Europe has long had the paradoxical reputation of a continent with low levels of entrepreneurship, yet high overall levels of economic competitiveness. A new report produced by the World Economic Forum and the Global Entrepreneurship Monitor provides an explanation: Europe is home to many intrapreneurs, individuals who choose to innovate within organizations.
The findings go against the widely-held belief of the dismal state of entrepreneurship in Europe. Indeed, the report finds, what Europe lacks in early-stage entrepreneurship, it makes up for in intrapreneurship:
- Of all regions surveyed, only US, Canada, and Australia scored better than Europe for intrapreneurship: out of every 100 workers in Europe, 8 could be classified as intrapreneurs. In other regions, including India (South Asia), China and ASEAN (Southeast Asia), Latin America and Africa, that number is lower
- That contrasts with Europe’s score for what is traditionally seen as entrepreneurship: people involved in start-ups, or “early-stage entrepreneurial activity”: only 4 out of 100 Europeans in the workforce are active as start-up entrepreneurs, among the lowest rates in the world
The findings are important for future potential growth in Europe, as those who innovate within organizations tend to create more jobs than those who start their own business. A correlation also exists between intrapreneurship rates and economic competitiveness: every 2.5% increase in a country’s intrapreneurship rate correlates to a 1 point increase in competitiveness as measured by the World Economic Forum’s global competitiveness data.
But the news is not all good. The European results vary widely, and are worst in its industrial heartland. The UK, one of Europe’s strongest economies, is the exception among large countries, coming in 5th overall and 3rd in intrapreneurship. But Germany (24th) and France (25th) appear at the bottom of the combined ranking, despite a moderate score in intrapreneurship. The three worst ranking countries overall are Greece (26th), Spain (27th) and Italy (28th). It is a worrying sign as Europe’s competitiveness depends on that of its heartland. Estonia, Sweden and Latvia come out on top. Other Northern countries also score well for the combined ranking of entrepreneurship and intrapreneurship, bringing up the continent’s total score.
The report explains the implications for policy makers, and ways they can design policies to enhance the economic competitiveness and unleash all types of entrepreneurship. The choice is not between start-ups and intrapreneurship as economies flourish when all types of entrepreneurship exist at healthy levels.
“In the public debate on entrepreneurship, a false contrast is often presented – the dynamic start-up entrepreneur versus the stale corporation. This report rebukes that narrow perspective on entrepreneurship,” says Michael Drexler, Head of Investors Industries at the World Economic Forum. “A better approach is to create policy frameworks that enable ‘collaborative innovation’, where young firms and established companies share complementary resources to support new ideas.”
“Countries should strive for a ‘healthy’ set of both types of entrepreneurship” said Niels Bosma, Utrecht University and co-author from Global Entrepreneurship Monitor. “Independent, innovative entrepreneurship is important as it is allows for introducing and testing very new concepts or ideas. New entrepreneurial projects that have been successfully introduced to the market will likely have a bigger impact as these projects can tap into the resources available within the existing firm.”