Description
Within this brief file pertaining to entrepreneurial spirit an essential factor in overcoming the economic crisis.
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
ENTREPRENEURIAL SPIRIT:
AN ESSENTIAL FACTOR
IN OVERCOMING
THE ECONOMIC CRISIS
Círculo de Empresarios
June 2013
1
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
Executive Summary
The spirit and initiative of entrepreneurial people will be the key to overcoming the current crisis
and paving the way for Europe to become a dynamic and competitive economy. This view is taken
by the European Union, which has included fostering entrepreneurial spirit in its strategy to boost
the European economy’s competitive capacity. Entrepreneurial people generate and promote
innovation; and they also contribute with greater flexibility and capacity of adjustment to the
economy as a whole. This makes entrepreneurial spirit an irreplaceable part of the growth engine,
and driver of job creation. Without it, the objectives of competitiveness and prosperity are simply
unattainable for society.
We need people who show the drive to transform their innovative and entrepreneurial ideas into
real, value-generating activities. This is not merely a question of new business initiatives (i.e.
setting up companies) but of encouraging all kinds of favourable approaches to transform and
improve the economic system, at any level and in all kinds of organization, from public
administrations to SMEs (Small and Medium Enterprises), and including major corporations and
civil society organizations.
There are two lines of action:
• Enhancing entrepreneurial spirit in its deepest sense: that of a person’s attitudes, prefer-
ences and skills.
• Creating an adequate incentive system to transform entrepreneurial ideas and skills into
activities that generate value.
There are four broad areas where action is needed:
1) Social recognition of entrepreneurs
• Development and establishment of a clear political-administrative and social aware-
ness regarding the importance of entrepreneurial spirit. All public and private institu-
tions must get involved in promoting entrepreneurial spirit as a key element in the
country’s competitiveness.
• Widespread awareness of the huge economic and social value of business initiative
and spirit.
• An effort by institutions, civil society and the media to convey a true picture of the
vast benefits associated with enterprise, to help bring all European society on board.
2
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
2) Integration of entrepreneurial spirit in education. All education systems must include the
following objectives in their teaching methods, organization and content:
• Conveying basic values for personal, social and economic development – hard work,
responsibility, recognition of merit, etc.– which are also at the very heart of entrepre-
neurial spirit.
• Encouraging creativity, initiative, responsibility and independence.
• Teaching the necessary skills and knowledge for business initiative, making entrepre-
neurial spirit the cornerstone of the education process.
• Specifically tailoring curricula to include subjects aimed at creating entrepreneurial
spirit.
• Teachers must be entrepreneurial in their own activity. It would be positive for per-
sons with business experience to go into teaching.
3) Institutional support for the creation of a favourable environment, especially in areas with the
greatest impact on entrepreneurial spirit and on its capacity to generate prosperity:
• Reducing and rationalizing regulatory burdens on entrepreneurs.
• Boosting competition, efficiency and flexibility in all markets where over-rigid regula-
tion is an issue, including the labour market.
• Reinforcing legal security and ensuring adequate legal treatment of the circumstances
of entrepreneurial activity, such as insolvency.
• Improving tax incentives for entrepreneurial activity.
4) Business leadership in promoting entrepreneurial spirit.
• Companies must encourage entrepreneurial spirit within their own organizations,
with innovative internal administrative and management systems that tend to align
employees’ objectives with those of the company.
• They must be intra-entrepreneurial, in other words, they should launch new business-
es from the companies themselves, for example by outsourcing or creating spin-offs.
• They must seek to attain optimum scope and achieve cooperation with other compa-
nies. Entrepreneurship, like innovating, is helped by the existence of appropriate net-
works to which companies themselves belong (incubators, technology parks, etc.).
By taking the right measures in these four areas, combined with other structural reforms and the
active involvement of society as a whole, entrepreneurship will help to reinvigorate the economy.
3
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
2. Entrepreneurial spirit and competitiveness: key factors
The entire global economy has been witnessing, since the last quarter of the 20th Century, a radical
transformation of the elements that determine the competitiveness of countries. The old world
map of specialisation patterns has seen a massive shift, caused by technological changes and
economic consolidation. As a result of this, the most advanced economies have progressed by
following the path of innovation towards a new developmental phase. A new competitive model
has been defined, in which entrepreneurial spirit and corporate activity have the necessary
dynamism to drive growth.
Recognition of this new reality brings with it the need for policies and measures to support
entrepreneurial spirit, as the European Union has been proposing for a decade
1
.
In turn, for the correct design and implementation of these policies it is necessary to understand
the factors that have an influence on the entrepreneurial spirit of people and on their ability to
generate value through entrepreneurial actions. These factors are not only related to personal
qualities, but also to the socio-cultural and institutional environment where economic agents
interact.
