The 2004 survey is based on data from interviews with over 21,000 people in 29 states. These included 18,500 EU25 citizens, 1,000 Americans and 1500 EEA/EFTA citizens (from Norway, Lichtenstein and Iceland).
Preference for Employee Status
The survey shows that we have some way to go before we reach the levels of entrepreneurial endeavour of US citizens, but also that the picture is varied across Europe (Graph). 45% of Europeans would like to be their own boss; whilst this is rather positive, it remains significantly below the 61% of Americans who are keen to try entrepreneurship. These rates have remained rather stable over the last 4 years. In fact more than half of Europeans (51%) would prefer employee status, compared to one-third (34%) of Americans.
These overall European figures mask some significant differences between Member States (Graph). Southern Europeans appear to be more interested in the entrepreneurial option (Portugal at 62% and Spain at 56%), whereas in the Netherlands and Finland only around 30% expressed such an interest.
Balancing the risks…
Why are Europeans less keen to “have a go”? It seems that much depends on the real or perceived balance between the risks and the rewards of entrepreneurship. We asked those who stated a preference for preserving their employee status to give us their reasons (Graph). 30% stated that a regular income is the main motivation (29% in EU15 and 37% in new Member States). This is therefore the most significant reason. It is nearly twice the proportion of Americans, only 16% of which answered that this was an important factor. Job stability is also considered important by twice as many Europeans, 23% (and 32% in NMS) compared with only 10% in the USA
The differences between the EU15 and the new Member States are also often marked. Citizens in the new Member States were even more concerned by lack of finance and lack of entrepreneurial skills. However, they were less constrained by lack of time than their EU15 neighbours.
For Americans by far the most prominent explanation given for preferring to continue in employment was the severity of the decision to launch a business, and fear of subsequently being tied to such responsibilities.
Fear of failure seems to particularly preoccupy Europeans compared to Americans. (Graph) Half of the Europeans we asked (and 62% in the new Member States) agreed that you should not set up a business if it is likely to fail, compared with only one-third of Americans. However, again the figures vary widely between Member States (from 29% in Ireland to 80% in Hungary).
Europeans tend to be more worried by the possibility of bankruptcy (45%, compared with 36% in the USA) or of losing their property (35% compared to 21% in USA) if their businesses fail.
… and the Rewards?
The survey found that one-third of EU citizens would still consider setting up a business in the next 5 years; this rises to 40% in the new Member States. Evidently for some the potential rewards outweigh the risks; and the survey suggests that the most crucial rewards are not necessarily financial. 77% of Europeans who stated a preference for entrepreneurship cited greater independence and self-fulfilment as an important motivation. This contrasts with only 23% who cited increased earning power.
Of course, entrepreneurship is not always a choice. Whereas 71% of Americans that had started a business did so because they saw an opportunity, and 13% out of necessity, in the EU15 56% were motivated by an opportunity, and in the new Member States this figure falls to 48%. The differences within Europe are not only east-west. Whilst northern Europe has similar levels of “opportunity entrepreneurs” to the US, entrepreneurs in the south often lacked alternatives.
Difficulties when Setting up a Business
Only 2% of the Europeans interviewed were actually in the process setting up an enterprise, compared to 8% in the US. Europeans and Americans ranked the obstacles to setting up a business in the same order (Graph), although Americans generally seem less apprehensive. Lack of available financial support still ranks as the single most important factor on both continents, though with considerable variations between European countries. It should also be noted that lack of financial support ranks much lower amongst those who have actually established a business.
Administrative burdens come a close second, though this is an area which shows a marked improvement compared to previous years (6% reduction on 2003 in the US, and 5% in the EU15).
What creates business success?
Americans and Europeans agree (Graph) that good management is the primary reason for business success, but the similarity ends there. Americans see good ideas and good leadership as the next most crucial factors, whilst Europeans, particularly those in the new Member States, believe that external factors, such as the economic and political context, have a far greater influence. Such external factors seem to matter little to Americans who display a confidence in the power of good ideas, management and leadership.