Author: Francois
When we speak about the determinants of one country’s level of entrepreneurship, the first thing which comes to my mind is the state intervention. Indeed the state, with the aim of fostering entrepreneurship, can establish a more or less favourable entrepreneurial climate with for example a low rate of taxation, a flexible labour market or an easy access to capital.
But surprisingly, when we compare two countries such as France and the USA which both try to foster entrepreneurship through state intervention, it’s quite amazing to see that the results of those policies are very different. Indeed the USA have the highest rate of business ownership in the total workforce and the highest TEA (Total Entrepreneurial Activity) among the OECD countries with 10%, whereas on the opposite France’s TEA is lower at around 4%.
Thus the state intervention isn’t the only determinant of entrepreneurship, albeit it is very important.
So, what else can influence entrepreneurship? What else can drive people to start their own business?
Maybe it’s people themselves! Indeed one country’s culture can partly explain the level of entrepreneurship. Thus, if we still compare France and the USA, we can understand why there is such a different TEA. The US culture claims to encourage risk-taking. Failure is considered as a step for the success, whereas in France, the culture does not encourage risk-taking, and French are afraid of failure. A quite impressive figure confirms this: for 50% of French, the fear of failure is a barrier for starting a new business. Whereas in the USA, entrepreneurs are considered an important part of the economy’s foundation. In France they are not; they are even sometimes considered no better than thieves.
Finally, it emerges from this that even if the state intervention is important for determining the level of entrepreneurship, culture plays a huge role. Thus it can be interesting for France and its president Nicolas Sarkozy to think about trying to change the negative perception of entrepreneurship and entrepreneurs and be inspired by the American model where “entrepreneurship is woven into the fabric of North American Society” (Alison Morrison).
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9 comments:
This blog entry makes some important points, stating that culture is a crucial factor in encouraging entrepreneurial behaviour. The cases of the USA and France show that state intervention may not be enough to spur on entrepreneurial behaviour due to other psychological and social aspects. The author makes the point that the French should work towards a more entrepreneurial society, akin to the USA.
Although there is no doubt about the importance of culture as a driving force behind entrepreneurship, in order to see the whole picture we must consider other important factors. One factor that is key to the entrepreneur and new business start up is technological change.
Technological innovation can give the nascent entrepreneur the means to realise a vision that may have initially seemed impossible. To illustrate this we can use the example of the increased importance of information technology.
This has given the would be entrepreneur the tools to make it easier to set up and run a small business, for example; “exposure to a home computer may make it substantially easier for a potential entrepreneur to create an experimental business plan, obtain information about tax codes and legal regulations, learn about specific industries, and research competition.” (Fairlie, 2005)
Along with the administrative aspect of entrepreneurship, information technology has also created “opportunities for new business ventures in new technologies” (Deakins & Freel, 2006), such as the internet. This has given some entrepreneurs the ability look outside their own culture, allowing them circumvent the limitations. The internet provides a global audience for ideas meaning entrepreneurs are less restricted by their own country’s borders.
This is by no means the whole picture, but there is no doubt that both culture and technological change are key factors linked to entrepreneurial activity.
Colin
I would like to stress the fact that the job market, job security and different level of state intervention can be the reason why there is a entrepreneurship level difference between the US and France.
As a French, I believe that entreprise creation is not as needed as in US.
In the US, job market and job security are more liberalistic and partial. You can lose your job very easily and get only a small amount of money if you are unemployed. So, people in this case are more tempted to create their onw company to survive.
In the contrary, french people like stability, predictability and uncertainty avoidance. We also have a high level of social protection leading to the fact that we are not obliged to find a job immediately. We can "live" with our unemployed social protection.
Moreover, it seems to be more complicated to set up a company in France than in the US due to high taxation level, complicated law, burdensome regulations...
All this may explain the different level of entrepreneurship between the 2 countries. This is nevertheless related to the differencial culture!