2.1 Entrepreneurial spirit and competitiveness
The entrepreneurial spirit of the citizens of a country is one of the keys that opens the door to
improving the competitiveness of their economy. Many of the economies that are now ranked as
the most competitive in the world are also countries with great entrepreneurial dynamism,
characterised not only by a high corporate turnover rate (the opening and closing of businesses),
but also by the arrival of innovative products and services onto the market.
In our closest economic environment, the growing attention being paid to competitiveness has also
meant an increasing emphasis on the need to promote entrepreneurial spirit.
Due to unstoppable technological progress and growing economic integration, knowledge and
innovation have become the central elements of the new competitive paradigm. And with them,
human capital has also grown, which is an important factor for prosperity at any time or in any
1
COM (1998) 550 end, dated 30.09.1998, page 2. The European Union has made the promotion of entrepreneurial spirit one of
the pillars of its strategy to relaunch the competitiveness of the European economy. For example, in January 2003 the European
Commission published the “Green Book for the Promotion of Entrepreneurial Spirit in Europe”. The European Commission clearly
states that it “supports a policy of promotion of entrepreneurial spirit as a fundamental tool to improve competitiveness, generate growth
and create employment”.
Entrepreneurship 2020 Action Plan Reigniting the entrepreneurial spirit in Europe COM (2012) 795 final. “The Entrepreneurship
Action Plan is a blueprint for decisive action to unleash Europe's entrepreneurial potential, to remove existing obstacles and to
revolutionise the culture of entrepreneurship in Europe. Investments in changing the public perception of entrepreneurs, in
entrepreneurship education and to support groups that are underrepresented among entrepreneurs are indispensable if we want
to create enduring change. Only if a large number of Europeans recognise an entrepreneurial career as a rewarding and attractive
option will entrepreneurial activity in Europe thrive in the long term.”
4
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
place and that encompasses knowledge, skills, aptitudes, experience and all personal qualities that
enable people to carry out activities that generate value.
The figure of the entrepreneur must be defined within this framework, where we can see the
embodiment of market forces: competition, innovation, creativity, achievement etc. People with
entrepreneurial spirit and skills play an essential role in any dynamic economy, since they are the
creators of innovation, elements of flexibility and therefore valuable driving forces in the
generation of wealth and employment.
For the above reasons, entrepreneurial spirit is considered one of the building blocks upon which
the competitiveness and prosperity of any country is based. Entrepreneurial spirit appears as one
of the variables that experts in the field place at the base of the competitiveness pyramid.
This is a view shared by the Círculo and is the central theme of this text. It does so with a vision of
entrepreneurial spirit in the broadest possible sense: that referring to the personal qualities of
individuals (and of the group to which they belong) a disposition towards or a preference for the
effective transformation of their ideas into activities that generate value through enterprising
actions, whether through entrepreneurial initiatives or through improvements in the functioning of
already established organisations.
2.2 Elements and factors that determine entrepreneurial spirit
Economic opportunities logically influence the decision of an individual when putting an
entrepreneurial initiative into practice, which is sometimes a new company, or the decision by an
entrepreneur to take risks and to expand. However, a growing number of economic opportunities
do not mean that there will automatically be more entrepreneurial initiatives: this also depends on
entrepreneurial spirit, that is, on the preferences of citizens, on skills and on the available
alternatives, as well as cultural and institutional characteristics and the demographics of the
environment. In short, several factors, which we can define as socio-cultural and institutional,
define the dynamic of a society regarding its degree of entrepreneurial spirit.
• Socio-cultural factors: entrepreneurial spirit is, in the final analysis, a personal quality that
is forged over several character traits and that is moulded in part by the social and cultural
SUSTAINED
GROWTH
Work
supply
Productivity
Prices
and
costs
Economic and
technological
infrastructures
Taxes and
regulation
Entrepreneurial
spirit and
innovation
Corporate
environment
Education and
training
Fuente: Annual Competitiveness Report 2005, National Competitiveness Council and Forfas
Entrepreneurial spirit and innovation, one of the building blocks of growth
5
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
factors that operate in people’s environments. The fundamental difference between
countries in terms of entrepreneurial spirit lies in people. Hence the importance of those
factors that can be influenced nowadays, thanks to generalised access to information,
technology and communication.
? Personal qualities of entrepreneurs: these can be seen in preferences for self-employment
and the creation of a business or for working for someone else. These preferences are
influenced by the degree of risk aversion of individuals, by their spirit of achievement, by
their sense of belonging to a group and serving the group etc.
? Social qualities: individuals never operate in a social vacuum. On the contrary, all
entrepreneurial initiatives involve, in one way or another, other people without whom no
transformation of a situation is possible. Traditions, culture, shared values, training and
other similar factors determine whether a socio-cultural environment is favourable to the
personal initiative of entrepreneurs or not. For example, the social stigmatisation of
failure goes against entrepreneurial spirit (see Box 1). Other elements, such as
demographics (the size and structure by ages of a population, the diversity of cultural
origins etc.) are also fundamental because they have an influence on the number of
people that develop and put into practice their entrepreneurial spirit.
