Europe has long had the paradoxical reputation of a continent with low levels of entrepreneurship, yet high overall levels of economic competitiveness. A new report produced by the World Economic Forum and the Global Entrepreneurship Monitor provides an explanation: Europe is home to many intrapreneurs, individuals who choose to innovate within organizations.
The findings go against the widely-held belief of the dismal state of entrepreneurship in Europe.Indeed, the report finds, what Europe lacks in early-stage entrepreneurship, it makes up for in intrapreneurship:
The findings are important for future potential growth in Europe, as those who innovate within organizations tend to create more jobs than those who start their own business. A correlation also exists between intrapreneurship rates and economic competitiveness: every 2.5% increase in a country’s intrapreneurship rate correlates to a 1 point increase in competitiveness as measured by the World Economic Forum’s global competitiveness data.
But the news is not all good. The European results vary widely, and are worst in its industrial heartland. The UK, one of Europe’s strongest economies, is the exception among large countries, coming in 5th overall and 3rd in intrapreneurship. But Germany (24th) and France (25th) appear at the bottom of the combined ranking, despite a moderate score in intrapreneurship. The three worst ranking countries overall are Greece (26th), Spain (27th) and Italy (28th). It is a worrying sign as Europe’s competitiveness depends on that of its heartland. Estonia, Sweden and Latvia come out on top. Other Northern countries also score well for the combined ranking of entrepreneurship and intrapreneurship, bringing up the continent’s total score.
The report explains the implications for policy makers, and ways they can design policies to enhance the economic competitiveness and unleash all types of entrepreneurship. The choice is not between start-ups and intrapreneurship as economies flourish when all types of entrepreneurship exist at healthy levels.
Professor Mark Hart, of the Enterprise Research Centre at Aston Business School and co-author from Global Entrepreneurship Monitor, said: “While the UK’s relatively high levels of start-up activity by European standards are often lauded this research shows that the entrepreneurial capacity of the nation goes way beyond new venture creation and is more important in terms of the future growth trajectory of existing businesses”.
“In the public debate on entrepreneurship, a false contrast is often presented – the dynamic start-up entrepreneur versus the stale corporation. This report rebukes that narrow perspective on entrepreneurship,” says Michael Drexler, Head of Investors Industries at the World Economic Forum. “A better approach is to create policy frameworks that enable ‘collaborative innovation’, where young firms and established companies share complementary resources to support new ideas.”
“Countries should strive for a ‘healthy’ set of both types of entrepreneurship” said Niels Bosma, Utrecht University and co-author from Global Entrepreneurship Monitor. “Independent, innovative entrepreneurship is important as it is allows for introducing and testing very new concepts or ideas. New entrepreneurial projects that have been successfully introduced to the market will likely have a bigger impact as these projects can tap into the resources available within the existing firm.”
Professor Jonathan Levie, of the Hunter Centre for Entrepreneurship at Strathclyde Business School and co-author from Global Entrepreneurship Monitor, said: “When taken together the EEA and TEA rates provide a fuller picture of the extent of entrepreneurial activity being undertaken in a nation. The UK continues to have a relatively high rate of entrepreneurship among employees by international standards. This is good news because resources for new business activities are often easier to access within established businesses.”
Read the full report here: http://www3.weforum.org/docs/WEF_Entrepreneurship_in_Europe.pdf
Notes to the editor
Enterprise Research Centre, Aston Business School, Aston University (www.enterpriseresearch.ac.uk) and Aston Centre for Growth (http://www.aston.ac.uk/aston-business-school/business/centre-for-growth/)
About GERA and GEM:
The Global Entrepreneurship Research Association (GERA) is, for formal constitutional and regulatory purposes, the umbrella organization that hosts the GEM project. GERA is an association formed of Babson College, London Business School and representatives of the Association of GEM national teams.
The GEM program is a major initiative aimed at describing and analyzing entrepreneurial processes within a wide range of countries. The program has three main objectives:
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