Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Action Plan: The European agenda for Entrepreneurship
Date: 2004-02-11
Institutions: European Commission
Subjects: EU programme, aid to undertakings, business start-up, entrepreneurship

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.02.2004 
COM(2004) 70 final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PARLIAMENT, 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

Action Plan: The European agenda for Entrepreneurship 

EN 

   EN 

 
 
 
TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

4. 

5. 

Europe’s entrepreneurial challenge.............................................................................. 3 

A Europe-wide debate on boosting entrepreneurship .................................................. 5 

Five strategic policy areas............................................................................................ 6 

Fuelling entrepreneurial mindsets ................................................................................ 7 

Encouraging more people to become entrepreneurs .................................................... 8 

Gearing entrepreneurs for growth and competitiveness............................................. 10 

Improving the flow of finance.................................................................................... 13 

Creating a more SME-friendly regulatory and administrative framework ................ 14 

The Commission’s next steps to realise the entrepreneurship agenda....................... 16 

Concrete results for Europe’s Entrepreneurs ............................................................. 17 

ANNEX I - PROPOSALS FOR KEY ACTIONS FOR 2006 AND BEYOND............................................. 19 

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1. 

EUROPE’S ENTREPRENEURIAL CHALLENGE 

Entrepreneurship is a major driver of innovation, competitiveness and growth. Due 
to  their  strong  presence  in  key  sectors  such  as  services  and  knowledge-based 
activities,  smaller  enterprises  and  entrepreneurs  today  play  a  central  role  in  the  EU 
economy. A positive and robust correlation between entrepreneurship and economic 
performance  has  been  found  in  terms  of  growth,  firm  survival,  innovation, 
employment creation, technological change, productivity increases and exports.1 But 
entrepreneurship  brings  more  than  that  to  our  societies.  It  is  also  a  vehicle  for 
personal  development  and  can  harness  social  cohesion  when  the  opportunity  of 
creating  one’s  own  business  is  offered  to  everybody,  regardless  of  background  or 
location.2 

The European Union (EU) is committed to boosting entrepreneurship as part of its 
strategy3  to  transform  its  economy  and  build  its  future  economic  and  competitive 
strength.  The  Council  called  for  action  in  favour  of  small  enterprises  and 
entrepreneurship,  notably  by  adopting 
the  European  Charter  for  Small 
Enterprises4 in 2000. 

Yet despite action taken since then, the EU has so far not succeeded in narrowing the 
gap  in  GDP  per  capita  with  the  US;  in  fact,  the  productivity  gap  is  widening. 
Forward-looking  studies  indicate  that,  if  Europe  allows  current  economic  trends  to 
persist,  its  percentage  share  of  world  production  will  decline,  even  as  absolute 
production  increases,  in  particular  as  the  emerging  Asian  economies  catch  up.5 
Europe needs more entrepreneurship to strengthen its economic position. 

to  become  an  entrepreneur.  According 

The  EU  is  not  fully  exploiting  its  entrepreneurial  potential.  It  is  failing  to 
encourage  enough  people 
the 
Eurobarometer  although  47%  of  Europeans  say  they  prefer  self-employment,  only 
17% actually realise their ambitions. Regarding new entrepreneurial initiative,  only 
4% of Europeans state to be engaged in creating a business or to be an entrepreneur 
since  less  than  three  years  against  11%  in  the  US.6  And  whereas  29%  of  Europe’s 
SMEs declared growth as their main ambition,7 too few actually generate substantial 
growth. Europe, unlike the US, suffers from low expansion rates after start-up.8 And 
all of Europe’s largest firms at the end of the last decade were already large in 1960.9 
Whereas  US  entrepreneurs  appear  to  test  the  market  and,  if  successful,  expand 

to 

1 
2 
3 

4 

5 

6 
7 
8 

9 

‘Entrepreneurship: A survey of the Literature’, David B. Audretsch, October 2002. 
See also ‘Joint Report on Social Inclusion’ Council of the European Union, 15223/01, 12.12.2001. 
The EU strategy for structural reform of the economy was set at the Lisbon European Council in March 
2000 and confirmed by the Council at several European Council meetings until now. 
The ‘Charter for Small Enterprises’, adopted on 13.06.00 by the General Affairs Council, was endorsed 
at the Feira European Council on 19-20 June 2000. 
Commission  Staff  Working  Document  ‘European  Competitiveness  Report  2003’,  SEC  (2003)  1299, 
12.11.2003  and  ‘Le  commerce  mondial  au  XXI  siècle’,  Institut  français  des  relations  internationales, 
October 2002. 
Flash Eurobarometer 146 ‘Entrepreneurship’, October 2003 
‘SMEs in focus–Main results from the 2002 Observatory of European SMEs’ European Commission. 
‘The  role  of  policy  and  institutions  for  productivity  and  firm  dynamics:  Evidence  from  micro  and 
industry data’, working paper No 329, Stefano Scarpetta et. al., ECO/WKP (2002)15, 23.04.2002. 
‘White  Paper,  Embracing  innovation:  entrepreneurship  and  American  economic  growth’,  National 
Commission on Entrepreneurship, 2001. 

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rapidly,  many  business  ideas  in  Europe  never  come  to  market,  as  their  viability  is 
questioned before they can be tested in the market place. Indeed, the Eurobarometer 
showed  that  44%  of  Europeans  agreed  that  ‘one  should  not  start  a  business  when 
there was a risk of failure’ against 29% in the US. 

An ageing population is likely to aggravate the entrepreneurial gap,10 since the age 
group that is most active in setting up businesses (between 25-34 years)11 will shrink 
in  the  coming  decades.  Also,  an  estimated  one  third  of  EU  entrepreneurs,  mainly 
those  running  family  enterprises,  will  withdraw  within  the  next  ten  years,  which 
affects some 610 000 firms and 2.4 million jobs every year. As less and less transfers 
are taking place within the family, more family enterprises will need to be transferred 
to employees or third parties. Yet many Europeans prefer starting a firm rather than 
taking over one. Finding successors is thus becoming increasingly difficult.12 

To release its full entrepreneurial potential, the EU must take serious steps to make 
Europe more attractive for business activity. But this alone is not enough to fuel the 
entrepreneurial drive: a more entrepreneurial mindset is needed. This means actively 
promoting entrepreneurial values and addressing the fear of risk-taking among the 
widest possible audience of potential entrepreneurs. 