• Factors related to the institutional and regulatory framework: the choice that leads an
individual to become an entrepreneur is always made within a certain institutional
context, where there are certain conditions that reward entrepreneurial initiative to some
degree or other. The tax system, its treatment of profits and losses, the quality of the legal
and judicial system, the existence of institutions for the protection of competition and a
culture that promotes competition, the social security system, the regulation of the
employment market etc.
All of the above factors are present and operate to some degree in any economy.
6
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
3. Proposals
The current economic crisis makes it essential to take measures focused on the construction of a
more flexible, competitive model. This is a profound transformation that is completely unfeasible
without the initiative of people with entrepreneurial spirit, with preferences towards an
entrepreneurial initiative that will turn their ideas into sources of wealth for society as a whole.
There are two lines of action proposed to make entrepreneurial spirit take root and grow,
becoming the engine for a real recovery from this crisis and that will guarantee future prosperity:
• Promote entrepreneurial spirit in its deepest sense, that of the attitudes, preferences and
skills of people.
• Secondly, it is necessary to create the conditions that will promote the translation of
entrepreneurial ideas and skills into initiatives that generate value. Not only that. It is also
necessary to ensure that these conditions enable entrepreneurial actions to have a
greater capacity for generating employment and wealth.
To do this, measures are proposed in the following four areas:
• The social and cultural framework.
• The educational framework.
• The institutional framework.
• The corporate framework.
3.1 The social and cultural framework
Entrepreneurial spirit takes root in the psychological, cognitive and attitudinal characteristics of
people, which are what make it possible to define certain individuals as entrepreneurs and others
as not. In turn, these characteristics are modulated by the influences that everyone receives from
their social and cultural environment. Hence the importance of creating a socio-cultural
environment that promotes entrepreneurial spirit.
• The promotion of entrepreneurial spirit requires the awareness and involvement of
society as a whole. It is a social responsibility. Society has to aspire to and acquire
dynamism and develop attitudes that will make it possible to drive changes in favour of
greater well-being for everyone; it must aspire to becoming a society of entrepreneurs in
all fields.
7
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
• The media and institutions should transmit this message, presenting the figure of the
entrepreneur as a very valuable form of personal and professional development, both for
the entrepreneur and for society. It is essential for society to overcome its current
ignorance about entrepreneurial spirit, including the stigma of failure
2
and distrust of
those who are successful in their enterprises.
• In public and private institutions it is necessary to improve the public image of
entrepreneurs, by educating the public about the real value of a professional career
dedicated to the creation and management of businesses.
3.2 The educational framework
The educational field should play a major role in the promotion of entrepreneurial spirit. An
effort should be made in all the various educational institutions to contribute both to a change
towards a more enterprising culture and to the training of the human capital where
entrepreneurial initiatives are born and nurtured.
• Education in the promotion of entrepreneurial and enterprising spirit should be present in
all educational stages, presenting entrepreneurial culture as something natural and
positive.
• Education needs to be established and organised based on a set of fundamental values for
personal, social and economic development. Hard work, continuous learning, the desire to
achieve, the acceptance of risks, the capacity for thought and independent learning, and
the recognition of merit are essential values and abilities to undertake anything in any
sphere of life.
• Education should, by definition, aspire to promoting personal qualities such as creativity,
initiative, responsibility and independence, which are precisely the qualities at the heart
of entrepreneurial spirit.
• Entrepreneurial spirit should form part of basic qualifications to be promoted in
education, together with others such as oral and written ability in language, both native
2
Society should respond to the invitation launched by the European Commission to work more intensely on programmes that will help to
reduce the stigma of business failure. “The advantages of starting from nothing should be presented in informative campaigns and
educational programmes, showing that making several attempts is very similar to the usual process of learning, research and discovery.”
Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the
Committee of the Regions: Overcoming the stigma of business failure through a policy that gives people a second chance. COM (2007) 584
final.
8
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
and foreign, the ability to use information and communication technology and the ability
to work as part of a team.
• The objective is to increase the employability of workers in the future and also increase
their ability to be part of workforces for new entrepreneurial projects. Education for
teachers: a decisive aspect is the training of trainers.
• This is about training them continuously, both culturally and technically so that they can
encourage entrepreneurial spirit in the classroom. Channels should be established to
facilitate the access of trainers to the business world. Vocational training is a very
influential area in promoting entrepreneurial and enterprising spirit, since its close
connection to the world of work facilitates the dissemination of the value of
entrepreneurial initiative as an option compared to working for someone else.
• Education in the promotion of entrepreneurial spirit in the university sphere should be
extended to include lecturing staff and the research community.
