Global entrepreneurship report - ResearchGate

Appendix A: The GEM Conceptual Model
The GEM research program is based on an
underlying conceptual model of the major causal
mechanisms affecting national economic growth.
This model has three primary features. First, it
focuses entirely on explaining why some national
economies are growing more rapidly than others.
Second, it assumes that all economic processes take
place in a relatively stable political, social and
historical context. Finally, and perhaps most unique
to GEM, it considers two distinct but complementary
mechanisms to be the primary sources of national
economic progress (Figure A-1).
The first major mechanism, as illustrated in the
top portion of Figure A-1, reflects the role of large
established firms that provide national
representation in international trade. The
assumption behind this part of the model is that if
the general national conditions are appropriately
developed, the international competitive posture of
large firms will be enhanced. Then, as these firms
mature and expand, they will create significant
demand for goods and services in their host national
economies. This increase in demand will, in turn,
produce market opportunities for many micro, small
and medium-sized firms. This scenario is particularly
robust when international exchanges are restricted
to stable commodities with little change in markets
or production technology.
The second primary mechanism driving
economic growth, as illustrated in the lower portion
of Figure A-1, emphasizes the role of
entrepreneurship in the creation and growth of new
firms. According to this portion of the model,
another set of contextual factors, referred to as
“Entrepreneurial Framework Conditions,” intervenes
between the social/cultural context and the
emergence and expansion of new firms. In addition,
two critical features in the entrepreneurial process
are specified: (1) the emergence or presence of
market opportunities and (2) the capacity
Figure A-1: The GEM Conceptual Model
General National
Framework Conditions
• Openness (External Trade)
•Government (Extent, Role)
• Financial Markets
(Efficiency)
•Technology, R&D
(Level, Intensity)
• Infrastructure (Physical)
•Management (Skills)
• Labor Markets (Flexible)
• Institutions
(Unbiased, Rule of Law)
Major
Established Firms
(Primary Economy)
Micro, Small and
Medium Firms
(Secondary Economy)
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Social, Cultural,
Political Context
Entrepreneurial
Framework Conditions
• Financial
•Government Policies
•Government Programs
• Education and Training
• R&D Transfer
• Commercial, Legal
Infrastructure
•Internal Market Openness
• Access to Physical
Infrastructure
• Cultural, Social Norms
Entrepreneurial
Opportunities
Entrepreneurial
Capacity
• Skills
• Motivation
Business Churning
National
Economic Growth
(GDP, Jobs)