Q&A: New book calls for new attitudes towards entrepreneurship

Summary

In his English-language book on entrepreneurship, Flemish economist Rudy Aernoudt calls on Flanders and Europe to embrace an entrepreneurship culture that applauds success, and accepts failure

The cost of opportunity

Ghent University economist Rudy Aernoudt has co-authored a book with Flemish entrepreneur Marc Van Rompaey in which he calls for a new attitude to entrepreneurship.

What is wrong with entrepreneurship in Europe, and Flanders specifically?
Entrepreneurship rates in Europe are among the lowest in the world due to a negative mind-set. In Flanders, for example, the perception is that an entrepreneur is what you become when you have no other career alternative. We have a lot of management schools and Flemish managers all over the world because of our language skills, but we don’t have entrepreneurs.

Is this different in other countries?
In the United States, going bankrupt is part of your CV. In the US and other countries such as Israel and New Zealand, entrepreneurship is considered a way of life, while countries like Belgium and France are lagging behind. People don’t applaud entrepreneurs for creating jobs, they tax them. The fact that Belgium has one of the highest tax rates is Europe does not help the situation, and if they go bankrupt they say: “You see, he couldn’t make it work.” And then there is the problem of banks that will not give you a loan to start a new enterprise if you have gone bankrupt in the past. We need to create an entrepreneurship culture where success is applauded and failure accepted.

Does this structural and cultural anomaly hurt the economy?
The opportunity cost is very high. I calculated that 35% of economic growth and 23% of employment is directly linked to the level of entrepreneurship. Having a low level of entrepreneurship implies that we don’t use this important factor for growth and job creation. So yes, lack of entrepreneurship hurts the economy. Instead of creating numerous, inefficient employment schemes, we’d do better to stimulate entrepreneurship; it’s probably the best employment policy.

How can Flanders be made more entrepreneurship-friendly?
People have to be given the means, and there is a need for a mentality shift. First, bankruptcy-friendly regulations and respect for success are probably the most important goals to realise in order to make Flanders – and Europe – more entrepreneurial. Second, education plays a role. In Scotland for example, they have started teaching entrepreneurship at the primary school level. This helps to create an entrepreneurial society.

Third, limit subsidies because they don’t encourage starting a company. Evidence shows that subsidies are often inefficient in the long run. Substitute all subsidies through measures that make access to real finance easier. We need entrepreneur-friendly banks, seed funding and efficient crowdfunding options.

Finally, we need fixed rules. Regulations, including fiscal regulations, shouldn’t change all the time because people cannot invest when rules keep changing. The government could start by scrapping excessive administrative regulations and by setting up efficient and stimulating support programmes.

What should universities do to address the problem?
I have been lecturing in European enterprise policy at Ghent University for over 10 years. This book will be a syllabus for our economics students. It will help us to bring about changes through education. At UGent, there is a project called Ghentrepreneur that allows students to apply for a special entrepreneurship status and offers them coaching to start a company. We then assist them in taking their business idea to a higher level. We venerate them as one would venerate a professional athlete. The programme is becoming more and more popular with the students.

I want to communicate to my students that entrepreneurship should be a choice among all the other choices and not some kind of last resort. It should become a way of life.

Entrepreneurship: A Way of Life is published by Intersentia in English