Monday, February 22, 2010

Europe in the Global Entrepreneurship Scene

What is the current state of entrepreneurship activity in different countries around the world? How does this relate to global development?

Ignacio de la Vega, Professor of Entrepreneurship and Strategic Management and at the Instituto de Empresa (IE) in Madrid and Chairman of Global Entrepreneurship Monitor (GEM) has the answers, in the form of the GEM 2009 Global Report, published in January this year.

In a lecture entitled, "Europe in the Global Entrepreneurship Scene", Vega presented the report's findings, particularly in relation to the European entrepreneurial sector.

The 55 counties covered in the report are divided into three sectors: "factor-driven", "efficiency-driven" and "innovation -driven" economies. As a rough guide, factor-driven economies include developing nations such as Uganda, where entrepreneurship is largely sparked by necessity, and innovation-driven economies cover counties such as the U.S. and U.K., where entrepreneurship is likely initiated by a drive to produce new and enterprising products. In addition, the report distinguishes entrepreneurial activates as having either high or low impact with high or low early-stage activity.

For example, according to this year's report, Uganda - which has the lowest Gross Domestic Product (GDP) of the nations surveyed - displayed high early-stage entrepreneurial activity, which had a relatively low impact. In contrast, the U.S., which has a high GDP, displayed low early-stage entrepreneurial activity with higher productivity.

According to Vega, the report, which compared entrepreneurial activities in 2006-2007 to 2008-2009, demonstrated that the innovation-driven world, which includes much of Western Europe, has suffered from a lack of confidence in the entrepreneurial sector, with a fall by 50% in opportunity perception, a 33% increase in fear of failure and a increase in necessity entrepreneurship over innovation entrepreneurship. He used the example of his home nation Spain as a demonstration of this phenomenon.

The report also surveyed the views of the entrepreneurs themselves, comparing their attitudes to the start-up market.

While more than half of the entrepreneurs interviewed claimed that starting a business was more difficult in 2009 than in 2008, 20% found it less difficult. Interestingly, young, well-educated entrepreneurs displayed greater optimism than their more experienced peers, saying that they expected to see more opportunities for their businesses due to the economic decline.

When asked which countries and sectors, in light of these findings, would be best to invest in, Vega joked, "If I knew, I would probably be doing less teaching and more investment."

In compromise, he said, Eastern Europe is a good area to watch, as well as so-called "sexy" industries, such as nano- and green-technology. "Opportunities, in my opinion, are everywhere," said Vega. "Even in the midst of crisis, you still get tones of possibility."

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