Best country for entrepreneurs? Hint: Not the US.

A survey of 71 nations placed the US third in entrepreneurial performance, after Denmark and Canada.

Denmark is the new land of opportunity, according to a survey that evaluated 71 nations in terms of entrepreneurship and performance.

Newscom/File

September 15, 2010

If entrepreneurial performance were an Olympic sport, Denmark and Canada just stole the gold medal from the perennially favored United States.

The U.S. lands third in a report from the U.S. Small Business Administration's Office of Advocacy, which evaluated 71 nations in terms of entrepreneurship and performance.

“The global perception of the country as a land of opportunity and as the mecca for individuals wanting to do something new and different seems to be somewhat challenged by the facts,” wrote the report's authors, Zoltan Acs of George Mason University in Fairfax, Va., and Laslo Szerb of Hungary's University of Pécs.

Those facts, according to their report: Stacked against other major economies, the U.S. lacks high-growth business and cultural support for entrepreneurship and is frail in the technology sector.

The weaknesses caused the United States to rank an unlikely sixth in entrepreneurial attitudes — society’s feelings toward entrepreneurship, based on education and social stability — and eighth in entrepreneurial activity: what citizens are doing to improve the quality of human resources and technological efficiency.

“However, it seems that in many respects a slowdown in U.S. entrepreneurial activities may be a reflection of progress by the rest of the world — learning from the U.S. model and beginning to catch up,” Acs and Szerb wrote in the report, titled “Global Entrepreneurship and the United States” and released Sept. 9.

The authors said they were hopeful the findings will help the U.S. understand its flaws and strengths in order to compete in a global economy.

“The United States does not simply need more new businesses; it needs more highly productive ventures. A potential way of achieving this kind of productivity improvement is to make progress in entrepreneurship,” they wrote.

Weaknesses

The slowdown in entrepreneurship can be traced back to several events, according to the report.

- The bursting of the technology sector bubble of the 1990s decreased the number of software companies and startups.

- The recent recession stalled business growth.

- Other countries are improving.

- Tighter immigration policies adopted after the Sept. 11, 2001, terrorist attacks control the stream of skilled workers into the U.S. and create disenchantment, particularly among immigrants.

“In this respect, countries like Canada, New Zealand, and Australia have all been more pragmatic by giving strong incentives to attract educated, skilled workers to their shores – whether doctors, engineers, or academic researchers – and to keep them there with offers of residency and citizenships,” Acs and Szerb wrote.

Strengths

The U.S. earns high marks for startup skills, competition and new-technology development, and also ranks first in entrepreneurial aspirations – how much activity is directed toward innovation, high-impact entrepreneurship and globalization.

“The findings of this paper should serve more as an eye-opener than as a cause for alarm,” the authors said.

“The United States maintains its place among the leading entrepreneurial economies. Its performance is still superior in most respects to the averages for innovation-driven and efficiency-driven economies. Its strengths in the skill of its workers, the size of its markets, the institutional support for its people, and the aspirations of the American population are strong and robust.

“What is required as we come to the end of the first decade of the new millennium is a more pragmatic reality check on some of our perceived strengths and evolving strategies to correct for past shortcomings.”