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) Potential entrepreneurs Knowledge & capabilities Nascent Entrepreneur 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): 1 st place in Europe But at the same time world champions in fear of failure factor Entrepreneurship: A desirable career choice (2 nd 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: ~ € (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 rank Doing Business 2011 rank Change in rank Doing Business Starting a Business Dealing with Construction Permits41421 Getting electricity77781 Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders84862 Enforcing Contracts90911 Resolving Insolvency Source: Doing Business 2012, World Bank

Starting a business Ease of... Doing Business 2012 rank 135 Starting a business Doing Business 2011 rank 149 GREECEOECD Procedures105 Time (days1012 Cost (% of income per capita) Paid-in Min. Capital (% of income per capita) 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