European entrepreneurship and business: integration’s perspectives (Part III)

The EU integration process in socio-economic perspectives is based on flourishing and competitively strong national entrepreneurship. Transforming global and European challenges into national business opportunities and supporting active and inclusive labour market for the benefit of all – these and other issues are vital for a whole “future of Europe” project and for positive integration’s evolution, in particular. The third article in the series concerning the “future of Europe’s” project is devoted to entrepreneurship and corporate issues as well as measures taken by the EU institutions and the member states.

First two articles in the EU-future’s series can be seen in:

  1. https://www.integrin.dk/2021/01/18/perspective-directions-in-the-eus-integration-key-global-and-european-challenges-part-i/ and
  2. https://www.integrin.dk/2021/01/23/political-economy-in-european-integration-new-growth-patterns-part-ii/

 

There are three main issues involved in predicting European “business future”:

  1. global and European challenges in a “transforming entrepreneurship”,
  2. the role of state in entrepreneurship, including education and training in modern business, and
  3. assisting business: the role of state and science and technology.

All three factors are supposed to be dealt with in a “complex cooperation”, as only in the integral triangle can corporate and business activity can be future-oriented and resilient in the member states.  

 

 

  1. Global and European challenges in a “transforming entrepreneurship”

“Business as usual” is not any more perspective and/or efficient (!); however, a combination of age-old business patterns (e.g. administration, taxation, accountancy, logistics, team-work, etc.) is urgently needed by inclusion of new modern trends in business. Among the main trends the following shall be mentioned:

Sustainability -17 SDGs since the end of 2015; it is a compulsory agenda presently for over 190 states;  

– Circular economy –together with renewables, waste management, etc.;   

– Digital society and economy (incl. e-health, e-governance, e-trade, etc.). See more in K. Schwab “the 4th Industrial Revolution”, 2016. Two most important EU’s recommendations are particularly relevant for the states in digital transformation: 

= to fine-tune scientific community’s approach to more mission-oriented and impact-focused research addressing regional and global challenges. Here, the EU’s support provides an insight into changes in industrial and social fabric through, for example, digital applications and devices bearing major practical implications and benefits.

= to improve the EU and national R&I in “combined efforts” to add to vital for all Europeans the outcomes of scientific achievements conducted together; in this way, a better coordination between EU and national research programs in digitalisation is to be achieved.

 

Among most important R&I directions are three “future-oriented”: graphene, human brain project and quantum technologies, which identify and develop practical digital applications to make a positive impact on people’s lives and socio-economic progress.

The digital transformation is accelerating involving almost all walks of life; in particularly, after the recent pandemic in 2020, when people and businesses started working mostly online, the process that has brought vast technical potentials into changing existence involving various network capacities. In this regard, scientific advances to governments and corporate entities are becoming important more than ever; it brings scientists and researchers into more resourceful potential to national political economy.  

There are three “digital clusters” among the EU-28 states (2018): a) high performing countries (8 EU states) with the highest level of digitalisation: Denmark, Sweden, Finland, the Netherlands, Luxembourg, Ireland, Belgium and Estonia; b) medium performing countries (11 states): Spain, Austria, Malta, Lithuania, Germany, Slovenia, Portugal, the UK, Czech Republic, France and Latvia; and c) low performing countries (9 EU states): Slovakia, Cyprus, Croatia, Hungary, Poland, Italy, Bulgaria, Greece and Romania. During last five years, several EU states managed to improve their digital performance and reduced the gap between the most and the least digital countries; see the table below:

Digital Economy and Society Index (DESI) 2018, Connectivity

Fixed broadband is available to 97% of Europeans, and 80% of European homes are covered by fast broadband (at least 30 Mbps); ultrafast connectivity with at least 100 Mbps is available to 58% of Europeans. Modern 4G mobile networks cover on average 91% of the EU’s population, measured as the average of each mobile telecom operator’s coverage within each country.

 

“Darker side” of digitalisation

The growing power of the largest internet platforms, and their incredible economic and even political influence, also leave me increasingly concerned. There are, of course, great promises of the digital world; but there as well created problems for national, regional economies, societies and democracy (when messages spread by online platforms and social media become a threat to democracy). This is why, in December 2020, the Commission launched the Digital Services/Digital Market Acts: this is the EU’s new framework for the digital market and society.

