Problems To Be Addressed

According to the 2002 annual survey by the Global Entrepreneurship Monitor (GEM), Western Europe represents 10% of the global workforce but only 4% of the entrepreneurial activity.

The European Union needs to boost its capacity for entrepreneurship to remain competitive and create more jobs. Europeans are currently three times less involved in new entrepreneurial ventures than Americans. Despite the fact that one-third of European entrepreneurs declare growth as their main ambition, they expand their firms much less than their US counterparts. Therefore the European Commission has published a Green Paper on Entrepreneurship¹ to raise awareness of and discussion on the subject.

The findings of a recent Eurobarometer survey² illustrate that many people in Europe are reluctant to start a business a business if they risk failure. But whilst the majority of EU citizens prefer employee status to self-employment and business ownership, there are marked national differences.

Timmo Summa, Director in charge of entrepreneurship and SMEs in the European Commission's Directorate-General for Enterprise believes that "entrepreneurship is first and foremost a mindset, where risk-taking and innovation are blended with sound management, in new or existing firms. Policy should not just seek to create a supportive business environment, but should also motivate today's and tomorrow's entrepreneurs to develop thriving businesses."

Cultural Obstacles to Entrepreneurship in Europe

The obstacles to entrepreneurship in the EU region, says Professor Paul Reynolds "are mostly cultural, plus the idea that people should not work too hard and that economic markets should not be the primary focus of a society. Europeans have the highest fear of failure among the countries in the 2002 GEM study and there is a very high level of economic security for people who lose their job for one reason or another -  there is a whole set of things in Europe that seem to be consistent with this idea that Europeans are uncomfortable with starting businesses... It is very hard to change this cultural bias that somehow it is unseemly to be starting a business and creating great personal wealth. It is reflected in the widespread avoidance of the word 'entrepreneurship'. More and more, particularly in the UK, the world 'enterprise' is used because it is found to be less unsavoury than the concept of 'entrepreneur'

"It took a long for Europeans to feel that - somehow - starting a business was not an appropriate career path, and it is going to take a couple of generations to reverse that. What may happen in the mean time is that as Europe begins to lag behind the rest of the world as a source of economic growth, the governments are not going to be able to afford all these welfare programmes... It is really an issue of whether European governments can continue to afford them and lose out in world competition."⁴

Three Pillars of the Entrepreneurship Development Policy

Critical questions for the future policy agenda are grouped into three main strands for action:

1. Bringing down barriers to business development, for example by improving the availability of finance and providing quality support services.

2. Balancing the risks and rewards of entrepreneurship, for example by reducing the negative effects of bankruptcy, encouraging prospective entrepreneurs to consider taking over existing firms, and developing 'intrapreneurship', where firms help employees to set up spin-offs.

3. Promoting a society that values entrepreneurship so the people have confidence and skills to turn their ambitions into action. Schools and universities have an essential role to play, and media campaigns can help to promote role models and success stories.