To help achieve this, the EU can exploit examples of good performance from within 
its  own  borders,  drawing  on  substantial  regional  diversity  in  wealth  and  business 
environment.  The  enlargement  will  not  only  enhance  the  range  of  economic 
performance, but also broaden the spectrum of entrepreneurial traditions and increase 
opportunities for exchange in an enlarged Europe. 

To  make  progress  on  the  entrepreneurship  agenda,  the  Commission  published  the 
Green  Paper  ‘Entrepreneurship  in  Europe’13  to  involve  the  largest  possible 
audience  of  stakeholders  in  setting  the  future  policy  agenda.  This  consultation 
provided  an  example  of  the  importance  that  the  Commission  attaches  to  upholding 
the dialogue with SMEs and their representatives. 

Based  on  extensive  research  data,  analysis,  surveys  and  policy  experiences,  the 
Green  Paper  raised  ten  questions  regarding  two  fundamental  issues  for  Europe: 
‘How  to  produce  more  entrepreneurs’  and  ‘How  to  get  more  firms  to  grow’?  As  a 
follow-up  to  the  Green  Paper,  the  Council  asked  the  Commission,  at  the  Brussels 
European Council in March 2003, to present an Entrepreneurship Action Plan at 
the 2004 Spring European Council. 

This Action Plan provides a strategic framework for boosting entrepreneurship, 
based  on  the  public  consultation  that  followed  the  publication  of  the  Green  Paper. 
This consultation generally supported the Commission’s ongoing activities but called 
for more effort in certain areas. Hence the Action Plan complements ongoing work, 

10 

11 
12 
13 

Europe’s  demographic  situation  will  change  dramatically.  Instead  of  one  person  of  65  and  older  for 
each four in the group 18-64, this proportion will change in 2040 to roughly one to two. The age group 
18-35 will shrink from more than a quarter to less than 20%, Eurostat projections. 
‘Global Entrepreneurship Monitor (GEM) 2002 Summary Report’, Reynolds, Bygrave, Autio and Hay. 
‘Final report of the expert group on the transfer of SMEs’, European Commission, May 2002. 
Green Paper ‘Entrepreneurship in Europe’, European Commission, COM (2003) 27 final, 21.01.2003. 

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notably  under  the  Multiannual  Programme  for  Enterprise  and  Entrepreneurship,14 
adopted by Council Decision 2000/819/EC without changing the objectives and the 
areas of action described in this Decision, through focused actions. 

2. 

A EUROPE-WIDE DEBATE ON BOOSTING ENTREPRENEURSHIP 

The public debate triggered by the Green Paper on Entrepreneurship stirred a great 
deal  of  interest  across  Europe  and  beyond.  Stakeholders  willingly  shared  their 
expertise, gleaned through their daily work with businesses or through research. The 
Green Paper was discussed at many events and 240 written responses were submitted 
by  both  individuals  and  organisations,  which  represented  a  large  number  of 
stakeholders, including national, regional and local public authorities, entrepreneurs, 
business organisations, support providers, universities and think tanks.15 

While confirming the main challenges in the Green Paper, respondents highlighted a 
wide  array  of  areas  for  action,  making  it  clear  that  there  is  no  silver  bullet  for 
creating  a  more  entrepreneurial  Europe.  Europe’s  untapped  potential  appears  to 
derive  from  a  complex  set  of  mutually  interacting  framework  conditions,  attitudes 
and skills. An overview of the main trends in responses received is provided below.  

The  prevailing  attitudes  towards  entrepreneurship  and  the  current  balance  of  the 
risks  and  rewards  appear  to  make  many  Europeans  less  inclined  to  become 
entrepreneurs. There also are fewer potential successors to take over the increasing 
number of businesses from entrepreneurs reaching retirement age. Entrepreneurship 
education  was  seen  as  an  important  way  to  create  more  entrepreneurial  mindsets 
among  young  people.  To  alleviate  the  burden  of  risk,  the  severe  consequences  of 
failure and the need to accept a lower degree of social security should be addressed. 
More  effort  was  requested  to  facilitate  business  transfers,  specifically  for  family 
enterprises. 

Finance  is  seen  an  increasingly  pressing  issue,  due  to  the  rising  rating  culture  and 
proposed  new  capital  adequacy  rules  for  banks  (Basel  II).16  Taxation  of  retained 
profits or private investment was seen as an obstacle to building equity and stronger 
balance  sheets,  which  are  needed  not  only  to  unlock  the  growth  potential  of  firms, 
but also to obtain cheaper finance. 

To  boost  performance,  respondents  mentioned  that  entrepreneurs  should  have 
access to quality and targeted support, mentoring and training. Clusters could provide 
an  impetus  to  growth,  Europe-wide  trade  and  internationalisation,  while  support  to 
encourage spin-offs and a more effective exchange between research and businesses 
could help foster innovation. 

14 

15 

16 

‘Multiannual  Programme  for  Enterprise  and  Entrepreneurship,  and  in  particular  for  Small  and 
Medium-Sized Enterprises (SMEs) (2001-2005)’, Council Decision (2000/819/EC) of 20.12.2000, OJ L 
333, 29/12/2000 p. 0084 - 0091. 
All  contributions  received  in  electronic  form  and  a  report  summarising  the  main  results  can  be 
consulted via the website http://europa.eu.int/comm/enterprise/entrepreneurship/green_paper/index.htm. 
Review  of  capital  requirements  for  banks  and  investment  firms,  further  information  in  ‘Commission 
Services Third Consultation Paper’, working document, 01.07.2003. 

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Frequently  mentioned  were  administrative  and  regulatory  burdens,  especially 
complying  with  tax  and  employment  requirements,  which  is  complex,  time-
consuming and costly. To create a better administrative and regulatory environment, 
policy-makers  should  maintain  a  dialogue  with  SMEs  and  their  representatives. 
Furthermore,  on  the  basis  of  respondents’  reactions  it  could  be  established  that 
regarding SMEs’ access to public contracts there is still room for improvement and 
that  challenges  for  the  Internal  Market  and  the  structure  of  the  State  aid  regime 
still exist. 