3.3 The institutional framework
It is necessary to have not only people with the ability and motivation to be entrepreneurs, but it is
also necessary to have a favourable institutional environment, that will lead entrepreneurial spirit
to initiatives that create value.
• The tax system: A tax system needs to be designed that can generate appropriate
incentives for business initiative.
• For example, a reduction in corporation tax would not only incentivise these types of
initiatives but would also be a relief to businesses in the current economic crisis and
would help to attract FDI. Legal system: the perception that entrepreneurs have of the
rule of law of the environment where they carry out their businesses is a decisive factor in
productive investment, innovation and the creation of businesses.
• Regulation and competition:
? Simplify and standardise regulations in accordance with criteria used to value
regulatory quality – proportionality, efficiency, transparency and prospective and
retrospective assessment.
9
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
? Administrative regulations and fees are too much of a burden for many people with
entrepreneurial projects. There should be specific, suitable regulation for the creation
of businesses.
? Improve legislation regarding insolvency. In the opinion of the European Commission
(COM 2007, 584 final), a radical change is required in the spirit of insolvency
legislation throughout the EU, so that new opportunities are created for those who
have suffered a failure caused not by fraudulent or irresponsible practices but by the
inherent risks of entrepreneurial initiatives.
? Introduce more competition into sectors that still have a certain degree of
protectionism and interventionism, especially in services. Competition in equal
conditions for all economic agents stimulates entrepreneurial initiative and corporate
dynamism.
• Factors that promote individual independence and the assumption of risks and that
support entrepreneurial attitudes should be introduced. Also, within active employment
policies, programmes could be introduced that would encourage the unemployed to
develop their own ideas, providing them with financial assistance and technical guidance.
• Financial markets. Although the current financial crisis is hindering access to the finance
that entrepreneurs need it is also true that there are numerous financial support
programmes for entrepreneurs. Better information in this respect would allow projects to
be created that otherwise would be lost before even an attempt had been made to put
them into practice. It is also necessary to promote the development of a real venture
capital market.
3.4 The corporate framework
Business is decisive in the development and promotion of entrepreneurial spirit. This is not just
about creating more businesses but the fact that they should be more flexible and adaptable
organisations that will create an environment that promotes ideas and their conversion into
improvements, whether productive, organisational or management. There should also be an
aspiration to create a business world that will promote the rapid dissemination of the positive
external effects of corporate dynamism – the transfer of technology, the creation of clusters, the
generation of critical mass etc.
• Business should support entrepreneurial spirit through the organisations themselves:
business needs to be what moulds entrepreneurial spirit; it should value flexible and
innovative human capital Companies should develop environments that promote
creativity and the generation of new knowledge.
10
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
• Improving internal management systems and innovating in administration and
management systems: the objective of achieving greater entrepreneurial spirit will only be
possible if the internal organisation of companies promotes creativity, continuous
innovation and leads to the integration of new ideas that arise in their environments.
• The outsourcing of activities: this allows groups inside or outside the company to carry out
activities that are not connected with the core business.
• The creation of spin-offs: businesses, especially as a result of their R+D+I endeavours,
usually develop ideas that are not connected to their main purpose, which means
excessive risk for the parent company and which can be exploited better in independent
units.
• The sale of business units (divestment): in times of expansion, large companies have
diversified by entering into activities that have no direct connection with the main
business. In the low phase of the cycle they wish to rid themselves of these business units.
In these cases, buy-out transactions (the acquisition of a company, or part of it or of its
assets by a group of directors that work there supported by an Investment Capital
company) could be incentivised.
• There should be a search for a company’s optimum size and for cooperation with other
companies: at the beginning and in other stages in their lives, companies encounter
problems arising from their lack of resources. These problems can be overcome through
corporate concentrations, alliances, joint ventures and other organisational and relational
structures, provided that these generate real gains in efficiency – synergies, economies of
scale, positive outsourcing etc.
• Turning employees that are capable of creating value into shareholders. Unlike other
alternatives, such as stock options, here there would be no asymmetry in risks as whoever
invests wins or loses along with the company, which generates greater incentives for more
direct involvement.
The promotion of entrepreneurial spirit will have to be created from the awareness and
responsibility of society as a whole. We all have to get involved in helping the educational system,
the institutional framework and businesses themselves organise themselves in a way that
promotes the establishment of entrepreneurial culture.
11
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
Bibliography
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Audretsch, D. B. and A. R. Thurik (2004) A Model of the Entrepreneurial Economy, International Journal
of Entrepreneurship Education 2(2), 143–166.
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Parliament, the European Economic and Social Committee and the Committee of the Regions:
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(2007) 584 end, dated 5.10.2007
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Entrepreneurial spirit: an essential factor in overcoming the economic crisis
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Monitor: 2001 Executive Report, Babson College, London Business School and Kaufman Center for
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pp. 437–48.
