This article is part of our special report What’s driving Europe’s digital transformation?.
The Nordic countries lead the rest of the EU in fostering new digital startups and helping businesses go digital, according to a European Commission report.
The Commission has listed five ‘dimensions’ in its Digital Entrepreneurship Scoreboard 2015 which measures and ranks member states.
The dimensions include how competitive countries are in making ICT-related products and how well their infrastructure supports digital. They also cover access to finance and the efforts companies make in teaching employees digital skills or the possibility of acquiring those skills at an educational institution.
The Commission has also measured the overall ‘entrepreneurial mindset’ of the member states.
The thinking behind the scoreboard is to ensure that traditional industry and services companies can “fully capture the opportunity and value of digitalisation,” according to Elżbieta Bieńkowska, the Commissioner for the Internal Market, Industry, Entrepreneurship and SMEs.
“European businesses are lagging behind in the uptake of advanced digital technologies, with companies slow to adopt new digital technologies. This is a challenge for business and necessitates action at local, national and European level,” she said in a statement.
Sweden, Denmark and Finland, outperform other EU countries because they succeeded to put in place a “virtuous circle,” the Commission said. All three lack an ‘entrepreneurial mindset’, but they have high levels of investment in education, research and development.
This investment helps innovation, which together with easy access to finance, directly boosts companies’ performance.
The case of Sweden
Sweden, the top performer, has proved that it is possible for Europe to lead when it comes to digital entrepreneurship.
Stockholm is emerging as a big player on the global tech stage, being the home of ventures such as the music streaming application Spotify, and video games Candy Crush and Minecraft.
As the American financial news magazine Forbes pointed out, the small Scandinavian country currently has almost as many tech startups as Silicon Valley.
In 2011, the Swedish government set the goal that “Sweden should become the best in the world exploiting the opportunities of digitisation”.
In one of its working programmes, it said school children must, and teachers should, have access to modern learning tools that are required for up-to-date education. Every primary and lower secondary school pupil must be able to use digital technology as a tool for knowledge-seeking, communication, creation and learning.
In higher education, the number of masters students in digital programmes has increased. The Royal Institute of Technology (KTH) is also now collaborating with the EIT Digital.
The UK, Ireland, Luxembourg, the Netherlands, Belgium, France, Germany, Austria and Cyprus rank below the Nordic countries.
The scoreboard categories them as a ‘good enabling environment’, which means it is easy to do business there and to access the appropriate technological infrastructure.
But digital training and knowledge is sometimes lacking, according to the Commission. This makes the return of the research and development investment smaller and makes it more challenging to access fresh financial resources.
The majority of member states fall into the ‘moderate enabling environment’ category. Digital entrepreneurs in these countries are faced with less business-friendly environments, difficulties in accessing finance and are lacking basic innovation knowledge.
But this group can be divided into two sub-groups, the Commission underlines.
In Italy, Spain, Portugal, Croatia, Bulgaria, Romania, Poland, Lithuania and Latvia, there is a strong entrepreneurial mindset, even though these countries score poorly for almost all the over dimensions.
Hungary, Czech Republic, Slovakia, Slovenia and Estonia on the other hand lack the so-called ‘entrepreneurial mindset’, but are much stronger when it comes to digital skills, e-leadership and financial environment.
New skills agenda in May
The scoreboard will be followed up by a New Skills Agenda for Europe initiative to be published in May, the EU executive revealed at a high-level conference in The Hague recently.
The Commission believes removing barriers to the digital economy could create a 4% growth in GDP, worth €500 billion, over the next decade.
The Commission is also expected to publish proposals for a new European framework for ICT professionalism next year.
“In today’s economies, new technologies are a major engine for growth and modernisation of industry,” said Sławomir Tokarski, director for Innovation and Advanced Manufacturing at the Commission’s DG GROWTH.
“There is a need to strengthen Europe’s position as a centre of educational excellence, research and innovation. The Commission will support member states’ efforts and help raise the recognition and the level of digital and key enabling technologies skills.”
Only 37% of Europeans would like to be self-employed, compared to 51% of people in the US and China. Some of the challenges to be tackled include:
- Education should offer the right foundation for an entrepreneurial career;
- Difficulty accessing finance and markets;
- Difficulty in transferring businesses;
- Fear of ‘punitive’ sanctions in case of failure;
- Burdensome administrative procedures.
The European Commission is expected to unveil an action plan on 6 April to unify and galvanise member states’ efforts towards the 'fourth industrial revolution'.
To that end, the Commission plans to allocate €5 billion over the next five years, while the industry is expected to contribute around €18 billion, a Commission official told EURACTIV. The executive will present three communications as part of its action plan:
- A horizontal paper setting the tone of the plan;
- A communication on standardisation, and
- A communication on cloud computing.
The package will include two staff working documents on high performance computing and on the Internet of Things, outlining the challenges and opportunities in those fields.
The overall aim is to put in place all the necessary building blocks for the next industrial phase so that European firms remain in the driving seat. To that end, the European Commission wants to encourage regional innovation hubs and industrial platforms to increase innovation capacity.
- May 2016: Commission to publish new digital skills package.
- 6 April: European Commission's Industry 4.0 action plan
- 2017: Commission to propose a new European framework for ICT professionalism.