Many  respondents  subscribed  to  the  Green  Paper’s  choice  of  a  co-ordinated 
approach. Respondents asked to reinforce the open method of co-ordination17 by a 
more systematic follow-up of the recommendations given and their implementation 
by the Member States. To take account of the differing challenges and needs across 
the EU, co-ordination should not only involve national governments, but also more 
often  the  regions,  which  play  a  vital  role  in  providing  infrastructure,  networks  and 
support  tailored  to  the  specific  needs  of  entrepreneurs  within  their  regions.  Co-
ordination is also necessary among all policy-makers working in different areas that 
affect entrepreneurship, such as research, innovation, taxation or employment. 

3. 

FIVE STRATEGIC POLICY AREAS 

On  the  basis  of  the  public  consultation,  the  Action  Plan  aims  to  encourage  more 
people to start businesses and to help entrepreneurs thrive by helping them to fully 
realise their ambitions and by providing an enabling business climate. To further the 
entrepreneurship  agenda,  the  Commission  will  act  in  five  strategic  policy  areas18 
that  the  respondents  to  the  Green  Paper  identified  as  being  crucial  for  boosting  the 
current entrepreneurial dynamism in the EU. 

–  Fuelling entrepreneurial mindsets 

–  Encouraging more people to become entrepreneurs 

–  Gearing entrepreneurs for growth and competitiveness 

–  Improving the flow of finance 

–  Creating a more SME-friendly regulatory and administrative framework 

To  advance  the  entrepreneurship  agenda,  the  EU  is  faced  with  a  double  challenge: 
Co-ordination and focus are needed to create synergy and allow real progress. Yet 
policy  should  take  account  of  the  differing  needs  of  entrepreneurs,  who  run 
businesses  ranging  from  university  spin-outs  to  family-owned  SMEs  to  social 
enterprises.  And  countries  and  regions  each  have  a  unique  mix  of  strength  and 
weaknesses affecting their entrepreneurial culture and business environment. 

17 

18 

Under this method, the Commission provides a platform to the Member States to set indicators, targets 
and  benchmarks  and  to  collect  good  practices  in  policy  areas  of  common  interest  to  allow  them  to 
improve their own policies. 
Without prejudice to the objectives and areas of action as set in the Multiannual Programme, Council 
Decision 2000/819/EC. 

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To achieve the best results, the Commission cannot and should not act alone. Success 
involvement  of  Member  States  and  business 
depends  critically  on  active 
organisations.  To  properly  respond  to  the  differing  entrepreneurial  challenges,  the 
Commission therefore calls upon the Member States and business organisations to 
take  the  necessary  action  in  the  five  strategic  areas  within  their  competence,  at  the 
best suited, national or regional level, thereby addressing their specific needs. 

In support of Member States’ national and regional strategies, the Commission will, 
under  the  open  method  of  co-ordination,  assist  policy-makers  to  benchmark 
performance and to exchange policy practices in relevant areas for action. 

The  commitment  of  the  business  community  is  a  prerequisite  for  successful 
entrepreneurship  policy.  By  way  of  example,  considering  the  needs  of  SMEs  in 
policy-making  can  only  work  with  the  active  involvement  of  businesses  and  their 
representatives,  while  business  organisations  can  play  an  intermediary  role  in 
bank/business  relations.  Entrepreneurs  learn  best  from  each  other (as  mentors  or  in 
networks),  so  their  role  in  promotional  and  educational  activities  is  of  the  utmost 
importance in creating entrepreneurial mindsets. 

The Action  Plan gives  priority to  a focused set of key actions19, to be launched in 
2004  and  2005,  which  are  addressed  to  both  the  Commission  and,  under  the  open 
method  of  co-ordination,  national  and  regional  policy-makers.  New  actions  to  be 
launched as from 2006 will be defined on the basis of their ability to add value and 
the emphasis given in the public debate; a list of proposals is appended in Annex I. 

3.1. 

Fuelling entrepreneurial mindsets 

The public consultation emphasised the need for better appreciation of entrepreneurs 
and greater awareness of a career as an entrepreneur. The Commission will, together 
the  open  method  of  co-ordination,  promote 
with  Member  States  under 
the  responsible 
entrepreneurship,  presenting  role  models  and  highlighting 
behaviour  of  many  entrepreneurs  who  respect  both  today’s  and  the  future  needs  of 
our  societies.  To  allow  everyone  to  seize  opportunities  that  match  their  skills  and 
ambitions,  promotional  activities  should  present  different  ways  of  being  an 
entrepreneur  (e.g.  expansion-driven,  craft,  part-time  or  co-operative  entrepreneur) 
and focus on different target groups. 

The  Commission  already  supports  the  organisation  of  entrepreneurship  events  in  a 
number  of  EU  cities.20  To  foster  entrepreneurial  attitudes  and  skills  among  young 
people, the Commission will continue to promote entrepreneurship education. 

Entrepreneurship  education  in  universities  should  be  available  for  students  and 
researchers  from  all  fields,  notably  in  technical  universities.  Matching  scientific 
potential  with  entrepreneurial  skills  will  contribute  to  better  commercialisation  of 
research results through spin-offs and more start-ups in knowledge-based sectors.21 

19 

20 

21 

Without prejudice to the objectives and areas of action as set in the Multiannual Programme, Council 
Decision 2000/819/EC. 
The Commission’s PAXIS network and Eurocities initiated a pilot project to organise the European Day 
of the Entrepreneur (www.entrepreneurday.org). 
The Commission will announce further initiatives on entrepreneurial innovation later in 2004. 

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Key action: Fostering entrepreneurial mindsets among young people 

Under  the  open  method  of  co-ordination,  the  Commission  and  external  experts 
reviewed the policy approaches to entrepreneurship education in the EU.22 Promising 
results showed that entrepreneurship is gaining importance in education programmes 
and  that  many  policy  initiatives  are  underway.  Work  will  now  concentrate  on 
exchanging  experience  on  valuable  policy  tools  and  on  ensuring  high  quality 
entrepreneurship education for all pupils throughout the EU. 

