Entrepreneurialism in Spain Today: quantity and quality

Ignacio de la Vega. Professor. IE Business School

27 September 2007

Slowly but surely the entrepreneurial spirit is taking root in Spain as it becomes a real professional alternative. But there is still one hurdle left, which is to improve the quality of Spain’s burgeoning start-ups.´

I would like to begin my analysis by congratulating the magazine Emprendedores on its 10th anniversary. The contribution made by Emprendedores and the media to the boom in entrepreneurial activity in Spain in recent years has been significant. It has popularised entrepreneurialism and raised awareness of entrepreneurship as a driving force for economic growth and as a possible and profitable professional alternative.

Since the year 2000, IE Business School has led the Global Entrepreneurship Monitor in Spain (the GEM Project), which is undoubtedly the largest world observatory for entrepreneurial activity and its impact. GEM has improved the awareness of the entrepreneurial phenomenon in our society and has promoted its understanding at all levels while supporting the development of public policies that encourage this major engine for economic growth, job creation, collective wealth and innovation.

The GEM Project’s definition of entrepreneur covers all individuals between the ages of 18 and 64 who are full or partial owners of any kind of business initiative that has been running for no longer than 42 months at the time of the survey. The definition includes self-employment.

Since the year 2000, the evolution of the percentage of the Spanish population involved in entrepreneurial activities has had its ups and downs as a result of certain economic, social and political events. However, from the year 2004 onwards, the trend has been positive, and in 2007 the preliminary figures for the Rate of Entrepreneurial Activity (REA) continue to confirm the trend.

Evolution of the total entrepreneurial activity index in Spain 2000-2006
2000 2001 2002 2003 2004 2005 2006
4.55 7.78 4.59 6.77 5.15 5.40 7.27

Spain’s current rate of entrepreneurial activity holds one of the leading positions recorded by the GEM Project in the European Union. However, the true nature of this activity has positive and negative aspects and the latter need to be analysed and corrected to prevent the quantity from necessarily prevailing over the quality of entrepreneurial initiatives.

The positive aspects include the fact that in 2006 more than 83% of entrepreneurs started up their business activity "to take advantage of an opportunity" instead of doing so out of need or due to a lack of employment alternatives. Moreover, the 34% of these entrepreneurs have university qualifications and an increasing number of young people and women are joining the process. It is also important to point out that seven of the seventeen Spanish regions have a rate of entrepreneurial activity above the national average and some have a rate of over 9%.

Many initiatives make good use of new communication technologies; however, the use of new production technologies is more moderate. From the sectoral point of view, there is still much to do for our business fabric to reach the level of other countries in the EU regarding the development of innovative technology-based enterprises with a potential for growth.

As for their size, more than 95% of entrepreneurial initiatives in Spain fall in the micro category and expectations for growth in sales and employment are, on average, very modest. The new entrepreneurs (those who have been involved in their activity for a maximum of three months) are more optimistic than their established counterparts regarding their intention for growth, innovation and development, but as their businesses become more and more established, this intention diminishes.

Consequently, as pointed out by the more than 600 experts interviewed each year by the GEM Project, despite the fact that the players that promote entrepreneurial activity are improving their actions on all fronts, it is still too early to see the effectiveness of many of the measures taken, especially in the area of finance, the transfer of R&D, internationalisation and the growth of entrepreneurial initiatives. Together with issues related to the entrepreneurial spirit in the education system and the promotion of all forms of innovation, these aspects are a priority for the coming years so that entrepreneurial activity in Spain can reach the levels of quality that should go hand in hand with its increase in quantity.

I am convinced that in 10 years´ time, besides congratulating Emprendedores on its 20th anniversary, we shall witness an environment in which many of the imperfections that still affect the full development and understanding of the importance of entrepreneurial activity in our society have been corrected. The GEM Project will be measuring this progress.

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