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What Europe needs is to become more entrepreneur-friendly

Dr. Vera Demary, Head of Research Unit “Structural Change and Competition”, Cologne Institute for Economic Research, Germany

Despite all the effort, data clearly shows that Europe is lagging behind the US when it comes to entrepreneurship and founding new companies. It is common knowledge that there are two main obstacles to becoming an entrepreneur in Europe: the availability of venture capital and administrative hurdles.

There is a third obstacle, however, that poses a great challenge for all future entrepreneurs in Europe: a weak entrepreneurial culture.

The following five cultural obstacles sadly establish this:

1. Lack of a “can do” attitude. In many European countries, confidence in one’s own entrepreneurial abilities is comparatively low. People just do not think they can do it.

2. High level of risk aversion. New technology, as well as self-employment in general, are perceived as too risky. People refrain from taking unnecessary risks, and therefore, do not become entrepreneurs.

3. No culture of second chances. Failed entrepreneurs in Europe often have to fight to finance a second, new business idea. In the US, the experience gained by starting a – albeit non-successful – business is taken into account. There, the reasoning is that a failed entrepreneur will do better the second time around.

4. Strong trust in the state. Especially the non-English speaking European countries have a strong state. In the US (as well as the UK), the focus is on individual responsibility. Individual responsibility is a prerequisite for becoming an entrepreneur.

5. Hardly any entrepreneurship education. In many European countries, entrepreneurship education hardly plays a role in schools. And would-be entrepreneurs must seek to gain the necessary competences through self-study.

How can we tackle these obstacles? Amongst the many possibilities, three stand out:

Strengthen entrepreneurial culture in schools. Entrepreneurship education needs to start in the classroom in order to facilitate an entrepreneurial culture. Children should learn how to start a business and about the important economic impact of entrepreneurs from an early age on. 

Use MOOCs to teach entrepreneurship. Education on how to become an entrepreneur does not need to end in school. In order to reach a large number of potential entrepreneurs, massive open online courses (MOOCs) could be used. 

Strengthen regional initiatives that promote entrepreneurship. Entrepreneurial culture is mainly a regional property, which is why support needs to start at the regional level. This could happen in various ways, from mentorship programmes to the establishment of business incubators.

A lot is already been done through many terrific initiatives, like the JA Company Programme. These initiatives not only operate on a regional level and build strong networks with other  local initiatives and stakeholders, but they directly strengthen the entrepreneurial culture at schools. Still, a lot remains to be tackled if Europe wants to become a more entrepreneurship-friendly environment. That’s why initiatives like Junior Achievement have to be further supported to achieve these goals.

Read more on entrepreneurial culture here.

Category : Entrepreneurship, Entrepreneurship Education Posted : 14 March 2016 13:38 UTC
About the Author
Dr. Vera Demary, Head of Research Unit “Structural Change and Competition”, Cologne Institute for Economic Research, Germany

Dr. Vera Demary has been head of the research unit “Structural Change and Competition” at the Cologne Institute for Economic Research in Germany since January 2015. Her research covers topics on the interface between competition and digitization. Vera joined the Institute in 2009 and worked different research positions on topics such as innovation, labor shortages and education. Before joining the Institute, Vera worked as a research assistant at the University of Cologne from 2005 to 2008. Vera received a B.A. in Economics from Paderborn University in 2004, a M.Sc. in Economics and Business from Erasmus University Rotterdam in 2005 and a Ph.D. in Economics from the University of Cologne in 2008.

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