Emerging market entrepreneurs and investors are more resilient about setbacks than their peers in more mature economies, such as in the West, says a new report from Barclays.

Emerging market entrepreneurs and investors in fast-growing economic regions such as Asia are more resilient about setbacks than their peers in more mature economies, such as in the West, says a new Wealth Insights report from Barclays.

The report, If at First You Don’t Succeed…Mapping Global Attitudes to Adversity, published today, suggests that different cultures hold traits such as persistence, optimism and the role of luck in high regard. It identifies respondents from fast-growing emerging markets that view setbacks and overcoming adversity as a stepping stone to future success. 

Behaviours of people in emerging markets are important for wealth managers trying to understand demands of potential and actual clients in these economies, which account for about 40 per cent of the world’s gross domestic product.

“Governments across the globe have highlighted the crucial role that entrepreneurs will play in kick-starting the global economy, so understanding their psyche, their culture of perseverance and how this differs across regions will be critical in making this opportunity become a reality,” said Richard Phelps, managing director, at the wealth and investment management of Barclays.

Three quarters (74 per cent) of global high net worth individuals agree that viewing failure positively is fundamental to the growth of an economy, with the majority (91 per cent) of Middle Eastern respondents and 80 per cent of those in Asia viewing failure as essential for an economy to grow.  In contrast, these figures drop to 70 per cent in the UK, 71 per cent in the US and 69 per cent across Europe.

The study was compiled with information from two main sources: Longitude Research conducted a series of interviews with entrepreneurs, academics, professionals and other experts around the world. Secondly, Ledbury Research carried out a survey of more than 2,000 high net worth individuals, all of whom have more than $1.5million/£1 million (or equivalent) in total net worth and 200 with more than $15 million/£10 million. Respondents were drawn from 17 countries.

Entrepreneurs

However, the report reveals a contrast in the number of people who see themselves as entrepreneurs in Western versus Eastern economies, with just 29 per cent of respondents in the US and 30 per cent in Europe regarding themselves as entrepreneurs, compared to 47 per cent in Asia, 50 per cent in the Middle East and 55 per cent in Central and South America.  In the UK, 35 per cent of respondents view themselves as entrepreneurs, 61 per cent of whom say that they learned from failure, compared with 42 per cent of non-entrepreneurs.

“The usual approach is to try to predict potential problems and then put plans in place to stop them happening.  But you cannot avoid failure.  You’ll never get round this fundamental problem, no matter how smart you are. It’s inherent to all evolving systems, which is exactly what human social and economic systems are.  Therefore, we come back to the power of persistence, which the East appears to be embracing.  The questions are what the West needs to do to counter this potential power shift, and what the longer term implications are,” said Paul Ormerod, economist and author of Why Most Things Fail…And How to Avoid It.

Personality Goes A Long Way

The personalities of entrepreneurs in different regions of the world are identified within the report, with those in the East being determined to overcome setbacks and persevere, the report's authors say.

Seeking to explain different behaviours between emerging and more developed economies, the report said: “These fast-growing economies are also more likely to value persistence in the face of failure or setback than those in many developed markets. Entrepreneurs in these fast-growing economies are used to dealing with constraints, high levels of bureaucracy and a challenging business environment.”

Entrepreneurs in emerging markets face challenges, a primary one being bureaucratic business environments, which would suggest they require a greater level of persistence. This is reflected in the report findings which show that 88 per cent of respondents in India and 74 per cent in Saudi Arabia agree that if their business is failing, an entrepreneur should persist rather than cut their losses, in contrast to just 35 per cent in the UK – the third lowest of all countries surveyed for the report.

The report said 34 per cent of entrepreneurs globally say that failure encouraged them to try again, compared with 23 per cent among non-entrepreneurs. Qatar, China and Hong Kong, saw 73 per cent, 71 per cent and 65 per cent of respondents citing that they have learnt a great deal from past failures. Just 49 per cent of these respondents in the UK believe they learnt a great deal from past failures.

In India, 82 per cent of respondents agreed that personality traits of this kind are vital to success, compared to 56 per cent in both the UK and the US.  In the Middle East, 83 per cent of respondents agree that with hard work comes successful entrepreneurialism.  The corresponding figures from the US and Europe are just 49 per cent and 44 per cent respectively.

The psychology of success

The report suggests that the ability to learn from failure and remain optimistic is essential to success. More than seven in ten (71 per cent) of respondents who have optimistic characteristics found that they could bounce back quickly from setbacks.

This positive psychology is similarly reinforced when it comes to investors: 55 per cent of respondents who display optimistic characteristics say that they have experienced failure in their personal investments, compared to 66 per cent of those who do not display these optimistic traits.

The report further demonstrated the importance of handling and learning from failure: when respondents were asked whether they would hire an individual who has experienced entrepreneurial failure 91 per cent of respondents in India, 89 per cent in Saudi and 86 per cent in Qatar confirmed that they would, while in the UK just 42 per cent of respondents would hire someone with a failed enterprise on their CV.  This figure drops to 25 per cent in Monaco.

The report shows that respondents in the UK believe being successful is significantly reliant on “skills/intelligence” and “effort/hard work”. On average, over a third of success is attributed to these factors (37 per cent and 38 per cent respectively). Chance and connections are seen as much less important factors, each at 14 per cent. In line with global average findings, the UK ranks fifth for importance placed on “skills/intelligence” and “effort/hard work”.