Select Committee on European Union Thirty-Fourth Report

Appendix 4 The EU Green Paper on Entrepreneurship in Europe: Overview

The Green Paper aims at stimulating debate amongst the widest possible audience of

stakeholders on the best entrepreneurship policy for the future. It assesses the state of

entrepreneurship in Europe, available policy options and asks a number of questions.

The Green Paper considers policy options with regard to two issues for Europe.

Firstly, why do so few people start a business when a relatively large number of individuals express their interest in entrepreneurship? Secondly, why do so few European enterprises grow and why do those that grow so much do so at such a modest rate?

Besides these, it considers the role of society at large in meeting these challenges.

Entrepreneurship is not only a driver for job creation, competitiveness and growth, but can also be a vehicle for a personal development and can help resolve social issues. Entrepreneurship is a mindset, which can occur throughout society at large but the green paper concentrates on creating new value in a business context. Entrepreneurship is about blending risk-taking creativity or innovation with sound management, within a new or an existing organisation and can occur in any sector or type of business. Compared to the US, people's inclination towards entrepreneurship in the European Union could improved. Also, there is less involvement in new entrepreneurial initiatives, less firm growth and more adversity towards risk taking. Europe needs to encourage new entrepreneurial initiative and help unlock the growth potential of the European Union's existing firms, among which there is no lack of ambition; some 30% of Europe's SME's 20 million express a desire for growth.

An individual's decision to start a business or have an ambition, as an entrepreneur, to take risks or expand is conditioned by a multitude of factors, including the existence of opportunity, entry barriers, skills and preferences.

While running a business, entrepreneurs are faced with many obstacles for business development and growth such as complying with administration requirements and lack of finance or skilled labour. To seize new opportunities in the changing markets, business should be encouraged to innovate or expand beyond national borders, or even, particularly larger firms, to allow their own employers to exploit ideas that would other wise be left unexplored.

Building an entrepreneurial society involves everybody. Positive attitudes towards entrepreneurial initiative and failure can help develop entrepreneurial ventures. Further more, entrepreneurship can be applied to achieving social and societal objectives.

The Green paper suggests adopting a co-coordinated approach to entrepreneurship policy, involving all the relevant policy-makers, to provide a coherent and comprehensive response to the needs of entrepreneurs. It asks question sunder three pillars for action:

  • Bringing down barriers to business development and growth
  • Balancing the risks and rewards of entrepreneurship
  • A society that values entrepreneurship

Questions for the European agenda on Entrepreneurship

1 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?

2 How can we improve the availability of finance (tax measures, public-private partnerships, stronger balance sheets, guarantees) and what alternatives to bank loans should be promoted (business angel finance, leasing, factoring and micro-loans from non-bank lenders)? How can entrepreneurship be supported in obtaining external finance?

3 Which factors most hinder growth (lack of) mutual recognition and EU rules or their (non-) implementation at national level, tax provisions or the situation on the labour markets)? What actions are best suited to supporting growth and internationalisation (trade missions, market analysis, clustering and networking, information and consultancy services)?

4 To ensure high quality businesses, what training and support should be offered for a business start-up (basic training—compulsory or voluntary, incubators, mentoring) and business development (networks, courses, mentoring, distance learning, e.g. e-learning)? Should there be services tailored to the needs of specific groups (women, ethnic minorities) or businesses (knowledge based activities)? Should the quality of delivery of support services be improved (using ICTs, professional standards)?

5 Are the obstacles and incentives for business development and growth in the European Union similar for entrepreneurs in the Candidate Countries, and does the forthcoming enlargement call for specific measures in Candidate Countries?

6 What can EU Member States do to make the balance between risk and reward more favourable to promoting entrepreneurship (reducing the negative effects of bankruptcy, making more social benefits available for entrepreneurs reducing the tax burden either in terms of administration or rates)?

7 How might more prospective entrepreneurs be encouraged to consider taking over rather than starting a new firm (buyers and sellers databases or market places, special training for family-owned businesses, management or employees buy-outs)?

8 How can spin offs be made more attractive (management buy-outs showcasing, specialist advice, tax or other provisions for employees and their employers whilst starting a business)?

9 How can education support the development of the awareness and skills necessary for developing an entrepreneurial mindset and skills (entrepreneurship training as part of a schools curriculum, getting entrepreneurs into the classroom, apprenticeships for students to work with experienced entrepreneurs, more entrepreneurial training in universities, more MBA programmes, matching entrepreneurial training with public research programmes)?

10What could business organisations, the media and public authorities do to promote entrepreneurship (role models, media campaigns open door days or firms, award schemes for entrepreneurs) and at what level (European, national, regional or local)?

Introduction to Appendix 5

The following table is drawn from 'Creating an entrepreneurial Europe: The Activities of the European Union for SMEs' CEC Brussels 21.1.2003 SEC (2003) 58 COM(2003) 26 (page 11). It should be noted that the table provides an overview of various types of actions (loans guarantees grants etc) occurring over various periods. It cannot therefore be added up across the various activities to give a global figure per year or common period. In the section on financial guarantees data is given on the amount actually guaranteed (estimated guarantee amount) as well as the budget contribution to the cost of the guarantee and the total estimated loan granted.

The following main acronyms are used in the Table;

EIB European Investment Bank

EIF European Investment Fund

ETF European Technology Facility

RTD Research and Technological Development.

The Leonardo da Vinci scheme supports vocational training and mobility

Full details of these institutions and related programmes and the others shown in the Table can be found in the report from which the Table is drawn.

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