GEM Indonesia 2014 Report

FOREWORD
UNPAR through the Centre of Excellence for Small and Medium Enterprise Development (CoE
SMED) has joined the GEM Consortium since 2013, and in 2014 we conducted our second
research activities and increase our sample size for more solid findings. GEM research project
that is mainly conducted based on Adult Population Survey (APS) and National Expert Survey
(NES).
Joining GEM and conducting research in entrepreneurship is our commitment to contribute to
the development of the Indonesian SMEs. The research is to understand the entrepreneurial
conditions in Indonesia and to provide data for the phenomena in entrepreneurship activities.
With this research project, we are able to recommend appropriate actions that might enhance
and maintain SME sustainability as well as to create research network and research
collaboration in entrepreneurship.
GEM Indonesia is really thankful for all the parties without whom this project would have not
been possible:
1. Our main sponsors International Development Research Centre Canada. Thank you sincerely
for the financial support as well as the encouragement for capacity building of the team member
and the effort for strengthening our networks.
2. Our University, represented by the Institute for Research and Community Service, UNPAR, that
continuously supports this project for both financial and non-financial supports.
3. The 36 national experts who willingly gave of their time and shared their insights with the
entrepreneurial framework conditions in Indonesia.
4. PT Idekami Riset Komunika Indonesia that conducted the Adult Population Survey 2014 and parts
of National Expert Survey.
5. GEM Malaysia Team Leader, Assoc. Prof. Dr. Siri Roland Xavier, Universiti Tun Abdul Razak,
Malaysia, for his great support and work in coordinating the project.
6. The GEM Global Data Team. We acknowledge their continuous support and significant
contribution in reviewing, evaluating and harmonizing data before, during, and after the survey
process.
7. Research fellows in CoE SME Development, UNPAR, for their feedback and support.
8. Jim Holmboe for the editing and proofreading process.
9. Sebastianus Stevanus for the wonderful cover design.
10. Entrepreneurs that have given their invaluable insights for supporting our findings.
11. Family and friends who provided incomparable support during the write-up of this report.
The GEM 2014 Indonesia Report highlights many positive entrepreneurial profiles and portrays
the entrepreneurial ecosystems in Indonesia. The results are not perfect; however, the report
hopefully can give solid basis for further research and to encourage more and more
exploratory studies in entrepreneurship. We also wish to get feedback and input to improve
our studies. Furthermore, we expect work together with many entrepreneurial stakeholders
to support challenging entrepreneurship journey. Thus, we call for more collaborative works
based on GEM 2014 findings.
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CONTENTS
FOREWORD ............................................................................................................................................ 1
CONTENTS .............................................................................................................................................. 3
GLOSSARY .............................................................................................................................................. 5
CHAPTER 1: ENTREPRENEURSHIP AND THE GEM MODEL .................................................................. 7
1.1 Employment in Indonesia .............................................................................................................8
1.2 Entrepreneurship in Indonesia .....................................................................................................9
1.3 GEM in INDONESIA ..................................................................................................................... 10
1.4 How GEM Measures Entrepreneurship ......................................................................................12
1.5 The GEM Conceptual Model ....................................................................................................... 13
1.6 Research Methodology .............................................................................................................. 14
CHAPTER 2: ENTREPRENEURIAL ATTITUDES ......................................................................................17
2.1 Entering Entrepreneurial pipelines ............................................................................................ 18
2.2 Self efficacy, role model, opportunity and fear of failure ........................................................ 19
2.3 Entrepreneurship as Career ....................................................................................................... 23
2.4 Roles of Media and Social Values .............................................................................................. 24
CHAPTER 3: ENTREPRENEURIAL ACTIVITY ........................................................................................ 27
3.1 Total early-stage entrepreneurial activity ................................................................................. 28
3.2 Established business ownership ................................................................................................ 32
3.3 Necessity and opportunity motives of entrepreneurship........................................................ 33
CHAPTER 4: INTRAPRENEURSHIP Entrepreneurship Employee Activities .................................... 35
4.1 Entrepreneurial Employee Activity : Concept and Definition .................................................. 36

4.2 Capturing Entrepreneurial Employee Activity...........................................................................37
4.3 Research design for Capturing Entrepreneurial Employee Activity ....................................... 38
4.4 Characteristics of Entrepreneurial Employee Activity ............................................................. 40
CHAPTER 5: ENTREPRENEURIAL FRAMEWORK CONDITIONS ......................................................... 45
CHAPTER 6: Indonesian Entrepreneurship in ASEAN Context ......................................................... 49
6.1 The entrepreneurial pipeline in ASEAN..................................................................................... 50
6.2 Entrepreneurial attitudes in ASEAN ..........................................................................................52
CHAPTER 7: CONCLUDING REMARKS AND IMPLICATIONS .............................................................. 59
REFERENCES ......................................................................................................................................... 61
CoE SME DEVELOPMENT (INSTITUTE FOR RESEARCH AND COMMUNITY DEVELOPMENT)
UNPAR
GLOSSARY
The table below list all indicators and the definitions .
Indicators
Description
Total early-stage Entrepreneurial

Activity for Female Working Age
Population
Percentage of female 18-64 population who are either a nascent

entrepreneur or owner-manager of a new business

Activity for Male Working Age
Population
Percentage of male 18-64 population who are either a nascent

Improvement-Driven Opportunity
Entrepreneurial Activity: Relative
Prevalence
Percentage of those involved in TEA who (i) claim to be driven by

opportunity as opposed to finding no other option for work
Necessity-Driven Entrepreneurial
Activity: Relative Prevalence
Percentage of those involved in TEA who are involved in

entrepreneurship because they had no other option for work
Established Business Ownership

Rate
Percentage of 18-64 population who are currently owner-manager

of an established business, i.e., owning and managing a running
business that has paid salaries, wages, or any other payments to the
owners for more than 42 months

Activity (TEA)
Percentage of 18-64 population who are either a nascent

New Business Ownership Rate
Percentage of 18-64 population who are currently a owner-manager

of a new business, i.e., owning and managing a running business
that has paid salaries, wages, or any other payments to the owners
for more than three months, but not more than 42 months
Nascent Entrepreneurship Rate
Percentage of 18-64 population who are currently a nascent

entrepreneur, i.e., actively involved in setting up a business they will
own or co-own
Media Attention for

Entrepreneurship
Percentage of 18-64 population who agree with the statement that

in their country, you will often see stories in the public media about
successful new businesses
High Status Successful

Entrepreneurship

in their country, successful entrepreneurs receive high status
Entrepreneurship as Desirable
Career Choice

in their country, most people consider starting a business as a
desirable career choice
Know Startup Entrepreneur Rate
Percentage of 18-64 population who personally know someone who

started a business in the past two years
Entrepreneurial Intention
Percentage of 18-64 population (individuals involved in any stage of

entrepreneurial activity excluded) who intend to start a business
within three years
Indicators
Description
Fear of Failure Rate
Percentage of 18-64 population with positive perceived

opportunities who indicate that fear of failure would prevent them
from setting up a business
Perceived Opportunities
Percentage of 18-64 who see good opportunities to start a firm in

the area where they live
Perceived Capabilities
Percentage of 18-64 population who believe to have the required

skills and knowledge to start a business
ENTREPRENEURSHIP AND THE GEM MODEL
One of the top creative products from Bandung, Amble Footwear, is designed with a paradigm
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The economic outlook of Indonesia in 2014 is promising, both in terms of economic growth
and business growth. Despite slowing down in recent years, Indonesias Gross Domestic
Product (GDP) growth is still impressive (5.8% in 2013).
Indonesia has high young population and it is expected that Indonesia will have population
bonus in 2030. Hence, Indonesia needs to have more job opportunities for accommodating
Indonesian adults. In the current situation, the macroeconomic growth has succeeded in
pushing Indonesia's unemployment rate steadily downward. Nevertheless, more
employment needs to be created. Thus, entrepreneurship is becoming more and more
important for Indonesian development.
GEM evaluates the relationship

between entrepreneurial
activities and entrepreneurial
attitudes by considering the
national context of the country,
including socio-economical and
cultural contexts.
In 2014, Indonesia administered an Adult Population Survey (APS) of

5,520 adults between 18-64 years old in urban and rural areas in 23
provinces in three parts of Indonesia (Western, Central and Eastern
Indonesia). These 23 provinces (of 34 provinces in Indonesia) cover more
than 85% of the Indonesian population. Complementing the APS was a
National Expert Survey (NES), which provided in-depth opinions from
selected national experts (36 experts) on the factors that impact the
nature and level of entrepreneurship in each economy. Experts were
selected from among entrepreneurs, professionals, government
officials, academics and researchers who had experience in one of nine
entrepreneurial framework conditions (EFCs).
Since its establishment in 1999, GEM has measured and analyzed entrepreneurship using a
holistic approach. In 1999, GEM started to analyze the ambitious and non-ambitious types
of entrepreneurship, and in 2000 it started identifying necessity and opportunity-driven
motivation early on in the project. Starting in 2001, GEM established and standardized the
same indicators in order to have a time-series analysis.
GEM evaluates the relationship between entrepreneurial activities and entrepreneurial
attitudes without ignoring the national context of the country, including socio-economical and
cultural contexts. Entrepreneurial attitudes are seen as both social and individual values. GEM
believes that there is the direct relationship between entrepreneurial conditions
(Entrepreneurial Framework Condition or EFC) with entrepreneurial attributes.
This chapter identifies the entrepreneurship and GEM in Indonesia, and shows how GEM
Indonesia team members conduct research in entrepreneurship.
1.1 Employment in Indonesia

The economic outlook of Indonesia is promising, both in terms of economic growth and
business growth. Despite slowing down in recent years, Indonesias Gross Domestic Product
(GDP) growth is still impressive (5.8% in 2013). The GDP has steadily risen, from $ 285,9 billion
in the 2006 to $878,0 billion in 2013, and future forecasts for Indonesia's economic
development are still. The World Bank projects Indonesia's annual GDP growth in the range of
5.3 to 6.0 percent for the period 2014 to 2017 because Indonesia has sufficient political and
economic reform. The World Bank also predicts that if it is combined with large investments in
physical infrastructure, the GDP will be even higher (one or two percentage points to current
GDP growth forecasts).
Table 1.1. Labor Force Indonesia
2010
Labor Force
116,527,546
- Working
108,207,767
- Unemployed
8,319,777
Unemployment rate
7.1%
Source: Statistics Indonesia
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2011
119,399,375
111,281,744
8,117,631
6.8%
2012
120,320,000
113,010,000
7,310,000
6.1%
2013
120,170,000
112,760,000
7,410,000
6.2%
2014
121,870,000
114,630,000
7,240,000
5.9%
This macroeconomic growth has succeeded in pushing Indonesia's unemployment rate

steadily downward. The table 1.1 indicates Indonesia's unemployment rates in recent years. It
can be seen that the unemployment rate has been decreasing along the years, with the rate of
5.9% in 2014.
Although macroeconomic growth has succeeded in holding the rate of unemployment down,
with around 250 million people, Indonesia still faces a big challenge. As around two million
Indonesians enter the labor force each year, the Indonesian government should be concerned
about job creation to absorb this group of annual newcomers: the youth.
Based on Statistics Indonesia Report (2013), Indonesia has a young population, as around half
of the total population is below the age of 30 years, and Indonesia currently contains a large
labor force--one that will grow larger in the foreseeable future.
Small and Medium Enterprises (SMEs) in Indonesia assist the issue of employment. SMEs
create job and play a significant role in reducing the unemployment rate. Based on COMCES
Coordination Office (2013), SMEs in Indonesia created 101,722,548 jobs in 2011, and in 2012,
SMEs successfully created 107,657,509 jobs . Also, Indonesian SMEs have contributed to more
than 90% of GDP, and between 2003 and 2006 both small and medium-scale businesses
contributed more than 50% to GDP growth (Tambunan, 2008).
1.2 Entrepreneurship in Indonesia

