The EU Enterprise Policy

Elements

• The EU and risk taking• European Enterprise Policy

The EU and Risk-taking

Risk-taking

• Europe has too few entrepreneurs. This is due to

• economic reasons, to which • cultural,• societal, • historical and • legal reasons contribute.

Risk-takingThe European Union has identified the most important of these to be:

– lack of entrepreneurial culture in schools, universities and other educational institutions,

– excessive punishment for “failure”– fear of loss of "control" of a company, – reluctant attitude towards risk taking.

Risk-taking

• The US economy has developed financial instruments to provide easy access to capital for high-tech start-ups, which have contributed to creating millions of jobs.

Risk-takingInformation technologies:Information technologies:

• In Silicon Valley alone eleven new companies were formed every week and one was floated on the stock exchange every five days.

• Every year 300 venture capital companies invest US$ 1 to 3 billion in start-ups there.

Risk-taking• Between 1981 and 1990 the value of

the PC industry, of which 70% of the firms were supported by venture capital, rose from 0 to $100 billion.

• Compaq(1982), Cisco(1984), Sun(1982), Oracle(1977), and Apple(1976) were all born with the aid of venture capital.

Risk-taking

• For several years Europe has been taking corrective measures to expand the venture capital markets, but these will not bear fruit until the medium term.

Risk-taking• Europe’s performance remains

insufficient on three fronts:1.

• Companies in the early stages of development received only 7.4% of the total investments from European venture capital funds, against 34% in the USA,

Risk-taking• which enables them to grow faster than

their European counterparts and to build up strong positions on the world market earlier.

2.• There is not always a sufficient

volume of truly innovative projects, capable of generating value rapidly.

Risk-taking3.

• In Europe, entrepreneurs find it more difficult to gain access to the capital market, which is more fragmented and less liquid.

EU Enterprise Policy

• Aim: – The creation of a favourable environment

for enterprises and business in Europe

• Measures:– Reduced administrative burden– Improved quality of legislation– Facilitating rapid start-up of new companies– Creating an environment supportive to

businesses

EU Enterprise Policy

• Treaty article 157:– Community should ‘ensure that the

conditions necessary for the competitiveness of the Community industry exist’

– Encourage entrepreneurial initiative– Encourage SME growth

EU Enterprise Policy

• Instruments: – Multi-annual Programme for Enterprise and

Entrepreneurship• Enhancing the growth and competitiveness of business • Promotes entrepreneurship• Simplifies regulatory framework for business• Improves financial environment for SMEs• Easier access to community support, networks

Not about direct support to SMEs, but an SME policy

– Successor program from 2007: Competitiveness and Innovation Programme

The EU and SMEs

Supporting SMEs

‘We need to roll out a red carpet for entrepreneurs, not create red tape’

J.M. Barroso – President of European Commission, 2006

Characteristics of SMEs

• SME = company with less than 250 employees, turnover up to 50 million €

• 23 million SMEs (99% of all) in the EU

• Key job creator (75 million jobs)

• Source of new (business) ideas

(c) European Commission, 2005

Integration and SMEs

• Enhanced opportunities for internationalisation

• Increased competition from fewer, larger companies

• Sensitivity to change• Regulation and disproportionate

costs to SMEs

Challenges for SMEs

(c) European Commission, 2006

Business Constraints

European Commission, 2007

European Charter for Small Enterprises

• Created through Lisbon process – 2000

• Aim: SME support through improved legislative and administrative framework

10 Key areas covered

1. Education and training for entrepreneurship

• Promotion of entrepreneurship and business knowledge in schools

• Business-related modules essential to education

Related actions

• The European Enterprise Awards to local initiatives (start at minute 1)

• Mini-companies run by students

• Revision of bankruptcy law and warning system re: financial position

Key areas covered

2. Cheaper and faster start-up

• Comparative cost with ‘competitors’• Catch-up for most burdensome EU

members• Encourage online registration

Key areas covered

3. Better legislation and regulation

• Assessment of national bankruptcy laws

• Screening of new legislation towards assessment of SME impact

• Simplify competition legislation

Related actions

• 60 laws withdrawn• 1,400 laws to be simplified• Dialogue with SMEs within SME

Panels• Encouragement of SME standards

participation (voluntary)• Help on law/regulations via SOLVIT

Related Action

• Prevention of dominant position and price fixing– Attention to SME complaints

• Grants towards business start-ups up to 2 million euros in poorest regions= Favourable state aid legislation for SMEs

Key areas covered

4. Availability of skills

• Training institutions and scheme adapted to business needs

• Lifelong training

Key areas covered

5. Improving online access

• Electronic communication with public authorities including:• Advice• Applications• Tax returns

Key areas covered

6. More out of the Single Market

• Advancing reforms in:• Electronic commerce• Telecommunications• Utilities• Public procurement• Cross-border payments

Related actions

• Help towards finding suitable business partners abroad – Euro Info Centres– Innovation Relay Centres

• ‘Your Europe’ business information on other countries

• Public tendering and online solutions

Key areas covered

7. Taxation and Financial Matters

• Taxation to encourage start-ups and SME expansion

• Improved access of SMEs to financial services

Related actions

• Set-up of Joint European Resources for Micro and Medium Entreprises (JEREMIE) – bank and investment funds financing

• Framework towards risk capital encouragement and microcredits

• 60% extra spending on SMEs by Community in 2013

• Attraction of regional funds towards SMEs

Key areas covered

8. Strengthen the technological capacity of SMEs– Support of technology dissemination

and adaptation– Cooperation on technology– Commercial application of knowledge– Community patent

Related Action

• Competitveness and Innovation budget for 2007-2013 budget: €3.5 bn

• R&D funding towards SMEs €5bn for 2007-2013

• Introducing less complicated evaluation procedures for funds access

Related Action

• INNOVA initiative for the exchange of successful solutions between business, universities, policy makers, investors, research institutes

• Training on IPR issues• European Design Prize

Key areas covered

9.Successful e-business models and top-class SME support

– Best practice encouragement– Easy to access networks and services– Use of European Observatory of SMEs

Key areas covered

10. Develop stronger, more effective representation of SMEs’ interests in EU and nationally

• Review of practices and social dialogue

References• EU Enterprise Policy

• European Charter of Small Entreprises• EU SME Policy• Implementing the Community Lisbon

Program. Modern SME Policy for Growth and Employment, 2005

• Support Services Across Europe• SME Performance Review