Schumpeter, J.A. (1942) Capitalism, Socialism and Democracy, reimpresión de 1994 por Routledge.
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Small Business Economics 3(3), 167–178.
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UAB, Barcelona, pp. 521–547.
Van Stel, A., D. Storey and A.R. Thurik (2007) The effect of business regulations on nascent and young
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13
doc_137660002.pdf
Within this brief file pertaining to entrepreneurial spirit an essential factor in overcoming the economic crisis.
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
ENTREPRENEURIAL SPIRIT:
AN ESSENTIAL FACTOR
IN OVERCOMING
THE ECONOMIC CRISIS
Círculo de Empresarios
June 2013
1
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
Executive Summary
The spirit and initiative of entrepreneurial people will be the key to overcoming the current crisis
and paving the way for Europe to become a dynamic and competitive economy. This view is taken
by the European Union, which has included fostering entrepreneurial spirit in its strategy to boost
the European economy’s competitive capacity. Entrepreneurial people generate and promote
innovation; and they also contribute with greater flexibility and capacity of adjustment to the
economy as a whole. This makes entrepreneurial spirit an irreplaceable part of the growth engine,
and driver of job creation. Without it, the objectives of competitiveness and prosperity are simply
unattainable for society.
We need people who show the drive to transform their innovative and entrepreneurial ideas into
real, value-generating activities. This is not merely a question of new business initiatives (i.e.
setting up companies) but of encouraging all kinds of favourable approaches to transform and
improve the economic system, at any level and in all kinds of organization, from public
administrations to SMEs (Small and Medium Enterprises), and including major corporations and
civil society organizations.
There are two lines of action:
• Enhancing entrepreneurial spirit in its deepest sense: that of a person’s attitudes, prefer-
ences and skills.
• Creating an adequate incentive system to transform entrepreneurial ideas and skills into
activities that generate value.
There are four broad areas where action is needed:
1) Social recognition of entrepreneurs
• Development and establishment of a clear political-administrative and social aware-
ness regarding the importance of entrepreneurial spirit. All public and private institu-
tions must get involved in promoting entrepreneurial spirit as a key element in the
country’s competitiveness.
• Widespread awareness of the huge economic and social value of business initiative
and spirit.
• An effort by institutions, civil society and the media to convey a true picture of the
vast benefits associated with enterprise, to help bring all European society on board.
2
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
2) Integration of entrepreneurial spirit in education. All education systems must include the
following objectives in their teaching methods, organization and content:
• Conveying basic values for personal, social and economic development – hard work,
responsibility, recognition of merit, etc.– which are also at the very heart of entrepre-
neurial spirit.
• Encouraging creativity, initiative, responsibility and independence.
• Teaching the necessary skills and knowledge for business initiative, making entrepre-
neurial spirit the cornerstone of the education process.
• Specifically tailoring curricula to include subjects aimed at creating entrepreneurial
spirit.
• Teachers must be entrepreneurial in their own activity. It would be positive for per-
sons with business experience to go into teaching.
3) Institutional support for the creation of a favourable environment, especially in areas with the
greatest impact on entrepreneurial spirit and on its capacity to generate prosperity:
• Reducing and rationalizing regulatory burdens on entrepreneurs.
• Boosting competition, efficiency and flexibility in all markets where over-rigid regula-
tion is an issue, including the labour market.
• Reinforcing legal security and ensuring adequate legal treatment of the circumstances
of entrepreneurial activity, such as insolvency.
• Improving tax incentives for entrepreneurial activity.
4) Business leadership in promoting entrepreneurial spirit.
• Companies must encourage entrepreneurial spirit within their own organizations,
with innovative internal administrative and management systems that tend to align
employees’ objectives with those of the company.
• They must be intra-entrepreneurial, in other words, they should launch new business-
es from the companies themselves, for example by outsourcing or creating spin-offs.
• They must seek to attain optimum scope and achieve cooperation with other compa-
nies. Entrepreneurship, like innovating, is helped by the existence of appropriate net-
works to which companies themselves belong (incubators, technology parks, etc.).
By taking the right measures in these four areas, combined with other structural reforms and the
active involvement of society as a whole, entrepreneurship will help to reinvigorate the economy.
3
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
2. Entrepreneurial spirit and competitiveness: key factors
The entire global economy has been witnessing, since the last quarter of the 20th Century, a radical
transformation of the elements that determine the competitiveness of countries. The old world
map of specialisation patterns has seen a massive shift, caused by technological changes and
economic consolidation. As a result of this, the most advanced economies have progressed by
following the path of innovation towards a new developmental phase. A new competitive model
has been defined, in which entrepreneurial spirit and corporate activity have the necessary
dynamism to drive growth.
Recognition of this new reality brings with it the need for policies and measures to support
entrepreneurial spirit, as the European Union has been proposing for a decade
1
.