Indonesia has put a lot of effort into strengthening and encouraging
entrepreneurship, including in small and medium enterprise activities.
With Presidential Decree No. 28/2008 about National Industry Policy, the
Indonesian Ministry of Industry in 2009 developed a roadmap for
industrial clusters (2010-2014)1, which set strategies including
empowering new development of entrepreneurs in certain clusters, such
as creative industries and SMEs and strengthening the competencies of
existing clusters in potential areas. Specific to SME development, the
Indonesian Ministry of Cooperatives and SMEs facilitates the emergence
and development of new SME businesses as SMEs are the main
economic actors in the competitive national economy.
Indonesia is considered to be a
country that has relative
difficulty in doing business
although Indonesian SMEs
have played significant roles in
Indonesian economic growth.
Based on measurements of the ease of doing business conducted by the World Bank (IFC,
World Bank, June 2012), it is evident that there are still challenges facing Indonesia. Among
ASEAN countries, Indonesia is considered to be a country that has relative difficulty in doing
business. Table 1.2 clearly indicates the substantial differences in ratings, especially when
mapped against ASEAN countries. While Singapore is the easiest country in term of the ease
of doing business, Indonesia and the Philippines have low ranks in this category.
There are six books of roadmap developed by Ministry of Industries: Manufactaring Industry Clusters,
Agroindustries, Transportation, Electronics and Telematics, Creative Industries; and Targeted Small and Medium
Enterprises.
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While the potential benefits of increased entrepreneurship are known, better evidence is
needed to identify the most effective policies for entrepreneurship promotion in the
Southeast Asian region. Available data (e.g. the World Bank, Ease of Doing Business Report
2012-2013 and the World Economic Forums Global Competitiveness Report 2012-2013)
approximate levels of entrepreneurship and focus on business environments but do not
analyze the relationship between a broader set of environmental conditions and the
entrepreneurial characteristics, perceptions, and aspirations.
Table 1.2. Easy of Doing Business Index
SEA Countries
1. Singapore
2. Malaysia
3. Thailand
4. Vietnam
5. Indonesia
6. Philippines
Ease of Doing Business Index - 2012

1
12
18
99
128
138
(Source: http://data.worldbank.org/indicator)
While the potential benefits of increased entrepreneurship are known, better evidence is
needed to identify the most effective policies for entrepreneurship promotion in the
Southeast Asia region. Available data (e.g. World Bank, Ease of Doing Business Report 20122013 and World Economic Forums Global Competitiveness Report 2012-2013) approximates
levels of entrepreneurship and focus on business environments but does not analyse the
relationship between a broader set of environmental conditions with the entrepreneurial
characteristics, perceptions, and aspirations of entrepreneurs.
These relationships are important for understanding the performance of entrepreneurship as
a tool of growth and job creation. Thus, GEM study has become important in Indonesia to
understand and assess the relationship of most entrepreneurship framework conditions and
all entrepreneurial activities taking place in Indonesia.
1.3 GEM in INDONESIA

The GEM model has a dynamic element in its methodology in which it incorporates an
understanding of how economies change as they develop, and the changing nature and
contribution of entrepreneurship in this development (Bosma et al, 2012). The model
suggests an evaluation of job creation, technical innovation and other factors such as the
degree of competition and international orientation. Furthermore, data collection can extend
to the exploration of the unique role of entrepreneurship in national economic development.
Since SMEs are a strong and unique source of entrepreneurship in Indonesia, the GEM model
will be able to capture SME development in Indonesia.
The Global Entrepreneurship Monitor was conceived in September 1997 by Michael Hay of the
London Business School (LBS) and Bill Bygrave of Babson College. LBS and Babson funded a
prototype study that year. Ten national teams (the G7 economies: Canada, France, Germany,
Italy, Japan, United Kingdom and the United States, and three additional economies:
Denmark, Finland and Israel) conducted the first GEM study in 1999 with Paul Reynolds as the
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principal investigator. Under his supervision the project grew to 31

national economies in 2003. In order to govern the interests of the GEM
National Teams, the Global Entrepreneurship Research Association
(GERA) was formed in 2004 to serve as the oversight body for GEM.
GERA is a not-for-profit organization governed by representatives of the
national teams, the two founding institutions and sponsoring
institutions.
GEM provides a comprehensive

view of entrepreneurship across
the globe by measuring the
attitudes of a population, as well
as the activities and
characteristics of individuals
involved in various phases and
Until 2014, GEM has measured entrepreneurship in more than a hundred

types of entrepreneurial activity.
economies, and has gained widespread recognition as the most
authoritative longitudinal study of entrepreneurship in the world. In
2014, seventy-three countries participated in the survey. Countries participating in the 2014
GEM survey represent 72.4% of the worlds population and 90% of the worlds GDP. Thus, this
survey provides a very significant basis for identifying different features of the
entrepreneurship phenomenon.
GEM focuses on these main objectives:
to allow for comparisons with regard to the level and characteristics of
entrepreneurial activity among different economies;
to determine the extent to which entrepreneurial activity influences economic growth
within individual economies;
to identify factors which encourage and/or hinder entrepreneurial activity; and
to guide the formulation of effective and targeted policies aimed at stimulating
entrepreneurship
GEM provides a comprehensive view of entrepreneurship across the globe by measuring the
attitudes of a population, as well as the activities and characteristics of individuals involved in
various phases and types of entrepreneurial activity.
These objectives also apply to GEM Indonesia. The research team in Indonesia, as in other
countries, administers an Adult Population Survey (APS). Complementing the APS is a National
Expert Survey (NES), which provides in-depth opinions from selected national experts on the
factors that impact the nature and level of entrepreneurship in each economy.
GEM is based on the following premises. First, an economys prosperity is highly dependent on
a dynamic entrepreneurship sector. While this is true across all stages of development, the
nature of this activity can vary in character and impact. Necessity-driven entrepreneurship,
particularly in less developed regions or those experiencing declines in employment, can help
an economy benefit from self-employment initiatives when there are fewer work options
available. More developed economies, on the other hand, generate entrepreneurial
opportunities as a result of their wealth and innovation capacity, yet they also offer more
wage employment options to attract those that might otherwise become independent
entrepreneurs. If these opportunities for entrepreneurship and innovation are to be captured,
such economies need to instill opportunity-based motives and entrepreneurial incentives.
Second, an economys entrepreneurial capacity is based on individuals with the ability and
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motivation to start businesses, and may be strengthened by positive societal perceptions

about entrepreneurship. Entrepreneurship benefits from participation by all groups in society,
including women, disadvantaged minorities, and a wide range of age groups and education
levels. Finally, high-growth entrepreneurship is a key contributor to new employment in an
economy, and national competitiveness depends on innovative and cross-border
entrepreneurial ventures.
1.4 How GEM Measures Entrepreneurship

The GEM research project looks at entrepreneurship as a process consisting of different
phases, beginning with the intention of starting a business, just starting, running a new or
established business and discontinuing a business. The entrepreneurship process is illustrated
in Figure 1.1 (Singer et al., 2015). This process starts with the involvement of potential
entrepreneurs that are individuals who believe they possess the capabilities to start
businesses, who see opportunities for entrepreneurship, and who have no fear of failure in
starting up a business.
The next phase is nascent entrepreneurs, who have just started a new business less than
three months old. New business owners are defined as those former nascent entrepreneurs
who have been in business for more than three months, but less than three and a half years.
Both nascent and new business owners account for the Total Early-stage Entrepreneurial
Activity (TEA) in an economy, which is a key measure of GEM.
The subsequent phase is established entrepreneurs, those who have been running a business
for more than three and a half years. It is important to consider both established business
owners as well as entrepreneurs who have discontinued or exited businesses because these
two categories represent a key resource for other entrepreneurs.
Figure 1.1. Stages of Entrepreneurship Model

To understand the phases of entrepreneurship, it is important to be familiar with important
indicators which have been used for GEM research projects. The indicators cover all
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entrepreneurial activity and perception, attitudes and perception as well as the

entrepreneurial aspirations for all phases of entrepreneurship.
1.5 The GEM Conceptual Model

GEM has developed a conceptual framework that identifies key elements of the relationship
between entrepreneurship and economic growth and the way in which the elements interact
(Amoros & Bosma, 2014) (See Figure 1.2). A different set of entrepreneurial framework
conditions (EFCs) and both entrepreneurial capacities and entrepreneurial opportunities are
needed to encourage new business activity. The first conceptual framework is discussed in
detail by Levie and Autio (2008).
Based on that model, the current GEM conceptual framework reflects the complexity of the
causal relationships between entrepreneurship and economic development globally (Bosma
et al., 2009; Bosma and Levie, 2010).
The conceptual framework incorporates the three main components that capture the multifaceted nature of entrepreneurship: entrepreneurial attitudes, entrepreneurial activity, and
entrepreneurial aspirations. The conceptual framework used for the 2013 research is shown in
the following figure. It also shows how entrepreneurial framework conditions are evaluated
(using National Expert Survey) and how the entrepreneurship profiles, attitudes, activities and
aspirations are measured (using the Adult Population Survey).
Figure 1.2. GEM Conceptual Model
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1.6 Research Methodology

Based on GEM methodology and to ensure the data can be harmonised over all participating
countries, Indonesia uses the same research design as the other GEM-participating countries.
There are two main surveys used in conducting GEM research: the Adult Population Survey
and the National Expert Survey.
Adult Population Survey (APS)

