Hannover B1 enterprise culture

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Hannover policy forum background paper


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Workshop objectives

  • To demonstrate the importance for intervening at an early stage to create the “mindsets” and conditions required for opening up entrepreneurship to a far wider public
  • To provide an overview of the range of strategies available in this field and the main lessons that have been acquired over the last few years.
  • To discuss what should be done to strengthen these strategies in the future.

What is the challenge?

People only turn to business advisors and banks when they are at least thinking about becoming an entrepreneur. However, the experience of EQUAL and many similar initiatives, is that the problem for many disadvantaged groups and areas starts far earlier on than this. For various reasons they may not even consider entrepreneurship as an option at all.

Entrepreneurship appears particularly difficult when communities have depended for a long time on traditional agricultural, industrial or public sector activities. Some target groups may also have little tradition of entrepreneurship and few positive role models to base their judgement on. The administrative cost and the risk of losing out in terms of taxes, benefits and other income can also act as a real disincentive.

On the other hand, certain ethnic groups have an extremely strong tradition of entrepreneurship. Similarly, the millions of Europeans who survive through some form of informal activity are practicing small scale entrepreneurship every day. They show that successful entrepreneurship does not depend primarily on formal education, class, gender or racial stereotypes.

In this context, strategies for improving business support and access to finance can only affect the tip of the entrepreneurial iceberg. Unless enough people want to become entrepreneurs in the first place, the banks and advisors will find themselves competing for a relatively small proportion of the potential field. So the long term challenge is to develop strategies for both changing the “mindsets” and some of the objective conditions which are necessary for opening up entrepreneurship in the formal economy to a far wider public.

What kinds of solutions are being tested?

“Fuelling entrepreneurial mindsets” was one of the main priorities of the Green Paper and subsequent Action Plan produced by DG Enterprise 2003. In its new €3.6 billion Competitiveneness and Innovation Framework Programme (CIP) DG Enterprise pays attention to crafts small businesses and target groups such as women entrepreneurs, young entrepreneurs and entrepreneurs from ethnic minorities as well as to the enterprise issues surrounding the social economy. They have recently launched the Enterprise and Industry Awards which attracted entries from over four hundred projects, many of which are especially active in the areas of entrepreneurial culture and conditions.

EQUAL projects have often been used to spear head new developments in this field or to test the application of tried solutions to new contexts and target groups. The lessons from these projects are important because the Social Fund dedicated nearly 14% of its total budget for 2000-2006 or 8 billion euros to a broad package of measure designed to promote entrepreneurship. The importance given to this area appears to have been maintained in new priorities for the next period of the ESF.

One of the first steps of EQUAL and similar projects in the field of entrepreneurial culture has been to try to improve the two way information gap that often exists between business support systems and potential entrepreneurs from disadvantaged groups and areas. This involves both obtaining first-hand knowledge of the real barriers these groups face and also building trust and providing more reliable information to them. Armed with this information it is possible to design strategies in a number of areas. This workshop will focus on three.

Firstly, the experience of Valnalon in Asturias provides many lessons about how to design a complete chain of very imaginative actions to improve entrepreneurship education in schools. Secondly, KCidade focuses on how to build the entrepreneurial capacity and confidence of urban communities that have seen an improvement in their housing conditions but need to develop new strategies for economic and social development.

Thirdly, one of the major impediments to entrepreneurship among disadvantaged groups and communities is the administrative cost and risk of losing out in terms of tax- benefits and other sources of income. Business and employment cooperatives provide a very promising and practical method for overcoming some of these barriers and obtaining mutual support.

Questions for discussion

  • What are the most important “levers” for building a more favourable entrepreneurial culture?
  • What can be done, at different levels, to improve the objective conditions for making entrepreneurship more accessible to all?
  • What has been learnt about what works and what does not work, for specific groups, in each of these areas?
  • What should be the priorities for the next round of the Structural Funds?

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