In  2004  the  Commission  will  organise  a  benchmarking  exercise  under  the  open 
method  of  co-ordination  around  the  use  of  mini-companies  (student  enterprises 
producing and selling real products or services in a protected environment). In 2005 
the  Commission,  together  with  a  group  of  experts  will  present  success  and  risk 
factors,  policy  targets,  recommendations  and  promotion  material  (success  stories, 
examples of good practice) based on case studies and evaluations. 

To  ensure  that  all  pupils  leaving  the  education  system  have  had  access  to 
entrepreneurship courses, the Commission calls upon the Member States to integrate 
entrepreneurship  education  into  all  schools’  curricula  and  provide  schools  with 
proper  support  to  allow  them  to  put  in  place  effective  and  high  quality  education 
schemes.  National  and  regional  authorities  can  arrange  awareness  campaigns,  offer 
training material, organise training modules for teachers and, together with business 
organisations, involve entrepreneurs in teaching programmes. 

The  results  of  the  Commission’s  work  in  entrepreneurship  education,  in  terms  of 
objectives  and  areas  where  more  support  is  needed,  will  be  taken  on  board  when 
preparing and implementing EU training, education and youth programmes. 

3.2. 

Encouraging more people to become entrepreneurs 

Notwithstanding wide agreement that risk is intrinsically linked to entrepreneurship, 
to encourage more people to become entrepreneurs, respondents to the Green Paper 
called not only for the possibility to register a business quickly and cheaply, but also 
for a fairer balance between the risk taken and the potential rewards. 

In recent years, significant work has been done at EU level and within the Member 
States to facilitate the administration of business start-ups.23 To alleviate the burden 
of  risk,  the  Commission  will,  together  with  the  Member  States  under  the  open 
method of co-ordination, continue to tackle the negative effects of business failure 
and will start examining the options for entrepreneurs to ensure against personal risks 
in social security schemes. 

Becoming an entrepreneur with a reduced risk of failure is possible, by taking over 
an established firm rather than building an enterprise from scratch. Research showed 
that  in  Austria  96%  of  business  transfers  survive  the  first  five  years  after  the 
transfer in comparison with 75% of start-ups.24 After its efforts to help the Member 

22 

23 
24 

‘Best  Procedure  project  on  Education  and  training  for  entrepreneurship’,  European  Commission, 
November  2002  and  ‘Making  progress  in  promoting  entrepreneurial  attitudes  and  skills  through 
Primary and Secondary education’ (forthcoming). 
‘Benchmarking the administration of business start-ups’, European Commission, January 2002. 
‘Business transfers and successions in Austria’, Austrian Institute for Small Business Research, 2002. 

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States  implement  the  1994  Recommendation  on  facilitating  business  transfers  of 
SMEs,25  the  Commission  will  increasingly  focus  on  promoting  awareness  of  the 
possibility of becoming an entrepreneur in this way. 

In  view  of  changing  demands  within  society,  because  of  the  ageing  of  the 
population  and  consumer  expectations  regarding  the  behaviour  of  firms,  new 
demands  are  arising  in  areas  such  as  health  care,  mobility  or  the  environment.  As 
these sectors are close to or within the public domain, the public sector can be client 
or competitor. Social economy enterprises26 already provide examples of delivering 
services  in  sectors  alternative  to  or  complementing  the  public  sector.  The 
Commission  will,  together  with  the  Member  States  under  the  open  method  of  co-
ordination,  address  barriers  to  the  development  of  both  commercially-driven  and 
non-profit  enterprises  in  these  sectors.  In  preparation  for  future  action,  the 
Commission is currently analysing the role of social enterprises. 

Key action: Reducing the stigma of failure 

Failed entrepreneurs are confronted with the stigma of failure, for example through a 
reluctance  to  place  orders  or  requests  for  extra  financial  guarantees.  Better 
understanding  of  business  failure,  including  distinguishing  between  honest  and 
dishonest  bankruptcies,  is  needed  in  order  to  tackle  the  stigma  of  failure.  A 
benchmarking  exercise  in  2003,  involving  the  Commission  and  external  experts, 
provided targets, indicators and recommendations to limit the severe legal and social 
consequences of failure.27 

In the progress reports on the Action Plan, the Commission will ask Member States 
to  report  on  action  taken  or  planned  to  comply  with  the  recommendations.  The 
Commission then will revisit this work if needed. 

To  promote  a  better  understanding  of  failure  and  dissociate  the  concept  of 
‘bankruptcy’  from  that  of  ‘bad’  behaviour,  the  Commission  will,  together  with 
Member  States’  experts,  draw  up  in  2004  information  on  the  principles  of 
bankruptcy, early warning signs of financial difficulties, reasons for failure, barriers 
to starting afresh and portraits of failed and restarted entrepreneurs. This information, 
to  be  used  in  promotional  campaigns  or  teaching  courses,  should  result  in  wider 
acceptance of failure and help reduce reluctance to deal with failed entrepreneurs. 

To  help  entrepreneurs  in  financial  problems  overcome  their  fear  of  disclosing 
problems  and  seek  help  in  time,  the  Commission  will,  together  with  the  Member 
States  under  the  open  method  of  co-ordination,  focus  on  facilitating  exchange  of 
experience on awareness and use of preventive measures. By 2005, the Commission 
will  have  drawn  up,  together  with  an  expert  group,  self-evaluation  tests  for 

25 

26 

27 

In follow-up to the ‘Commission Recommendation of 07.12.94 on the transfer of SMEs’, 94/1069/EC, 
OJ L 385, p. 14-17, 31.12.1994, the Commission presented in 2002 and 2003 reports on experts’ views 
on the measures needed to improve the environment for business transfers and to speed up the Member 
States’ implementation of the Recommendation. 
Social  economy  enterprises  include  co-operatives,  mutuals,  associations  and  foundations  and  act  in 
circumstances that ‘investor-driven’ firms would find less lucrative. 
‘Study:  Bankruptcy  and  a  fresh  start’,  July  2002  and  ‘Final  report  of  the  expert  group  on  the  Best 
Project on Restructuring, bankruptcy and a fresh start’, September 2003, European Commission. 