This data set is a survey of the Indonesian adult population, males and females, aged between
18 and 64 years. As GEM requires, each country has to conduct the survey among a random
representative sample of at least 2,000 adults. Indonesia used 5,520 adults as its sample size,
from both urban and rural areas in the vicinity of the capital city of their respective provinces.
Twenty-three provinces were selected for the survey based on the highest populated
provinces representing more than 85% of the Indonesian population. The table below shows
the sample size for each province and also for rural and urban areas.
Table 1.3. Sample Size of Indonesia APS 2014
Province
DI Aceh
Sumatera Utara
Sumatera Barat
Riau
Sumatera Selatan
Lampung
Banten
DKI Jakarta
Jawa Barat
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Survey Area
Banda Aceh
Kabupaten Aceh Besar
Medan
Kabupaten Deli Serdang
Padang
Kabupaten Padang Pariaman
Kabupaten Pesisir Selatan
Number of samples
100
50
200
90
150
30
30
Kabupaten Solok
30
Pekanbaru
200
Kabupaten Kampar
30
Kabupaten Siak
30
Palembang
200
Kabupaten Banyuasin
30
Kabupaten Ogan Ilir
30
Kabupaten Ogan Komering Ilir
30
Bandar Lampung
150
Kabupaten Lampung Selatan
50
Serang
150
Kota Tangerang
50
Kota Tangerang Selatan
50
Kabupaten Serang
90
Jakarta
300
Kota Depok
50
Kota Bekasi
50
Kota Bogor
50
Bandung
200
Province
Jawa Tengah
Survey Area
Number of samples
Kabupaten Bandung
50
Kabupaten Bogor
50
Semarang
200
Kabupaten Demak
30
Kabupaten Semarang
30
Kabupaten Kendal
Jawa Tengah
Solo
100
Kabupaten Sukoharjo
30
Kabupaten Boyolali
30
Kabupaten Karanganyar
Jawa Timur
Surabaya
200
Malang
100
Kabupaten Malang
30
Kabupaten Gresik
30
Kabupaten Sidoarjo
30
Kabupaten Mojokerto
30
Denpasar
150
Kabupaten Badung
50
Kabupaten Gianyar
50
Mataram
100
Kabupaten Lombok Barat
90
Kupang
100
Kabupaten Kupang
90
Pontianak
150
Kabupaten Pontianak
90
Makassar
150
Kabupaten Gowa
30
Kabupaten Maros
30
Kabupaten Takalar
30
Samarinda
150
Kutai Timur
50
Banjarmasin
150
Kab. Banjar
50
Manado
100
Kab. Minahasa
50
Palu
100
Kab. Donggala
50
Ambon
100
Kab.Maluku Tengah
50
Papua
Jayapura
100
DI Yogyakarta
Yogyakarta
100
Bali
Nusa Tenggara Barat

Nusa Tenggara Timur
Kalimantan Barat
Sulawesi Selatan
Kalimantan Timur
Kalimantan Selatan
Sulawesi Utara
Sulawesi Tengah
Maluku
TOTAL URBAN
3.950
TOTAL RURAL
1.570
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The main stages of sample design for this APS are as follows:
Stage 1: The country is divided into 34 provinces
Stage 2: Each province is then divided into regions (urban and rural) at the city level.
Stage 3: Each stratum at the city level is then divided into district levels. The strata
(urban/rural) at the sub district level will be randomly selected by team.
Stage 4: Each District is then divided into RT (Rumah Tetangga) which is the smallest
community group. The sample is randomly selected by a team.
Stage 5: The final step is to select the appropriate respondent within each household at the
RT level. The selection of the respondents within a household will be based on the
"kish grid" method.
The selection of respondents provides a profile of a representative cross section of the
Indonesian adult population, balanced for age and gender distribution. Weights are applied to
each stratum (at the province level) for age and gender based on Indonesian BPS
demographic data.
PT Idekami Riset Komunika, a market research company, interviewed 5,520 respondents, aged
between 18 and 64 years, between May and July 2014. The survey was conducted in Bahasa
Indonesia.
National Experts Survey (NES)

The national experts survey (NES) provides insights into the entrepreneurial climate in each
country. The NES was conducted by surveying four experts from each of the Nine
Entrepreneurial Framework Condition categories:
1. Financial Support
2. Government Policies
3. Government Programs
4. Education and Training
5. Research and Development Transfer
6. Commercial and Professional Infrastructure
7. Market Openness
8. Access to Physical Infrastructure
9. Cultural and Social Norms
Thirty-six experts were surveyed online, comprising nine entrepreneurs, who were also
experts in any of these nine Entrepreneurial Framework Conditions and twenty-seven
government officers, professionals, academics and researchers. The survey was carried out in
English as all respondents were fluent in English.
Additional Sources of Data

In addition to the annual surveys, GEM also makes use of standardized data from international
data sources such as the World Bank, the World Economic Forum and the United Nations. The
data are used to determine the relationship between entrepreneurial activity and national
economic growth.
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ENTREPRENEURIAL ATTITUDES
(harvesting red seaweed in south Bali, a long standing entrepreneur in extracting industry)
To enter, to survive and to stand out in a business, there are individual values, societal values
and supporting values from the environment. Being an entrepreneur is a blend of many
interacting factors and is unique to the countrys conditions.
Indonesian adults have perceived high societal values and it provides a direct impact to the
high intention to start a business. However, the businesses tend to be similar (customer
oriented business) and fall into micro enterprises (less than 5 employees) for all stages of
entrepreneurship: nascent, baby and established entrepreneurs.
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This chapter focuses on entrepreneurial attitudes, which consists of 4 parts:

Part I: Entering Entrepreneurial pipelines
This part starts with the entrepreneurial pipelines with all characteristics, in terms of age,
gender, education level, income and socio-economic condition, as well as the areas where
they live. It also explores the characteristics of active entrepreneurs, which consist of
intentional entrepreneurs, early-stage (nascent and new) entrepreneurs and established
business owners.
Part II: Self efficacy, role model, opportunity and fear of failure
This part explores the self efficacy, role model, opportunity, and fear of failure for being
entrepreneurs for Indonesian adults.
Part III: Entrepreneurship as a career
This part describes personal desirability in entrepreneurial activities undertaken by people
who consider starting a new business a desirable career choice.
Part IV: External drivers: roles of media and social values
This section describes entrepreneurial perceptions measured by the role of media and
individuals perceptions about the successful high-status entrepreneurship, which measures
the percentage of individuals who agree with the statement that in their country, successful
entrepreneurs receive high status. Also, media attention for entrepreneurship is measured to
see the percentage of individuals who agree with the statement that in their country, they will
often see stories in the public media about successful new businesses.
2.1 Entering Entrepreneurial pipelines

This chapter focuses on each stage of the entrepreneurial pipeline, namely: entrepreneurial
intentions (first phase), nascent entrepreneurs (second phase), new entrepreneurs (third
phase) and established entrepreneurs (fourth phase). As entrepreneurial pipelines describe a
process rather than an event,
1.
Intention is defined as the percentage of individuals who expect to start a business

within the next three years (those who are currently already entrepreneurially active
are excluded from this measure).
2. Nascent entrepreneur is defined as individuals who are actively involved in setting up a
business they will own or co-own; this business has not paid salaries, wages, or any
other payments to the owners.
3. A new entrepreneur is defined as a person who owns and manages a running business
that has paid salaries, wages, or other payments to the owners for more than 3
months but less than 42 months.
4. Established entrepreneurs are defined as those who own and manage a running
business that has paid salaries, wages, or any other payments to the owners for more
than 42 months.
18
Based on the APS survey for adults in the perception of entrepreneurial activities, 31% have the
intention to start a business within the next three years, 4% are nascent entrepreneurs, 10% are
new entrepreneurs and 12% are established entrepreneurs. Figure 2.1 shows the rates of the
entrepreneurial pipelines in Indonesia in 2014.
31%
4%
Intentional
entrepreneurs
Nascent
entrepreneurs
10%
New
entrepreneurs
12%
Established
entrepreneurs
Figure 2.1. Indonesian Entrepreneurial Pipeline 2014
2.2 Self efficacy, role model, opportunity and fear of failure

Based on the GEM Model, it is believed that entrepreneurial attitudes can be seen as social
values and also individual attributes (Singer et al., 2015). Some individual attributes are
demographic factors, psychological factors and motivational aspects.
In psychological factors, there are four attributes that we identify: self-efficacy or perceived
capabilities, perceived opportunity, knowing entrepreneurs or role models, and fear of failure.
Self-Efficacy
Self-efficacy or perceived capabilities reflect the percentages of adults between 18 and 64
years old who believe they have the required skills, knowledge and experience to start a new
business. All respondents (5,520 adults) who statistically represent Indonesian adults were
asked: Do you have the knowledge, skill and experience required to start a new business?.
Based on the question, 60.2% of Indonesian adults believed that they have knowledge and
skills to start business. The table below shows the proportion of females and males in their
perceived capabilities among the population.
19
Table 2.1. Perceived capabilities

Perceived capabilities
All adult
Male
Female
Percentage of particular population

60.2%
63%
57.4%
Breaking down the 60.2% into age classifications, of all the age groups, the highest perception
that they have capabilities to start a new business was in individuals between 25 and 34 years
old, followed by the 35-44 years old individuals (See Figure 2.2). Although it is not significantly
different, we can see that more younger females believe that they have the ability to start up
a business than their male counterparts. However, for those who are between 45 and 54 years
old and above, more males believe that they have the capabilities necessary to start a
business than females of the same age, and the perceived capabilities are roughly equal for
those who are 55 years old and above.
10.7%
10.6%
55-64
18.6%
45-54
21.1%
26.6%
25.5%
35-44
29.5%
28.7%
25-34
14.6%
14.1%
18-24
.0%
5.0%
10.0%
15.0%
20.0%
Female
Male
25.0%
30.0%
35.0%
Figure 2.2. Self-Efficacy between Indonesian females and males
Role model
For many individuals, a role model is an important factor in starting a new business. The role
model measures the perception of adults between 18 and 64 years old who know a role model
(someone who started a business in the past 2 years) personally. In general, 68% of Indonesian
adults know someone who has started a business, with 70% of males knowing entrepreneurs
and almost 66% of females knowing them (See Table 2.2).
Table 2.2. Role Model
Role model
All adult
Male
Female
20
Percentage of particular population

