What is inclusive entrepreneurship
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I am going to give just a brief talk today about what 'inclusive entrepreneurship' is, and how it connects to the Lisbon agenda and finally I want to comment on why I think the COPIE approach is important. | I am going to give just a brief talk today about what 'inclusive entrepreneurship' is, and how it connects to the Lisbon agenda and finally I want to comment on why I think the COPIE approach is important. | ||
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| − | Evidence shows that people from any background can be successful in business. Education is no guide to business success (although obviously a bit of education can help). We have seen examples of remarkable transformations where people who had been inactive in the labour market and who had been sidelined by society have reinvented themselves and gone on to create jobs for others (example here). But as we know there are also problems and many people are held back or become trapped in the informal sector because of barriers and lack of support. | + | Evidence shows that people from any background can be successful in business. Education is no guide to business success (although obviously a bit of education can help). We have seen examples of remarkable transformations where people who had been inactive in the labour market and who had been sidelined by society have reinvented themselves and gone on to create jobs for others (example here). But as we know there are also problems and many people are held back or become trapped in the informal sector because of barriers and lack of support. |
| − | + | ==HISTORY AND DEVELOPMENTS== | |
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| − | ==HISTORY | + | |
I've been trying to do some of what you are doing for years from inside the European Institutions and particularly in the context of regional development programmes. When we first started in the early 1990s there was not much practice that anyone knew about. In the past decade this situation has changed. A lot has been going on in this field. | I've been trying to do some of what you are doing for years from inside the European Institutions and particularly in the context of regional development programmes. When we first started in the early 1990s there was not much practice that anyone knew about. In the past decade this situation has changed. A lot has been going on in this field. | ||
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This is why the COPIE approach of engaging with all of the stakeholders is so crucial for future success. This is why the [[Declaration of Commitment to future cooperation by the Managing Authorities |Declaration on Inclusive Entrepreneurship]] that is being made today by the Managing Authorities founder members of COPIE is so important. | This is why the COPIE approach of engaging with all of the stakeholders is so crucial for future success. This is why the [[Declaration of Commitment to future cooperation by the Managing Authorities |Declaration on Inclusive Entrepreneurship]] that is being made today by the Managing Authorities founder members of COPIE is so important. | ||
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What COPIE demonstrates is that to make Europe more entrepreneurial and more inclusive requires a range of interventions across the whole of enterprise policy. | What COPIE demonstrates is that to make Europe more entrepreneurial and more inclusive requires a range of interventions across the whole of enterprise policy. | ||
| + | COPIE has broken these down into four elements of an [[Entrepreneurial ladder]]. These are: | ||
| − | + | 1) [[Culture and conditions]] <br/> | |
| − | + | 2) [[Start up support]] <br/> | |
| − | + | 3) [[Appropriate business finance]]<br/> | |
| − | + | 4) [[Consolidation and growth]] <br/> | |
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| − | 1) [[Culture and conditions]] | + | |
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| − | 4) [[Consolidation and growth]] | + | |
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[[Culture and conditions]] is about people thinking that this could be for them. It involves, among other things, policy and regulations. We need, for example, to ensure that the regulatory barriers erected in some member states are as low as possible. Where they are high, we find many people going into the [[informal economy]]. Good policy prevents this. | [[Culture and conditions]] is about people thinking that this could be for them. It involves, among other things, policy and regulations. We need, for example, to ensure that the regulatory barriers erected in some member states are as low as possible. Where they are high, we find many people going into the [[informal economy]]. Good policy prevents this. | ||
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[[Integrated Business support]] can take many forms, some of the most effective seem to be around coaching and mentoring, as you all know. But the EQUAL experience also shows the value of pre start support. Outreach, which I define as getting advisers out of their offices and on to the street is essential. Improving [[quality]] both of advisers and support schemes through accreditation is key at this start up stage. | [[Integrated Business support]] can take many forms, some of the most effective seem to be around coaching and mentoring, as you all know. But the EQUAL experience also shows the value of pre start support. Outreach, which I define as getting advisers out of their offices and on to the street is essential. Improving [[quality]] both of advisers and support schemes through accreditation is key at this start up stage. | ||
