Commentary on EC Entrepreneurship 2020 Action Plan

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Last month the European Commission launched its Entrepreneurship 2020 Action Plan which is a blueprint for the development of an entrepreneurial culture across Europe. The document offers well-reasoned contextualisation to its various initiatives and it details the actions that the European Commission will take, as well as the activities that it ‘invites’ the Member States to enact. The document proposes three areas for intervention: (1) entrepreneurial education and training; (2) strengthening framework conditions for entrepreneurs; and (3) reaching out to specific groups.

The groups identified in the Action Plan for targeted support are women, seniors, migrants, unemployed and young people. Each of these groups is currently under-represented in entrepreneurship activity across the EU and tailored initiatives need to be delivered to enable them to start their own business. Indeed a forthcoming OECD report will give further evidence to the challenges that such disadvantaged groups face in terms of entrepreneurial achievement and will also offer recommendations regarding future actions.

In terms of creating an environment where entrepreneurship can flourish, the Action Plan identified six areas where intervention is required: (1) better access to finance; (2) supporting new businesses in crucial phases of their lifecycles; (3) unleashing new opportunities in the digital age; (4) enabling easier business transfers; (5) offering second chances for ‘honest’ bankrupts; and (6) reducing unnecessary or excessive regulatory burden. Any entrepreneur reading the Action Plan would immediately concur with the critical need to address these areas of business activity, no matter what country their operations were based.

The Action Plan is a very well-considered document and it offers clear action points that should be taken by the Commission and EU Member States. However, it suffers from a lack of vision and an inability to enforce actions within Member States. While it is a well-established fact that businesses in Europe do not grow to the same levels as US firms, this issue is not really addressed in the plan. Furthermore, European firms are increasingly less competitive in global markets and this issue is also not addressed in any detail.

To become a stronger economic force across the world, the EU does not need more ‘me too’ products and services but instead it must substantially increase its activities in the area of innovative entrepreneurship. Cutting-edge research being brought to market by European firms must become a central element of any strategy by the European Commission towards building European competitiveness. However, only the pillar discussing ‘unleashing business opportunities in the digital age’ actually addressed this issue. Overall. the plan is more concerned with improving entrepreneurial activity within the internal market rather than re-establishing the position of the EU within the global marketplace.

Another concern of the Plan is that the European Commission cannot enforce the Action Points recommended to the Member States but can only invite them to address such points. Effectively this means that each Member State will continue to work to its own agenda and if measures are introduced which coincide with recommended Action Points then they will report that they implemented x% of the Action Plan. Such a situation hardly leads to a coherent approach to the adoption of the Entrepreneurship 2020 Action Plan but suggests instead that the document is very much aspirational in terms of support from Member States.

Ireland currently has many excellent initiatives aimed at creating jobs and late this year we will see the publication of a strategy or policy on Entrepreneurship, a plan that needs to be visionary and implementable. When the Irish government considers the recommendations of the EC Entrepreneurship 2020 Action Plan, it will note that not only do we not have an Entrepreneurship Policy currently, but we also do not have an entrepreneurship education strategy, nor a policy regarding the development of entrepreneurial activity amongst under-represented groups. We also need a plan that will reduce our dependency on multinationals (particularly for export activity) and that is linked with Innovation Policy. As a small island economy, we need to adapt so that we can compete in global markets and given the constraints that we face, innovative entrepreneurship offers us our best option for future success.

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About the Author:

Professor Thomas M. Cooney (B.Comm, MBA, PhD, MMII, MCIM, FIMCA)

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