Armenia registered a high level of entrepreneurship last year, according to the Global Entrepreneurship Monitor: Armenia National Report 2019/2020. One out of five adults in Armenia were engaged in early-stage entrepreneurship, which was the 7th highest indicator among the 50 countries included in the GEM. GEM is a renowned annual report, considered a reliable source of information for economic policy makers and well-known international companies.

The sectoral structure of entrepreneurship in Armenia shows that the country has one of the lowest productivity levels compared to other countries. Unlike most of the countries in the 2019 GEM report, the structure of Armenian entrepreneurship is largely concentrated in two sectors: trade and agriculture. Motivation to start a business in Armenia appears to be less driven by the goal “To make a difference in the world” than by job scarcity and the country’s predominant socio-economic conditions.  

GEM Armenia team leader Tigran Jrbashyan (Head of Research at Ameria Advisory) and GEM researcher for Armenia Artashes Shaboyan (Chief Research Consultant for Ameria Advisory) have highlighted some positive findings of the report. According to them, GEM’s Adult Population Survey (APS) and the National Expert Survey (NES) contain four key related takeaways.

1. Most Armenians consider business a desirable career choice.

Is starting a business a desirable career choice? According to 87.2% of Armenian adults, the answer is yes. This ranks Armenia 4th out of 50 GEM countries in this category and first among Eastern European countries.

2. Armenia is average as it relates to the social perception of entrepreneurship.

The share of adults in Armenia who agreed with the statement “will be a good opportunity to start a business in next 6 months” is 53.9%. This perhaps is an aftereffect of the Armenian Velvet Revolution in 2018 which fomented some optimism in the population about the near future.

It is curious to observe that populations from Armenian regions outside of the capital city of Yerevan are more optimistic about future opportunities compared to those who live in the capital.

3. Self-perception indicators towards entrepreneurship are contradictory.

While Armenians assess their knowledge, skills, and experience quite high (12th out of 50 GEM countries), they rank among the top-10 for fear of failure. This is a very important factor, fear of failure correlates strongly to not being likely to start a business.

More Armenians would not start a business because of fear of failure (51%), compared to Russia and Belarus (45% and 37%), even if many more Armenians reported having the knowledge, skills and experience (70%) than Russians (36%) and Belarusians (42%).

A high level of fear of failure to start a business in Armenia can perhaps be explained by the nature of business culture in Armenia. If a business is not successful, it is perceived as a personal failure. This may also be a reason why the capital market is not developed in Armenia and why there are no large companies with many shareholders in the country. The lack of clear legislation addressing easy business exit, bankruptcy procedures and the sale of businesses further contributes to the fear of starting a business.

4. Armenians: innovative but inactive.

Interestingly, Armenia is 8th out of 50 countries and 2nd out of 9 Eastern European countries in terms of viewing themselves as innovative. However, they rarely see business opportunities (11th out of 50 countries) and their proactivity and vision is on an average level among all 50 GEM countries. Around 65% of Armenians rarely act even if they spot a profitable business opportunity.

Here you can access the complete study on Armenia:

https://www.gemconsortium.org/file/open?fileId=50506

Here you can download the global GEM report:

https://www.gemconsortium.org/report/gem-2019-2020-global-report

Amalie Khachatryan