Entrepreneurship in 2007: an optimistic view of the Spanish environment

<a href="http://www.ie.edu/IE/php/en/profesores_medios_detalle.php?id=320">Ignacio de la Vega. Professor. IE Business School</a>

1 April 2008

Entrepreneurial activity plays a key role in any country’s economy. Hence, when the going gets as tough as it is at the moment, we should take great pains to keep it coming.

Levels of entrepreneurial activity in any society are closely related to the evolution of the main economic indicators in said society. For almost a decade this fact, long recognised by economists, has been empirically demonstrated in the annual results of the Global Entrepreneurship Monitor (GEM) prepared in Spain by IE Business School for the last eight years and produced in 52 countries around the world by leading universities and business schools.

Since the launch of the GEM project in Spain we have witnessed a definite improvement in the conditions and recognition of the work carried out by entrepreneurs. The successive governments have understood the importance of the business creation factor (and the growth of SMEs), designing increasingly ambitious support plans for their work. The social media report increasingly on this activity and other social players are now involved in the process. Furthermore, the participation of universities and training programmes now plays a leading role in promoting the phenomenon. As a result, we have witnessed a significant increase in Total Entrepreneurial Activity, which has allowed us to move as a country from relatively low positions in entrepreneurial activity rankings of the EU and the OECD to positions of a certain standing.

What is the reason for this growing interest in entrepreneurial activity? There are a number of reasons that explain our society´s interest in the creation of new businesses. Entrepreneurial activity in any advanced society is fundamental for the generation of employment, innovation and collective wealth. This is the main explanation we can offer to understand a raised awareness of the entrepreneur´s work and the creation of multiple support instruments. This in turn strengthens the direct relationship between the creation of enterprise and the creation of social wealth and value. Business start-ups and the growth of small and medium-sized enterprises (the following phase) are directly responsible for a high percentage of employment generated in any system. If we speak of innovation, a very high percentage of technological innovations and business models also come from the world of new business projects. Finally, through taxes and subcontracting, their growth is responsible for an alternative generation of social wealth.

2007 has been a positive year overall for business creation and the growth of consolidated enterprises in Spain. The official statistics issued by the INE (Spain´s National Statistics Institute) shows a deceleration in entrepreneurial activity during the last two months of 2007 in lockstep with a more uncertain economic environment. I consider it essential to offer a dose of optimism at this present time, evidently based on the figures provided by the most complete world research on the subject in order to appease certain animal spirits that appear to be closing in on our economy. I would also like to encourage all those entrepreneurs with projects in their portfolio to embark on their project using quality business plans despite the fact that the economic cycle is in the throes of deceleration.

Let me give you some figures taken from the GEM 2007 report to back my optimism: in 2007, entrepreneurial activity was up by 4.11% (on an exceptional 2006); the consolidated activity of enterprises on the market increased by 18.52%; the rate of abandonment fell by 16.6%; there was an increase in the average amount of capital invested, with the corresponding effect on project viability; and the sources of finance diversified and increased.

However, even though there are still many shadows on the short-term economic horizon and many issues need to be resolved and improved for the promotion of entrepreneurial activity in our society (including finance, social return, education, public policies), the figures suggest that during the last decade we have been building a more entrepreneurial society. A society that is more capable of taking up the opportunities offered by more dynamic and complex markets and a society that shows greater solidarity with the creation of employment, wealth and innovation. Let´s hope it lasts!

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