Democratic values haven’t yet become integral part of the “European DNA”: e.g. as to business, corporate models on online platforms not only were having a serious impact on free and fair competition; it also has an impact on social-democracies, on security and the quality of information. Probably the governance units in the states and the EU need to limit, by democratic means, the huge and currently largely unchecked political power of the internet giants. Decisions with extensive democratic consequences must not be taken by computer programs over which no human has control and which more than often sounds like “surveillance capitalism”. There is an urgent need to prevent large gatekeeper platforms from storing personally specific and sensitive data, and from using them for commercial purposes.

European business is based on innovation: companies are enthusiastic about the wonders of modern technology and new things: e.g. trying to bring their publications to the market in new, digital formats and test out what interests their readers. Every day the pandemic is showing how much digital applications can help people – from home schooling to the home office. The relentless rise of the large tech groups and their market value – soaring specifically during the crisis has led to an estimated loss of 255 million jobs worldwide during just one 2020.

Hence the EU decided to focus on digitalisation alongside climate protection in the post-Corona crisis recovery. Twenty percent of the money from NextGenerationEU recovery program will be spent on digital projects to support vibrant start-ups, to strengthen links between universities and research institutions or to build a special European cloud.

To remedy the situation, Commission made three suggestions: first, under the Digital Services Act, the large internet platforms, in other words those with more than 45 million users in the EU, have specific obligations. For example, in the future they will have to give their users the option of preventing recommendations of further content that are based on profiling, i.e. the systematic analysis of their data by computer programs.

Second, the EU is reinforcing the provisions of General Data Protection Regulation. Although it entered into force only in 2018, in no time at all the GDPR has become a model for large parts of the world; this also disproves common assertion that Europe almost always reacts too late. On the contrary, this time the EU has set standards early with the GDPR. In future, the Digital Markets Act will be used to prohibit the large internet platforms from automatically combining into a single profile their users’ personal data collected from their main platform with additional data from other services. In this way, the EU intends to ensure that competition remains fair.

Third, in consultations with the member states during 2021, the Commission also proposed to secure European identity and thereby provide citizens with an alternative way of navigating the internet without reservations, whether paying taxes, enroll in university or hire an electric car.

Source: https://ec.europa.eu/commission/presscorner/detail/en/AC_21_301

 

Business technology

Increasing modern technologies greatly affect both numerous spheres of socio-economic development and provide for fundamental changes in corporate activities, e.g. on the ways the companies are organised, function and survive not only in critical times but in the distant future too. These issues are often connected to a new trend commonly called “business technology”.

Besides, the digital “intervention” is transforming the essence of entrepreneurship and the corporate responsibility: never before in the corporate history have contemporary technological changes have had such a dramatic effect on modern corporate management and administration.

Various EU states are using their own national strategies; however the EU institutions are “holding a corrective arm” in integration development pattern into the European integration model: the latter is also subject to transformations, e.g. from the “united in diversity” to the “ever closer union”.

More in: https://www.integrin.dk/2020/12/23/modern-trends-in-the-eus-integration-rebuilding-and-transforming-member-states-economies/

 

Hence, the Commission’s “white paper” on the future of Europe (2017) envisaged both the “general paths” for the regional integration and provided guidelines for research and innovation in the states.

Main European directions in science, innovation and research (R&I) include the following four main principles are recommended: from initiatives to new technologies and from innovations to solutions; besides, they are concentrated on the following directions:

= new technologies and business models, which could make digital economy/society more inclusive (generally, by using collaborative solutions to reduce inequality);

= innovations, that could empower people to fully participate in digital agenda and gain from employment;

= initiatives that support active labour market and crating appropriate skills to shape knowledge economy through creativity;

= solutions to protect and support low wage/skilled workers in the evolving labour market.

More in:

https://ec.europa.eu/commission/white-paper-future-europe-reflections-and-scenarios-eu27_en

 

It is highly important for the national “governing block” to realize that national science policy is a vital component of a perspective growth strategy. To reach the objective of high peoples’ well-being some fundamental structural reforms ensuring country’s competitiveness are needed, raising productivity, boosting employment and investments. For example, the labour market is already under severe stress threatened by new skills and digital solutions: R&I is becoming crucial to boosting growth and jobs, addressing global and European challenges and increasing wellbeing. 

The EU and EIB provide guarantees’ support with loans: e.g. the EIF is offering the dedicated EFSI-backed guarantees to contain the impact of the pandemic on SMEs and small mid-cap companies. Commission and European Investment Fund (part of EIB Group) managed in 2020 to provide about one billion euros in financial guarantees for 100 thousand SMEs in the member states; it is to be done through various guarantee’s schemes and would facilitate liquidity in the amount of about €8 bn to support businesses. Present actions fulfill the Commission’s commitment made in March 2020 to bring immediate relief to hard-hit SMEs, with money able to flow already in April, as a part of the measures designed to rapidly mobilize support for Europe’s SMEs and mid-caps.

