How can policymakers facilitate and foster entrepreneurship? And how can women entrepreneurship improve? That was questions discussed when Swedish Entrepreneurship Forum launched a new report, The Entrepreneurial Code – Entrepreneurial climate and prospective growth in Europe and US, at the House of Sweden on June 1 2015.
Göran Lithell, Deputy Chief of Mission, Embassy of Sweden in Washington, D.C, made opening remarks and noted that Sweden is one of the world’s most globalized countries. Lithell hoped that Sweden will stay in this position and that it might be possible through investments in women’s entrepreneurship – one of the topics for the afternoon.
Johan Eklund, Managing Director Swedish Entrepreneurship Forum and Professor Jönköping International School of Business as well as Moderator of the seminar then welcomed all participants and promised a facts filled seminar with a lots of graphs on display.
The floor was then given to Lisa Silver, Project Manager at Swedish Entrepreneurship Forum and coordinator of the Swedish GEM team. She presented the GEM survey of 2014 that covers 73 countries and 206,000 respondents in the age group of 18–64 years. Participating countries account for approximately 90 percent of world GDP and more than 72 percent of the world population. It is undoubtedly the largest study of entrepreneurs’ activity and ambitions and of societal attitudes towards entrepreneurship and that is conducted, Lisa Silver said.
Lisa Silver also mentioned that the report The Entrepreneurial Code examines the similarities and differences between the dominating economic regions in terms of level of entrepreneurial activity and attitudes towards entrepreneurship as well as entrepreneurs’ ambition to grew, internationalize and to innovate.
Pontus Braunerhjelm, Research Director Swedish Entrepreneurship Forum and Professor KTH Royal Institute of Technology, then presented the highlights from the report.
– The U.S. entrepreneurial level, 13.8 percent, is about twice that of the EU-countries. And China is basically on par with the U.S.
The U.S. has the highest entrepreneurial level and also dominates the earliest stage of entrepreneurship – nascent entrepreneurship – with 9.7 percent of the adult population involved in setting up a business in 2014, he continued. The UK ranks second (6.3%), while Sweden (4.9%), a traditional welfare state, is in fourth place, just after China (5.4%).
– The U.S. outperform most European countries in practically all entrepreneurial dimensions, g. early stage and women entrepreneurship, but also in terms of growth ambitions, said Pontus Braunerhjelm.
The U.S. firms are however somewhat weaker with regard to intrapreneurship, suggesting that policy and cultures are critically important in determining how entrepreneurship is materialized within countries. There seems to be much that Europe can learn from the U.S. when it comes to entrepreneurial endeavor, according to Pontus Braunerhjelm.
The audience at the House of Sweden
Braunerhjelm also presented the of levels of informal investors, growth expectations, international orientation, attitudes towards entrepreneurship, well-being, perceived opportunities, capabilities and fear of failure etc for the respective countries and county groups.
He also emphasized three policy areas that are of particular importance for early-stage entrepreneurship;
- First, the effects of regulations on entrepreneurship. There is a significant and negative relationship between regulatory burdens and start-ups.
- Second, the supply of skills – a key condition for entrepreneurs to grow and maintain their innovative capacities. In addition to impacting the levels of entrepreneurship, the supply of skills influences the types of entrepreneurs present in an economy.
- A third important component in promoting entrepreneurship-driven dynamics and economic growth concerns access to capital. Business angels and entrepreneurship are clearly positively associated.
If the political aim is to enter a path on which entrepreneurship, innovation and continuous market experimentation pave the way for a sustainable future growth, Pontus Braunerhjelm suggested that policymakers focus their efforts on the areas above.
Jean-Luc Bald, Delegation of the European Union to the United States of America, gave an EU perspective of the report.
– The EU and the US has recently signed a cooperation agreement on promoting entrepreneurship. It is supposed to facilitate best practice for SMEs and promote international trade, Bald said.
In Europe, around 40 percent of the population identifies good business opportunities and feel that they have sufficient capabilities to become an entrepreneur, but only ten percent or less make the move. What´s wrong? Jean-Luc Bald, asked rhetorically. He answered that there are difficulties to access finance, there is a perception of entrepreneurship as being too complicated (taxes and administration) and that the education in entrepreneurship is insufficient.
To tackle these challenges the EU has developed an entrepreneurship 2020 action plan for all EU levels. The action plan will focus on three areas. First, the EU will develop and nurture entrepreneurship education. Second, public administration will help entrepreneurs grow through creating the right environment and reducing bureaucracy. Third, role models will be promoted. For example women represents 50 percent of the population while only being 34 percent of entrepreneurs.
– This is an underexploited growth area and the EU is responding with an online platform for women.
In the subsequent policy discussion Ruta Aidis, Global Women Entrepreneur Leaders Scorecard, ACG Inc. and George Mason University, raised the issue of formal investors. According her the investors are very important for early stage entrepreneurship, especially as supporters and advisers. Ruta Aidis also raised the question of women entrepreneurship.
– Women do not have entrepreneurship in their genes in the same way as men. Only 20 percent of global media shows women’s entrepreneurship.
Sameeksha Desai, SPEA and Indiana University, mentioned that it is notable, from a policy perspective, that women are underrepresented in entrepreneurship in the fields of science and tech. Efforts should be made to increase women’s likelihood to start business, for example with projects such as Girls Who Code etc. Sameeksha Desai also thought there might be difficulties in finding funding for women in early stages of their entrepreneurship.
– If you want women start entrepreneurship you need to work on their husbands first.
Hulya Ulku, World Bank, made some observations regarding the main findings of the report on Sweden. She pointed out that Sweden has the highest rate of informal investors in new businesses along with the U.S. However, surprisingly, the nascent entrepreneurship rate in Sweden, although increasing over time, is still lower than that of the U.S., U.K., and a few other innovation-driven economies.
– An explanation could be that being an employee in Sweden is an attractive option.
She also noted that, Swedish entrepreneurs perceive themselves as having the highest opportunities in starting a new business, however, they perceive their own capabilities to be not as high. This is unexpected given that the Swedish education system has a high emphasis on entrepreneurship, Hulya Ulku added.
Björn Falkenhall, Growth Analysis, added that individuals take bankruptcy laws and regulation into consideration when starting business. It is in the equation as well as well-being, he said.
– A fair and not to harsh regulation will encourage entrepreneurship. That is why it is important to pay attention to regulations and administrational burdens.