EURADA and its membership are of the opinion that the European Union should provide very accurate definitions of the concepts of "entrepreneur" and "entrepreneurial society" in order to give to them a specific status, rights and access to specific support services.
It is suggested that the notion of "entrepreneur" encompasses the business development stage ("start-up") and the first months in a business's activity.
Furthermore, EURADA regrets that no specific question addresses the issue of entrepreneur training.
Question 1
Any European entrepreneurship policy needs to reckon with the five levels below:
Community
National
Regional
Individual
Business
In this context, each of those five levels requires taking steps to reach the common objective, which is to grow the number of new businesses being developed throughout Europe while adhering to a European social model.
At European level , there is a need for Community institutions to:
a) Provide Europe-wide framework conditions that leverage business development and growth;
b) Manage an Observatory on Entrepreneurship to:
promote the analysis and transfer of all national practices with a positive impact on entrepreneurship in all fields outside the European Union's specific areas of competence (tax systems and practices, education, etc.);
measure Member State performance using an entrepreneurship index (based on five or six indicators).
c) Bring their respective policies closer together. All EURADA member RDAs regret and criticise the lack of coherence between on the one hand the State aids control policy and on the other hand the business and Structural Funds policy. It can hardly be considered congruent to express a desire to stimulate the development of Entrepreneurial Growth Companies (the so-called EGCs) while restricting regional venture capital fund activity or questioning public intervention in favour of new incubators.
d) Drawing up an entrepreneurship checklist against which to judge the neutrality of all European Union decisions and regulations with respect to the Lisbon Strategy.
At Member State level, it would be advisable to:
a) Enforce the checklist (see section d) above);
b) Exchange and analyse any an all measures taken in other Member States to promote business development, in particular when it comes to budget-related action.
At regional level : the Community and national levels should provide guarantees to regional and local operators regarding the implementation of the principle of subsidiarity to all entrepreneurship-related action and measures. Indeed, regional and local authorities need assurances that the strategies defined in this field (a) do meet entrepreneur needs very accurately, (b) can be implemented without any interference from administrative nitpicking, and (c) reckon with specific regional and local dimensions. Furthermore, it is difficult to consider business a generic concept at local level, as business needs and expectations vary hugely between large corporations, mid-sized, small and micro businesses, and EGCs.
At individual level . It is worth recalling that the term "entrepreneurship" sums up a number of aspects originating in the aspirations of individuals. An entrepreneurship policy therefore needs to reconcile individual business developers' aspirations cycle with the business development and entrepreneurial environment. Increased attention needs to be paid in the future to the pre-development stage in this cycle, namely when it comes to the rights of potential businesspersons.
Europe should also learn the lessons of other business development processes—in Silicon Valley for instance—and look for ways of making entrepreneur status an attractive proposition for migrant business developers (fully one third of business developers in Silicon Valley are Asian by birth).
At business level. Finally, the European entrepreneurship social model needs to come to terms with the fact that in many regions, the business culture is not necessarily driven by high-potential, fast-growing start-ups (the so-called "gazelles") and that any entrepreneurship strategy therefore needs to be built on a detailed analysis of the existing fabric of regional businesses and entrepreneurs (see answer to question 4 below).
Question 2
The European Union should develop instruments to:
a) support both the growth of EGCs and the consolidation of businesses operating in traditional industries;
b) think in terms of market failures and business finance value chain as well as counter-cyclical intervention and market failure prevention (addressing issues including the adverse effects of Basel II or the lack of available venture capital for business transfers);
c) promote investment readiness programmes;
d) advocate support services and access to finance as hand-in-hand concepts;
e) support informal and seed venture capital markets as well as guarantee schemes, which are especially prone to failure in the European Union;
f) reconciling its professed desire to promote business development and growth—by encouraging and supporting the deployment of financial engineering instruments—with its State aids legislation. This could namely be achieved by reviewing the "de minimis" rule, calculating State-aid equivalents when providing financial support to SMES—namely from regional venture capital funds, guarantee funds and incubators—, and reconsidering the prohibition of working capital grants in sectors such as the agro-food industry, commerce, etc.
Question 4
Support services are more efficient when segmented. This can be done using a variety of criteria (types of businesses and businesspersons, location, etc.). For certain target groups of potential entrepreneurs however—and in particular for young people, women, migrants, etc—, rather than developing dedicated services, there is a need to promote access to—and possibly also consumption of—-mainstream support services. Among the wide range of existing services, the one whose availability and leveraging could most usefully be advertised and promoted with many entrepreneurs is entrepreneurship education. It is also useful, and indeed important, to procure enterprise demographics data per market segment, as such data can be used to review entrepreneurship development strategies.
Question 5
EURADA members from the Acceding countries unanimously underscore the need to take action to support them specifically as part of any Community-wide entrepreneurship and business policy. They recall that these notions were introduced in their countries as recently as a dozen years ago, which means that:
most SMEs are still fragile;
the balance sheets and turnovers of a majority of businesses in the Acceding countries are below those of similar businesses in the current EU 15,
the banking and guarantee markets are not mature yet and the cost of their services is often above Community average,
public sources of financial support are not always adjusted to the requirements of local companies as they are too often based on programmes originally tailored to the needs of EU businesses.
Question 7
The members of EURADA acknowledge the importance of taking action at Community level regarding business transfers and the consolidation of existing activities in their region. A number of members already have programmes to deal with these issues and have so far drawn the following conclusions:
tax systems are inappropriate and put businesses at a disadvantage;
there is a sizeable need to improve potential entrepreneurs' awareness of ownership transfers as business opportunities;
there is a need to assess individual business transfer potential either in full or in blocks;
potential buyers need to be trained,
potential buyers face difficulties in accessing finance to effect their buyouts.
Programmes have also highlighted the need to develop regional methods that are both integrated and shared by all stakeholders.
Question 8
It has been demonstrated in many regions that spin-offs are drivers of business development. Interesting results are obtained when markets are divided into segments and appropriate solutions are then found and applied to individual segments.
A number of players recommend the following approach to market segmentation:
Academic and research centre spin-offs,
Spin-offs of large growing corporations,
spin-offs of large corporations as part of business reorganisations.
It emerges from the above that it is useful to promote mechanisms that support spin-offs.
Question 9
EURADA's membership unanimously believes that entrepreneurship needs to be promoted at all levels in our educational systems. Educational products should reckon with student ages. At academic level, there is a need for action in all departments—i.e. not only in schools of economics. Closer attention should be given to the training of teachers who are called upon to pass entrepreneurship values onto their students as well as to the space reserved for such teaching in school curricula.
Question 10
It can safely be argued that people like the business in which they work but do not like the business community as such. This is due to selective media coverage of business segments: their reporting is driven by sensation (company closures; mass redundancies) rather than information (illustrating the fact that regional business birth and mortality rates are roughly equal; covering business exhibitions and fairs). The business world is also misrepresented at school: history lessons for example, cover the industrial revolution only from the point of view of its immediate social consequences.
It is therefore important for communication at Community, national and regional level to promote a dynamic and positive vision of the business world. A number of useful instruments are available to promote such a vision, including notably business plan competitions and business fairs organised with the support of the media (possibly with regional TV coverage, as in Andalucia).
At Community level, the European Union should develop an appropriate instrument to encourage the emergence of a positive image of entrepreneurship.
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EURADA Response to the 10 Questions Raised in the Green Paper on Entrepreneurship in Europe
