2. ENTREPRENEURSHIP IN EUROPE
(24230)
5765/03
COM(03) 27
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Commission Green Paper: Entrepreneurship in Europe.
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| Legal base: | —
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| Document originated: | 21 January 2003
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| Deposited in Parliament: | 29 January 2003
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| Department: | Trade and Industry
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| Basis of consideration: | EM of 17 February 2003
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| Previous Committee Report: | None
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| To be discussed in Council: | March Competitiveness Council
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| Committee's assessment: | Politically important
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| Committee's decision: | For debate in European Standing Committee C together with the Commission Communication on A Better Environment for Enterprises already recommended for debate
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The document
2.1 This Green Paper on Entrepreneurship in Europe,
and the "SME package" on which we also report today,[2]
are part of an initiative to speed up progress on entrepreneurship.
This is expected to play a crucial role in meeting the Lisbon
objective of improving the EU's competitiveness, measured in particular
against that of the United States. The aim of the Green Paper
is to spark an EU-wide debate amongst policy makers, businesses,
representative organisations, journalists and experts on the future
of entrepreneurship policy.
2.2 The Green Paper addresses two key issues:
- why so few people in the EU start a business; and
- why so few European enterprises grow, and at such a modest
rate when they do.
2.3 The introduction to the Green Paper, and Section
II on "The Dynamics of Entrepreneurship", follow the
all too common Commission practice of duplicating, with minor
variations, much of the content of earlier documents, and in this
case a package of five documents issued on the same day as "the
SME package". Whilst those documents deal with small and
medium-sized enterprises (SMEs), this document notes that entrepreneurship
can occur in any sector and type of business. In these sections,
in which many of the statements are familiar, though perhaps not
to the wider audience targetted by the Green Paper, the Commission
analyses what entrepreneurship is and why it is important.
2.4 Of marginally greater interest is the section on
the weaknesses in the EU's present performance and its potential.
A few facts taken from various quoted sources may be worth noting:
- more than twice as many Europeans as Americans give up their
efforts to start a business;
- US firms are smaller at birth than European firms but expansion
"among successful entrants" in the US is much stronger
in the initial years after start-up;
- compared with 25% of US citizens, 46% of EU citizens agreed,
in a November 2002 Eurobarometer survey, that a business should
not be started if there was a risk it might fail;
- compared to the US there is less entrepreneurial dynamism
in the EU.
No figure is given for business failures in either the US or the
EU.
2.5 In Section III, the Paper aims to put forward various
policy options, but in effect sets out a number of issues and
comments on them and how they might be addressed, quoting examples
of action taken in a range of Member States. It does so under
three headings:
(1) What does it take to produce more entrepreneurs?
— Entry Barriers
"Despite recent improvements, Europeans still consider administrative
barriers as a major hurdle to starting a business. Business start-ups
have difficulties in getting the seed and early-stage finance
they need. Risk-sharing between public and private sectors can
help increase the availability of finance."
— Risk and reward
"In Europe, the risks associated with entrepreneurship are
not adequately offset by the prospect of reward. This calls for
a re-examination of the balance of the risks and rewards associated
with entrepreneurship."
— Insolvency laws
Belgian courts can declare "honest" bankrupt entrepreneurs
to be "excused", allowing them to make a fresh start.
— Reducing the cost of entrepreneurship
More than twice as many Europeans would prefer to start a business
than take over an existing one, though taking over may be less
risky.
— Fostering capacity and skills
Education and training should contribute to encouraging entrepreneurship,
by fostering the right mindset and awareness of career opportunities
as an entrepreneur, and of the skills needed.
— Making entrepreneurship accessible to all members of
society
"Entrepreneurship should be widely promoted, with particular
focus on women and other under-represented groups. Ethnic minorities
display high levels of entrepreneurial flair and even greater
potential. The business support services available seem to respond
less well to their specific needs."
(2) How can enterprises be geared to growth?
— The regulatory environment
"Despite ongoing efforts for improvement, entrepreneurs still
point to red tape as a major hurdle to running a business, particularly
for those who want to operate and grow within the Internal Market".
— Taxation
"Appropriate tax measures can contribute to the development,
growth and survival of firms."
