Barriers to Entrepreneurship

Aggelos Tsakanikas

Laboratory of Industrial and Energy Economics – National Technical University of Athens

Early stage entrepreneurs in Greece

Early Stage entrepreneurship(TEA index)

Potentialentrepreneurs Knowledge

& capabilities

NascentEntrepreneur

Starting a business

New entrepreneur

(< 3,5 years old)

Established entrepreneur

(> 3,5 years old)

Idea Firm creation

Survival

•Wide concept of entrepreneurship

•Unit of analysis: the individual

Global Entrepreneurship Monitor (GEM)

Source: ΙΟΒΕ, GEM

TEA entrepreneurs in Greece

8% of the population

Main characteristics 2010

Necessity entrepreneurship: 27% Opportunity entrepreneurship: 39%

Mostly men, on average 41 years old Limited participation of tertiary graduates Self-employment: ~60% only 1 person Focused on consumer oriented activities (retail) Use of modern technologies, but no significant

innovation

Attitudes towards entrepreneurship

High levels of self confidence (knowledge and skills to start a business): 1st place in Europe

But at the same time world champions in fear of failure factor

Entrepreneurship: A desirable career choice (2nd place in Europe)

High level of status and respect for entrepreneurs Some good ideas and opportunities, but various

problems when trying to proceed…

But at the same time…

It’s expensive to start up in Greece Average initial capital investment:

~30.000 € (higher than european average)

It’s also risky in terms of personal funds Own capital (from savings): 53% of the

investment’s cost Half of the rest from close family and

only 1/3 from Banks (or used to…).

Doing Business 2012

Ease of... Doing Business

2012 rankDoing Business

2011 rankChange in

rank

Doing Business 100 101 +1

Starting a Business 135 149 14

Dealing with Construction Permits

41 42 1

Getting electricity 77 78 1

Registering Property 150 151 1

Getting Credit 78 75 -3

Protecting Investors 155 153 -2

Paying Taxes 83 80 -3

Trading Across Borders 84 86 2

Enforcing Contracts 90 91 1

Resolving Insolvency 57 50 -7Source: Doing Business 2012, World Bank

Starting a business

Ease of... Doing Business 2012 rank 135

Starting a business Doing Business 2011 rank 149

GREECE OECD

Procedures 10 5

Time (days 10 12

Cost (% of income per capita) 20.1 4.7

Paid-in Min. Capital (% of income per capita) 22.8 14.1

Source: Doing Business 2012, World Bank

Barriers to entrepreneurship

1. Getting Funding

2. Costly procedures for starting a business

3. Labour market rigidities

4. Closed professions

5. Complicated public procurement procedures

6. Complex and unstable tax regulation and administration

7. Poor research / innovation

8. Old fashioned institutional set up in education (memory based system and no critical thinking)

9. Ambiguous societal attitude towards entrepreneurship

But today we need to work harder

Need to change the mindset of young people towards entrepreneurship The Public sector not an option anymore

Need to prepare graduates in terms of capabilities to formulate an action plan (marketing their ideas)

New funding mechanisms & schemes: possibility for synergies between them and family (own) funding, towards a more rational allocation of resources

Effective mechanisms that help the entrepreneur after the initiation of his/her venture is actually lacking in Greece

Need to overcome the toxic culture of the “easy” way out

Quality, Value adding activities, differentiation

Vision and planning