Earlier this month, we asked what Europe could do to encourage entrepreneurship, particularly in the field of ICT and internet services. With the European Commission now predicting a 0.3% contraction of eurozone GDP in 2013, and with manufacturing jobs increasingly moving overseas, Europe could really benefit from an innovative and globally-competitive ICT sector.
The European Commission wants the “Digital Agenda” to be a central pillar of their Europe 2020 strategy, yet when we think of high-profile ICT companies they are much more likely to be from America or Asia than Europe. Indeed, in 2007, the number of ICT patent applications from the EU was significantly below Japan, Korea, China or the US.
A comment sent to us last year on Twitter (a US company) from 10Comm really seemed to hit the nail on the head:
There certainly are successful European ICT companies, but they don’t seem to have the global visibility that American and Asian companies command. So, why is that? We approached Craig Mundie, the chief research and strategy officer at Microsoft, to ask him what he thought of 10Comm’s question:
Craig Mundie’s response was that it’s easy to be an entrepreneur and have a great idea, but that also has to translate to broad applicability and you need to be willing and able to make the investment to market it on a global basis. In other words, it’s not enough just to be innovative, you also have to actively push that innovation in markets around the world, and this might be where European ICT firms fall short.
Why is this? When we asked what Europe could do to encourage entrepreneurship, we had a lot of comments arguing that high levels of bureaucracy and red tape in Europe were to blame.
Jude, for example, argued that:
We need less bureaucracy, less taxes, and [more] protection from big businesses who buy or destroy whatever is affordable to them. Fair competition with fair rules for everybody, big and small.
Whilst Ana suggested that:
Reducing the amount of bureaucracy that is required will definitely cause a huge impact. This will motivate young people to take the risks.
In an earlier debate, we had a similar comment sent in from Peter, arguing that:
Europe urgently needs to be a truly open internal market and reduce the red tape for SMEs. Give the EU parliament the mandate and slim down the institutions. In doing so, austerity will be compensated by growth.
When we interviewed Martin Callanan, the Chairman of the European Conservatives and Reformists group, we put Peter’s suggestion to him for his reaction:
Mr Callanan was very supportive of Peter’s suggestion, arguing that it is private sector companies, businesses and SMEs that will create jobs, and that he would like to see the single market extended further, including to services, so that the “many barriers to doing business are removed”.
But how much is red tape really a barrier to entrepreneurship and innovation? Last year, a Eurobarometer poll (PDF) was published looking at attitudes towards entrepreneurship in the EU, and it will have made for sobering reading amongst those who support greater innovation in the EU’s ICT sector.
The poll suggests that the number of Europeans who would like to be self-employed has shrunk by 8% since 2009. Moreover, very few people said that the burden of red tape was a reason for not wanting to start their own business. Instead, the lack of financial resources and the troubling economic climate was a much more important factor.
Finally, we also took Peter’s comment about red tape to Franco Frattini, former Italian Foreign Minister in the Berlusconi government, to see how he would respond:
Mr Frattini argued that, if Europe wants to be a global ICT leader, then we need to “create, as promised, a digital internal European market. If we don’t have a digital single European market, we won’t be in any condition to compete on the world stage.”
He also argues that this deepening should go hand-in-hand with a strengthening of the European Parliament and the direct election of the next President of the European Commission. In other words, Frattini says that deepening the single market needs to be accompanied by “political union” in order to increase legitimacy and efficiency.
What do YOU think? Why are European ICT companies less globally visible than their counterparts in America and Asia? Is it because innovation is being stiffled by too much red tape? Or is it because there is no true “Digital European Single Market” to help European companies establish their products globally? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.