68%
70.3%
65.8%
Based on the age classifications as illustrated in Figure 2.3, individuals between 25 and 34
years old also have the highest percentage in knowing a role model personally. The greatest
difference between males and females in knowing a role model occurs in this age
classification. For the other age classifications there are similar trends for males and females in
knowing a role model personally, except for the age classification of 35 44. The survey
shows similar trends between females and males in this age group.
Female
Male
9.2%
9.7%
55-64
18.4%
18.0%
45-54
26.0%
27.4%
35-44
30.5%
30.1%
25-34
16.0%
14.8%
18-24
Figure 2.3. Role Model between Indonesian females and males
Perceived Opportunities
Perceived opportunities, or the perception of entrepreneurial opportunities, measure the
percentage of adults between 18 and 64 years old who see good opportunities to start a firm
in the area where they live. As indicated earlier, perceived opportunity among Indonesian
adults is quite high (45.5%). It is similar between males (47%) and females (44%. Among females
who see good opportunities to start a new business, those who are between 25 and 44 years
old represent the highest percentage, and this also applies to males. Younger males (between
25 and 34 years old) were just as likely as females to perceive good opportunity is; however,
females over 35 years old (28.5%) were more likely than males in the same age bracket (26.6%)
to see good opportunity (See Figure 2.4).
21
Female
Male
9.8%
8.5%
55-64
17.2%
45-54
21.4%
28.5%
26.6%
35-44
30.0%
30.8%
25-34
14.5%
12.8%
18-24
Figure 2.4. Perceived opportunities between Indonesian females and males
Fear of Failure
Fear of failure measures the indication that fear of failure would prevent them from setting up
a business for adults between 18 and 64 years old who have positive perceived opportunities.
In Indonesia, the trend for fear of failure is similar to the trend of perceived opportunities.
When someone has a high perception of the entrepreneurial opportunities, the fear of failure
is also high. This is in line with the statement of high risk, high return.
Table 2.3. Fear of failure
Fear of failure
All adult
Male
Female
Percentage of those who have positive

perceived opportunity
42.3%
41.1%
43.4%
Percentage of adults
19.4%
19.1%
19.2%
Based on the survey result illustrated in Figure 2.5, there is a trend where younger males have
a lower fear of failure than females, and this trend applies to males younger than 25 years old.
Females, on the other hand, have lower fear of failure than males between 35 and 54 years
old. There is no significant difference in the fear of failure for males and females aged 55 years
and above (See Figure 2.5).
22
Female
55-64
Male
10.6%
9.9%
16.4%
45-54
19.2%
23.1%
25.1%
35-44
30.1%
28.8%
25-34
19.8%
18-24
17.0%
Figure 2.5. Fear of failure between Indonesian females and males
2.3 Entrepreneurship as Career

The perception that entrepreneurship is a good career choice is one of the social values that
leads to entrepreneurship. This attributes assess the percentage of adult population who
agrees with the statement that most people consider starting a new business a desirable
career choice. There is 72.9% of the population which agrees that being an entrepreneur is a
good career choice.
Female
55-64
45-54
Male
10.5%
10.7%
17.5%
17.7%
24.7%
25.9%
35-44
29.9%
29.9%
25-34
18-24
17.3%
15.7%
Figure 2.6. Social Values Entrepreneurship as a Good Career Choice
23
Among females and males, this perceived value is found mostly in young adults (25 34 years
old). As shown in Figure 2.6 above, there is insignificant difference in choosing
entrepreneurship as a career between males and females for most age brackets; however,
more young females (18-24 years old) than males perceive that being an entrepreneur is a
desirable career choice.
2.4 Roles of Media and Social Values

Role of Media
The other social values are media exposure about entrepreneurship and status. The number
of individuals who perceive that they often see business success stories in the public media in
Indonesia is quite high. Overall, 78% of Indonesian adults see success stories of business
people in the public media. Among those who see success stories, the highest percentage is
for young females and males (age 25- 34), with females seeing more success stories than
males in this age bracket (See Figure 2.7). For the other age bracket, the role of media is quite
equal between males and females.
Female
Male
10.0%
10.7%
55-64
17.4%
18.7%
45-54
25.2%
25.5%
35-44
30.8%
28.7%
25-34
16.7%
16.5%
18-24
Figure 2.7. Social Values Role of Media for Entrepreneurship
High Status and Respect

In Indonesia, gender is not a differentiating factor on individual perceptions about high status
and respect of successful entrepreneurship. The respondents were asked about this social
value with the following question: In Indonesia, those successful at starting a new business
have a high level of status and respect. About eighty-five percent of the adults agreed with
the statement.
24
The table below shows the breakdown of male and female responses to the question. It can
be seen that individuals from 25 to 34 have a generally higher positive perception than the
other age brackets that successful entrepreneurs receive high status .
Table 2.4. Social Values - High Status for Entrepreneurship

Agreement on "successful person at
starting a new business have a high
level of status and respect"
Age (years old)
18-24
25-34
35-44
45-54
55-64
Total
(batik artist in desa Ciwaringin,

Cirebon, West Java), photo from
antaranews.com
Male
Frequency
322
575
523
367
224
2,012
Female
%
16%
29%
26%
18%
11%
100%
Frequency
343
582
525
374
205
2,029
%
17%
29%
26%
18%
10%
100%
On the average, creative entrepreneurs in Ciwaringin, Cirebon

(batik artists) find a supportive environment for starting up and
scaling up their business. Support from the environment (other
entrepreneurs and companies) are significant for creative young
entrepreneurs
in
desa
Ciwaringin,
Cirebon.
Support
from
government is also evident. The supports encourage them to

improve their capabilities and to scale up the business. Ciwaringin
has special pattern for its batik and the batik artists use natural raw
materials for batik dye.
25
26
ENTREPRENEURIAL ACTIVITY
(situation in trademark, an annual exhibition that display young and creative entrepreneurs
products Bandung, West Java)
There is a wide range of entrepreneurial activities in Indonesia from the nascent or start-ups
to established businesses, based on the length of business operation; from youth to senior
entrepreneurs if we categorize the age of entrepreneurs when they startd up their
businesses; and from micro, small, and big enterprises if we look at the size of the
businesses.
The wide variety of entrepreneurial activities in Indonesia also applies to the type of
businesses they are running. We separated the businesses into four main categories:
extractive, transforming, business service and consumer oriented.
27
In this chapter, we break down our analysis based on the total early-stage entrepreneurs and
established entrepreneurs. The early-stage entrepreneurs comprise two groups, namely
nascent entrepreneurs and baby/new entrepreneurs.
3.1 Total early-stage entrepreneurial activity

Total early-stage entrepreneurial activity (TEA) is composed of two groups: nascent
entrepreneur and baby/new entrepreneur. Nascent entrepreneurs are those individuals
between the ages of 18 and 64, who have taken some action towards creating a new business
in 2014. These individuals must also expect to own a share of the business they are starting
and the business must not have paid any wages or salaries for more than three months.
Furthermore, new business owners/entrepreneurs are individuals who are active as ownermanagers of a new business and have paid wages or salaries for between three and forty-two
months (3.5 years).
Based on the APS survey in 2014, the percentage of adults involved in early-stage
entrepreneurial activity was 14.2%. The table below shows the percentage for this category.
Figure 3.1. The total early-stage entrepreneurial activities (TEA) in Indonesia
Category
Percentage (%)
Nascent entrepreneurs
4.4
Baby entrepreneurs
10
Total early stage

activities (TEA)
entrepreneurial
14.2
TEA for males
13.2
TEA for females
15.2
The first three months of setting up a business is a crucial stage for creating a good
foundation for the business. The entrepreneurs are challenged to have a good business
concept/model that will become the strong point of their firm. The business model consists of
a unique idea that can be used for competing with competitors. The real challenge for the
entrepreneurs is in transforming the idea into a workable business activity. To implement a
successful business idea, entrepreneurs need adequate abilities/competencies, sufficient
resources, and strong motivation. Motivation is a key ingredient for becoming a successful
entrepreneur. The entrepreneur profile such as age, education, area of residence, and gender
may shape the level of their motivation.
In Indonesia, compared to young female entrepreneurs, males aged 18-24 years old are more
willing to set up a new business (see Figure 3.1). The same phenomena also occur with the
new entrepreneurs (the ones who have run businesses for up to 3.5 years). This situation is
reversed when they reach 55 64 years old. Maybe this is because the young males (18-24)
have to try their best to obtain a better future but when they reach 55-64 years old, their
stamina and health may become a significant hindrance for opening a new business. For the
new entrepreneur category, more male entrepreneurs still have their new businesses than do
the females. In Indonesia, the young generation is eager to open new businesses. Forty-one
28
percent of female respondents and 34.3% of male respondents already have the new business
between the ages of 25 and 34 years old (see Figure 3.2).
Male
55-64
Female
13.1%
4.4%
20.7%
45-54
23.7%
27.9%
35-44
29.6%
27.7%
25-34
23.8%
10.6%
18-24
18.5%
Figure 3.1. Nascent Entrepreneurs Gender Rates for Age Categories
Female
55-64
5.9%
9.0%
14.7%
45-54
18.2%
29.8%
35-44
26.1%
41.0%
25-34
18-24
Male
34.3%
8.6%
12.5%
Figure 3.2. New Entrepreneurs Gender Rates for Age Categories

The majority of Indonesians decide to start a business after finishing their high school
education (59.1 % male and 56.2 % female). This trend is slightly improved if we compare it with
29
the situation in 2013 (58 % male and 52 % female). Maybe this is because the people in question
might not have enough money to study further. The number of Indonesian adults who have a
low education level (less than primary education) who are involved in early- stage
entrepreneurship is very low (0.6%), and the number of Indonesians with a high education
who are involved in early-stage entrepreneurship is zero (see Figure 3.3). The education
background phenomenon is similar for the new entrepreneurs (see Figure 3.4).
Female
Male
12.9%
Diploma/Undergraduate
25.1%
56.2%
59.1%
Senior Secondary Education
21.1%
Junior Secondary Education
9.0%
9.7%
6.1%
Primary Education
Less than Primary Education
.0%
.6%
Figure 3.3. Nascent Entrepreneurs Gender Rates for Education Level Categories
Female
Male
20.5%
23.2%
48.0%
58.6%
22.1%
9.5%
8.3%
8.8%
Primary Education
Less than Primary Education
1.0%
.0%
Figure 3.4. New Entrepreneurs Gender Rates for Education Level Categories
For the area of living, the highest nascent and new entrepreneur rates were found in western
Indonesia, where economic and political activities are concentrated. This attracts individuals
to work and earn more money. For both nascent and new entrepreneurs (or TEA total early-
30
stage entrepreneurial activity), females in west area of Indonesia are more likely than males to
be involved in entrepreneurship (see Figure 3.5).
Female
Male
52%
Eastern Indonesia
48%
49%
Central Indonesia
51%
55%
Western Indonesia
45%
Figure 3.5. Nascent Entrepreneurs Gender Rates for Area of Living Categories
In general, early-stage entrepreneurs (nascent

and baby entrepreneurs) in Indonesia involve
more in customer-oriented business (56%),
followed by transforming businesses (30%).
Only 12% of early-stage entrepreneurs do
business in business service, and an even
smaller percentage is in extractive businesses.
The pie chart (Figure 3.6) shows the
categorization of businesses. The chart is
based on business type data of 14.2% TEA in
Indonesia.
Extractive
2%
Transformi
ng
30%
Consumer
Oriented
56%
Business
Service
12%
Figure 3.6. Types of business for early-stage entrepreneurs
31
3.2 Established business ownership