In turn, for the correct design and implementation of these policies it is necessary to understand
the factors that have an influence on the entrepreneurial spirit of people and on their ability to
generate value through entrepreneurial actions. These factors are not only related to personal
qualities, but also to the socio-cultural and institutional environment where economic agents
interact.
2.1 Entrepreneurial spirit and competitiveness
The entrepreneurial spirit of the citizens of a country is one of the keys that opens the door to
improving the competitiveness of their economy. Many of the economies that are now ranked as
the most competitive in the world are also countries with great entrepreneurial dynamism,
characterised not only by a high corporate turnover rate (the opening and closing of businesses),
but also by the arrival of innovative products and services onto the market.
In our closest economic environment, the growing attention being paid to competitiveness has also
meant an increasing emphasis on the need to promote entrepreneurial spirit.
Due to unstoppable technological progress and growing economic integration, knowledge and
innovation have become the central elements of the new competitive paradigm. And with them,
human capital has also grown, which is an important factor for prosperity at any time or in any
1
COM (1998) 550 end, dated 30.09.1998, page 2. The European Union has made the promotion of entrepreneurial spirit one of
the pillars of its strategy to relaunch the competitiveness of the European economy. For example, in January 2003 the European
Commission published the “Green Book for the Promotion of Entrepreneurial Spirit in Europe”. The European Commission clearly
states that it “supports a policy of promotion of entrepreneurial spirit as a fundamental tool to improve competitiveness, generate growth
and create employment”.
Entrepreneurship 2020 Action Plan Reigniting the entrepreneurial spirit in Europe COM (2012) 795 final. “The Entrepreneurship
Action Plan is a blueprint for decisive action to unleash Europe's entrepreneurial potential, to remove existing obstacles and to
revolutionise the culture of entrepreneurship in Europe. Investments in changing the public perception of entrepreneurs, in
entrepreneurship education and to support groups that are underrepresented among entrepreneurs are indispensable if we want
to create enduring change. Only if a large number of Europeans recognise an entrepreneurial career as a rewarding and attractive
option will entrepreneurial activity in Europe thrive in the long term.”
4
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
place and that encompasses knowledge, skills, aptitudes, experience and all personal qualities that
enable people to carry out activities that generate value.
The figure of the entrepreneur must be defined within this framework, where we can see the
embodiment of market forces: competition, innovation, creativity, achievement etc. People with
entrepreneurial spirit and skills play an essential role in any dynamic economy, since they are the
creators of innovation, elements of flexibility and therefore valuable driving forces in the
generation of wealth and employment.
For the above reasons, entrepreneurial spirit is considered one of the building blocks upon which
the competitiveness and prosperity of any country is based. Entrepreneurial spirit appears as one
of the variables that experts in the field place at the base of the competitiveness pyramid.
This is a view shared by the Círculo and is the central theme of this text. It does so with a vision of
entrepreneurial spirit in the broadest possible sense: that referring to the personal qualities of
individuals (and of the group to which they belong) a disposition towards or a preference for the
effective transformation of their ideas into activities that generate value through enterprising
actions, whether through entrepreneurial initiatives or through improvements in the functioning of
already established organisations.
2.2 Elements and factors that determine entrepreneurial spirit
Economic opportunities logically influence the decision of an individual when putting an
entrepreneurial initiative into practice, which is sometimes a new company, or the decision by an
entrepreneur to take risks and to expand. However, a growing number of economic opportunities
do not mean that there will automatically be more entrepreneurial initiatives: this also depends on
entrepreneurial spirit, that is, on the preferences of citizens, on skills and on the available
alternatives, as well as cultural and institutional characteristics and the demographics of the
environment. In short, several factors, which we can define as socio-cultural and institutional,
define the dynamic of a society regarding its degree of entrepreneurial spirit.
• Socio-cultural factors: entrepreneurial spirit is, in the final analysis, a personal quality that
is forged over several character traits and that is moulded in part by the social and cultural
SUSTAINED
GROWTH
Work
supply
Productivity
Prices
and
costs
Economic and
technological
infrastructures
Taxes and
regulation
Entrepreneurial
spirit and
innovation
Corporate
environment
Education and
training
Fuente: Annual Competitiveness Report 2005, National Competitiveness Council and Forfas
Entrepreneurial spirit and innovation, one of the building blocks of growth
5
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
factors that operate in people’s environments. The fundamental difference between
countries in terms of entrepreneurial spirit lies in people. Hence the importance of those
factors that can be influenced nowadays, thanks to generalised access to information,
technology and communication.
? Personal qualities of entrepreneurs: these can be seen in preferences for self-employment
and the creation of a business or for working for someone else. These preferences are
influenced by the degree of risk aversion of individuals, by their spirit of achievement, by
their sense of belonging to a group and serving the group etc.
