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Innovation for job creation

MOSCOW — Young entrepreneurs from the Group of 20 (G-20) countries see themselves as the most dynamic source of technology innovation and expect their businesses to achieve strong growth and job creation in the next two years, according to a report by Accenture and the G-20 Young Entrepreneurs’ Alliance (G-20 YEA). However, these entrepreneurs demand more support from governments and larger businesses to help them sustain their contribution to economic growth.

The survey of 1,000 business owners in the G-20 countries aged forty or younger revealed that more than three quarters (76%) believe they are the major source of technology innovation in their countries. Forty-one percent expect to grow their businesses by more than 8% annually over the next two years and 81% expect to create new jobs in that period. The findings were published in a report, "Entrepreneurial Innovation: How to unleash a key source of growth and jobs in the G20 countries," at the G-20 YEA Summit in Moscow, which brings together entrepreneurs and their local representative bodies from around the world.

Young entrepreneurs see their strong contribution to economic growth increasingly dependent on working with larger businesses. Thirty-five percent of respondents claim to collaborate with large businesses today and a further 46% intend to do so in the coming two years. They cite access to new markets, specialist skills and more expensive technologies as benefits of working with bigger organisations. Larger businesses appear less open, however. Fifty-two percent of respondents of a survey of larger companies conducted for the report said they have either no collaboration with entrepreneurs at all or just one such initiative with at least a single small company.

"Success requires autonomy and freedom to innovate, but certainly not isolation, and young entrepreneurs are no longer so suspicious of larger companies or intimidated by them," said Bruno Berthon, global managing director, Accenture Strategy and Sustainability Services. "But the feeling is not entirely mutual and big business should see entrepreneurs as peers, not just as small suppliers or irritating threats. Technology has shifted the balance of power towards small and agile inventors and larger incumbents would do well to bring young entrepreneurs into their ecosystem and benefit from their innovation, creativity and agility."

Entrepreneurs also demand more support from the government. Two thirds are not satisfied with current government policies. Eighteen percent say that governments take no actions to help entrepreneurs and a further 49% say that while they do, their efforts are not relevant or effective. Their primary demands are for changes to tax, the development of technology training and education, and public finance for entrepreneurs and small businesses.

"The influence of small companies and young enterprises is significantly greater thanks to new technologies," said Victor Sedov, president of the Centre for Entrepreneurship in Russia, the host of the G-20 Young Entrepreneurs’ Alliance Summit 2013. "Governments should do more to ensure that the innovation, power and ambition of young entrepreneurs can help address the problem of structural youth unemployment, and fuel economic growth. But entrepreneurs need governments to develop infrastructure and facilitate market access, improve technology skills, and open up new sources of finance and incentives that encourage riskier approaches to growth and international expansion."

Innovation expectations shift to China, India

Although respondents see the US as the most innovative country in the next two years, China and India are considered the second and fifth most innovative, respectively. This assertion finds possible support in separate Accenture analysis revealing that, of the world’s 5-million science, technology engineering and math (STEM) graduates, 86% came from China, Brazil and India in 2011.

"Young entrepreneurs are digital entrepreneurs who know that technology goes beyond geographic and sectorial boundaries and helps them rapidly scale their businesses to reach markets that, until recently, only large organisations could touch," said Accenture’s Bruno Berthon. "These entrepreneurs are in the best position to accelerate the move to mass customisation and to create entirely new categories of products and services through technology. It is vital that policy makers understand that, for young entrepreneurs, all markets are de facto emerging markets and that small digital enterprises have choices as to where they locate and do business."

The report suggests actions by large businesses and entrepreneurs themselves to improve the environment for innovative entrepreneurs. Key recommendations for country governments include:

• Stimulate demand through the development of digital infrastructures, export support schemes, the digitisation and opening up of public procurement to small companies, and the digitalisation of public services (including open data policies that encourage companies to create innovative services for the public sector).

• Support entrepreneurs through efficient tax incentives, access to broader sources of funding, greater investment in STEM education and training, and facilitating the creation of clusters and incubators.

• Develop business friendly environments for technology innovation through personalised and simplified online administrative processes, a higher tolerance for failure, standards for cloud technology that reduce fixed businesses costs, and an attractive environment for entrepreneurs to set up new businesses.

About the report

The report was based on an online survey of 1,000 entrepreneurs across all G-20 countries. Accenture also conducted workshops with young entrepreneurs in eight locations around the world to support qualitative analysis. Supplementary interviews of subject matter experts were also conducted.