Established business ownership rates measure the percentage of the 18-64 year old
population who are currently owning and managing a running business that has paid salaries,
wages, or other payments to the owners for more than 42 months. The majority of the
entrepreneurs who have established businesses are between 35 and 44 and 45 to 54 (see
Figure 3.7). The majority of Indonesians decide to start a business after finishing their high
school education (48.5% of males and 47.2% of females).
Female
Male
13.8%
55-64
16.3%
28.0%
26.2%
45-54
32.8%
30.7%
35-44
20.3%
22.1%
25-34
18-24
5.1%
4.7%
Figure 3.7. Established Business Gender Rates for Age Categories
Similar to early-stage entrepreneurs, most

established entrepreneurs in Indonesia
are involved more in customer-oriented
businesses (59%). More entrepreneurs in
this stage are involved in transforming
businesses
than
the
early-stage
entrepreneurs (33%). Also, a small
percentage falls into the business service
and extractive business categories (7% and
1% respectively). The pie chart shows the
categorisation of businesses. The chart is
based on 12% of established entrepreneurs
in Indonesia.
Extractive
1%
Transformi
ng
33%
Consumer
Oriented
59%
Business
Service
7%
Figure 3.8. Types of business for early-stage entrepreneurs
32
3.3 Necessity and opportunity motives of entrepreneurship

For the early-stage entrepreneurs, we further explore their motives in starting up a business.
We categorise the motives into necessity driven and opportunity driven. Necessity-driven TEA
means that the adults became entrepreneurs because they were forced to (for instance,
because of the situation). Opportunity-driven TEA, on the other hand, means that the main
reason for the adults becoming entrepreneurs was because they saw opportunity for their
future as an entrepreneur.
Furthermore, we also see a third category of motives, which is improvement-driven motive.
Improvement-driven entrepreneurs are those who choose to be entrepreneurs because they
want to improve their life quality.
In Indonesia, the trend of necessity-driven TEA is similar to opportunity-driven TEA and
improvement-driven TEA. The highest rate of opportunity TEA is in males between 25 and 34
years of age (see Figure 3.9). More females than males aged 18-24 years old start a business
because there are no other options (necessity-driven TEA). Furthermore, more males have
strong motivation in improving their life quality than females.
Female
55-64
5.7%
5.6%
15.8%
45-54
20.2%
31.9%
35-44
26.5%
38.0%
25-34
18-24
Male
31.9%
8.5%
15.9%
Figure 3.9. Opportunity Motive TEA, Gender Rates for Age Categories
Based on education level, those who are involved in early-stage entrepreneurship are high
school (SMA). Most Indonesians have a tendency to achieve higher degrees, at least until high
school education; the majority of Indonesians decide to start a business after finishing their
high school education. Maybe this is because they might not have enough money to study
further.
In central Indonesia, more males start a business because they see opportunities or are
motivated to improve their life quality (see Figure 3.10). The proportion of males and females
33
that start a business because of a necessity-driven motive is indifferent. The proportion of

female entrepreneurs is higher than the proportion of males in both western and eastern
Indonesia.
Indonesia Timur (Eastern

Indonesia)
Indonesia Tengah (Central

Indonesia)
Female
Male
Indonesia Barat (Western

Indonesia)
42.0% 44.0% 46.0% 48.0% 50.0% 52.0% 54.0%
Figure 3.10. Opportunity Motive TEA, Gender Rates for Area of Living Categories
34
INTRAPRENEURSHIP
ENTREPRENEURSHIP EMPLOYEE ACTIVITIES
(tree plantation workers are picking tea leaves for production Ciwidey, West Java)
The spirit of the entrepreneurship is indicated as a person that always has a positive mind,
challenges the risk, and acts with determination. Indonesian demographic dividends could
result in a drawback for a productive labor force because of limited employment
opportunities. Cultivating the entrepreneurial spirit may promote productive individuals to
give a positive contribution to the economy
35
This part sees entrepreneurship as a spirit rather than an activity. Nandram and Samsom (2006)
describe entrepreneurship as an inner mechanism within the spirit of a person.
4.1 Entrepreneurial Employee Activity : Concept and Definition

The GEM survey generates a variety of relevant primary information on
different aspects of entrepreneurship and provides harmonized
measures about individuals attributes and their activities in different
phases of venturing (from nascent to start-up, established business
and discontinuation).
GEM also tracks highly ambitious
entrepreneurship (by identifying aspirations that grow among ownermanaged businesses and the presence of entrepreneurial employee
activity).
GEM has had as one of its core principles the objective to explore and
assess the role of entrepreneurship in national economic growth. This
scope is aligned with the Schumpeterian view that entrepreneurs
are ambitious and spur innovation, speed up structural changes in the
economy, introduce new competition and contribute to productivity,
job creation and national competitiveness (Singer et al., 2015).
The entrepreneurship within existing

organizations field is related to the
term
corporate
entrepreneurship.
This becomes a business strategy

and practice for pursuing business
opportunities by developing potential
new ventures or by strategically
renewing the company and usually
involves entrepreneurial behavior of
employees.
It is important to note that different types of entrepreneurship may all have important
implications for socio-economic development. Across the globe, many individuals pursue a
business activity because alternative options for work are limited or non-existent; by having
the option to engage in self-employment they are able to take care of themselves and their
families (Amoros & Bosma, 2014). They may even be able to set aside some money allowing
their children to participate in proper education. This face of entrepreneurship is very
prominent in developing economies. Even though the self-employed contribute to the
flexibility and productivity of the overall economy, some could possibly be more productive by
working as an employee.
The entrepreneurship within existing organizations field employs a wide-ranging terminology.
One of the most extended concepts in the literature is related to the term corporate
entrepreneurship. This becomes a business strategy and practice for pursuing business
opportunities by developing potential new ventures or by strategically renewing the company
and usually involves entrepreneurial behavior of employees.
Researchers into entrepreneurship acknowledge this and argue that studying causes and
consequences of entrepreneurship requires going beyond viewing entrepreneurship as an
occupation (self-employment; startup rates). Instead, the focus is moved to entrepreneurial
behavior, including for example entrepreneurial employee activity a term that is closely
related to entrepreneurship or corporate entrepreneurship, see (Bosma, Wennekers et
al. 2013).
This report defines entrepreneurial activity which involves employees as employees
developing new activities for their main employer, such as developing or launching new goods or
36
services, or setting up a new business unit, a new establishment or subsidiary (Bosma,

Wennekers et al. 2013).
4.2 Capturing Entrepreneurial Employee Activity

Since 2011, GEM captures entrepreneurial employee activity (EEA), acknowledging the
existence of different types of entrepreneurship (early-stage entrepreneurs, established
businesses, and ambitious entrepreneurial employee activity), which together builds an
economys entrepreneurial capacity.
GEM operationalizes entrepreneurial employee activity as a situation where an employee in
the past three years was actively involved in and had a leading role in either the idea
development for a new activity or the preparation and implementation of a new activity. This
definition is wider than the creation of a new organization, but it excludes employee initiatives
that mainly aim at optimizing internal work processes.
The assessment of entrepreneurial employees can be positioned as an extension of the
(evolving) conceptual model GEM has used over the years. GEM monitors Entrepreneurial
Framework Conditions (EFCs) in each country through harmonized surveys of experts in the
field of entrepreneurship. The measures of entrepreneurial attitudes, activity and aspirations
are captured using the adult population surveys and constitute the three main components
that capture the multifaceted nature of (independent) entrepreneurship. In particular,
aspirations or ambitions are relevant because researchers increasingly realize that all
entrepreneurial activity does not equally contribute to development. Figure 4.1 can be seen as
an abstraction of the overall GEM model and shows how the EFCs relate to entrepreneurial
dynamics, both in the form of (early-stage and established) entrepreneurship and of employee
entrepreneurial activities.
Figure 4.1. The Role of Entrepreneurial Employee Activity in a Process Model Explaining
Macro Economic Development (Bosma, Wennekers et al. 2013)
Different profiles of entrepreneurship, related to different conditions, may hence lead to
different forms of socioeconomic output. In this sense, the measurement of entrepreneurial
employee activity may prove to be of value for exploring the role of entrepreneurship in
economic development as well. In this perspective, it is important to note that GEM
recognizes that different profiles of entrepreneurial activity may be required at different
37
stages of economic development in order to advance in terms of socio-economic

development. The measure of entrepreneurial employee activity (EEA) is increasing along the
development stages, higher in innovation-driven economies, the lowest in factor-driven
economies.
4.3 Research design for Capturing Entrepreneurial Employee Activity

Figure.2 shows a research design for capturing the entrepreneurial employee activity. There
are two phases involved, which are distinguished, i.e. idea development for a new activity
and preparation and implementation of a new activity. Idea development includes active
information search, brainstorming and submitting ideas for new activities to the management
of the business. Preparation and implementation of a new activity refers to promoting an idea
for a new activity, preparing a business plan, marketing the new activity, finding financial
resources and acquiring a team of workers for the new activity.
Figure 4.2. Entrepreneurship process and GEM operational definitions, including

entrepreneurial employee activity (Bosma, Wennekers et al. 2013)
The first definition of an entrepreneurial employee activity may refer to employees who, in the
past three years, were actively involved in and played a leading role in at least one of these
phases (i.e., idea development for a new activity and/or preparation and implementation of
a new activity). The second (more narrow) definition refers to the entrepreneurial employees
who are also currently involved in the development of such new activities. The two
38
definitions are showed in 4.3. While Figure shows how entrepreneurial employees according
to gradually narrowing definitions may be identified, further distinctions are also possible
dependent on the characteristics of EEA.
Figure 4.3. Entrepreneurial Employee Activity: Recent And Current Involvement (Bosma,
Wennekers et al. 2013)
Figure 4.4. Narrowing down from adult population to entrepreneurial employee activity
(Bosma, Wennekers et al. 2013)
As mentioned in the introduction, entrepreneurial employee activity (EEA) is increasingly
accepted as a relevant type of entrepreneurship in the sense that it aims at new venture
creation and the introduction of new products and services.
It also shares many behavioral characteristics with the overall concept of entrepreneurship,
such as taking initiative, pursuing opportunities and promoting innovativeness.
39
Entrepreneurial employee activity is much scarcer than TEA across the world. North America
and EU economies have the highest incidence of entrepreneurial employee activity. Based on
the GEM conceptual framework and collected data, a set of numerous indicators are
calculated and included in global and national reports.
4.4 Characteristics of Entrepreneurial Employee Activity

Respondents participating in the GEM survey were asked if they, in the past three years or
currently, were actively involved in and played a leading role in either idea development for a
new activity or in preparation and implementation of a new activity. The result from a 2014
survey based on adult population 18-64 years old is shown in Figure below.
Figure 4.5. Comparison of presence of TEA and EEA in 2014, by geographic regions (as % of
adult population, 18-64 years)
Specific to Indonesia, based on the model in Figure 4.4, the EEA characteristics in Indonesia
are illustrated in Error! Not a valid bookmark self-reference.. The table indicates a decreasing
rate of entrepreneurial employees, either there are as active role or active and leading role. In
general, the percentage of employees who take an active and leading role in the
entrepreneurial activity is very low (only 1% of the working population), and there is a
decreasing trend when compared currently and over the last three years (from 1.2% to 1%).
There is a higher rate for the employees who are active in entrepreneurial activity but not lead
the activity (4.7% now and 5.8% in the past three years).
40
Table 4.1. The EEA characteristics of Indonesia in 2014

