Europe Needs More Intrapreneurship for Competitiveness and Innovation
Entrepreneurship has been widely recognised by researchers as the source of a country’s competitiveness. But while the European Union (EU) countries have consistently high competitiveness rankings in the Global Competitiveness Reports, it is argued that Europe lags the world in entrepreneurship, which creates a paradox.
This paradox disappears when one takes a more detailed look at the phenomenon of entrepreneurship. Research shows that not all types of entrepreneurship lead to competitiveness of a country in the context of the EU. Only one type of entrepreneurship – intrapreneurship i.e. entrepreneurial behaviour of individual employees in established companies – drives competitiveness in the EU, both at the country level and the level of individual companies. This makes the EU a special case in the world, as in the EU competitiveness is based on intrapreneurship, rather than independent entrepreneurship by entrepreneurs establishing and managing their own companies.
In the EU, intrapreneurship drives competitiveness through the mediating function of innovation, as intrapreneurship is conceptualised as employee-driven innovation.
But currently the level of intrapreneurship in the EU countries is low, on average less than 5% of employees are behaving entrepreneurially at their workplaces (data from the Global Entrepreneurship Monitor reports). As the EU economy becomes more innovation-driven, such low share of employees engaging in intrapreneurship is creating a challenge for the EU companies regarding their competitiveness. This challenge is especially big for SMEs, the backbone of the EU economy.
This leads to an important realisation: to remain able to provide high and rising living standards and gainful employment for its citizens, the EU needs to increase its regional competitiveness, and to achieve this the EU needs more intrapreneurship, especially in SMEs.
Along similar lines, the World Economic Forum’s report “Europe’s Hidden Entrepreneurs: Entrepreneurial Employee Activity and Competitiveness in Europe” proposes that European leaders invest time, energy and capital in intrapreneurship, and develop competitive advantages that will play to Europe’s strengths, rather than to try and emulate other regions that are driven by spin-offs and independent entrepreneurship, like Silicon Valley in the U.S.
Thus, the EU needs more intrapreneurship to stay competitive and increase its regional competitiveness in today’s globalising world. The same is true for European companies, as their success also depends on their competitiveness coming from innovation rooted in intrapreneurship. Innovation happens when employees behave entrepreneurially at work, i.e. they engage in intrapreneurship and are intrapreneurs.
Mart Kikas
Programme Director
Executive MBI & Customer Focused Innovation [Open Executive Programme]