| − | Access to finance and [[Appropriate Business Finance]] | + | Access to finance and [[Appropriate Business Finance]] is crucial for all business. we need better financial literacy and capability across the population and especially in potential entrepreneurs. At the start up phase, many entrepreneurs go to family and friends for a loan, but this is an area where the banks can do much more especially working with grass roots microfinance organisations. I already mentioned Maria Nowak and the growing band of micro finance practitioners who have taken their lead from Muhammad Yunus in Bangladesh. I also want to emphasise that banks are the most important mainstream source of finance for business. Banks may be going through a rough time at the moment; but we must find new ways of dealing with the reason that they are making fewer and fewer small loans for business. Two reasons are high transaction costs relative to the size of loan and uncertain levels of risk that modern credit scoring rules out. It ought to be possible to find ways of securitising bundles of loans by linking public and private better and by using ERDF and EIB/EIF more creatively. |
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And finally, with regard to [[Consolidation and growth]], we must do more to ensure these things, for example by looking at how small businesses can get into procurement and commissioning supply chains, and at how marketing can be improved. | And finally, with regard to [[Consolidation and growth]], we must do more to ensure these things, for example by looking at how small businesses can get into procurement and commissioning supply chains, and at how marketing can be improved. | ||
| + | COPIE's community of practice is showing that policy and practice on inclusive entrepreneurship are indivisible. Whereas policy is essentially a top down exercise, practice is from the bottom up. To some degree policy is easy but implementation is hard. You have created a space in which these two groups, policy makers and practitioners, can have a dialogue. You have even brought the voice of the user, the entrepreneur into the room. By working in this way and especially by creating your own knowledge base on Wikipreneurship.eu you will be able to ensure that developments in one part of Europe are known about and understood in another. You are not the first people to be trying to do this, good work was done on Regional Innovation Strategies, around cities through urbact. But you are the first people to focus on Inclusive entrepreneurship. | ||
| − | + | “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has,” said Margaret Mead, the anthropologist. This was also popularised by President Bartlett in the TV series West Wing. | |
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==notes and references== | ==notes and references== | ||
Latest revision as of 15:20, 31 October 2008
Draft speech
I am going to give just a brief talk today about what 'inclusive entrepreneurship' is, and how it connects to the Lisbon agenda and finally I want to comment on why I think the COPIE approach is important.
Why are we talking about inclusive entrepreneurship at this conference? 90 30 20 (% of enterprises, percent of employment and percent of output)
Inclusive entrepreneurship is a term we use as policy makers and practitioners to describe a commitment to making entrepreneurship open and easily accessible. It means in practice a process of modernising entrepreneurship policy in all its forms to address diversity of people, and a range of enterprise formats (including inter alia self-employment, partnerships and limited companies and social enterprises).
Many of you have been directly involved in taking entrepreneurship policy forward by exploring how particular groups can be reached, and have worked out how institutional frameworks and structures need to be reformed to achieve this. Perhaps Wales best illustrates the approach with the adoption of the Welsh Entrepreneurship Action Plan back in 1999 and the use of EQuAL resources up until last year to implement a genuinely braided approach by which mainstream agencies linked to specialist providers of support for women, minority ethnic groups, the old and the young and so on.
Contents |
WHAT IS INCLUSIVE ENTREPRENEURSHIP
What is Inclusive entrepreneurship? Briefly, inclusive entrepreneurship is a term we are using to describe about widening entrepreneurship opportunity to people from all walks of life. The underlying idea of entrepreneurship that is inclusive is that it should be equally possible for a young mother to set up a new enterprise as it is for a venture capitalist. It should be easy for a new migrant to register their business in their new country. It should be possible for anyone with a good business idea to get a loan and to get started. Inclusive entrepreneurship is all about making setting up a business possible for all.
Evidence shows that people from any background can be successful in business. Education is no guide to business success (although obviously a bit of education can help). We have seen examples of remarkable transformations where people who had been inactive in the labour market and who had been sidelined by society have reinvented themselves and gone on to create jobs for others (example here). But as we know there are also problems and many people are held back or become trapped in the informal sector because of barriers and lack of support.