Jeremie
As someone with little knowledge of France, I have somewhat had a perception in my mind that entrepreneurship is not something of importance to the French citizens. I am not sure as to how I have came to this conclusion but I am presuming it is from past conversations.
During research I came across something called Entrepreneurship Week USA which indicates how important entrepreneurhip is to them. I was not previously aware of this and found the web site really interesting. In addition it showed a video clip of entrepreneurship week which has 1310 partners in 50 states, 3700 activities, 481,000 participants, 21 million reached and all is done in just one week. Jonathan Ortmans is the Executive Director and states "We challenge young people across the nation". The aim of the week is to make young people look and view the world as an entrepreneur. This indicates how important they view it. Some kids involved looked around 10 years old.
This website had a link to another page which shows that entrepreneurship week also takes place in other countries and that in actual fact the program is known as Global Entrepreneurship Week. France was mentioned in this and I found that 100,000 entrepreneurs gathered about 40 organisations to help with their campaign. Although this is not as much as America, I do feel it is an awful lot of individuals since the US has a bigger population than France.
Am I wrong to think that entrepreneurship is of less importance to France?
After these findings I feel I am wrong.
The links to these sites:
http://www.entrepreneurshipweekusa.com/
http://unleashingideas.org/
In addition there is a blog which is fascinating.
Victoria
As far as the entrepreneurship is concerned, I do not think that the intervention of the government is necessary. I reckon that it depends mainly on culture, some countries have several pre-dispositions to be entrepreneurial than others. That is why we can see this difference between the TEA in France and USA. The economical structure is not the same, people are more assisted in France and it is may be that is why people are less interest in entrepreneurship and what it can provide.
Therefore, i think that the gorvernment intervention's is the main cause of a low rete of entrepreneurship in France.
Policies are not always in the same direction and do not encourage entrepreneurs to start a new business.Besides, several people in France think that the intervention of the government is suspect and when this one decide to introduce several policies there are very wary about that.
I Agree that studies have shown that the mentality of French peole regarding business start up is very negative.
I feel a question that to my knowledge remains unanswered is why have the French government let the situation reach this stage of such low entrepreneurship activity?
There is as you say francois, a risk taking opportunity in Usa which is frownded upon by the French. I find it an intersting task which is going to prove difficult for the French government when it comes to changing the mentality that taking risks is not a successful way to promote entrepreneurship.
Would it be possible for France to try and immitate the Usa approach of promotion of entrepreneurial activity?
I liked your article Francois & Co.
You asked "So, what else can influence entrepreneurship? What else can drive people to start their own business?"
In my country (Finland) freedom to make your own decisions is probably be the biggest reason.
The work of Hofstede is still amazingly valid if we speak about business and cultures.
I welcome you to compare different nationalities (cultures):
http://www.geert-hofstede.com/hofstede_dimensions.php
... and think about what it means for entrepreneurship ;-)
Hi anonymous,
First of all, don't be afraid to write your name ;)
More seriously, I don’t think that we can say that it’s the French government who “let the situation reach this stage of such low entrepreneurship activity”, because as far as I know, this level has always been low in France.
About promoting entrepreneurship, France is trying to imitate some part of the US approach, however as it has already been said previously, this is not the only factor.
Besides I think it will take a couple of years before we see the effect of the current French policies.
François
However, even if the French TEA is low compared to the USA, it grew up, according to GEM, from 2.2% in 2000 to 4.4% in 2006, so we can say that the French are efficient. To remind the Total Entrepreneurial Activity to you, TEA allows the measure of early stage entrepreneurial activity, that means the population involved in business creation.
Charles Riou
I knew that French were “risk adverse”, but I didn’t know there was such a difference with the UK, it’s pretty amazing the see the score of France for the Uncertainty Avoidance Index compare to UK.
“Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures”. I think this index is one of the reasons why the level of entrepreneurship is so low in France.
François
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