Reference to: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_459

It should also be reminded to EU citizens that contrary to some people’s perception, European integration does not cost much: barely the price of a coffee per day/ per inhabitant.

 

  1. The role of state in modern entrepreneurship (politics, education, training, etc.)

Any national strategy, as well as that of the whole EU, needs a long-term vision and perspective: hence the role of state (or, in modern terms, the governance) has to be oriented on European/global challenges and include available nationally natural and human resources. Thus, the governance shall reveal the publicly adopted political ideas, define the time table for most vital trends in national growth (and having the courage to carry out the promises), and use modern sciences’ achievements in formulating short- and –long-term priorities, etc.

Global/European/national trends are constantly interchanging: thus, the so-called “global value chains” (gvcs) entered into business technology after the process of globalisation started. Another direction is gaining momentum, called regionalisation, and based on specific socio-economic development patterns used in a number of sub-regional politico-economic blocks. The former suggests that the leading global powers dominate in gvcs and trade rules; the latter –on national economies’ competing abilities and cooperation in resources and workforce.     

As to education and training in modern entrepreneurship: no doubt, innovative approach is important; at the same time modern online trends in corporate activities (instigated by the COVID-19 aftermath) have shown that all sectors of entrepreneurship are subject to “digital technologies”. In short, the whole entrepreneurship has turned into a “business technology”, including education and training.  

The role of “new business and governance” is being so attractive in European educational community, that the European University Institute in Florence has started recently a “School of Transitional Governance”.   

 

Youth’s career aspirations, the “future of work” and dream jobs

Almost every day, teenagers make important decisions that are relevant to their future.

The time and energy they dedicate to learning and the fields of study where they place their greatest efforts profoundly shape the opportunities they will have throughout their lives.

A key source of motivation for students to study hard is to realize their dreams for work and life. 

As to teaching, another important aspect in business technology (BT’s) implementation represents corresponding aspects in perspective growth schemes.

Thus building upon already existing business’s education disciplines, such as “management information systems, MIS” and “technology and innovation management, TIM”, etc., the BT education and training seeks to provide an integrated framework for the strategic use of technology and the digital transformation of organizations, for example, changing entrepreneurial thinking and establishing new types of online undertakings, etc. However, the BT courses are supposed to involve similarly important disciplines in business education and research areas, e.g. professional disciplines like “changing management, CM”; “management consultancy, MC”; “organizational behavior in companies, OB”; as well as derivations from strategic management (SM), and operation management (OM).

Source: https://issuu.com/oecd.publishing/docs/dream_jobs_teenagers__career_aspirations_and_the_f  

 

National development plans shall reflect the country’s commitment to achieving the 2030 Sustainable Development Goals (SDGs) agreed by the United Nations at the end of 2015. The 17 SDGs are addressing the environmental, economic, and social challenges: all states need to tackle by 2030 into the national planning to ensure a sustainable future. For example, the SDG-13 calls on countries to “take urgent action to combat climate change and its impacts”, e.g. by improving public awareness of the need for climate action.

 

Innovative business

Innovative approach to developing business initiatives is a rather recent trend presently concentrated in the European Innovation and Networks Executive Agency, INEAthe successor of the Trans-European Transport Network Executive Agency (TEN-TEA); the latter was created in 2006 to manage technical and financial solutions in transport. However, some concerted actions appeared in the INEA only in 2014; presently it is implementing the following EU programs: Connecting Europe Facility (CEF), as part of Horizon 2020 (including smart, green and integrated transport, plus secure, clean and efficient energy), and other transportation programs from previous years, such as TEN-T and Marco Polo active during 2007-13.

INEA’s main objective is still to increase the management efficiency of the technical and financial aspects in the EU numerous transportation programs. 

More on the INEA’s web site: https://ec.europa.eu/inea/

 

National governance shall analyse the use of various “connected devices”, commonly known as the internet of things (IoT), have been already expanding exponentially around the world: they work in numerous forms and platforms, e.g. from smart building technologies that monitor and manage energy usage to connected vehicles that help anticipate and avoid potential collisions, to name a few. By 2025, the number of IoT devices is projected to exceed 40 billion, fuelled by continued technological advances and the plummeting costs of computing, storage and connectivity. Scaling up the next generation of policies and protocols help to accelerate the IoT’s societal benefits and mitigating the risks of connected devices in all socio-economic spheres including public and private sectors, consumers and enterprises.

