Entrepreneurship in the European Union: Unified Is Not Uniform

Entrepreneurship in the European Union: Unified Is Not Uniform

Mark Potts (Saginaw Valley State University, USA) and George M. Puia (Saginaw Valley State University, USA)
DOI: 10.4018/978-1-4666-0882-5.ch108
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Abstract

Entrepreneurship research posits that high potential new firms are the leading source of employment growth (Acs et al., 2008), wealth creation (Venkataraman, 1997), and economic development (EC, 1999). The European Union’s Lisbon Strategy recognized the significant role of entrepreneurs in creating employment (EC, 2000). The authors posit that a “Unified Europe” is not the same as a “Uniform Europe.” Using states in the United States as a comparative unit of analysis, the authors demonstrate ways in which differences in endowments (e.g., human capital, support for entrepreneurship, and regulatory environment) dynamically influence entrepreneurial outcomes. This analysis identifies challenges faced by local entrepreneurs in the context of Europe 2020.
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Introduction

Entrepreneurship research posits that high potential new firms are the leading source of employment growth (Acs et al., 2008), wealth creation (Venkataraman, 1997), and economic development (EC, 1999). Recognizing the significant role of entrepreneurs, the Lisbon Strategy (EC, 2000) sought to usher in an era of full employment by investing in human resource development, strengthening the link between research institutes, universities, and businesses; reducing red tape and other local business entry regulations, and developing green technologies to reduce the impact of economic growth. In essence, the Lisbon Strategy posited that innovation was a central ingredient in economic growth and the entrepreneurs were agents of innovation.

The final years of the Lisbon Strategy found a world in economic disarray with major economies in deep recession. The preface to the Europe 2020 document described in grim terms the state of the European economy: millions unemployed, a lasting burden of debt, and pressures on social cohesion. In designing a path out of the crisis, the European Commission proposed seven flagship programs. The very first focuses on the importance of innovation. The innovation union seeks to improve entrepreneurial infrastructure and provide greater access to financing to turn innovative ideas into job creating goods and services (EC, 2010).

Clearly, a “Unified Europe” expects entrepreneurs to fill an important role in a post-crisis economy. Given European unification, high potential entrepreneurs might serve as an economic growth engine in a post-crisis economy. Further, entrepreneurs in a “Unified Europe” operate within a common economic and financial environment that includes greater freedom in the movement of goods and services and in many cases a common currency.

The authors posit that a “Unified Europe” is not the same as a “Uniform Europe”. Using states in the United States as a comparative unit of analysis, the authors demonstrate ways in which U.S. states, comparable in size and resources to emerging European economies, have differing endowments, business and technology clusters, economic policies, workforce development levels, and quality of life standards. These differences dynamically influence entrepreneurial outcomes, e.g., firm start-ups, patent applications, and business failure rates. From this analysis, the authors compare U.S. state contexts to those faced by European countries to identify challenges faced by local entrepreneurs in the context of Europe 2020.

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