Adult population
In past three
Now
years
(currently)
Employment population
In past three
Now
years
(currently)
Active
2.2 %
1.8%
5.8 %
4.7 %
Active and leading
0.5 %
0.4 %
1.2 %
1.0%
Source : Indonesian GEM survey 2014
Age and education could be a driving factor of EEA. The following charts depict the effect of
age and education factors on the EEA. Figure shows the percentages of EEA at different
categories of ages. The figure shows that the 25-34 age group for males shows a higher active
EEA rate (43%) than for females between 35 and 44 years old, which show a lower active EEA
rate (36.6%).
.5%
55-64
6.0%
17.2%
45-54
10.1%
36.6%
35-44
22.5%
25.3%
25-34
43.0%
20.4%
18.5%
18-24
.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Female
30.0%
35.0%
40.0%
45.0%
50.0%
Male
Figure 4.6. The active EEA in past three years (based on adult population) by age categories
41
Master
1.5%
.0%
36.2%
26.0%
47.4%
57.4%
8.2%
12.7%
6.7%
4.0%
Primary Education
.0%
10.0%
20.0%
Female
30.0%
40.0%
50.0%
60.0%
70.0%
Male
Figure 4.7. The active EEA in past three years (based on adult population) by education
categories
Education factors show as a driving factors as well. A male or female with high school
education, shows a higher rate of active EEA rate 57.4% and 47.4% respectively (see Figure
4.7).
A comparison of Indonesia with other countries is shown in Figure . Indonesia is included in
the efficiency-driven economies, together with other ASEAN countries such as Malaysia and
Thailand. Indonesia has a higher EEA rate than Malaysia, but lower if compared with Thailand.
In general the figure indicates that the entrepreneurial employee activity (EEA) increases
along with the development stage,--highest in innovation-driven economies, and lowest in
factor-driven economies. This condition can also be seen in Figure , which shows a positive
relationship between GDP per capita (PPP) and the EEA rate. The higher the economic stage
of development of a country, the higher the EEA rate. In this figure, Indonesia is located in the
lower left corner, which indicates a low economic stage of development, and this corresponds
to a low EEA rate.
42
Figure 4.8. The Indonesian EEA compares with other countris (Singer, Amors et al. 2015).
43
Figure 4.9. Relationship between GDP per capita (PPP) versus EEA rate
(Singer, Amors et al. 2015)
44
ENTREPRENEURIAL ECOSYSTEM
Market is an important component of entrepreneurship that together with other factors or pillars
create entrepreneurial ecosystem
Entrepreneurship ecosystem is a strategic theme which becomes attention of various

stakeholders such as business players, regulators, and related co-working
organization to promote a healthy entrepreneurship environment. Entrepreneurial
ecosystem as a set of interconnected entrepreneurial actors, organizations,
institutions and processes that build connection, facilitation and governance for
improving entrepreneurial performance in its environment. Entrepreneurs should be
supported by other stakeholders and parties, not only entrepreneurial actors
themselves, in order to have better performance and maintain their sustainability.
45
Based on the GEM conceptual framework, entrepreneurial activity is shaped by a distinct set
of factors called Entrepreneurial Framework Conditions (EFCs) that support the growth of
new businesses. Bosma et al. (2009) maintain that EFCs are one of the most important
components of any entrepreneurship ecosystem which provide necessary inputs and support
for the creation and growth of new firms.
Entrepreneurial ecosystem is an important support for entrepreneurial growing intention. A
more holistic approach is recently emerging that entrepreneurship is seen not only as an
individual or sectorial efforts but more networking and institutional efforts by fostering
synergies between different stakeholders. Entrepreneurial ecosystem was originally initiated
by Moore in his article titles Predators and Prey: New Ecology of Competition (1993). He
argued that in business ecosystem, firms work cooperatively and also competitively to build
their competencies, such as to develop new products, to satisfy customers, to improve and to
innovate. The argument emphasizes that firms or businesses work in its interaction with other
stakeholders.
Entrepreneurial ecosystem is defined as a set of interconnected entrepreneurial actors,
organizations, institutions and processes that build connection, facilitation and governance
for improving entrepreneurial performance in its environment (Mason and Brown, 2014). The
connection is maintained through both formal and informal approaches. Similarly, World
Economic Forum in 2014 identifies entrepreneurial ecosystem as a system of interrelated
pillars that impact the speed and ability with which entrepreneurs can create and scale new
ventures in a sustainable way (WEF, 2014, p. 9). These definitions show that entrepreneurs
should be supported by other stakeholders and parties, not only entrepreneurial actors
themselves, in order to have better performance and maintain their sustainability. Also, the
ecosystem should show an interrelated connection between all the relevant stakeholders that
creates conducive and healthy pillars for entrepreneurship activities.
Various studies identified factors in entrepreneurship ecosystem, including government
policies, financial support, market dynamics, education and training, and cultural support.
World Economic Forums study (2014) identifies three main pillars of the Entrepreneurial
ecosystem that contributes to their companies high growth are: accessible markets, human
capital/workforce and funding and financing. Global Entrepreneurship Monitor (GEM) identify
entrepreneurship framework conditions (EFCs) as pillars of entrepreneurial ecosystem
(Amoros and Bosma 2014; Nawangpalupi, Pawitan et al. 2014; Singer, Amors et al. 2015).
In GEM framework, the assessment of entrepreneurial ecosystem is carried out using National
Expert Survey. The NES is designed to assess all EFCs, and it reveals judgments from experts
regarding the status of EFCs that consists of the following criteria:
1.
2.
46
Entrepreneurial Finance. The availability of financial resources-equity and debt for small
and medium enterprises (SMEs) (including grants and subsidies).
Government Policy. The extent to which public policies give support to entrepreneurship.
This EFC has two components:
2a. Entrepreneurship as a relevant economic issue and
2b. Taxes or regulations are either size-neutral or encourage new and SMEs.
3.
Government Entrepreneurship Programs. The presence and quality of programs directly

assisting SMEs at all levels of government (national, regional, municipal).
Entrepreneurship Education. The extent to which training in creating or managing SMEs
is incorporated within the education and training system at all levels. This EFC has two
components:
4a. Entrepreneurship Education at basic school (primary and secondary)m and
4b. Entrepreneurship Education at post-secondary levels (higher education such as
vocational, college, business schools, etc.).
R&D Transfer. The extent to which national research and development will lead to new
commercial opportunities and is available to SMEs.
Commercial and Legal Infrastructure. The presence of property rights, commercial,
accounting and other legal and assessment services and institutions that support or
promote SMEs.
Entry Regulation. This EFC contains two components:
7a. Market Dynamics: the level of change in markets from year to year, and
7b. Market Openness: the extent to which new firms are free to enter existing markets.
Physical Infrastructure. Ease of access to physical resources-communication, utilities,
transportation, land or spaceat a price that does not discriminate against SMEs.
Cultural and Social Norms. The extent to which social and cultural norms encourage or
allow actions leading to new business methods or activities that can potentially increase
personal wealth and income.
4.
5.
6.
7.
8.
9.
The table shows the average (non-standardized) of Indonesia status of EFCs compared to
those of efficiency-driven countries and Southeast Asian (SEA) countries surveyed by GEM.
The score ranges from 1 (completely false) to 5 (completely true) for 9 entrepreneurial
framework conditions. It can be seen that experts in Indonesia assess that internal market
dynamics have a better status (3.56 of 5), followed by physical infrastructure and access to
services (3.46), cultural, social norms and society support (3.31) and education for
entrepreneurship - Post Secondary (3.31). These assessments are similar to that of experts in
SEA countries. The Indonesian experts estimate that the conditions that may hinder the
entrepreneurial activities due to low status are national regulations (2.48) and government
entrepreneurship program (2.57). On the other hand, the experts in SEA countries enlist
education entrepreneurship primary and secondary - that may discourage the
entrepreneurship activities.
Table 5.1. Entrepreneurial Framework Conditions
EFC
No.
1
2a
2b
3
4a
4b
5
Entrepreneurial Framework Conditions

Entrepreneurial finance
National policy - general policy
National policy - regulation
Government entrepreneurship programs
Education for entrepreneurship - Primary
and Secondary
Education for entrepreneurship - Post
Secondary
R&D transfer
Average Indonesia
3.03
2.91
2.48
2.57
2.6
SEA
countries
2.90
2.94
2.75
2.74
2.46
3.31
3.08
2.63
2.50
47
EFC
No.
6
7a
7b
8
9
Entrepreneurial Framework Conditions

Commercial & Services Infrastructure
Internal market - dynamics
Internal market - openness
Physical infrastructure for entrepreneurship
Cultural and social norms
Average Indonesia
2.96
3.56
2.89
3.46
3.31
SEA
countries
3.10
3.49
2.68
3.76
3.17
The figure below shows the status of EFCs in Indonesia in comparison to the average in
efficiency-driven economies. It can be seen that Indonesian EFCs are often better than the
average efficiency-driven economies, except in national regulations, government programs,
and commercial and physical infrastructure for entrepreneurship. Although Indonesian
experts assess physical infrastructure as the second highest rates among the conditions, this
reveals that Indonesian physical infrastructure are still of low quality compared to other
ASEAN countries and efficiency-driven economies (See Figure 5.1).
Average - Indonesia
Physical infrastructure
forentrepreneurship
Internal market openness
Efficiency driven country
4
3.5
3
2.5
2
1.5
1
0.5
0
SEA countries
National policy - general

policy
National policy regulation
Government
entrepreneurship
programs
Education for
entrepreneurship Primary and Secondary
Internal market dynamics
Education for
entrepreneurship - Post
Secondary
Commercial & Services

Infrastructure
R&D transfer
Figure 5.1. Radar Diagram of Entrepreneurial Framework Conditions
48
INDONESIAN ENTREPRENEURSHIP IN ASEAN
There are six ASEAN countries that are involved in GEM research study; they are Indonesia,
Malaysia, the Philippines, Singapore, Thailand and Vietnam. These six countries cover most of
the area in Southeast Asia as shown in Figure 6.1 (see the dark blue area on the map).
Figure 6.1. GEM members in Southeast Asia
Entrepreneurship ecosystem is a strategic theme which becomes attention of various

stakeholders such as business players, regulators, and related co-working
organization to promote a healthy entrepreneurship environment. Entrepreneurial
ecosystem as a set of interconnected entrepreneurial actors, organizations,
institutions and processes that build connection, facilitation and governance for
improving entrepreneurial performance in its environment. Entrepreneurs should be
supported by other stakeholders and parties, not only entrepreneurial actors
themselves, in order to have better performance and maintain their sustainability.
49
These six countries have different stages of development, Singapore is categorised into
innovation driven economy, Malaysia, Indonesia and Thailand are the efficiency driven
economies, and the Philippines and Vietnam are the factor driven economies.
These six countries have different stages of development, Singapore is categorized as an
innovation-driven economy, whereas Malaysia, Indonesia and Thailand are considered
efficiency-driven economies, and the Philippines and Vietnam are factor-driven economies.
Based on the WEF and GEM report (2015) about Leveraging Entrepreneurial Ambition and
Innovation, factor-driven economies compete based on their natural gifts, such as [unskilled]
labor and natural resources. The focus here is on improving its economy by maintaining and
developing well-functioning public and private institutions, infrastructure, a stable
macroeconomic environment, and a healthy workforce with a basic education.
For efficiency-driven economies, the main focus of development is on creating efficient
production processes and increasing product quality. These countries tend to have large
domestic markets, or are starting to access the international market, and are also beginning to
harness existing technologies and improve higher education and training. It is suggested by
WEF (2015) that governments in this stage of development focus on ensuring smooth
mechanisms of market access, higher education systems and technology infrastructure.
Countries that enter the innovation-driven stage should focus on innovation for maintaining
their competitiveness.
Based on the above arguments, in this chapter the discussion will analyze how Indonesia
performs its entrepreneurial activities in its present stage of development.
6.1 The entrepreneurial pipeline in ASEAN