? Social qualities: individuals never operate in a social vacuum. On the contrary, all
entrepreneurial initiatives involve, in one way or another, other people without whom no
transformation of a situation is possible. Traditions, culture, shared values, training and
other similar factors determine whether a socio-cultural environment is favourable to the
personal initiative of entrepreneurs or not. For example, the social stigmatisation of
failure goes against entrepreneurial spirit (see Box 1). Other elements, such as
demographics (the size and structure by ages of a population, the diversity of cultural
origins etc.) are also fundamental because they have an influence on the number of
people that develop and put into practice their entrepreneurial spirit.
• Factors related to the institutional and regulatory framework: the choice that leads an
individual to become an entrepreneur is always made within a certain institutional
context, where there are certain conditions that reward entrepreneurial initiative to some
degree or other. The tax system, its treatment of profits and losses, the quality of the legal
and judicial system, the existence of institutions for the protection of competition and a
culture that promotes competition, the social security system, the regulation of the
employment market etc.
All of the above factors are present and operate to some degree in any economy.
6
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
3. Proposals
The current economic crisis makes it essential to take measures focused on the construction of a
more flexible, competitive model. This is a profound transformation that is completely unfeasible
without the initiative of people with entrepreneurial spirit, with preferences towards an
entrepreneurial initiative that will turn their ideas into sources of wealth for society as a whole.
There are two lines of action proposed to make entrepreneurial spirit take root and grow,
becoming the engine for a real recovery from this crisis and that will guarantee future prosperity:
• Promote entrepreneurial spirit in its deepest sense, that of the attitudes, preferences and
skills of people.
• Secondly, it is necessary to create the conditions that will promote the translation of
entrepreneurial ideas and skills into initiatives that generate value. Not only that. It is also
necessary to ensure that these conditions enable entrepreneurial actions to have a
greater capacity for generating employment and wealth.
To do this, measures are proposed in the following four areas:
• The social and cultural framework.
• The educational framework.
• The institutional framework.
• The corporate framework.
3.1 The social and cultural framework
Entrepreneurial spirit takes root in the psychological, cognitive and attitudinal characteristics of
people, which are what make it possible to define certain individuals as entrepreneurs and others
as not. In turn, these characteristics are modulated by the influences that everyone receives from
their social and cultural environment. Hence the importance of creating a socio-cultural
environment that promotes entrepreneurial spirit.
• The promotion of entrepreneurial spirit requires the awareness and involvement of
society as a whole. It is a social responsibility. Society has to aspire to and acquire
dynamism and develop attitudes that will make it possible to drive changes in favour of
greater well-being for everyone; it must aspire to becoming a society of entrepreneurs in
all fields.
7
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
• The media and institutions should transmit this message, presenting the figure of the
entrepreneur as a very valuable form of personal and professional development, both for
the entrepreneur and for society. It is essential for society to overcome its current
ignorance about entrepreneurial spirit, including the stigma of failure
2
and distrust of
those who are successful in their enterprises.
• In public and private institutions it is necessary to improve the public image of
entrepreneurs, by educating the public about the real value of a professional career
dedicated to the creation and management of businesses.
3.2 The educational framework
The educational field should play a major role in the promotion of entrepreneurial spirit. An
effort should be made in all the various educational institutions to contribute both to a change
towards a more enterprising culture and to the training of the human capital where
entrepreneurial initiatives are born and nurtured.
• Education in the promotion of entrepreneurial and enterprising spirit should be present in
all educational stages, presenting entrepreneurial culture as something natural and
positive.
• Education needs to be established and organised based on a set of fundamental values for
personal, social and economic development. Hard work, continuous learning, the desire to
achieve, the acceptance of risks, the capacity for thought and independent learning, and
the recognition of merit are essential values and abilities to undertake anything in any
sphere of life.
• Education should, by definition, aspire to promoting personal qualities such as creativity,
initiative, responsibility and independence, which are precisely the qualities at the heart
of entrepreneurial spirit.
• Entrepreneurial spirit should form part of basic qualifications to be promoted in
education, together with others such as oral and written ability in language, both native
2
Society should respond to the invitation launched by the European Commission to work more intensely on programmes that will help to
reduce the stigma of business failure. “The advantages of starting from nothing should be presented in informative campaigns and
educational programmes, showing that making several attempts is very similar to the usual process of learning, research and discovery.”
Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the
Committee of the Regions: Overcoming the stigma of business failure through a policy that gives people a second chance. COM (2007) 584
final.
8
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
and foreign, the ability to use information and communication technology and the ability
to work as part of a team.
• The objective is to increase the employability of workers in the future and also increase
their ability to be part of workforces for new entrepreneurial projects. Education for
teachers: a decisive aspect is the training of trainers.
