Entrepreneurship: Creating conditions for success in Europe[fr][de] 

Despite the EU attempts to stimulate entrepreneurship, EU citizens remain less inclined to become entrepreneurs and more risk-averse than their US counterparts. Moreover, once a new company has been created, it tends to grow at a slower rate than in the US, and there are around twice as many failures in Europe. 

In a debate hosted by Microsoft during the third annual SME day in Brussels on 5 June, experts including entrepreneurs, academics and policymakers concluded that Europe must undergo a series of key policy changes in order to develop entrepreneurial spirit and facilitate the growth of SMEs: 

• Increase labour flexibility;
• dramatically increase funding of basic science research in universities;
• open borders to immigration;
• reform early-stage education to nurture the entrepreneurial minds of the youth;
• create a European patent, and;
• reform the capital-tax system in order to get more people to invest in initial public offerings (IPOs) of private companies' first public stock sales.

Jiri Plecity, responsible for entrepreneurship and SMEs in Commissioner Verheugen's cabinet, pointed out that the solutions being proposed, including education, cultural shift and tax reform, were all outside the direct influence of Brussels. "The Commission is doing all it can but the responsibility lies in the hands of member states," he stressed. 

Žiga Turk, Slovenian growth minister, whose country will take over the EU Presidency as of 1 January 2008, commented: "The EU is not doing so little for SMEs – politically at least," pointing to moves to cut red tape (see Better Regulation LinksDossier), to promote research and to facilitate SME's access to finance. 

Nevertheless, he believes that "finance is not the biggest problem in Europe. It’s the lack of risk-taking that is the main problem". He said that education and promoting success stories was important and commented that less government interference would benefit SMEs. "They cannot digest everything coming from Brussels. Even Slovenia cannot digest everything coming from Brussels," he stressed, welcoming the new EU target to cut the administrative burden on businesses by 25%.

John Sammis, minister-counselor for economic affairs at the US Mission to the European Union agreed that the EU wants to regulate too much. He believes that the 'Merkel initiative' to boost regulatory co-operation between the EU and the US could "help find a more happy equilibrium" (EurActiv 05/01/07). 

Microsoft’s Chief Research and Strategy Officer Craig Mundie agreed that over-regulation was a problem: "Regulators cannot always anticipate in such a high-velocity environment." 

Based on the premise that entrepreneurship is a feature of a precious few that are "born with the 'start-up gene'", he believes that Europe should create a friendly environment for such minds. This means investing much more money in university research and making Europe more attractive to "big talent", he said, warning that more and more researchers and entrepreneurs are moving to Asia: "Both the EU and the US have messed up their immigration policies and their capacity to retain high IQ is falling," he said. 

Lastly, he pointed to the importance of harmonising IPR systems in Europe, saying: "One of the biggest impediments for small companies is getting a patent. The cost and the complexity are far too big in Europe." 

Frank Brown, dean of the leading business school INSEAD, nevertheless stressed that entrepreneurship could also be taught, if people are exposed to it at an early age. He believes that Europe must reform its "overly-rigid" early-stage education system and develop research centres through increased funding and more favourable immigration policies. 

"Europe can still take the lead as regards research into innovative energy sources and climate change solutions," he stressed. 

Venture-capitalist specialist Jean Schmitt said that a lack of access to capital and to funding sources was a major problem for SMEs and blamed Europe's ill-functioning stock markets for the situation. "Stock markets are losing money in Europe, there's more going out than coming in," he said, adding: "The cost of capital and the way you can create money is completely wrong in Europe. People can make money by placing it in short-term investments than by creating something." 

For him, the solution is taxation: "We need to tax short-term gains more and make sure that long-term investors are properly rewarded," he said.