HISTORY AND DEVELOPMENTS
I've been trying to do some of what you are doing for years from inside the European Institutions and particularly in the context of regional development programmes. When we first started in the early 1990s there was not much practice that anyone knew about. In the past decade this situation has changed. A lot has been going on in this field.
In 1994 we worked with the Merseyside Objective 1 partnership to put a measure into programmes called Pathways to Integration. We wanted people to take an active role in transforming their own run-down communities. We believed then, as I still believe, that every person had the potential to contribute to economic development. One of the lessons we learnt in Merseyside was that entrepreneurship was as important as employment in helping to turn these communities around. This also needed time and investment in building capacity.
Later in the 1990s, I helped the authorities in South Yorkshire to set up the South Yorkshire Key Fund . South Yorkshire had suffered terrible economic restructuring in coal and steel, and the area needed desperately to be turned around. Our original idea was that anyone from the poorest communities could come forward to get support to work up a business idea or a social enterprise, and within two weeks they would either receive the go ahead for their investment or they would get extra help to prepare their idea further. This has now become the Key Fund Yorkshire and supports social and micro entrepreneurs in their communities. I'm convinced that finance plays a major role in helping individuals to set up initiatives.
Back in 2006, Maria Nowak from European Microfinance Network came to see me to ask what Europe could do to promote Microcredit also known as Microfinance. Her organisation ADIE, which she set up nearly 20 years ago, last year lent small sums of money to 18,000 mostly start-up micro enterprises across France. 40% were women and around a third from a migrant background, often in the Banlieues. To achieve this, however, she has had to sign nearly 1,000 agreements with municipalities, funding bodies like ERDF and ESF and banks. It shouldn't be so difficult to do the great work that they do.
As a result of her initiative at European level, last autumn the Commission published an initiative on Micro Finance that will provide loan capital and technical assistance to help micro finance institutions with potential to reach more clients and grow rapidly.
So, when we started in this arena in the 1990s there was no way of linking up the actors across Europe. There was no knowledge bank of good practice. No tools that you could use to demonstrate to policy makers that there were parts of their communities that were not being reached. Indeed many policy makers at the time did not believe that there was any entrepreneurial spirit in their poorest communities. Indeed, some may still believe this.
WHY COPIE AND OTHER COMMUNITIES OF PRACTICE ARE IMPORTANT
You, the people working on entrepreneurship in the Member States, have proved them wrong. Initiatives like the UK's Inner City 100 published annually in the Financial Times were able to show that disadvantaged communities were full of enterprise. Meanwhile projects funded under EQUAL have pushed the envelope to demonstrate that there are techniques for reaching some of the most excluded groups in society and that when you do reach them they can surprise you with their entrepreneurial zeal. I am hoping that there are people from the Association of Community Based Business Advisers ACBBA in the audience. They have developed a technique of training business advisers from within refugee and migrant community associations. It means that their adviser already speaks Somali or Farsi or Chinese. They have doubled the number of minority ethnic business advisers in London and created the concept of the 'embedded business adviser. Their project reached 1300 clients and is scalable.
We have seen amazing innovation around supporting young people to become entrepreneurs. Who would have thought that Valnalon, a former Objective 2 area in Asturias with a closed steelworks, would be the place where 'minicompanies', one of the most successful school based enterprise programmes, would be developed? Or that the UK's Make your mark campaign where school children had £10 (about €10 at the new exchange rates} to launch an enterprise project in their school? Some of the winners had made £400 six weeks later and the ultimate winner did this as a social enterprise where the profit went to African schools.
