Being an entrepreneur in the Middle East isn't always easy. Language barriers, access to capital, and red tape are just some of the issues that business owners have to contend with.
But, according to a recent report by HSBC, despite these barriers, the Middle East is nonetheless home to the highest number of business owners aged under 35 years, or what the bank calls 'millennial entrepreneurs'.
The findings are part of a nine-nation study that polled 2,834 respondents, worth between $250,000 and $20m, from across mainland China, Hong Kong, Singapore, the UK, Germany, France, the US, the United Arab Emirates, and Saudi Arabia.
Within this cohort, the Middle East is home to the highest proportions of millennial entrepreneurs (63 percent), some way ahead of mainland China and Hong Kong, which both have 44 percent.
Here are five key findings about the Middle East that emerge from HSBC's research:
- Some 46 percent of those surveyed in the region decided to become entrepreneurs at school or college. That figure is the highest percentage of any country or region in the study.
- However, more than a quarter of entrepreneurs in the region revealed they sought some professional experience before beginning their entrepreneurial journey.
- With a figure of 26 years, the Middle East also has the youngest average age of entrepreneurship.
- Some 63 percent of Middle East entrepreneurs come from a business-owning family.
- However, only 23 percent are shareholders or executives in the family business. That finding means that although they may start out in the family business, they typically go their own way.
As Nick Levitt, head of the global solutions group at HSBC Private Bank, acknowledged in a blogpost about the report, technology in the form of the internet, smartphones, and apps has made it possible for millennial entrepreneurs around the world "to build their personal fortune at a speed that would have been hard to imagine even 30 years ago".
"Millennial entrepreneurs, those born after 1980, are reshaping the business world. The way they make their money, spend it, and invest it has broad implications for wider society," he says.
In the Middle East, as around the world, one key impact can be seen in the "growing philanthropic impulse [found] in the under-35s". This impulse manifests itself in a number of different ways, including the tendency of entrepreneurs in the Middle East to be "more likely to structure their giving than their older counterparts through a foundation or an estate plan".
This next generation of business leaders in the Middle East is also more likely to be active in "volunteering their expertise to social causes". In contrast, the study commented, the region's older generation of entrepreneurs typically approached philanthropy through the giving of "regular gifts to good causes".
Globally, the study finds, 79 percent of young entrepreneurs have been involved in charitable giving in the past 12 months, while more than half of the sample noted that "having a positive economic impact on their community" is an integral factor in their decision to go into business.
Younger entrepreneurs are also likely to be more collaborative, using physical and social networks as an integral part of their business, the report observes.
"These subtle shifts between generations and cultures are a reminder that value creation from entrepreneurial activity is interwoven into the economic and cultural fabric of society," the authors comment.
Wider cultural differences are also visible at a geographic level. Young entrepreneurs in Western Europe and the US often display different characteristics to their counterparts in Asia and the Middle East.
For example, in countries such as the US, UK, Germany, and France, the entrepreneurship cycle is more focused on starting, growing, and then selling businesses, the report states. Subsequently, "success is often measured in terms of the personal fortunes made in the process".
In contrast, in mainland China, Hong Kong, Singapore, and the Middle East, "success is more likely to be judged in terms of the size of the enterprise built by the entrepreneur".
As a result, it's interesting to note that "the average size of business turnover across these Asian countries and the Middle East was almost $10m, compared with just $5m in the US and Western Europe".
Successful entrepreneurs in the East are therefore typically running with double the revenue of their Western counterparts, although entrepreneurs in the US, UK, Germany, and France may have relatively higher levels of personal wealth.
Differences are also discernible in terms of the number of second-generation entrepreneurs.
"Across Asia and the Middle East, one in three second-generation entrepreneurs has joined the family business, compared with just 15 percent of those in the US and Western Europe," the study finds.
Interestingly, in the Middle East the high percentage of entrepreneurs from a business-owning family yet their relatively low ownership in that business means that although entrepreneurship runs in their blood, the region's next generation of entrepreneurs is nevertheless keen to stand on their own two feet and make their own mark on the world.
In this regard, they differ from many of their peers in mainland China, Hong Kong, and Singapore, where they "are often making their mark through business strategy: proving their ideas, consolidating their market position, diversifying business lines and expanding into international markets".
What these examples show is that although entrepreneurs around the world share many of the same traits, there are many differences too.
Entrepreneurial characteristics and environments can be shaped by culture and tradition, just as much as the individuals concerned. This diversity needs to be recognized and understood by banks, venture capitalists, policy makers, and governments, all of which have a role in seeking to enhance and encourage entrepreneurship.
Compared with other regions, the relative youth of Middle Eastern entrepreneurs, their early career path decisions, and family business backgrounds constitute characteristics that will be the secret to the region's long-term entrepreneurial success.
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