— Access to skilled labour
"Bottlenecks in the labour market create barriers to growth
and efforts to develop the skills of workers need to be intensified."
— Helping firms to exploit knowledge and international
opportunities
"To reap the benefits of the Internal Market and to meet
the challenge of fiercer competition, entrepreneurs should be
encouraged to innovate and to internationalise. For this, they
should have access to knowledge, relevant contacts, training and
top-class business support services."
— Intrapreneurship[3]
and corporate venturing
"'Intrapreneurship' and corporate venturing provide an effective
means of developing entrepreneurial ventures that would otherwise
be left unexploited."
(3) Towards an entrepreneurial society
— More positive attitudes towards entrepreneurship
"Building an entrepreneurial society involves everyone. Attitudes
towards entrepreneurial initiative, and failure, must be made
more positive. Crucial to achieving this are those on whom today's
and future entrepreneurs depend."
— Entrepreneurship's role in achieving social objectives
"The social economy and social enterprises apply business
principles and efficiency to achieving social and societal objectives.
Such enterprises face particular challenges in accessing finance,
management training and advice."
2.6 In Section IV of the Paper, headed "The Way
Forward", the Commission proposes action under three pillars:
- bringing down barriers to business development and growth;
- balancing the risks and rewards of entrepreneurship; and
- creating a society that values entrepreneurship.
2.7 Under these pillars, it poses 10 broad questions,
such as:
"What should be the key objectives for an agenda for entrepreneurship
in the European Union and how should these relate to other political
ambitions? How can we build a model for entrepreneurship in an
enlarged Europe?"
The Government's view
2.8 The Parliamentary Under-Secretary of State for Small
Business, Department of Trade and Industry (Nigel Griffiths) comments:
"The Government warmly welcomes the work that the Commission
has undertaken to produce the Entrepreneurship Green Paper, and
the realisation that entrepreneurship is crucial to achieving
the aims of the Lisbon Agenda. It has the potential to significantly
improve the environment for SMEs in the European Union and is
likely to form the cornerstone of EU SME policy in the coming
years.
"The UK has already presented its initial views to the Commission,
prior to the publication of the Paper, in 'Enterprise For All',
which examines the main barriers to entrepreneurship on an EU
and national level, and sets out possible solutions.
"The UK is calling for a challenging and demanding action
plan which can make a tangible difference to the SME community.
In any action plan we would look for actions to be taken by individual
Member States, by Member States acting collectively and by the
Commission itself.
"The report broadly concurs with the UK views on the key
factors which hinder current and potential entrepreneurs. It also
demonstrates that many good initiatives have already been brought
forward by Member States. We will seek to learn from the good
practice of other Member States and build on those areas where
we are perceived to be doing well.
"The Entrepreneurship Green Paper covers a wide range of
issues and it is difficult at this stage to assess precise policy
implications. A more detailed assessment would be possible if
an action plan is proposed at a later stage."
2.9 The Minister hopes that any action plan can be adopted
by the end of 2003.
Conclusion
2.10 The Commission has clearly put in a considerable
amount of work on the SME package and this Green Paper. Yet it
gives no clear lead on what action it might take or which might
be taken by the Member States, whether individually or collectively.
The response to the Green Paper will no doubt result in a further
lengthy exercise in collecting information and views. We would
have preferred the Commission to have concentrated on producing
a robust draft action plan as a focus for discussion rather than
spending quite so much time and effort on providing us with an
analysis of the problems.
2.11 Nevertheless, the need to create a better environment
for businesses and improve the EU's competitiveness remains vital,
with the Lisbon objective remaining more of a distant dream than
a realistic target. We consider, therefore, that this document
should be debated in European Standing Committee C, together with
the Commission Communication, A Better Environment for Enterprises,
already recommended for debate.[4]
The debate should take place before mid-June, when the responses
are due, and preferably before the Government finalises its response.
2 (24248)
5748/03 and (24227) 5650/03; see paragraph 6 of this Report. Back
3 The
commercial exploitation of the results of research and development
or innovation which large firms, universities or research institutes
do not want to exploit themselves but which they often assist
employees or former employees to manage. Back
4 (23989)
13982/02; see HC 63-vii (2002-03), paragraph 4 (15 January 2003). Back
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