European entrepreneurs have a hard time.

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The crisis in Europe has many roots beyond the Euro, its currency. The lack of growth and innovation is also due to the hard time most countries give to entrepreneurs. “The Economist” describes some of the hurdles.
The Global Entrepreneur Monitor ranks many European countries far down the list when it comes to early stage entrepreneurs with Italy (2.3%), Germany (4.2%) and France (5.8%) lagging significantly behind countries like the US (7.6%), China (14%) and Brazil (17%). In addition, small companies grow more slowly in Europe than in the US and Asia with psychological, financial, and structural problems being regarded as responsible for this problem. From the psychological side the populations of the “Old World” seem more risk averse with a history of total destruction in wars and operating in a union with a common currency but within local markets. This conservatism can also be found in rigid ways of financing and outdated bankruptcy legislation. Private investors are in short supply and nowadays bruised by the burst of the dotcom bubble. A failing innovative company puts a severe burden on its executives because it takes years to close it and there is regularly the assumption of misconduct. To pay new staff with stock options and free shares is close to impossible since small companies cannot incorporate a way of facilitating this. Finally labor laws and the social security systems are not very flexible. Temporary contracting is complicated and the costs of laying off individuals are especially high as in most countries six months severance pay is obligatory.
Bureaucracy and over-regulation are the names of the entrepreneurial game in most European countries. Small innovative companies with strong fluctuations in size and staff during their first years meet a legislative order making adjustments difficult. In many countries semi-legal ways of working around labor laws have developed, but fines are stiff and a disgruntled employee will find a court putting things right. Many European entrepreneurs consequently move to friendlier shores on the other side of the Atlantic or in the Far East to set up their companies. However, innovation, labor markets and tax income suffer from this trend.