The ups and downs of Greek start-ups

A new survey has found that the image of the imaginative and persisting Greek businessman is not a totally unscientific stereotype, showing Greeks to have great start-up skills. At the same time, however, the study illustrates that Greeks’ performance in key areas that business growth depends on leaves a lot to be desired. According to the Global Entrepreneurship Index 2015, Greece’s young entrepreneurs enjoy scant cultural support, they are reluctant to take risks, and their chances of fast-paced growth are slim.

“Greece appears to exhibit both outstanding strengths and notable bottlenecks,” said the report, which was published by the Global Entrepreneurship and Development Institute (GEDI Institute), a nonprofit organization.

Greeks’ most outstanding strength according to the survey, which evaluates entrepreneurship around the world on the basis of 14 institutional variables, is start-up skills. This means that young Greek entrepreneurs have good qualifications, fresh ideas and determination, Costas Iliopoulos, director of the Agricultural Economics and Policy Research Institute (AGRERI), explained to Kathimerini.

The country is also above the European average in terms of human capital. “There is this generation of people who grew up during the years of prosperity. Many of them studied at good foreign universities and acquired a high level of education and skills which are now going to waste,” Iliopoulos said.

The study also shows Greeks doing well in technology absorption, which is a measure of a country’s capacity for firm-level technology absorption, as well as in internationalization, a factor that measures a business’s exporting potential.

Greeks’ performance in these two areas appears to be in contrast to most people’s experience of local businesses, which generally seem averse to modernization. But one must take into consideration that the survey is about new, innovative businesses and not traditional ones such as the local corner-shop. A modern firm can be based anywhere that suits it and can expand its activities as much and anywhere it wants.

In addition, high-technology or IT start-ups can these days apply for financing from European or international programs regardless of where they are based, which explains why leading Greek businesses feature in the European average in terms of financing.

Greece scores below average in the high-growth indicator. This is a combined measure of the high-growth businesses that intend to employ at least 10 people and plan to grow more than 50 percent in five years with business strategy sophistication.

Risk acceptance is also low, the study found. In Greece, people tend to avoid entrepreneurship because there is no support network in the event of failure, Iliopoulos explains. “In Greece a failed businessman loses everything. In contrast, in other countries there is support for those who fail. This failing effectively puts those who are not traditional entrepreneurs off giving it a try.”

Cultural support – a combined measure of how a country’s inhabitants view entrepreneurs in terms of status and career choice, and how the level of corruption affects this perception – to young entrepreneurs is low. “In this country profit – and by extension businesspeople – has a bad name. It’s as if they are a bunch of immoral people who are exploiting others in order to make profit,” Iliopoulos said.

Perhaps the biggest problem dogging local entrepreneurs, the report said, is the country’s notorious bureaucracy, which constitutes a real hindrance to its entrepreneurial potential.

“While much has been done to address this constraint and move economic activity out of the gray to the formal economy, Greece still has much to do in terms of harnessing its entrepreneurial potential to boost economic growth,” it said.

“Greece could draw inspiration from Iceland and Ireland, both of which were hard hit by the economic downturn but have emerged from the recession and embarked on a steady growth path,” it said.

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