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The UK has become Europe's most entrepreneurial economy and has climbed five places to fourth globally, according to an Imperial report.
The improvement in the UK's ranking is due to progress in entrepreneurial attitudes and abilities. However, entrepreneurial aspirations - a measure of how innovative, risk-taking and internationally oriented UK entrepreneurial ventures are - remains a relative weak spot compared to other leading countries.
This year's GEI, formerly known as the Global Entrepreneurship and Development Index, is now in its fifth edition. It profiles and benchmarks the entrepreneurial ecosystems of 130 countries. In this year's index, the US ranked first, Canada second and Australia third.
The UK's ranking has improved steadily over the past three years. In 2012 the UK ranked 14th and in 2013 it ranked ninth. This year's ranking is the UK's highest position in the history of the index.
The study was carried out by researchers from Imperial College Business School in association with collaborators at the London School of Economics and Political Science (LSE), University of Pécs and George Mason University. The GEI uses 14 index pillars such as start-up skills, networking and cultural support to benchmark countries' entrepreneurial ecosystems. The research team analysed survey data from nearly half a million adults in different countries, combined with data describing the country's "entrepreneurial framework conditions" - i.e. how well each country supports entrepreneurial activity.
The researchers found that the UK is Europe's leading entrepreneurial economy and exhibits a strong all-around entrepreneurial profile. The UK's greatest strength in entrepreneurship is its entrepreneurs' ability to provide unique products or services that are not currently offered by other businesses in the same market. In this regard, UK businesses ranked second in the world behind the US and Denmark, which ranked first in the Index. The UK also exhibited strengths in recognising opportunities to start a business and the prevalence of highly educated and skilled entrepreneurs. The UK's relative weaknesses were found in its perception of start-up skills, internationally oriented business ventures, and risk capital.
The report showed that the UK ranked higher than the US, Australia and Canada in entrepreneurial networking. However, gaining access to people who can provide mentoring support, financial resources and learning is better in these countries than in the UK.
The improvement in UK's entrepreneurial performance since the last report is linked with an improvement in UK support for entrepreneurs. One example is the UK Government's start-up loan scheme, which provides business loans, advice and mentoring to start-up businesses. The scheme has now lent £120 million to entrepreneurs looking for support in starting up a business and is on track to meet the target of supporting 30,000 new businesses by 2015.
The researchers found that the overall UK performance in entrepreneurship is world class. However, the different elements making up entrepreneurship in the UK - such as ability, attitudes and ambition - are not as well balanced as in the leading entrepreneurial economies such as the US and Australia.
Professor Erkko Autio, co-author of the study from Imperial College Business School, said:
"The UK's performance in entrepreneurship is improving with more people recognising that there are opportunities to start up a business. However, our report shows that entrepreneurial aspirations remain a relative weak spot in the UK profile, especially when compared against global leaders such as the US, Australia and Canada. Improving entrepreneurial aspirations is important, because it is the innovative, high-growth entrepreneurs that make all the difference. In entrepreneurship, quality matters more than quantity. Our report highlights areas that the government needs to focus on to further improve UK's already strong performance."
Professor Zoltan Acs, co-author of the study from the LSE and George Mason University, commented:
"Compared to the US, the UK needs to improve its entrepreneurial aspirations. While there is not that much difference in entrepreneurial attitudes and ability, the UK lags over 20 index points (out of 100) behind the US in entrepreneurial aspirations. The challenge for the UK, then, is to make its entrepreneurs more innovative, growth seeking and internationally oriented."
The RT Honourable Dr Vince Cable, Secretary of State for Business, Innovation and Skills, said:
"From building cutting-edge robots to designing satellites, British entrepreneurs succeed through combining innovation with strong business acumen. That is why despite tough economic times, we have jumped 10 places in just two years to be the number one enterprising nation in Europe. Our industrial strategy will continue this legacy by providing an environment where businesses can innovate and have confidence to invest in new ideas for long-term growth."
The authors suggest that UK Government policymakers could use the GEI index to identify and alleviate the bottlenecks that hold back UK's entrepreneurial performance.
This year's GEI report is launched during the Global Entrepreneurship Week, which co-brands the index.