Interview: EU must reduce 'risk-to-reward-ratio' for business[fr][de] 

While the EU says it is committed to improving the business environment for its small and medium sized enterprises, Jonathan Zuck, president of the Association for Competitive Technology (ACT), which represents more than 3000 IT SMEs from around the world, as well as larger companies such as eBay, Oracle and Microsoft, told EurActiv that he thinks the Commission does not always focus on the right priorities and says more still could be done to create a "healthy tech environment" that promotes innovation, competition and investment. 

• Fostering an 'entrepreneurial mindset': 

While the latest Commission documents on SME policy stress the need to address European citizens' lack of entrepreneurship, notably through education and training, Zuck emphasised that "the most important thing that Europe can do for entrepreneurship is to create an environment conducive to that entrepreneurship – in other words: making it easier for venture capital firms to work and operate within Europe, or reforming the bankruptcy law." 

He believes that Europe's "cultural adversity towards risk" is "exaggerated", saying that "in reality, if the risks are too high and the rewards are too little, what may seem like risk-adversity might just be rationality." 

According to him, "creating an environment for entrepreneurship is a combination of instability and opportunity." 

"If you have too much comfort in your job and your social protections and you also have a lot of limits on your opportunities for success – both through the tax and regulatory systems – then the risk of leaving the 'comfort zone' to take the risk seems far too high." 

Thus, he insists, the EU must create an environment in which the "risk-to-reward-ratio" is decreased. 

• Completing the internal market 

"There are still a lot of things that small businesses need simplified if they are to grow their businesses to become more Europe-wide," said Zuck, pointing to difficulties associated with hiring foreign nationals, getting venture capital, doing business in other countries, etc. 

"What SMEs need is low overhead flexibility...But the laws surrounding being an independent contractor are complicated; the laws surrounding engaging a foreign national are very complicated – these are still areas for real simplification," he stressed. 

• European Private Company: 

The creation of a European Private Company (EPC) Statute would be "certainly a step in the right direction", said Zuck, referring to moves at EU level to investigate the creation of a single company statute for all EU private companies, thus making it easier for SMEs to establish a Europe-wide network of subsidiaries and operate across the whole single market, without having to comply with 27 different national legal settings (EurActiv 15/05/07). 

The Commission is currently holding a public consultation on this subject (EurActiv 24/07/07). 

Nevertheless, Zuck noted that "creating a subsidiary is a still high overhead simply to do some work in another member state", and that "ideally, SMEs would like to have the ability to directly engage employees, customers and partners" in other countries without having to create subsidiaries. 

• Community patent: 

Zuck called on Europe to address its intellectual property "quagmire", stressing that the lack of a Community patent was causing large losses to the European economy (see our LinksDossier on the Community Patent).

"A lot of SMEs end up patenting their inventions in the US because they can get to a market much more efficiently there instead of patenting their inventions in Europe. I think that is a shame and I think having a less complicated, less fragmented system in Europe could be a real boon to entrepreneurship and innovation throughout Europe," he stressed. 

• European Institute of Technology: 

As regards the Commission's proposal to establish a European Institute of Technology (see LinksDossier), on the model of the American MIT, linking research, education and innovation, Zuck said: "I think it has the potential to be interesting, but I think it misses the point… In Europe there is a constant desire by the government to 'create and manage', but in reality, most of the time it is a question of getting out of the way."

To read the interview in full, please click here.