The Entrepreneurial Challenge

  • Year of publication: 2016
  • Category: National Reports
  • Language: English
  • Upload date: 2016-06-23

Anglo-Saxon countries outperform all other countries in all entrepreneurial dimensions – entrepreneurship rate, new business ownership, women’s entrepreneurship and future potential entrepreneurs, according to the new report “The entrepreneurial challenge – A comparative study of entrepreneurial dynamics in China, Europe and the US” launched today by Swedish Entrepreneurship Forum. To accelerate growth and close the entrepreneurial gap, in particular to the US, institutions must more clearly encourage risk, entrepreneurial endeavor and firm growth. The report is based on data from the Global Entrepreneurship Monitor. The report examines the similarities and differences between China, EU, and the US in terms of entrepreneurial activity and attitudes towards entrepreneurship as well as entrepreneurs’ ambition to grow, internationalize and to innovate. The highest levels of entrepreneurship are found in the US (12 percent each) and UK (13 percent), whereas the lowest levels are found in Germany and Italy (four percent). Sweden’s level is seven percent. Also growth expectations are considerably higher among US entrepreneurs as compared to the EU. China’s entrepreneurial activity is still high but declining, which reflects that much of the previous entrepreneurship was necessity-based and a business-cycle effect. - The entrepreneurial vein is shown to be weak in the larger EU-countries, this manifests in a lower rate of entrepreneurship and in a considerably weaker intrapreneurship, says Pontus Braunerhjelm, Professor at KTH Royal Institute of Technology and Research Director at Swedish Entrepreneurship Forum. The authors emphasize four policy areas that are particularly important for early-stage entrepreneurship; supply of skills, access to finance, regulations, fear of failure and taxes. First, supply of skills is a key condition for entrepreneurs to grow and maintain their innovative capacities. It is essential that universities are rewarded for their interaction with society, i.e. interacting with businesses and diffusing knowledge. Second, access to capital is important and the Anglo-Saxon model, found to be by far the best at creating entrepreneurial activities, is partly based on a social and economic acceptability of successful entrepreneurs who also builds fortunes. Third, several studies have highlighted the negative effects of regulations on entrepreneurship. A reduction in red tape is a necessary prerequisite for building an entrepreneurial culture. Forth, debts incurred by the firm may become personal and extremely hard to terminate. Stigmatizing institutions hamper entrepreneurial risk-taking and stifle growth and industrial dynamics. This tends to feed a fear of failure culture instead of an entrepreneurial culture. Taxes should be designed to encourage new and growing firms, i.e. including investment incentives, stock options and transparency. If the political aim is to enter a path where entrepreneurship, innovation and continuous market experimentation pave the way for sustainable future growth, the authors suggests that policymakers focus their efforts on the areas above.