 

  1. Assisting business: the role of science and technology

During, and in particular through post-covid crisis, unprecedented approaches and specific decision-making in all spheres of national socio-economic growth are to be taken. Through a number of fundamental reforms in governance and business, the scientific community is the only valuable resource in the EU and in the s tates to help the governments in formulating optimal answers to new visions in changing policies, governing structures, businesses and education. The role of science, research and innovation is becoming even more important due to the fact that modern corporate activities both in production and servicers will in greater extent depend on new achievements in science and technology.  

SMEs are the backbone of the member states’ economies: they represent over 95 percent of all entrepreneurship’s activities (about two-thirds of the total employment in the private sector) and create about 85 per cent of new jobs. However, recently SMEs have been under severe stress; besides, most of them are “turning digital” – the process entails several problems to be resolved.

The EU and most of the states consider SMEs (and entrepreneurship, in general) as a key to ensuring economic growth, innovation, job creation, and social stability. However, several global challenges have been constantly breaking the spirit of certainty, hope and trust among entrepreneurs. In particular, during and after the epidemic tackling these issues would be vital obligations for the national governance.    

More on SMEs in: https://ec.europa.eu/growth/smes/business-friendly-environment/sme-definition_en

European efforts to support SMEs in dealing with the pandemic crisis are taking various forms with the following general approaches in stimulating the “spirit of entrepreneurship’ in the states:

= Creating business friendly environment. According to the ideas of the “Small Business Act for Europe” (so-called SBA), which included a comprehensive guide the SME policy in the member states, the EU promotes the “think small first” principle and entrepreneurial spirit in the states’ governance. Among other SBA’s priorities are: less regulatory burden for SMEs, better access to finance, radical assistance in entering global markets, etc. 

More on “Small Business Act” in:

 https://ec.europa.eu/growth/smes/business-friendly-environment/small-business-act_en

 

= Promoting entrepreneurship. In line with the proposals in the EU’s Entrepreneurship Action Plan, the member states acquire support for entrepreneurship education and creating additional tools to aspire SMEs and entrepreneurs.

More on promoting entrepreneurship in:

https://ec.europa.eu/growth/smes/business-friendly-environment_en

 

= Improving access to new markets. The EU efforts are to ensure that enterprises in the states can work in a business friendly environment and make the most out of cross border activities, both within the EU Single Market and outside the EU. However, only about 25% of the EU-based SMEs (or about 5 million companies) presently are involved in export activities and even smaller portion of them export beyond the European region. Therefore, the Commission aims to help SMEs “facing” competition, access foreign markets and find new business partners abroad; going international increases SMEs’ performance, enhances competitiveness, and reinforces sustainable growth. With this in mind, the Commission has created a special “business portal”, which includes a practical guide to “doing business in Europe” and supplying entrepreneurs with information and interactive services that help them expand business abroad.

More on “Your Europe Business Portal” in: https://europa.eu/youreurope/business/index_en.htm

More on SME internationalization in: https://ec.europa.eu/growth/smes/access-to-markets_en

 

= Facilitating access to finance. The issue has become the most pressing for SMEs; numerous EU institutions are working on improving their financing situations by providing information on available funding opportunities: for example, the “Late Payment Directive” strengthens businesses’ rights to prompt payment. Presently, the following financial instruments are used to mitigate SMEs problems: loans and guarantees, venture capital, business angels, growth stock markets, crowd funding and fintech/blockchain.

More on access to finance in: https://ec.europa.eu/growth/access-to-finance_en

 

= Supporting SMEs through competitiveness and innovation. This line of activity represents one of the key aspects of the EU’s policy in relation to industry and enterprise, in particular for SMEs. More on industrial competitiveness in: https://ec.europa.eu/growth/industry_en#competitiveness; on general start-up information in: https://startupeuropeclub.eu/guide/?box=startup; on innovation in: https://ec.europa.eu/growth/industry/policy/innovation_en  

 

Note: Additional information on European support networks SMEs are in the following web links: the Your Europe Business Portal (contains a practical guide to doing business in Europe, providing entrepreneurs with information and interactive services that help them expand their business abroad); the Enterprise Europe Network (it helps SMEs and entrepreneurs in access to market information, overcoming legal obstacles, and finding potential business partners across Europe); the SME Internationalisation support web-page providing information on foreign markets and helping European SMEs in internationalizing activities; and the EU portal on Access to Finance, which helps SMEs finding financial supported from the EU sources.