• This is about training them continuously, both culturally and technically so that they can
encourage entrepreneurial spirit in the classroom. Channels should be established to
facilitate the access of trainers to the business world. Vocational training is a very
influential area in promoting entrepreneurial and enterprising spirit, since its close
connection to the world of work facilitates the dissemination of the value of
entrepreneurial initiative as an option compared to working for someone else.
• Education in the promotion of entrepreneurial spirit in the university sphere should be
extended to include lecturing staff and the research community.
3.3 The institutional framework
It is necessary to have not only people with the ability and motivation to be entrepreneurs, but it is
also necessary to have a favourable institutional environment, that will lead entrepreneurial spirit
to initiatives that create value.
• The tax system: A tax system needs to be designed that can generate appropriate
incentives for business initiative.
• For example, a reduction in corporation tax would not only incentivise these types of
initiatives but would also be a relief to businesses in the current economic crisis and
would help to attract FDI. Legal system: the perception that entrepreneurs have of the
rule of law of the environment where they carry out their businesses is a decisive factor in
productive investment, innovation and the creation of businesses.
• Regulation and competition:
? Simplify and standardise regulations in accordance with criteria used to value
regulatory quality – proportionality, efficiency, transparency and prospective and
retrospective assessment.
9
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
? Administrative regulations and fees are too much of a burden for many people with
entrepreneurial projects. There should be specific, suitable regulation for the creation
of businesses.
? Improve legislation regarding insolvency. In the opinion of the European Commission
(COM 2007, 584 final), a radical change is required in the spirit of insolvency
legislation throughout the EU, so that new opportunities are created for those who
have suffered a failure caused not by fraudulent or irresponsible practices but by the
inherent risks of entrepreneurial initiatives.
? Introduce more competition into sectors that still have a certain degree of
protectionism and interventionism, especially in services. Competition in equal
conditions for all economic agents stimulates entrepreneurial initiative and corporate
dynamism.
• Factors that promote individual independence and the assumption of risks and that
support entrepreneurial attitudes should be introduced. Also, within active employment
policies, programmes could be introduced that would encourage the unemployed to
develop their own ideas, providing them with financial assistance and technical guidance.
• Financial markets. Although the current financial crisis is hindering access to the finance
that entrepreneurs need it is also true that there are numerous financial support
programmes for entrepreneurs. Better information in this respect would allow projects to
be created that otherwise would be lost before even an attempt had been made to put
them into practice. It is also necessary to promote the development of a real venture
capital market.
3.4 The corporate framework
Business is decisive in the development and promotion of entrepreneurial spirit. This is not just
about creating more businesses but the fact that they should be more flexible and adaptable
organisations that will create an environment that promotes ideas and their conversion into
improvements, whether productive, organisational or management. There should also be an
aspiration to create a business world that will promote the rapid dissemination of the positive
external effects of corporate dynamism – the transfer of technology, the creation of clusters, the
generation of critical mass etc.
• Business should support entrepreneurial spirit through the organisations themselves:
business needs to be what moulds entrepreneurial spirit; it should value flexible and
innovative human capital Companies should develop environments that promote
creativity and the generation of new knowledge.
10
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
• Improving internal management systems and innovating in administration and
management systems: the objective of achieving greater entrepreneurial spirit will only be
possible if the internal organisation of companies promotes creativity, continuous
innovation and leads to the integration of new ideas that arise in their environments.
• The outsourcing of activities: this allows groups inside or outside the company to carry out
activities that are not connected with the core business.
• The creation of spin-offs: businesses, especially as a result of their R+D+I endeavours,
usually develop ideas that are not connected to their main purpose, which means
excessive risk for the parent company and which can be exploited better in independent
units.
• The sale of business units (divestment): in times of expansion, large companies have
diversified by entering into activities that have no direct connection with the main
business. In the low phase of the cycle they wish to rid themselves of these business units.
In these cases, buy-out transactions (the acquisition of a company, or part of it or of its
assets by a group of directors that work there supported by an Investment Capital
company) could be incentivised.
• There should be a search for a company’s optimum size and for cooperation with other
companies: at the beginning and in other stages in their lives, companies encounter
problems arising from their lack of resources. These problems can be overcome through
corporate concentrations, alliances, joint ventures and other organisational and relational
structures, provided that these generate real gains in efficiency – synergies, economies of
scale, positive outsourcing etc.
• Turning employees that are capable of creating value into shareholders. Unlike other
alternatives, such as stock options, here there would be no asymmetry in risks as whoever
invests wins or loses along with the company, which generates greater incentives for more
direct involvement.
The promotion of entrepreneurial spirit will have to be created from the awareness and
responsibility of society as a whole. We all have to get involved in helping the educational system,
the institutional framework and businesses themselves organise themselves in a way that
promotes the establishment of entrepreneurial culture.
11
Entrepreneurial spirit: an essential factor in overcoming the economic crisis
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