As in the GEM model, we model entrepreneurship based on stages of the entrepreneurial
pipeline, starting from entrepreneurial intentions (first phase), nascent entrepreneurs
(second phase), new entrepreneurs (third phase) and finally established entrepreneurs
(fourth phase). As the entrepreneurial pipelines describe a process rather than an event,
Figure 6.2 shows the rates of each phase in ASEAN countries, measuring the rates for females
and males separately.
50
Figure 6.2. Entrepreneurial pipeline for ASEAN countries

The intentional entrepreneurship rate measures the intention of adults to start a business.
GEM defines entrepreneurial intention as the percentage of the 1864 year old population
(excluding individuals already engaged in a stage of entrepreneurial activity) who intend to
start a business within the next three years. This phase is important in the entrepreneurial
process as a strong association exists between entrepreneurial intention and actual
entrepreneurial behavior. The intention of starting a business for males is higher than for
females (20.4% and 14.9% respectively), but the actual entrepreneurial behavior is not
significantly different between genders.
The above is supported by Figure 6.3, which shows the rate on a horizontal bar chart for the
next three phases (nascent, new and established entrepreneurs). From the chart we can see
that Indonesia is about average in entrepreneurship compared to the other ASEAN countries.
The percentage of the Indonesian population involved in the formation of new enterprises
ranks fourth among the 6 countries, only higher than Malaysia and Vietnam (See Figure 6.3).
Measuring the Nascent Entrepreneurship Rate, only 4% of Indonesian adults are involved in
starting up a business. The highest ranking in this category goes to Thailand and the
Philippines (8%). The percentage of Indonesian adults actively involved in new entrepreneurial
activities is similar to the nascent one. The new business rate in Indonesia is 10%, only higher
than Malaysia and Singapore (both have a rate of 5%). Thailand has the highest rate of 17%
followed by Vietnam.
For established business ownership, or entrepreneurs who have owned and managed
businesses for longer than 42 months, Thailand and Vietnam show much higher rates than the
other ASEAN countries. The lowest rate is in Singapore, which we know is an innovationdriven countries. It seems that this rate is low due to the competitiveness of businesses in
Singapore and predominant influence on innovation and technology than businesses in other
countries.
51
Established Business Ownership Rate
New Business Ownership Rate
Nascent Entrepreneurship Rate
Vietnam
Nascent Entrepreneurship
Rate
2
New Business Ownership

Rate
13
Established Business
Ownership Rate
22
Thailand
17
33
Singapore
Philippines
11
Malaysia
Indonesia
10
12
Figure 6.3. Entrepreneurial pipelines in ASEAN (6 countries)
6.2 Entrepreneurial attitudes in ASEAN

Most adults in these six ASEAN countries perceive entrepreneurship as a positive value, for
both social and individual values, shown by the measures that are above the GEM average.
Adults in these six countries seem to appreciate entrepreneurship as a desirable career option
as they have the opportunities and capabilities in doing so.
Table 6.1 summarises the social values of entrepreneurial attitudes in ASEAN countries. The
social values for entrepreneurial attitudes are given three attributes: Entrepreneurship as a
good career choice, High status to successful entrepreneurs, and Media attention for
entrepreneurship. Most ASEAN countries perceive these values higher than the GEM average,
except for Singapore and Malaysia.
On average, two-thirds of people in ASEAN see entrepreneurship as a good career choice.
Thanks to the growth of media exposure of entrepreneurial activities, in this region most
adults (81%) believe that there is high media visibility for successful entrepreneurs. This is
shown by the high level of media attention for entrepreneurship.
At an individual country level, Indonesia comes in second after the Philippines, and this shows
consistently high levels of societal values across all three measures. Malaysia, on the other
52
hand, reports the lowest regional levels on all three indicators, by a significant margin. In
terms of entrepreneurship as a good career choice and status for successful entrepreneurs,
Malaysia also scores substantially below the GEM average.
Table 6.1: Social values in ASEAN countries and GEM average (in percentage of the countrys
adult population)
Country
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
ASEAN average
(unweighted)
GEM average
(unweighted)
Entrepreneurship as a
good career choice
72.9
50.4
81.8
51.7
73.6
67.2
High status to
successful
entrepreneurs
78.0
50.0
78.1
62.9
71.1
75.9
Media attention for

entrepreneurship
84.8
69.8
84.7
79.1
80.3
86.8
66.3
69.3
80.9
62.46
68.11
63.30
Table 6.2 shows individual attributes in entrepreneurship, measured by perceived

opportunities, self efficacies (perceived capabilities) and fear of failure.
Table 6.2. Perceived opportunities, capabilities and fear of failure in ASEAN countries
Country
Perceived
opportunities
Perceived
capabilities
Fear of failure
Indonesia
46
60
38
Malaysia
43
38
27
Philippines
46
66
38
Singapore
17
21
39
Thailand
47
50
42
Vietnam
39
58
50
ASEAN
average
(unweighted)
GEM average (unweighted)
40
49
39
43
51
34
GEM considers those who perceive good opportunities for starting a business, as well as
believe they have the required skills; these are the potential entrepreneurs in a society.
Opportunities (or the perception of good opportunities) play an important role in determining
whether an individual will even consider starting a business. Entrepreneurs recognize
opportunities well in advance or just before they set up their businesses. To get an estimate
of the size of the pool of potential entrepreneurs, the APS asks two questions:
53
1.
In the next six months will there be good opportunities for starting a business in
the area where you live?
2. Do you have the knowledge, skills and experience required to start a new
business?
Another factor taken into account is the fear of failure, assessed as a percentage of the
people who perceive opportunities in the area in which they live. Fear of failure can be
influenced by intrinsic personality traits, as well as by societal norms and regulations. Much
about entrepreneurship can be taught or acquired through practical experience, but the
propensity for risk cannot be taught. For the risk-averse person, the downside risk of failure
often outweighs the most promising opportunities or expectations, even if the potential
returns are considerably higher than the next best alternative.
From the table (See Table 6.2) we can see that ASEAN countries have about average scores in
terms of perceived opportunities and capabilities. With slightly lower scores for perceived
opportunities and capabilities in ASEAN compared to the average, this implies that fairly
moderate numbers of people in the ASEAN region see opportunities and believe they have the
capabilities to pursue them. However, in terms of the fear of failure, the regional score is
higher, thus the propensity for risk in the area is a concern.
At the individual country level, the rates in ASEAN countries show varied results. Singapore is
a definite outlier in terms of perceived opportunities and capabilities its scores for these
measures are almost one third of the combined average for the other five countries.
The previous table (See Table 6.1) indicates that entrepreneurship is particularly highly
regarded in the Philippines, and this trend continues with the Philippines displaying among the
highest levels of both perceived opportunities and perceived capabilities. Indonesia, the
second highest rank for its social values, has a lower rank in terms of individual attributes,
although the scores are still above the average (both ASEAN and GEM average scores).
Malaysias score is relatively low in terms of perceived capabilities, which is also consistent
with relatively low societal attitudes towards entrepreneurship in general. Malaysia has,
however, the lowest score for fear of failure. Vietnam has the highest fear of failure for the
region. Fear of failure tends to be more common in developed economies (such as Singapore),
where the greater prevalence of alternative career options can create the impression that
people have more to lose by forgoing these other opportunities. However, Vietnam is a
factor-driven economy, where job opportunities are more restricted and society often sees
entrepreneurship as a means to improve ones economic and social standing. Vietnams score
of 50.1 is significantly higher than the GEM average.
Those three key individual attributes refer to potential entrepreneurs, who see good
opportunities for starting a business and believe that they have the necessary skills,
knowledge and experience to start a business. However, perceiving a good opportunity and
having the skills to pursue it do not necessarily lead to the intention of starting a business.
Potential entrepreneurs still will assess benefits and challenges of business, the opportunity
costs, and risks and rewards, of starting a business versus other employment preferences, if
these are available.
54
Table 6.2 again refers to entrepreneurial intention in ASEAN countries. Although both societal
and individual values are high, the entrepreneurial intention is only about 20%, and quite a bit
lower in Singapore and Malaysia. In line with their consistently positive scores in both social
values and individual attributes, the Philippines and Indonesia top the rankings among the
ASEAN countries. The high entrepreneurial intentions of some countries need to be
maintained and groomed with supportive entrepreneurial conditions.
Table 6.2. Entrepreneurial intentions in ASEAN countries
Country
Entrepreneurial intentions*
Indonesia
27.4
Malaysia
11.6
Philippines
42.8
Singapore
9.4
Thailand
21.8
Vietnam
18.2
ASEAN average (unweighted)
21.9
GEM average (unweighted)
20.9
*Intentions assessed among adult (18 64 years old) population
6.3 Entrepreneurial Ecosystem in ASEAN

