2021 Entrepreneurial Activity Review

Finland last participated in the GEM surveys in 2016. From 2004 to 2016, Finland was a rarity among GEM economies in that its EBO rate was consistently higher than its early-stage entrepreneurship rate (TEA). In 2021, this inverted relationship continued, with the country’s EBO rate at 8.9%, while its TEA rate was 7.9%. Such a sustained level of EBO compared to early-stage entrepreneurial activity can be interpreted in different ways. As a positive, it means that a steady flow of new businesses become established businesses every year in Finland, reflecting the availability of clear paths for new business growth. However, lower TEA rates can also suggest a lack of interest, or confidence, in becoming an entrepreneur within a particular country. It could also suggest a cultural and or state preference for established firms over new entrants.

A deeper consideration of Finland’s 2021 results can help explain why EBO rates remain high, and consistently above TEA rates. This starts with the fact that 64.1% of Finnish adults say they know someone who has started a business in the last two years, the highest rate among GEM Level A economies. Often, a high positive rate for this question corresponds with higher TEA rates, as knowing other people who have started a business can inspire others to do the same by presenting role models. Other countries with high positive rates on this question, such as Israel, the United States and Saudi Arabia, had significantly higher TEA rates than Finland. Yet, despite their high rate of knowing new business starters, Finns seem discouraged when considering doing the same themselves. This is evident by the low rate of Finns who say they have the knowledge, skills and experience required to start a business (42.8%), as well as for those who expect to start a business in the next three years (9.7%). It is also quite possible many Finns see the risk undertaken by entrepreneurs they know and decide it is too high. An unfortunate result of these attitudes appears to be a lower rate of female participation in both earlystage and established entrepreneurship.

Among Finnish TEA respondents, the ratio of female to male entrepreneurs is 0.67%, so about three male to every two female entrepreneurs, while among EBO respondents the ratio is 0.54%, nearly two to one. With this knowledge, Finnish policymakers could help increase the rate and dynamism of early-stage entrepreneurship by specifically prioritizing potential female entrepreneurs, who would eventually become established business owners.

2021 Framework Conditions Review

The high scores on Finland’s framework conditions are consistent with an environment that allows new businesses to grow and sustain themselves, even if a relatively few pursue early-stage entrepreneurship. On both financing-related conditions, Finland had the highest scores among GEM Level A economies. The quality of the country’s financial sector, and its efficient distribution of funding, allows many new businesses to scale up and continue the growth necessary to become a sustained established business for many years. Why this does not result in more potential entrepreneurs wanting to start a business will need further study. 

Finland also scored highly on its educational conditions, with Entrepreneurial Education at School (with a score 6.1) the highest among GEM Level A economies. This reflects the high priority the Finnish government places on education, and may explain why there is near parity between graduates of post-secondary degree holders and non-graduates among Finland’s TEA respondents, an unusual balance among Level A economies, which tend to have more graduates among its earlystage entrepreneurs. Yet the lower rates of female participation indicate more subtle, perhaps cultural, barriers to pursuing entrepreneurship, which policymakers should consider.