Europe’s Hidden Entrepreneurs Make Up for Continent’s Low Start-Up Rate

Published

20 Dec 2016

2016

Europe’s Hidden Entrepreneurs Make Up for Continent’s Low Start-Up Rate, but Germany, France, Italy and Spain score poorly as small Baltic and Nordic states lead the way

Peter Vanham, US Media Lead, Public Engagement, Tel.: +1 646 592 5907, Email: peter.vanham@weforum.org

· Northern Europe has an unusually high rate of individuals who innovate within organizations (intrapreneurs), making up for low levels of start-ups, and debunking the myth of Europe’s lack of entrepreneurs, a study shows

· The top overall performers are small Baltic states (Estonia and Latvia) and Nordic countries (Sweden)

· Germany, France, Italy and Spain, however, come in at the bottom of the combined ranking that measures entrepreneurship in start-ups and established businesses

· For more information on the report, go here

Geneva, 20 December 2016 – 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 innovate within organizations.

The findings go against the widely held belief that entrepreneurship in Europe is in a dismal state. Indeed, the report finds that, what Europe lacks in early-stage entrepreneurship, it makes up for in intrapreneurship:

· Of all regions surveyed, only the US, Canada, and Australia scored better than Europe for intrapreneurship: out of every 100 workers in Europe, eight could be classified as intrapreneurs. In other regions, including India (South Asia), China and ASEAN (Southeast Asia), Latin America and Africa, that number is lower

· That contrasts with Europe’s score for what is traditionally seen as entrepreneurship namely, people involved in start-ups, or “early-stage entrepreneurial activity”: only four out of 100 Europeans in the workforce are active as start-up entrepreneurs, among the lowest rates in the world

The findings are important for future 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 one point increase in competitiveness as measured by World Economic Forum 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 ranked 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 how they can design policies to enhance economic competitiveness as well as unleash all types of entrepreneurship. The choice is not between start-ups or intrapreneurship as economies flourish when all types of entrepreneurship exist at healthy levels.

“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.”

Read the full report here: https://www.weforum.org/whitepapers/europe-s-hidden-entrepreneurs-entrepreneurial-employee-activity-and-competitiveness-in-europe

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