Related to chapter 5, a supportive entrepreneurial ecosystem can create dynamics and
become key business drivers comprising bankers, investors, educators, incubators and other
relevant clusters. Based on ASEAN report (Xavier, Guelich et al. 2015), entrepreneurial
ecosystems in ASEAN have supported business actors in a certain way. ASEAN countries on
average have some pillars with limited support. Financial supports, for example, while funding
for start-ups is required, established conservative financial institutions tend only to lend
money subject to their comfort levels and demand some collaterals. Access to funding is also
subject to the private equity and venture capital industry sizes within the respective countries.
Moreover, Xavier et al. (2015) also argue that internal market dynamics and openness such as
demand and supply, import and export, and some barriers to entry can hinder entrepreneurial
activities. Despite the ASEAN Economic Community (AEC) in 2015, the lack of market openness
was named as one of the top four constraints in the ASEAN region. An understanding of roles
for each pillar for entrepreneurial ecosystem is an important study to foster entrepreneurial
activities.
GEM and WEF (WEF, 2015) study maintains that competitiveness matters for entrepreneurship
although it is not simple as a linear relationship. The most competitive economies are not the
ones with the most new business creators, however, in the bases of the attitude and ability of
the entrepreneurs themselves, their economies tend to receive greater benefit from their
entrepreneurs than do less competitive economies (World Economic Forum 2015). From this
argument, although we present in the same table, the comparative studies will be based on
the same stage of development. Hence, the apple-to-apple comparison for Indonesia is with
Malaysia and Thailand.
55
From Table 6.3 it can be seen that Indonesia ecosystem conditions are perceived better than
Thailand. The low score in Thailand tend to be affected by its political situation during the
year. It can be seen that although physical infrastructure (pillar 8) for Indonesia is relatively
high, it is significantly lower than the other economies, and was the second lowest score pillar
compared to other economies (after the Philippines).
Table 6.3. Entrepreneurship ecosystem comparison between other neighbouring economies
(in 2014)
the highest score is in bold, the lowest score is in red
EFCs
SINGAPORE
Stage of development
3
Pillar 1
Pillar 2a
Pillar 2b
Pillar 3
Pillar 4a
Pillar 4b
Pillar 5
Pillar 6
Pillar 7a
Pillar 7b
Pillar 8
Pillar 9
INDONESIA
2
MALAYSIA
2
THAILAND
2
PHILIPPINES
1
VIETNAM
1
National policy - general
policy
National policy regulation
Government
entrepreneurship
programs
Education for
entrepreneurship Primary and Secondary
Education for
entrepreneurship - Post
Secondary
3.56
3.03
3.34
2.51
2.57
2.37
3.48
2.91
3.35
2.52
2.42
2.93
3.98
2.48
2.86
2.61
2.11
2.46
3.68
2.57
3.28
2.11
2.43
2.35
3.02
2.60
2.45
1.94
2.89
1.83
3.34
3.31
3.12
2.79
3.28
2.64
R&D transfer
Commercial & Services
Infrastructure
Internal market dynamics
Internal market openness
Physical infrastructure
for entrepreneurship
3.17
2.63
2.68
2.13
2.07
2.30
3.23
2.96
3.31
3.22
2.92
2.93
3.42
3.56
3.55
3.60
3.09
3.71
3.04
2.89
2.83
2.37
2.53
2.43
4.45
3.46
4.08
3.72
3.12
3.75
3.16
3.31
3.54
2.85
3.05
3.13
Note: 1: factor-driven economy ; 2: efficiency-driven economy ; 3: innovation-driven economy .
Physical infrastructure sometime is considered as taken-for-granted pillar and receives less

attention from entrepreneurship studies. Physical infrastructure such as ease of access and
low cost to access to communication, basic infrastructure transportation, land or operating
space, are somewhat vital for the successful operation of entrepreneurial activities and startup. To setup a new business, entrepreneur needs access to physical infrastructure and the
speed of access and affordability of access of such utilities will encourage new business
creation.
Among the other efficiency-driven economies, Indonesia has the highest market dynamics
(pillar 7a) and it is consistent. One significant feature of market dynamics is the available
56
market to sell the products or services. Indonesian experts perceived high market dynamics
although not as high as Thailand and Vietnam. As growing economy, Vietnam is able to see its
market opportunity. As a large and highly populated country, Indonesian see its big market
and Indonesia experts perceive this huge local market as a big potential market dynamics.
57
58
CONCLUDING REMARKS AND IMPLICATIONS
Similar to designing denim, entrepreneurship is a craftsmanship, which is a result of good ideas

and fine execution, complemented with passion, hard work and persistence
The GEM research study provides a comprehensive description of entrepreneurial activity for
Indonesia. It describes the attitudes, aspirations, and phases of entrepreneurship in Indonesia.
Indonesia shows relatively high entrepreneurial attitudes, for both social and individual values.
This contributes to high intentional entrepreneurship attitudes, and also relatively high
entrepreneurial rates, for both early stage entrepreneurship activities and established
entrepreneurship activities. Also, it is important to mention that there are only slight
differences between males and females in their entrepreneurial activities, and males and
females perceived similar opportunities and capabilities in their entrepreneurial intentions.
This shows that women entrepreneurs tend to be sufficiently empowered and supported in
the creation of new businesses.
Societies can benefit from the entrepreneurial energy of people of all ages. The younger
generations (aged 18-34 years old) have been exposed to entrepreneurial activities. Most
early-stage entrepreneurs are young entrepreneurs between 25 and 34 years of age, and
59
young entrepreneurs perceive entrepreneurship as an opportunity rather than a necessity.

This result indicates a good starting point, yet it needs further support from stakeholders in
entrepreneurial activities. It is also important that the government improve its programs and
policies as well as the physical infrastructure, as these entrepreneurial framework conditions
are those that are still lacking when compared to neighbouring countries in ASEAN.
The report highlights a lot of interesting findings yet there are still many facets of
entrepreneurship that have the potential for exploration. Among many issues that are
important to explore, we identify several alarming issues that still need to be considered.
Based on the entrepreneurial framework conditions, and compared to other Southeast Asian
economies, Indonesia has low infrastructure readiness, national regulations, and government
programs in entrepreneurship. This is additional homework that all stakeholders in
entrepreneurial activities need to be concerned about.
In recommending programs and policies to deal with these key issues, one size does not fit all.
Recommendations with respect to entrepreneurship need to be tailored to the specific
context. This study has sufficient profiles for different phases of entrepreneurship and
different demographic characteristics. Combined with other findings, richer profiles could be
built and more careful analysis would be able to create better and more appropriate
recommendations.
60
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62
CoE SME DEVELOPMENT

(INSTITUTE FOR RESEARCH AND COMMUNITY DEVELOPMENT)
UNPAR
In the beginning 2008, World Bank under the Presidential
Scholar Funds, has supported the UNPARs effort to
empower the micro, small and medium enterprises, by
establishing Center of Excellence in Small, and Medium
Enterprises Development CoE-SMED, which cover the micro
enterprise as well.
Micro, Small, and Medium Enterprises have been a major player in domestic economic
activities. Drew (2003) stated that the small and medium enterprises play a significant role in
the economy of the country. Statistics Indonesia (Biro Pusat Statistik BPS) reported that the
micro, small, and medium enterprises contribute around 60% of the Indonesian GDP in 2003.
The vision in Preferential Option for the Poor has urged UNPAR to consolidate and
strengthen the activities in contributing to the community development. The realistic
contribution will be in giving support in to the development and sustainability of the
community base economic activity in the micro, small and medium enterprises. This effort is
organized by Institution for Research and Community Services, UNPAR, which establishing
The Center for Small and Medium Enterprises Studies (CoE SMEs).
The center has a vision to be a centre of excellence in micro, small and medium enterprises,
with emphasis in sustainable growth of knowledge in Development of SMEs. The mission is to
give active contribution in sustainable growth of local and regional micro, small and medium
enterprises through building up the knowledge base activity.
To achieve the above vision and mission, CoE SMEs has four main activities: knowledge of
creation, knowledge of dissemination, knowledge of application, and knowledge of
conservations and networking. Each of the knowledge has the following activities:
Knowledge of creation :
Mapping of local or regional SMEs by conducting a periodically survey.

Research in various topics of SMEs by the centers associates.
National and international research collaboration
Knowledge of dissemination
Working paper, research reports and publications on SMEs

Centers web sites which containing articles and reports, and electronic newsletter;
Annual research seminar or conference
63
Knowledge of application
Training to be tailored for specific purposes
Business Consulting
Enterpreneurship For SMEs programme

Customized seminar or workshop
Post graduate level courses
Knowledge of conservation and networking
Database on local or regional SMEs

Dynamic collection of articles on SMEs; -- Library
Collaboration with other center and Networking.
To provide significant contributions for the development of the Indonesian SMEs, and to
strengthen activities in the four knowledge activities, CoE SMEs makes solid collaboration
with various organizations such as the ministry of Cooperatives Small and Medium
Enterprises, government of West Java, government of Bandung, firms in Indonesia that have a
focus in SMEs for their Corporate Social Responsibility program, banks that have program to
support the development of SMEs, etc. CoE SMEs also make an active collaboration with
foreign organization such as World Bank, Mastricht School of Management from the
Netherlands, and Jiangsu University from China. Starting from 2013, CoE SMEs joined Global
Entrepreneurship Monitor (GEM) to strengthen its research activities in micro, small and
medium enterprise monitoring.
64

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FOREWORD

4.1 Entrepreneurial Employee Activity : Concept and Definition .................................................. 36

Total early-stage Entrepreneurial

Percentage of female 18-64 population who are either a nascent

Total early-stage Entrepreneurial

Percentage of male 18-64 population who are either a nascent

Percentage of those involved in TEA who (i) claim to be driven by

Percentage of those involved in TEA who are involved in

Established Business Ownership

Percentage of 18-64 population who are currently owner-manager

Total early-stage Entrepreneurial

Percentage of 18-64 population who are either a nascent

New Business Ownership Rate

Percentage of 18-64 population who are currently a owner-manager

Nascent Entrepreneurship Rate

Percentage of 18-64 population who are currently a nascent

Media Attention for

Percentage of 18-64 population who agree with the statement that

High Status Successful

Percentage of 18-64 population who agree with the statement that

Percentage of 18-64 population who agree with the statement that

Know Startup Entrepreneur Rate

Percentage of 18-64 population who personally know someone who

Percentage of 18-64 population (individuals involved in any stage of

Fear of Failure Rate

Percentage of 18-64 population with positive perceived

Percentage of 18-64 who see good opportunities to start a firm in

Percentage of 18-64 population who believe to have the required

ENTREPRENEURSHIP AND THE GEM MODEL

GEM evaluates the relationship

In 2014, Indonesia administered an Adult Population Survey (APS) of

1.1 Employment in Indonesia

This macroeconomic growth has succeeded in pushing Indonesia's unemployment rate

1.2 Entrepreneurship in Indonesia

Ease of Doing Business Index - 2012

1.3 GEM in INDONESIA

principal investigator. Under his supervision the project grew to 31

GEM provides a comprehensive

Until 2014, GEM has measured entrepreneurship in more than a hundred

motivation to start businesses, and may be strengthened by positive societal perceptions

1.4 How GEM Measures Entrepreneurship

Figure 1.1. Stages of Entrepreneurship Model

entrepreneurial activity and perception, attitudes and perception as well as the

1.5 The GEM Conceptual Model

Figure 1.2. GEM Conceptual Model

1.6 Research Methodology

Adult Population Survey (APS)

Kabupaten Ogan Ilir

Kabupaten Ogan Komering Ilir

Kabupaten Lampung Selatan

Kota Tangerang Selatan

Kabupaten Lombok Barat

Nusa Tenggara Barat

National Experts Survey (NES)

Additional Sources of Data

This chapter focuses on entrepreneurial attitudes, which consists of 4 parts:

2.1 Entering Entrepreneurial pipelines

Intention is defined as the percentage of individuals who expect to start a business

Figure 2.1. Indonesian Entrepreneurial Pipeline 2014

2.2 Self efficacy, role model, opportunity and fear of failure

Table 2.1. Perceived capabilities

Percentage of particular population

Figure 2.2. Self-Efficacy between Indonesian females and males