship is seen as a good career for which opportunities exist within the capacities of a large segment of the population," the report says.

Among the positive attitudes cited for Canadian culture:

• Highly supportive of individual success achieved through personal effort.
• Emphasizes self-sufficiency, autonomy and personal initiative.
• Encourages creativity and innovation.

But the culture of innovation is different in Canada.

"In most countries consumer services is the big sector, but in Canada, the highest rate is in the business to business services and that's a whole different ballgame," Josty said in an interview with CBC News Network's The Exchange with Amanda Lang.

Canada also lags in entrepreneurship — in which process engineers and others improve business efficiency within a larger company, he said.

"The number of people in large businesses doing this is half the rate in the U.S. and Australia and we think this correlates with poor innovation and productivity in Canada," Josty said.

The peak age range for Canadian entrepreneurship is 45 to 64, but there remains a lot of activity among Canadians under age 45.

More highly educated Canadians are more likely to start businesses, but there are entrepreneurs with every level of education.

Education and innovation

Josty still sees some opportunity to boost entrepreneurship through the school system.

"The Canadian education systems, from the earliest levels, are suitably creativity oriented, but lacking in specific basic economic education and introduction to entrepreneurship itself," the report says.

Alberta has the highest number of early-stage entrepreneurs, while Quebec excels in entrepreneurs who create new business lines within an existing company.

"It turns out that Alberta's got the highest rate of entrepreneurship and it's also got the highest rate of gross domestic product per capita and if you look at the other provinces, it generally scales down according to their wealth," Josty said. 

As data for the report was gathered in 2014, when the economy was humming along, Josty expects data for this year should prove whether a faltering economy pushes more people toward starting businesses.

"I think there is quite a lot of incentive to stay small in Canada — there's the small business tax rate and the fact that quite a lot of people start lifestyle businesses, where they're not looking to be a global player, they're just looking to provide employment for themselves," he added.

Two women are entrepreneurs for every three men, a figure Josty says could be improved with policies to support female entrepreneurs.

Canada has a strong track record among G7 countries for turning its entrepreneurs into established businesses, with 9.4 per cent lasting at least 3½ years.

On the other hand, a large number of entrepreneurial startups don't survive, and others sell to new owners who continue the business.

Weakness in financing

Canadian entrepreneurs set less ambitious targets than their U.S. counterparts, perhaps because of the size of the economy, Josty said.

The weak areas in Canada's entrepreneurial sector are financing and creating opportunities for transformative innovation, as there are often delays in accepting new technologies.

"For example, programs at all levels could promote the rapidly emerging green technology industry in Canada as a transformative sector," the report said.