In our previous post we presented a recently published study of Europe’s entrepreneurial ecosystem.
In this follow-up post, we’d like to highlight a few key findings of the study that give useful insights on the current status and the future prospects of the European entrepreneurial ecosystem.
We’ll start by presenting a summary of the key inhibiting factors in the current European ecosystem for internet-based entrepreneurs, as identified by the FutureEnterprise Experts’ Panel with the feedback of YES for Europe member organizations and associated entrepreneurs, along with a high level view of the required policy changes.
The first major issue identified is the need to foster business model, governance and market innovations (i.e. improvements within companies, among companies (suppliers and rivals) and between companies and government (input to policy and self-regulation) as well as between companies and customers, by providing the appropriate infrastructure and support for the development of new products and services and new ways of interaction between business and customers that increase the effectiveness of business processes.
To address this innovation mismatch, EU needs to accelerate the development and adoption of new technologies and smart infrastructures, capitalizing on Future Internet assets. EU also needs to provide or develop new legal forms for new types of enterprise and interaction (i.e. regulatory reform, including improved participation in policy processes by all sorts of enterprise).
The second major issue identified by the expert committee is that of a “business mismatch” between research developments and the commercial market.
This is a longstanding and multi-faceted issue, caused by lack of effective communication and co-ordination between universities and research organizations and enterprise needs. Academics lack a thorough knowledge of market needs and business trends that would help guide their research, while businesses don’t have the skills and resources to identify business opportunities that could leverage current research. Researchers are not always able to identify the most pressing or promising avenues of research or to couch their results in terms that stimulate business uptake, while businesses are not always able to articulate their needs and to identify and translate the most useful results.” Beyond this, one might note that the feedback from market experience to research is underdeveloped and argue for policy to support extended and different relations between research and application. Finally, it is worth recording (again) the different cultures of “the republic of science” and “the kingdom of industry” and the need to ‘federate’ them to handle differences in time-scale, methods and values and to encourage the free movement of people, ideas and capital between the two domains.
This gap can be bridged by encouraging multi-disciplinary teams to work on knowledge co-creation, and by bringing together the research and business worlds through EU co-funded research projects that follow market-oriented approaches. Not just research projects; also team-based public procurement and practical initiatives to tackle grand challenges. The point is that the architecture of these must be changed to give the two sides equal standing and appropriate power. Also, can note that researchers increasingly face (different) markets – both research and industry are already market-orientated, but many of the available mechanisms for linking them are not.
Another key issue European entrepreneur face is access to risk-tolerant capital sources and financing instruments, as those operating in Europe tend to favor more conservative approaches. The behaviour of European financial markets does not always properly choose which risks to take or how to manage them. Like many markets, it tends to prefer financial risks to ‘real’ risks, leaving many innovations unfunded or dependent on private investors or slow and cumbersome grant-based public funding that is ill-suited to the selection and support of risk-taking opportunities or poorly adapted to recognising and exploiting the most useful outputs.
Innovative financing instruments have to be created under the Horizon 2020 program that address this very basic need by going beyond supportive and coordinating actions to create new funding mechanisms and opportunities, including new forms of ownership and participation.
Last, but not least, European youth lacks entrepreneurial awareness, with the current anti-entrepreneurial culture at schools and universities hampering the development of internet entrepreneurs. In cases that this does not apply, there are problems of understanding; governments press for a form of entrepreneurism that uses start-ups as ao try. Therefore, the up-take and outcomes are suboptimal. But there is also widespread confusion as to what entrepreneurism and entrepren way to substitute for poor youth employment activities, and has given too little thought to sustaining the enthusiasm and welfare of those wheurial culture involve; how they differ from commerce and how to balance competition and cooperation.
Students should be encouraged to start their own businesses through entrepreneurship curricula and university start-up incubators, while high schools and primary education can use targeted education activities to create an entrepreneurial mentality