9 

 
 
  
 
                                                 
entrepreneurs  to  assess  their  financial  condition,  including  information  on  existing 
support and procedures aimed at rescue from failure. 

Key action: Facilitating business transfers 

The  radical  increase  in  expected  business  transfers  in  the  coming  years  will 
particularly affect the numerous family businesses, which form a key part of the EU 
business community. The EU should avoid a situation where such enterprises close 
not because of a lack of competitiveness, but merely because of obstacles in the tax 
and legal environment or the lack of a successor. 

The  Commission  will  continue  to  help  national  and  regional  policy-makers  to 
facilitate  business  transfers,  mainly  with  a  view  to  ensuring  the  continuity  of  the 
many  viable  family  enterprises  in  the  EU.  The  Commission  will  keep  spurring  the 
Member  States  to  implement  the  Recommendation  on  Business  Transfers  and  will 
step  up  efforts  to  raise  awareness  among  prospective  entrepreneurs  for  business 
transfers.  This  may  include,  for  example,  providing  assistance  to  national  and 
regional  policy-makers  in  promoting  marketplaces  for  buyers  and  sellers  of 
businesses.  More  specific  actions  will  be  announced 
the  forthcoming 
Communication on Business Transfers in 2004. 

in 

Key action: Reviewing social security schemes for entrepreneurs 

The Commission will present by 2005 an overview of social security schemes for the 
self-employed  and  business  owners,  including  their  spouses  and  other  dependants, 
and  the  effects  of  transition  from  one  statute  to  another.  This  will  include  health 
insurance,  income  guarantees  in  case  of  inability  to  work  or  ceased  activities, 
pension  rights  (compared  to  employees’  schemes),  take-up  of  voluntary  schemes, 
undue losses for new entrepreneurs of rights acquired in another career and specific 
schemes  for  starting  entrepreneurs.  This  will  allow  it  to  quantify  the  overall 
downside  risk  associated  with  entrepreneurship  and  determine  more  precisely  the 
influence of social security on preferences for entrepreneurship. 

Based  on  this,  the  Commission  will  ask  the  Member  States  in  2005  to  define  the 
areas  in  which  they  intend  to  take  action.  The  Commission  will  then  organise  an 
exchange of experience involving external experts about how best to make progress. 
This  work  will  result  in  identification  of  good  practice  cases  to  help  the  Member 
States in adapting their schemes to the extent needed. 

3.3. 

Gearing entrepreneurs for growth and competitiveness 

Prompted  by  requests  from  respondents  to  the  Green  Paper  for  high  quality  and 
client-oriented support services, the Commission will keep promoting access to top-
class  support  and  management  training  for  entrepreneurs  from  all  backgrounds, 
including  groups  with  specific  needs  such  as  women  and  entrepreneurs  from 
ethnic  minorities.  The  Commission  will  also  promote  access  to  support  for 
entrepreneurs from all backgrounds and in regions with low entrepreneurial 

10 

 
 
  
 
performance through the Structural Funds.28 

According  to  the  respondents,  entrepreneurial  growth  can  be  triggered  by  actively 
supporting  SMEs  in  their  efforts  to  internationalise.  Internationalisation  does  not 
only give access to a larger marketplace, operating in different markets can help in 
gaining competitive advantage over firms based in one country only. 

Support should be available for SMEs to make the most of the opportunities in the 
knowledge-based  economy.  Apart  from  more  effective  transfer  of  knowledge 
between  research  and  business  communities,  the  availability  of  skilled  staff  in  a 
modern  work  organisation  and  solid  protection  of  intellectual  property,  more 
attention should be paid to ‘value’ innovations (e.g. a new business model, marketing 
strategy or design), which are increasingly important, particularly for smaller firms.29 

The  Commission  will  foster  networks,  partnership  events  and  clusters  to  assist 
entrepreneurs  in  building  strategic  partnerships,  getting  better  access  to  knowledge 
and forging business links within and beyond the EU. The Commission will reinforce 
the  role  of  the  European  support  networks  ‘Euro  Info  Centres  (EICs)’  and  the 
‘Innovation  Relay  Centres  (IRCs)’  by  involving  them  in  promoting  business  co-
operation  and  ensuring  streamlined  delivery  of  all  EU-wide  support  services,  not 
only by these networks, but also by the Business Innovation Centres (BICs). 

Further  to  the  Council’s  commitment  to  boost  investment  in  research  and 
technological  development  (R&D)  and  a  public  debate  in  2002,  the  Commission 
presented  in  2003  an  Action  Plan  to  increase  R&D  investment  to  3%  of  GDP  by 
2010.30  In  addition,  the  6th  Framework  Programme  for  RTD  provides  funds  to 
SMEs, through reserving 15% of the budget to SMEs and offering specific activities 
for SMES.31 

The  Commission  recently  extended  the  scope  of  the  SME  Block  exemption 
regulation  to  exempt  from  notification  aid  for  R&D  granted  to  SMEs.  Regarding 
innovation,  the  Commission  will  review  the  specific  needs  of  various  players,  in 
particular SMEs, in adapting to change and incorporating knowledge in production, 
products and services. Given its importance, the Commission will publish an Action 
Plan entirely dedicated to Innovation in 2004. In this context, the Commission will 
examine evidence of market failures that inhibit innovation, depending on the type of 
actor,  activities  and  localisation,  including  international  comparisons  within  and 

28 

29 

30 

31 

The  Commission’s  work  to  improve  support  services  includes  Commission  Staff  Working  Paper 
‘Creating  Top-class  Business  Support  Services’,  SEC  (2001)  1937,  28.11.2001,  ‘Benchmarking  of 
Business  Incubators’,  February  2002,  ‘Good  practices  in  the  Promotion  of  Female  Entrepreneurship’, 
December 2002, the European network to promote Women's EntrepreneurShip (WES), the ‘European 
conference on ethnic minority entrepreneurs’, June 2003 and the Charter implementation reports. The 
Community  Initiative  ‘EQUAL’  provides  funds  to  support  entrepreneurs  from  disadvantaged  groups 
and  to  remove  barriers  for  social  enterprises  and  is  a  source  of  good  practice  measures  to  support 
entrepreneurs from all backgrounds with low entrepreneurial performance. 
Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  ‘Innovation  Policy  Updating  the 
Union’s approach in the context of the Lisbon strategy’, COM (2003) 112 final, 11.03.2003. 
Barcelona European Council of March 2002, Communication from the Commission ‘More research for 
Europe  Towards  3%  of  GDP’,  COM  (2002)  499  final,  11.09.2002  and  ‘Communication  from  the 
Commission Investing in research: An action plan for Europe’, COM (2003) 226 final, 04.06.2003. 
Further information on Community R&D programmes can be found on www.cordis.lu. 

