A theoretical grounding and test of the GEM model

J.D. Levie, Erkko Autio

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297 Citations (Scopus)
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The Global Entrepreneurship Monitor model combines insights on the allocation of effort into entrepreneurship at the national (adult working age population) level with literature in the Aus-trian tradition. The model suggests that the relationship between national-level new business ac-tivity and the institutional environment, or Entrepreneurial Framework Conditions, is mediated by opportunity perception and the perception of start-up skills in the population. We provide a theory-grounded examination of this model and test the effect of one EFC, education and train-ing for entrepreneurship, on the allocation of effort into new business activity. We find that in high-income countries, opportunity perception mediates fully the relationship between the level of post-secondary entrepreneurship education and training in a country and its rate of new busi-ness activity, including high-growth expectation new business activity. The mediating effect of skills perception is weaker. This result accords with the Kirznerian concept of alertness to oppor-tunity stimulating action.
Original languageEnglish
Pages (from-to)235-263
Number of pages29
JournalSmall Business Economics
Issue number3
Publication statusPublished - Oct 2008


  • entrepreneurial activity
  • entrepreneurial framework conditions


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