Risk-aversion stifles European entrepreneurialism

Jan 18 2005 by Brian Amble Print This Article

Why are people in the EU generally less entrepreneurial and more risk-averse than people in the USA?

On average, only 45 per cent of Europeans said that they would choose self-employment compared to 61 per cent of Americans.

So for the past five years, the EU has financed an annual poll of more than 21,000 people on both sides of the Atlantic in an attempt to find out.

The results, according to the International Herald Tribune, are enlightening:

It has long been assumed here that red tape is holding back Europe's entrepreneurial spirit. With shorter waiting times to register companies and easier procedures for hiring, the argument goes, new European businesses would sprout like tulips in a Dutch greenhouse.

The survey told a different story. Europeans essentially told pollsters they couldn't be bothered with the effort involved in starting a business: they wanted a stable income and a reliable, relatively risk-free job.

Americans, by comparison, said those things were less important. Some 30 percent of Europeans who said they would prefer to be employees than self-employed cited "regular, fixed income" as a reason, compared with 16 percent of Americans. A further 24 percent of Europeans cited "stability of employment," compared with 10 percent in the United States.

Indeed, overall, only 5 percent of Europeans said fear of red tape or reluctance to battle bureaucracies was holding them back - a result which will surprise anybody who has ever had to deal with the labyrinthine bureaucracy in France, for example.

The bottom line appears to be the most Europeans are far more afraid of failure than most Americans. Fully half of all European respondents agreed with the statement, "One should not start a business if there is a risk it might fail." Only one-third of Americans agreed.

International Herald Tribune | Risk-takers are a rare breed in EU