11 

 
 
  
 
                                                 
outside the EU and the need to find appropriate remedies. The Commission will also 
through  exchanging  experience  on  regional 
continue  promoting 
innovation  policies,  technology  transfer  mechanisms  and  promoting  e-business 
activities.32  

innovation 

As  raised  by  the  Green  Paper  on  Entrepreneurship  and  confirmed  in  the  public 
debate, too few fast-growing enterprises, or gazelles, which are the key drivers of 
innovation and entrepreneurial dynamism, emerge in Europe. Entrepreneurial growth 
rarely  happens  accidentally:  an  explicit  growth  orientation,  first  and  foremost  a 
mindset,  is  needed.  Evidence  shows  that  entrepreneurs  seek  inspiration  from 
successful  role  models.33  The  Commission  will  seek  good  policy  practices  for 
spreading role models and providing suitable support to potential gazelles. 

Key action: Providing tailor-made support for women and ethnic minorities 

The  specific  needs  of  female  entrepreneurs  and  ethnic  minorities  are  currently  not 
being  satisfied  by  support  providers.  Building  on  the  work  underway  to  promote 
female  entrepreneurship,  as  from  2004  the  Commission  will  assist  the  national  and 
regional authorities  to  address  those  areas where  the  needs  of  female  entrepreneurs 
are still insufficiently met, notably access to finance and entrepreneurial networks. 

On  the  basis  of  experience  with  exchanging  good  practice  through  studies  and 
networks  among  policy-makers,  the  Commission  will  apply  a  similar  methodology 
for  addressing  the  needs  of  ethnic  minority  entrepreneurs.  In  2004  and  2005,  the 
Commission  will  identify  and  evaluate  policy  measures  with  a  view  to  identifying 
good  practices 
the 
Commission  will  encourage  networks  among  policy-makers  and  seek  the  active 
involvement  of  representative  bodies  of  ethnic  minorities  for  building  a  better 
dialogue at EU, national and regional level. 

to  assist  ethnic  minority  entrepreneurs.  Simultaneously, 

Key action: Supporting businesses in developing inter-enterprise relations 

The  Commission  will  support  matchmaking  events  in  EU  regions,  allowing 
entrepreneurs  to  meet  strategic  partners  (entrepreneurs,  researchers,  financiers, 
advisors,  mentors,  business  partners  and  policy-makers)  who  can  help  boost  their 
performance.  The  Commission  can  rely  on  a  wide  network  of  potential  partners, 
through  the  business  organisations,  in  several  Commission  databases  and  the  EIC, 
IRC and BIC networks. By mid 2004, the EIC, IRC and BIC networks will have the 
administrative, support and IT tools in place for supporting the events in which they 
take part in a co-ordinated way. This experience will be evaluated during 2005 with a 
view to defining a strategy for the next years. 

After participating in matchmaking events, SMEs can rely on the European business 
support  networks,  through  their  widespread  network  of  offices,  for  further 

32 

33 

Network of Innovating Regions in Europe (IRE)’, ‘Improving Institutions for Technology Transfer to 
Enterprises’, the ‘PAXIS Pilot Action of Excellence on Innovative Start-ups’ and the Communication 
from  the  Commission  to  the  Council,  the  European  Parliament,  the  European  Economic  and  Social 
Committee and the Committee of the Regions ‘Adapting e-business policies in a changing environment: 
The lessons of the GoDigital initiative and the challenges ahead’, COM (2003) 148, 27.03.2003. 
See also ‘Bottlenecks and catalysts of entrepreneurial growth’, Professor Erkko Autio (forthcoming). 

12 

 
 
  
 
                                                 
information  and  advice  about  doing  business  in  the  Internal  Market,  a  specific 
country or a particular region. 

Clusters  can  help  SMEs  create  critical  mass,  pool  resources,  allow  them  to  find 
business  partners  or  provide  access  to  strategic  information.  Building  on  its  work 
reviewing Member States’ cluster policies34 and facilitating exchange of experience 
on  clustering  at  regional  level  under  the  ‘Innovating  Regions  in  Europe’ 
programme,35 the Commission will in 2005, with a group of cluster managers, define 
and test a model for forging strategic links among clusters within the EU. 

3.4. 

Improving the flow of finance 

Access  to  finance  is  crucial  for  firms  in  various  development  phases.  Besides 
existing  difficulties  reported  in  the  public  consultation,  notably  as  regards  building 
up equity, firms need to anticipate changing financial requirements due to increased 
use  of  rating  systems  and  the  proposed  revision  of  banks’  capital  requirements 
(‘Basel  II’),  as  a  result  of  which  loan  pricing  will  more  closely  reflect  the  risk 
associated with a client. 

The  Commission  currently  helps  to  improve  the  financial  environment  for 
enterprises,  especially  SMEs,  through  its  Financial  Instruments36  and  by  bringing 
together  SMEs  and  financial  players  to  allow  the  exchange  of  good  practice  and 
make for a better mutual understanding among SMEs and the financial community.37 

To  help  firms  anticipate  changes  in  the  financial  environment,  the  Commission 
will  promote,  with  national  and  regional  policy-makers,  the  availability  of  support 
for responding to more demanding risk assessments. They will work to make more 
guarantees and loans available at reasonable cost, particularly for micro-enterprises. 
Removing loan portfolios from banks’ balance sheets by selling these to institutional 
investors - securitisation - can also increase the lending capacity of banks to SMEs. 

