By: Gigaom
The Economist lays it out: Europe’s entrepreneurial crisis goes back decades
European startups love to analyze their failures and look for reasons the continent finds it hard to build huge new businesses. Now a great, comprehensive piece in The Economist manages to show how the problems are deep, dangerous -- and go back at least 50 years.

There’s a must-read piece on the crisis in European entrepreneurship in The Economist this week. But before you go and pore over it, I’ll warn you: brace yourself, because it’s not going to leave you entering the weekend with a warm and fuzzy feeling.

It’s stuffed with factoids that may well induce depression. For example, not only were most of Europe’s biggest companies were built out of the industrial revolution but in fact continental Europe has produced just one of the world’s top 500 companies over the last 30 years (California alone, by comparison, has produced 26).

Europe produces plenty of corner shops, hairdressers and so on. What it doesn’t produce enough of is innovative companies that grow quickly and end up big. In 2003, analysing Europe’s entrepreneurial gap, the European Commission cited a study which showed that during the 1990s, 19% of mid-sized firms in America were classified as fast-growers, compared with an average of just 4% in six European Union countries.

[…]

If Europe were more entrepreneurial, says everyone from the commission down, it would not have been such a poor producer of big businesses. And it would have produced more successful new technology firms. Entrepreneurship doesn’t have to be channelled through the tubes of the internet, but over the past few decades a great deal of it has been. That an economy so copiously provided with the technically educated as Germany’s has not produced a single globally important business-to-consumer internet company suggests a big problem with entrepreneurship.

So why exactly are things so dismal?

The article identifies a set of familiar problems: Europe suffers from a lack of risk-taking; its entrepreneurs have an inability to access larger funding rounds; there are more restrictive labor laws.

But it also identifies a few bright spots, such as the fact that governments are actually starting to take a more activeand actually helpful — role in promoting startups.

Go, read!


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