Inclusive Entrepreneurship sits at the intersection between social policy and economic policy. It is pure Lisbon agenda. We know that economies that have more dynamic entrepreneurial cultures have higher levels of growth. We also know that for many people on the margins of society, entrepreneurship offers more hope of escaping the revolving door of unemployment than going through national schemes. We know that becoming an entrepreneur can be a transformative experience. The danger is that to both the employment and industry ministries, sometimes even the enterprise people think that micro enterprises are too small to register on their radar; and this means that they get away with ignoring the contribution that Inclusive entrepreneurship makes. Such ministers are happier meeting the captains of industry. But micro enterprise makes up over 90% of European enterprise and accounts for nearly a third of employment and a fifth of output. (According to Eurostar in 2005, 92% of all NFBE non financial business economy enterprises in the EU27 were micro enterprises (1-9 persons employed). Micro enterprises employed 38 million persons, which equalled 30% of total employment, and created 1 100 billion euro of value added, which equalled 21% of total value added.
WHY COPIE'S APPROACH IS IMPORTANT
This is why the COPIE approach of engaging with all of the stakeholders is so crucial for future success. This is why the Declaration on Inclusive Entrepreneurship that is being made today by the Managing Authorities founder members of COPIE is so important.
What COPIE demonstrates is that to make Europe more entrepreneurial and more inclusive requires a range of interventions across the whole of enterprise policy.
COPIE has broken these down into four elements of an Entrepreneurial ladder. These are:
1) Culture and conditions
2) Start up support
3) Appropriate business finance
4) Consolidation and growth
Culture and conditions is about people thinking that this could be for them. It involves, among other things, policy and regulations. We need, for example, to ensure that the regulatory barriers erected in some member states are as low as possible. Where they are high, we find many people going into the informal economy. Good policy prevents this.
Integrated Business support can take many forms, some of the most effective seem to be around coaching and mentoring, as you all know. But the EQUAL experience also shows the value of pre start support. Outreach, which I define as getting advisers out of their offices and on to the street is essential. Improving quality both of advisers and support schemes through accreditation is key at this start up stage.
Access to finance and Appropriate Business Finance is crucial for all business. we need better financial literacy and capability across the population and especially in potential entrepreneurs. At the start up phase, many entrepreneurs go to family and friends for a loan, but this is an area where the banks can do much more especially working with grass roots microfinance organisations. I already mentioned Maria Nowak and the growing band of micro finance practitioners who have taken their lead from Muhammad Yunus in Bangladesh. I also want to emphasise that banks are the most important mainstream source of finance for business. Banks may be going through a rough time at the moment; but we must find new ways of dealing with the reason that they are making fewer and fewer small loans for business. Two reasons are high transaction costs relative to the size of loan and uncertain levels of risk that modern credit scoring rules out. It ought to be possible to find ways of securitising bundles of loans by linking public and private better and by using ERDF and EIB/EIF more creatively.
And finally, with regard to Consolidation and growth, we must do more to ensure these things, for example by looking at how small businesses can get into procurement and commissioning supply chains, and at how marketing can be improved.
COPIE's community of practice is showing that policy and practice on inclusive entrepreneurship are indivisible. Whereas policy is essentially a top down exercise, practice is from the bottom up. To some degree policy is easy but implementation is hard. You have created a space in which these two groups, policy makers and practitioners, can have a dialogue. You have even brought the voice of the user, the entrepreneur into the room. By working in this way and especially by creating your own knowledge base on Wikipreneurship.eu you will be able to ensure that developments in one part of Europe are known about and understood in another. You are not the first people to be trying to do this, good work was done on Regional Innovation Strategies, around cities through urbact. But you are the first people to focus on Inclusive entrepreneurship.
“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has,” said Margaret Mead, the anthropologist. This was also popularised by President Bartlett in the TV series West Wing.
notes and references
[http://ec.europa.eu/employment_social/employment_strategy/index_en.htm Joint Employment Report 2007/2008
[1]
found nothing
Joint Employment Report 2006/2007
inclusive entrepreneurship actions page 11 1st and 2nd para, p 13, 2nd para
[http://ec.europa.eu/employment_social/employment_strategy/guidelines_en.htm
inclusive entrepreneurship employment guidelines] GL 15
last report with recommendations
annual progress report on growth and jobs 10 countries have reported actions on start ups or entrepreneurship
on DG Regio website [2]
the Community strategic guidelines on cohesion
entrepreneurship 1.2.2 last para, end of 1.2.4 last item in box, 1.2.4 3rd last bullet point
