The lack of an entrepreneurial culture in Germany and how to change that

In Germany there are too few entrepreneurs. Single reasons such as high tax hurdles, little unbureaucratic funding, or the fact that few women and migrants establish businesses, contribute to this finding. But behind these individual problems is a much more fundamental problem: the lack of an entrepreneurial culture in Germany!

What does that mean — what defines an “entrepreneurial culture” in a society?

“Culture” means a system of shared values, beliefs and norms of a society under the expectation that the members of the society behave in accordance with these common values and beliefs. An entrepreneurial culture in particular, with regards to the aforementioned premise, includes the appreciation of creativity, risk and failure the toleration of creative people who sometimes fail. In addition, it includes the belief that innovation and the use of market opportunities are appropriate behaviors to deal with problems such as economic growth, environmental uncertainty, or global competition.

If one looks at Germany under these provisions, a gloomy picture can be found: The fear of failure is particularly strong, many population groups are not or only moderately targeted with entrepreneurial support offerings and success is not seen as something to aim for, but as something that is not shown publicly because of fear of envious people.

That needs to be changed! A vibrant entrepreneurial culture is an important part of the business environment in every country — and that is particularly true for Germany as one of the strongest economies in the world. To encourage more people to start and to run a business society must succeed — as a basis for further steps — in improving the public opinion about start-up entrepreneurs and about entrepreneurs in general so that entrepreneurship becomes a legitimate, respected and desirable option as a career opportunity.

But what kind of concrete actions must be taken? Based on a recent study by PricewaterhouseCoopers (PwC) on “Young Entrepreneurs” and “Entrepreneurial Culture” three areas can be identified that need to be addressed:

Remove the stigma of failure! A business is in principle something risky. A society should not punish entrepreneurs excessively when they fail. Rather, they should receive support — especially in public — so that they will try again, once they have failed. From each failure something can be learned, and entrepreneurs who start businesses repeatedly have a higher chance to make a company successful than those who found a company for the first time. In this context, the regulations of insolvency law play an important role: these regulations must achive a good balance between the protection of creditors and allowing new opportunities for the (failed) entrepreneur.

Open the door for currently hidden talents! Women, young people and migrants can make an enormous contribution to the entrepreneurial culture by bringing in fresh ideas. Yet they are still highly underrepresented in the business community in Germany. If these groups receive stronger support the basis of existing entrepreneurs will become broader. As a result there will be more people who can speak about being an entrepreneurs and about its benefits.

Highlight the success! Success in business in Germany — in contrast to countries such as the USA or Australia — is not something that is often emphasized. While such success is something to be proud of in the US, in Germany it results in envy very quickly. Here a shift in the general perception is urgently needed. If it is possible to convince more local entrepreneurial role models to participate in events and campaigns showing them as successful entrepreneurs and to make them talk about their success (and about their failures), a new generation of entrepreneurial talents can be inspired. Entrepreneurs should emphasize the social benefits of enterprises, such as job creation, the development of innovative products and services or the overall strengthening of economic growth. And if more local and regional policy-makers show more genuine interest in entrepreneurs and highlight their role in the local community as something that is worthy of imitation, slowly but surely a rethinking of the general population can be achieved.

In a nutshell — how can who strengthen the entrepreneurial culture (according to the study by PwC):

State:

1. Recognize, understand and support the strength and value of enterprises as an engine for economic growth;
2. remove the stigma of failure by raising the profile of entrepreneurs;
3. create opportunities for entrepreneurs to meet with their peers for exchange and networking.

Business owners:

1. Tell the whole story — with the successes, the failures and the benefits for society;
2. support and strengthen the next generation of entrepreneurs through mentoring, active assistance in business or financial support.

Organizations:

1. Provide more funding and accelerator programs for entrepreneurs and make them more easily accessible;
2. recognize the contributions and success of start-ups and entrepreneurs, highlight them and communicate them actively as something positive.

You want more information? Follow me on Twitter (@kanzlei_lexa) or become a fan on Facebook (kanzlei.lexa). And don´t forget to visit my website (in German and in English language) on www.kanzlei-lexa.de or my blog on www.entre-preneur.de.

Carsten Lexa is a lawyer by profession, a lecturer at several universities about contract design for businesses and an entrepreneur himself. Apart from that he is the President of the G20 Young Entrepreneurs´ Alliance Germany, a member of the B20 Employment Taskforce and by invitation of the European Commission a participant of the SME Assembly.

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