To improve the capital structure of enterprises and move towards stronger balance 
sheets, fiscal neutrality for the different financing options should be sought. To help 
increase equity and stimulate more enterprise growth, the Commission will intensify 
its  actions  to  improve  the  availability  of  venture  capital,  business  angel  finance 
and  investments  by  private  individuals  (micro-angels).  The  Commission  also 
provides criteria to assess Member States’ measures supporting risk capital funding 
under State aid rules.38 

34 

35 
36 

37 

38 

In 2003, the Commission organised a seminar and a series of expert meetings, the results of which are 
made available in an ‘Expert group report on clusters and networks’. 
http://www.innovating-regions.org/. 
The  Financial  Instruments  bridge  gaps  in  financial  markets  focusing  on  high-tech  starters,  SME 
guarantees  and  seed  capital.  These  cover,  through  the  Multiannual  Programme  for  Enterprise  and 
Entrepreneurship, some € 322 million euros and are managed by the European Investment Fund. 
For example the Round Tables of bankers and SMEs or the discussions involving financial institutions 
and business organisations on establishing a code of conduct for banks on relations with SME clients. 
Commission  Communication  on  ‘State  aid  and  risk  capital’,  OJ  C235  21.08.2001,  p.  3-11,  and 
Communication from the Commission to the Council and the European Parliament on ’Implementation 
of the Risk Capital Action Plan (RCAP)’, COM (2003) 654 final, 04.11.2003. 

13 

 
 
  
 
                                                 
Key action: Creating more equity and stronger balance sheets in firms 

The  Commission  will  use  its  financial  instruments  for  SMEs  to  facilitate 
entrepreneurial  growth  by  stimulating  the  supply  of  both  debt  and  equity  finance 
from  2004.  Subject  to  the  evaluation  of  the  financial  instruments,  revised  and 
streamlined  financial  instruments  will  be  launched  in  2006.  Besides  offering 
guarantees and promoting securitisation, they plan also focus on equity for research-
based and innovative SMEs. 

In view of the expiry of the Communication on State aid and risk capital in 2006, the 
Commission  will  also  re-examine  in  2004  and  2005  the  role  of  State  aid  in 
remedying  possible  market  failures  in  the  provision  of  funding  for  SMEs, 
particularly the young and growth-oriented ones. 

The  Commission  will  analyse  elements  in  national  tax  structures  that  favour  debt 
finance as opposed to equity finance (notably retained earnings, informal investors). 
The  Commission  will  start  this  analysis  and  set  up  a  working  group  involving 
Member  States'  experts  in  2004.  Based  on  the  outcome,  the  Commission  will  call 
upon  Member  States  that  apply  disadvantageous  tax  treatment  of  equity  to  take 
action to ensure fiscal neutrality. Recommendations and existing good practices will 
be presented in 2005. 

3.5. 

Creating a more SME-friendly regulatory and administrative framework 

According to the consultation, a real reduction and simplification of administrative 
and regulatory burdens is needed in relevant areas for businesses, such as taxation, 
employment or environment. Since a certain degree of regulation and administration 
is necessary to regulate markets or to protect the public interest, national and regional 
policy-makers should also provide for support for SMEs to cope with these. 

In  2002  the  Commission  launched  an  ambitious  programme  to  improve  European 
Governance,  covering  better  law-making,  impact  assessment  and  stakeholder 
consultation39 and will now concentrate on its implementation.  

The Internal Market has made life of businesses, particularly SMEs, much easier. 
But the Internal Market is not complete. There are still obstacles which stand in the 
way. The Internal Market Strategy 2003-200640 addresses relevant issues for SMEs, 
including  removal  of  barriers  for  services,  reduction  of  the  impact  of  tax  obstacles 

39 

40 

Communications from the Commission ‘European Governance: Better Lawmaking’, COM (2002) 275 
final, 05.06.2002, ‘Impact Assessment’, COM (2002) 276 final, 05.06.2002, ‘Action plan: Simplifying 
and improving the regulatory environment’, COM (2002) 278 final 05.06.2002, Communication from 
the Commission ‘Towards a reinforced culture of consultation and dialogue - General principles and 
minimum standards for consultation of interested parties by the Commission’, COM (2002) 704 final, 
11.12.2002,  Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the 
European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  ‘Updating  and 
simplifying the Community acquis’, COM (2003) 71 final, 11.02.2003. 
Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic and Social Committee and the Committee of the Regions ‘Internal Market Strategy Priorities 
2003-2006’, COM (2003) 238 final, 07.05.2003. 

14 

 
 
  
 
 
                                                 
and contributing to expanding procurement opportunities through a better use of the 
Member States procurement network. The Commission will also continue to promote 
the involvement of SMEs in standardisation.41 

The Commission will continue in 2004 to seek simplification in State aid rules. In 
particular, it will continue developing an instrument to identify aid that is unlikely to 
produce  significant  effects  on  competition.  Such  an  instrument  would  reduce  the 
scrutiny of the Commission for aid and provide greater margin of manoeuvre for the 
Member  States  to  grant  small  amounts  of aid  unlikely  to  lead  to  distortions.  SMEs 
should proportionally benefit from such measures. 

The Commission will encourage more effective consultation of SMEs to allow them 
to  give  their  opinions  on  new  initiatives  at  an  early  stage  of  the  decision-making 
process and about the accuracy of existing regulations and practices. To ensure that 
such  consultation  covers  all  public  activities,  internal  co-ordination  within  public 
administrations is needed. 

Key action: Listening to SMEs 

To give SMEs a stronger voice in EU policy-making, the Commission will improve 
the  assessment  of  the  effects  of  EU  proposals  on  SMEs  within  the  context  of  the 
recently introduced Business Impact Assessment. In addition to the already ongoing 
involvement of SMEs in specific Commission policy initiatives, the Commission will 
through  the  SME  Envoy42  intensify  the  dialogue  between  all  Commission  services 
and business organisations through more regular meetings. 

