That’s what The Economist wrote recently in an article criticizing the European business climate. According to the article, Europe doesn’t produce enough innovative companies that grow quickly and end up big. The chart below sums up their point:

An excerpt of the article, below:

[In Europe, start-up companies] will struggle to hire professional managers to help their firms grow, because European executives are extremely risk-averse. Their young firms will quickly find that established European companies tend not to like dealing with tiny ones. Most sources of capital will shun them. Regulations will shackle them. And when they fail, as most are sure to do, they will not be allowed just to dust themselves off and start all over again. In Europe, a business blow-up leaves a lasting stain, akin to a moral failure…

Few in number, European entrepreneurs are also gloomy about their prospects. A study by Ernst & Young, an accounting firm, showed last year that German, Italian and French entrepreneurs were far less confident about their country as a place for start-ups than those in America, Canada or Brazil. Very few French entrepreneurs said their country provided the best environment; 60% of Brazilians, 42% of Japanese and 70% of Canadians thought there was no place as good as home…

Many aspiring entrepreneurs simply leave. There are about 50,000 Germans in Silicon Valley, and an estimated 500 start-ups in the San Francisco Bay area with French founders. One of the things they find there is a freedom to fail…

The cost of paying out large severance packages (six months of severance pay is typical even for very recent hires) can be a huge drain for a small company. “In San Francisco and in China, a communist country, I pay one to two months,” says a beleaguered French chief executive who does not want his name attached to such a sensitive subject. Big severance packages also make it much harder for start-ups to recruit the professional managers that can take them into the big league. Experienced executives are loth to forgo such reassuring goodies by resigning.”

Source: The Economist

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