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:
http://twitter.com/#!/10comm/status/170167425738866688
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.
35 comments Post a commentcomment
Very good question, and one that has troubled me for some time. I shall follow the debate with interest.
I have some great ideas to put in practice; so much interest and positivity to run the business and most importantly I have an amazing family and friends. I know it fulfills the criteria to achieve a global and total success.
How can I engage my ideas?
Jussara Hayward
they are buried under reams of pointless eu directives.
I have a paralel question for the economists, how can a economy be sustainable if everyone (extreme case) was self employed? It is posible? What will change?
Sim as empresas do TIC devem romper a sua burocracia e acabar com os seus secretismo a europa precisa de um mercado digital europeu e global porque o futuro da europa irá passar pelas novas tecnologias
UE pays more attention for problems measurement by statistics/comparisons between countries.
There is no common strategy in order to influence positively these statistics.
UE pays more attention for problems measurement by statistics/comparisons between countries.
There is no common strategy in order to influence positively these statistics.
Many reasons: too much red tape, stigmatisation of failure, lack of a standard European language, lack of funding,…
I believe it’s in the best interest of all european countries to unite into a single market to be able to face the competing markets from the west and from the east.
you only think of EU as a market? EU is about a multitude of cultures, languages, countries, realities. Better quality than quantity, and quality in Europe is very high. Portuguese and other companies working with NASA, for example, portuguese computers being used by police abroad. European language? We have hundreds of languages and dialects. And we are people, not numbers.
Well said! Why are the debates always about growth in a financial global world that in order to succeed it must reduce standards of living, environmental quality and homogenize cultures into one size, one color?? Why does Europe have to become another USA? Or treat people like China does in order to compete?
We should keep the trade market but get rid of the rest of the eu and all its officers and employees.
EQUAL RIGHTS FOR ALL THE COUNTRIES IN THE EU
Europe is dead as a all! The famous european social state it is not only a lie aswell as a trap! Politicians serve themselves instead of serving tne common cause and the red tape exists because the growth with the confusion! EUROCRATS!
I am afraid, none of the arguemts given in the interviews are hitting the heart of the matter. Particularly Frattini is just exercising good old eurospeak.
The policy on strategic innovations in Europe is under the controle of the US. This is firtsly a result of WWII, but secondly also of actions of the EU-establishment who agrees and signs all kinds of treaties to enable the US to controle and nose out European business and technological development. Just think about how the EU had to compromise with the US for operating GALILEO, or SWIFT, ECHELON etc.
Thirdly, their is wrong priority setting in the EU. Instead of investing, for example, in advanced space technology a country like Germany, which has great potentials in this field, has to waste resources for such false constructions like the €uro. Whereas in the forties Germany was the avantgard in this field, today it degenerated to a second or even third rate supplier, in strategic terms behind China, Japan and even India. ESA remains an appendix of NASA with no room for a challenging European space programme.
Fourthly, there is envy and blockage among member states when it comes to innovation and technology (see ESA, EADS, European patent etc.).
It appears more and more that if member states like Germany would go alone in matters of high tech it would be better for the whole of Europe, provided they are able to emancipate from US controle first.
The so called “European values” provided by the EU are more than questionable in matters of innovation and technology.
i believe that we should point in education and research for the ICT project in europe. the bureaucracy is another problem which is produced from the luck of the two above mentioned elements.
http://www.facebook.com/pages/Romania-la-putere/388975167868419?ref=hl
Look at the costs of patents…
EU Innovation is in outbond direction
SOS ! VERY BAD SITUATION- ?ULGARIA !
Very simple. European companies expect their policians to work for them and be consulted by them, they do not invest in lobbying.
On the other hand American software companies are traditionally highly present in Brussels and act as if they were members of our constituency, in ways unthinkable for European companies in Washington.
Also EU politicians tend to take testimonies from persons which stem from third nations.
Thus politicians get the impression that Us companies dominate the scene. Just let me make an example. European administrations depend on Microsoft office, but an investment into competing European solutions of less than one billion Eur and the lockin is gone, and the cash cow is shot dead. Now, every year billions in licensing fees cross the Atlantic. So you can imagine why it is of critical importance of that company to invest in lobbying and entertain European lawmakers by their presense.
