Entrepreneurship in Greece: Main trends & characteristics Aggelos Tsakanikas

1. Global Entrepreneurship Monitor(GEM) Foundation for Economics and Industrial Research Entrepreneurship in Greece: Main trends & characteristics Aggelos Tsakanikas Research Associate FEIR / IOBE "Innovative views on youth entrepreneurship" National Capodestrian University of Athens 21/05/2007

2. Global Entrepreneurship Monitor(GEM) • A non-profit academic research consortium aiming at undertaking high quality international research on entrepreneurial activity • Coordinated by London Business School and Babson College • From a comparison of 10 countries (1999) to 42 countries in 2006 • Annual world report comparing and contrasting levels of entrepreneurialal activity across countries. • GEM focuses on three main objectives: • To measure differences in the level of entrepreneurial activity between countries • To uncover factors determining the levels of entrepreneurial activity • To identify policies that may enhance the level of entrepreneurial activity • Collected Data: • Adult population (telephone) survey conducted to minimum 2,000 respondents. • Expert survey: in-depth interviews with at least 36 experts in each country from finance, policy, government programmes, education and training, technology transfer, support infrastructure and wider society/culture. • Macroeconomic data (World bank, IMF, Eurostat, UN, OECD)

3. FEIR/IOBE in GEM • The Greek representative – partner in GEM from 2003 • Conduct empirical research and preliminary analyses on raw data • Population telephone survey (2000 people) • 36 interviews with country’s experts • National Report on Entrepreneurship • Greece’s main characteristics • Peculiarities and differences from other countries • Public policy monitoring and policy implications • From 2007: Desk on Entrepreneurship • Pool of various data and relevant policies • Design and conduct Other targeted surveys (corporate entrepreneurship, family run business, etc)

4. The GEM scope of entrepreneurship • It touches upon the level of the individual: it tries to estimate all attempts to create a new venture, self employment included. • It does not measure corporate entrepreneurship, it is not addressed to firms • It gives a prevalent rate: trends and attitudes of the population towards entrepreneurial activity Three types of identified entrepreneurs: Early stage entrepreneurs: • Nascent entrepreneurs: Those individuals (18 - 64 years old), who have taken some action towards creating a new venture (operating up to 3 months). • New entrepreneurs: Owner-managers of firms who have paid wages for more than 3 months and less than 42 months Established Entrepreneurial Activity • Owner-managers of firms who have paid wagesfor more than 42 months: they operate for at least 3,5 years

5. Main findings (2006) • A 16% of the Greek population 18-64 years old (>1,1 mill. people) were as involved in some kind of entrepreneurial activity (3rd place in Europe) • 11.1% in Europe, 10.9% in UK, • A 8,2% (~600 thudspeople) were established entrepreneurs, owners (alone or with others) of a business venture older than 42 months (2nd in Europe) • 5.4% in Europe and UK, • A 7,9% (~500 thudspeople) were “early stage entrepreneurs” (4th place in Europe) • 6.1% in Europe, 5.77% in UK, • The larger part are nascents and no new entrepreneurs • A decreasing trend in necessity entrepreneurship (pushed into entrepreneurship because of all other options options are absent or unsatisfactory), but increase in 2006 • 35% (2003), 28% (2004), 14% (2005), 20% (2006) • 18.6% in Europe,

6. Early Stage Entrepreneurship (2006) Greece: 4th in Europe Low/middle growth countries

7. The “shallow” character of entrepreneurial activity in Greece • “Shallow” entrepreneurship: ineffective in improving the value chain of the Greek economy, as it focuses merely on the last link of the chain, the final customer / consumer • New entrepreneurial activity reproduces rather than restructures the sectoral distribution of established activity