 

European “science policy’s guidance” is divided between numerous EU institutions and the member states through the so-called “shared division of competence”: the EU provides guidance and funding, the states implement perspective research & innovation (R&I) achievements. Therefore, it is important that the states’ growth programs are intervened into the European “scientific environment” based on common EU research efforts. As to the EU’s financial assistance, the next seven years’ budget up to 2024 includes “maximizing the impact of EU research and innovation in the member states progressive development”; e.g. the EU’s post-2020 budget for R&I has been significantly increased. As soon as most countries lack adequate financial recourses, some serious analysis shall be undertaken to prioritise limited funding along the most vital for national competitiveness’ directions in growth. Some new R&I directions have already appeared in the EU: e.g. “human brain project”, which provides additional understanding of the human brain and its diseases, as well as perspective directions in graphene and quantum research. But the member states have to figure out their own specific and progressive R&I spheres corresponding to the existing national needs and priorities.

Perspective roles of R&I in entrepreneurship posed some questions: how to capitalize on the results already achieved for SMEs’ use in a rapidly evolving innovation dynamics; how to best seize the existing R&I opportunities in creating solutions for the strategic national issues; what is the R&I role in the national strategic growth patterns; and how can R&I facilitate every-day’s life in the countries?

 

Another dimension in “integrating digital technology into businesses and development” is constantly increasing: the process includes increased use of business software for electronic information sharing, sending electronic invoices (almost twice for five years) or using social media to engage with customers and partners; this trend is most advanced in Denmark, Finland and Ireland.

E-commerce by SMEs is also growing; however, less than half of the European companies are trading online, i.e. selling to another EU state while the majority operates only trade within their own countries. In 3 Baltic States the situation in Lithuania is much better (with about 50%) than in Estonia with about 40% and Latvia with less than 30%. 

 The “digital public services” dimension is measuring the digitisation of public services, focusing on e-government and e-health. Modernisation and digitisation of public services can lead to efficiency gains for the public administration, citizens and businesses. The European champions in the “digital public services” are Finland, Estonia and Denmark.

Finally, some rather sophisticated BT’s definitions can be mentioned, which include, generally, management (i.e. business technology management, BTM) as an emerging trans-disciplinary research area and professional discipline in business administration. Building upon other business disciplines, such as management information systems and technology/innovation management, this definition seeks to provide an integrated framework for the strategic use of technology and the digital transformation of organizations. True, the BTM is evolving along all other research areas in business: e.g. professional disciplines of change-management and management consulting, organizational behavior, strategic and operations management.  

Source: https://en.wikipedia.org/wiki/Business_Technology_Management 

 

It has been an acknowledged fact that any modern and successful company is to rely on technology achievements. The present stage of digital technology transformation (so-called 4th industrial revolution) is already changing both the peoples’ skills and jobs and the ways the existing (and quickly modernising) hardware/software facilities are transforming business management and outcomes. Therefore, business technology (BT) means, in part, maintaining corporate software systems, managing the storage of data and/or ensuring that the workforce in SMEs has the right and secure ICT devices.

References to:

https://www.futurelearn.com/subjects/it-and-computer-science-courses/business-technology

Conclusion

Governments have a unique chance for a green and inclusive recovery that would not only secure growth, income and jobs, but also reach broader well-being goals, i.e. integrating climate and biodiversity action, sustainability and resilience. Therefore, stimulus packages provided by the EU need to be aligned with these strategic policies: only such an approach can deliver a win-win-win solution out of the crisis. In formulating policies to “re-start economies” the governing institutions have to see one of the vital political-economy’s components: the role of SMEs in progressive growth and well being.

The SMEs can assist the countries’ perspective growth in numerous ways, e.g. in resolving low-carbon recovery, in building new infrastructures based on reduced use of fossil fuels. From the government’s side access to low-cost financing and flexibility on incentive measures such as tax credits should be preserved for SMEs in renewable energy, circular economy and sustainability. Signals from carbon prices, emission standards, environmental taxes and other European regulations need to be maintained to provide more certainty and long-term stability for low-carbon activities, investments and innovation. The support provided to SMEs shall be increasingly accompanied both by the stronger environmental standards (e.g. for clean air and water) and greater incentives in their welfare activities (e.g. public health and happiness).

Source: OECD General Secretary’s appeal to nations in: http://www.oecd.org/coronavirus/en/

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