Entrepreneurship is defined as “any attempt at new business or new venture creation, such as self-employment, a new business organisation, or the expansion of an existing business, by an individual, a team of individuals, or an established business”(Reynolds, P. et al, 1999, p. 3).

GEM longitudinal studies across the globe have improved our understanding of the relationships between entrepreneurship and national development by answering the following three questions:

• Does the level of entrepreneurial activity vary between countries, and if so, to what extent?
• Does the level of entrepreneurial activity affect a country’s rate of economic growth and prosperity?
• What makes a country entrepreneurial and what factors influence entrepreneurial activity?

To answer these questions, GEM developed a conceptual framework that captures the relationships between entrepreneurship and national development. During the last 19 years, this conceptual framework and the basic definitions have evolved gradually without compromising the comparability of the collected information but bringing more clarity to assumed relationships.

GEM conceptual framework remains aligned with its original key objectives:

• To allow for comparison of levels of entrepreneurial activity among different countries, geographic regions and economic development levels;
• To determine the extent to which entrepreneurial activity influences economic growth within individual economies;
• To identify factors which encourage and/or hinder entrepreneurial activity (especially the relationships between national entrepreneurship conditions, social values, personal attributes and entrepreneurial activity);
• To track entrepreneurial attitudes, activity and aspirations within countries to provide annual national assessment of the entrepreneurial sector;
• To guide the formulation of effective and targeted policies aimed at enhancing entrepreneurial capacity within individual countries.

The GEM conceptual framework derives from the basic assumption that national economic growth is the result of the personal capabilities of individuals to identify and seize opportunities, and that this process is affected by environmental factors which influence individuals’ decisions to pursue entrepreneurial initiatives. Entrepreneurial activity is thus an output of the interaction of an individual's perception of an opportunity and capacity (motivation and skills) to act upon this and the distinct conditions of the respective environment in which the individual is located. In addition, while entrepreneurial activity is influenced by the framework conditions in the particular environment in which it takes place, this activity ultimately benefits this environment as well, through social value and economic development.

GEM MODEL OF BUSINESS PHASES

GEM understands entrepreneurial activity as the core of a complex process that begins with individuals’ or groups of individuals’ entrepreneurial intention and that continues with successive phases of effective business start-up (nascent activity), business consolidation (new or baby activity), business development and persistence (established activity), and business discontinuation (activity exited from the market).