Being in the process of starting up a large global non-profit, I have found that start up funds from the EU are impossible to get any of, even if one is based in the EU. The project within our non-profit has to be done within the EU in order to get start funds which to me is not at all understood when we surely will offer European young people jobs within our non-profit??
Our project will cover employment and education for young people from no less than 3 Continents, it is about the entire EU but will not be completed within the EU. This does not however mean that we will not employ Europeans…we sure will, but no funds because the project itself is not done here?? It will however create income for EU Countries via tourism among other things, but still no opportunities!?
I do not understand this…not at all EU??
There is so much talk about global citizens, we will offer young people education, jobs etc., but no start-up funds at all and, we will have to go get our funds from private Companies around the World for this which might mean, we will not be a European non-profit after all, but simply chose to start up elsewhere which is sad, as this project is very much about the EU??
I am telling you this simply because I refuse to believe we are the only ones in this or a similar situation and, when you ask about the ICT and going global, I understand why it doesn’t work dear EU……no help at all to do so and, I can only see this as if the EU is trying to force Nationalization upon us which won’t work, because we’ll just leave, but why when do we have to do this, when the EU obviously needs us??
Is there a difference in giving start-up funds for a global star-up and a pure EU project??
it is not only the technical innovation. It is as well knowing the users, their habits, loves and hates. Can we match them? Make an effort :).
The answer is simple: it is easier and cheaper for IT services to be outsourced to countries such as India and China.
Why should #EU encourage anything? The market should.
I think there are many well edjucated IT-professionals from East Europa, but they don`t have the developed spirit of entrepreneurship. This is a direction, where The European Commission should work.
We’re still too fragmented and have too many internal obstacles :( … in order to succed, any ict biz depends on the market and if this is small, the time to grow is longer :(
we are all paying and saving Money for germany to be happy and grow :)
pay to the right people.
THERE IS NO EUROPE, just a little band of some people that want it all for them selfs.
Europe must do a lot more than just bring together politicians for polite talks, nice photos and good food. LET SPECIALISTS TAKE OVER !!!
All ICT innovation comes from dropouts, who were given the chance to fail repeatedly before succeeding with the help of venture capitalists. They thrive in a natural ecosystem with many immigrants . In Europe, capitalism is hated, dropouts are assisted, and immigrants are banned. IT is dictated from above by technocrats who worship the State, in various Gosplans, paid by taxpayers.
Slightly different, but the same issue here in Japan.
“The number of ICT Patents” is only one of minor advantages in ICT services.
Might need emerging market like SE Asia for Japan, Africas for EU, to have the realistic and effective innovation in socioeconomic ecosystem.
It is very clearly about access to money, just look at the huge amounts of money investor have been wasting on amazon.com before it finally turned to profit. I’m guessing you will never find that kind of money in Europe because they don’t have the faith to do it. Furthermore without a big investor behind you the first (nonsense) patent lawsuit by a big tech company will force you out of business, or if you’re lucky force you to sell out. Furthermore laws might force you to make unnecessary costs (for instance it might be against a the law to start a business from your home) or might even forbid you to be innovative. I mean those experimental google cars would never be allowed to drive around Amsterdam. Similarly drones cannot be flown in urban areas, testing your x-price reusable spacecraft?…verboten!, you want to be innovative in biotechnology?, forget about it, genetic crops, outlawed, cloned animals?, verboten again. Europeans are ruled by irrational fear of the unknown and untested and therefore stifle progress in their own backyard and murder the economic future of their youth.
More than in many other sectors of the economy, the IT industry is constantly under the pressure of change, innovation, growth, emerging technologies and new business models.
While the expected recovery from the recession presents new challenges and opportunities for European IT market in 2014 and 2015, IT executives are set to leverage both global and local IT opportunities (such as increased spending and hiring, business intelligence, virtualization, and outsourcing) to overcome not only global challenges but also local IT and business challenges.4
Outsourcing services in 2014 are expected to grow, driven mostly by hosting infrastructure services and hosted application management services. Nearshore is the most preferred ITO destination among European countries, and this tendency is predicted to be the leading one for the next 5 years.