8. Early stage entrepreneur: some demographics • A male, aged 25-44 years old, High School (secondary) graduate already working either full time or part time. • A 74% of early stage entrepreneurs are male • One out of three is 25-34 years old • Three out of five have participated in up to the secondary education • Low female entrepreneurship in early stage (~25-27%): Greece was holding the 2nd lowest place in Europe (2003-2005) • But in 2006 a 4.7% of female 18-64 y.o. were early stage entrepreneurs (European average 3.7%) • Still though almost 40% of the female ventures are created out of necessity (19% in male) and not driven from an effort to exploit an opportunity • Need for experience: 36,5 year old the average early stage entrepreneur, 43,5 years old for the established one

9. Financing new ventures • Starting a business in Greece is expensive • Average initial capital investment: ~83.000 € (double than the GEM average) • Half of the ventures cost more than 50000 € • It is 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.

10. Personal and social attitudes towards entrepreneurship • High levels of confidence - knowledge and skills to start a business (1st place in Europe) but… • … at the same time, world champions in fear of failure factor: 60% would let fear of failure prevent them from starting a business • Entrepreneurship: A desirable career choice (2nd place in Europe), enjoying a high level of status and respect among the population, but… • …most people detest disparities in income levels and local media do not present success business stories, but focus n the bad examples

11. Six problematic elements: areas requiring policy intervention • Negative perception of business opportunities • Only a 22% of the population responds that in the next months there will be some good opportunities for starting a business in the area they live in • However, perception of an opportunity is not directly related to the number of opportunities existing in an economy but to the ways (easy) these can be exploited . Need for reducing various obstacles in starting a venture in Greece, adopt more simple processes Improve doing business in Greece (bureaucracy)

12. Six problematic elements: areas requiring policy intervention • The “shallow” sectoral pattern of new ventures • Large part of new ventures aim at the final consumer, reproducing established entrepreneurship pattern • Limited effect on competitiveness, growth, employment Encouragement of closer ties between SMEs and larger firms: start as a supplier • The crucial role of family as an informal investor • Intense role played by the family, large use of own capital • High risk option, hardly a second chance. New funding mechanisms & schemes: possibility for synergies between them and family (own) funding, towards a more rational allocation of resources

13. Six problematic elements: areas requiring policy intervention • The fear of failurefactor • World champion: Greece. • Entrepreneurship entails risk taking and experimentation. • Fear of failure discourages capable individuals from following an entrepreneurial career • Less innovative and risky ventures: safer but also with smaller impact on the economy, less effective in renewing and upgrading the productive capacity of the Greek economy. Need for a new bankruptcy law: allow a second chance. Proper education of potential entrepreneurs Effective mechanisms that help the entrepreneur after the initiation of his/her venture is actually lacking in Greece Social security system: easier transfers between waged labor and entrepreneurial activity: the entrepreneur feels secure about pension rights, regardless of changes in his career path.

14. Six problematic elements: areas requiring policy intervention 5. The ambivalent attitude of Greek society towards entrepreneurship • Starting a business is a socially acceptable and desirable career choice, but Greeks also detest disparities in income levels. • They wish for an entrepreneurial activity but they do not see good (safe?) opportunities. • Very confident about their knowledge and skills but “world champions’’ in the fear of failure factor. • Limited media coverage of success stories: entrepreneur as a manipulator of the market Actions for familiarization of the Greek society with success business stories, placing emphasis not on the entrepreneur’s own standard of living, but on the creative view of entrepreneurship: he/she creates something new (business, product, service), which could not be possible without his/her activity 6. The problem of the education system • Misalignment between entrepreneurship and education system. Tertiary Students are not offered the knowledge and skills necessary for an entrepreneurial career. • Public sector remains a top priority for the majority Courses related to entrepreneurship have been recently introduced into university programs. Should expand also in secondary education Closer relations between universities and firms

15. Thank you for your attention Contact : Aggelos Tsakanikas, +30 210 9211265, atsakanikas@iobe.gr • FEIR/IOBE: www.iobe.gr • GEM: www.gemconsortium.org