NCPA - National Center for Policy Analysis

Europeans Lack Entrepreneurial Spirit

July 2, 1999

The proportion of Americans starting up new businesses is far higher than the rate for Europeans, according to a 10-nation study by the London Business School and Babson College. Europeans are much more risk-averse than Americans and Canadians, and they fear the stigma of failure, the researchers found.

  • In the U.S., 8.5 percent of the U.S. adult population will start a business at some time in their lives -- while the rate for Canadians is 6.8 percent.
  • That compares with 3.3 percent of Britons, 2.2 percent of Germans, 2 percent of Danes, 1.8 percent of the French and 1.4 percent of Finland's adult population.
  • Italians were the most entrepreneurial of the Europeans, with 3.4 percent of adults starting businesses at some point during their lifetimes.
  • The study demonstrated a strong link between new business start-up rates and growth in gross domestic product.

Despite policy-makers' efforts to encourage entrepreneurialism, the cultural barriers among Europeans remains steep. Germans were found to be particularly risk-averse and prone to put safety first. The French reportedly give in to social pressure to conform -- and prefer working for large organizations.

Italians are more willing to take a chance, the researchers say, because high unemployment there is shrinking the number of jobs available in the public sector for younger workers.

Nevertheless, the study found that Germany's entrepreneurial climate has improved recently, and most German adults -- in contrast to Britons -- show a relatively high regard for people involved in starting new businesses.

Source: Julia Flynn, "Gap Exists Between Entrepreneurship in Europe, North America, Study Shows," Wall Street Journal, July 2, 1999.


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