The  Commission  will  also  improve  mechanisms  to  take  account  of  SMEs’ 
the 
experiences  with  existing 
Commission’s  ‘Interactive  Policy  Making’  initiative,  the  EIC  network  records 
feedback  on  internal  market  obstacles  experienced  by  SMEs.  More  intense 
promotion,  a  systematic  follow-up  on  the  reported  problems  and  a  wider  range  of 
areas on which feedback can be given will increase consideration of SMEs’ views. 

legislation,  policy  and  programmes.  Under 

Apart  from  organising  a  more  effective  dialogue  with  SMEs,  this  work  needs  to 
show evidence that the issues raised by SMEs are really taken on board. At the end 
of 2004, the Commission will have operational structures for organising the dialogue 
and assessing progress; by 2005 the Commission will report on the involvement of 
SMEs  and  their  representatives  in  the  consultation  process  and  the  extent  to  which 
their views are taken into account. 

The Commission has started, together with Member States’ experts, a benchmarking 
project  on  the  involvement  of  SMEs  in  national  policy-making.  This  action  will 
examine successful methodologies already applied in the Member States to organise 
consultation  of  SMEs,  embracing  all  services  whose  work  affects  SMEs.  On  this 
basis, best practices and policy recommendations will be presented in 2005. 

Key action: Reducing the complexity of complying with tax laws 

41 
42 

The Commission promotes the participation of SMEs in standardisation through NORMAPME. 
The SME Envoy seeks to step up exchanges with SMEs and their representative bodies and to ensure a 
proper consideration of SME needs within all EU policies, programmes and legislation. 

15 

 
 
  
 
                                                 
Complying  with  different  national  tax  laws  and  regulations  is  an  obstacle  to  cross-
border activities, particularly for SMEs. If such firms were able to apply the familiar 
rules  and  regulations  of  their  'home'  state  when  calculating  their  taxable  profits  or 
when complying with value added tax (VAT) obligations, expanding across borders 
would be easier.  

To  simplify  and  reduce  tax  compliance  procedures  related  to  direct  taxation,  the 
Commission intends to launch a pilot scheme whereby SMEs can apply 'Home State 
Taxation'. Under this scheme  participating Member States would  agree  to  mutually 
recognise the  different national  methods of calculating taxable profits. In  2004,  the 
Commission  will  address,  together  with  interested  parties  and  Member  States,  the 
remaining technical issues and develop the detailed arrangements of a pilot scheme. 
This should lead to considerable savings and efficiency gains for qualifying SMEs. 

Based  on  the  outcome  of  the  discussions  on  the  technical  issues,  the  Commission 
will present its conclusions on future ‘Home State Taxation’ schemes later in 2004. 
Based  on  these,  the  Commission  will  periodically  monitor  progress  of  the 
implementation of such schemes, which is the Member States’ competence. 

For  several  categories  of  business  to  consumer  transactions,  application  of  VAT  at 
the  place  of  consumption  currently  means  traders  have  to  be  identified  and  make 
returns  and  payments  in  every  Member  State  where  they  carry  out  taxable 
transactions. This is burdensome for traders within the Internal Market. 

Based  on  the  outcome  of  a  European  study  on  VAT  obligations  and  a  public 
consultation in 2003,43 the Commission intends to propose in 2004 a ‘one-stop-shop’ 
system whereby companies registered in more than one Member State could fulfil all 
their  EU-wide  VAT  obligations  in  their  country  of  establishment.44  Such  a  system 
would,  building  on  the  experience  already  gained  in  the  single  EU  VAT  portal  for 
third country e-commerce traders, substantially reduce the administrative burden of 
VAT  as  it  would  enable  firms  to  deal  with  one  single  tax  authority,  in  their  own 
language, and to benefit from a single set of compliance obligations. 

4. 

THE COMMISSION’S NEXT STEPS TO REALISE THE ENTREPRENEURSHIP AGENDA 

To  implement  the  entrepreneurship  agenda,  the  Commission  will  act  where  it  can 
best  achieve  results  at  EU  level  and  where  it  can  give  valuable  support  to  the 
Member  States’  national  and  regional  strategies  under  the  open  method  of  co-
ordination. 

The Commission intends to carry out this work through the policies and programmes 
within the Community’s competence. All new actions proposed in this Action Plan, 
directly  related  to  advancing  the  entrepreneurship  agenda  within  the  objectives 
described  in  article  2  of  the  Council  Decision  2000/819/EC  and  areas  of  action 
described in annex I of the decision, and notably under 'promoting entrepreneurship, 
in particular the key actions, are intended to be carried out through the Multiannual 

43 
44 

http://europa.eu.int/comm/taxation_customs/taxation/consultations/obligations_tva_en.htm. 
In line with the Communication from the Commission to the Council, the European Parliament and the 
European  Economic  and  Social  Committee  ‘Review  and  update  of  VAT  strategy  priorities’,  COM 
(2003) 614, 20.10.2003. 

16 

 
 
  
 
                                                 
Programme  for  Enterprise  and  Entrepreneurship,  which  runs  until  2005.45  The 
Commission  will  submit,  in  its  annual  work  programmes  for  2004  and  2005  to 
implement  this  programme,  concrete  and  detailed  proposals  for  activities  and  the 
required  financial resources deemed necessary to implement the key  actions in this 
Action  Plan.  These  proposals  will  be  adopted  in  accordance  with  the  Programme’s 
objectives  and  rules  of  procedures  as  laid  down  in  the  aforementioned  Council 
Decision. 

The  Commission’s  proposal  for  a  next  Multiannual  Programme,  to  be  presented  in 
2004, will be based not only on its own experience and independent evaluations, but 
also  on  the  public  debate  that  followed  the  Green  Paper  and  this  Action  Plan.  A 
review  of  the  areas  where  new  actions  are  needed  will  be  made  in  2005.  Concrete 
activities to implement these as from 2006 will be proposed in accordance with this 
Programme’s goals and rules of procedure. 

The  Commission  will  also  pay  due  attention  to  advancing  the  entrepreneurship 
agenda within all other policy areas relevant for entrepreneurs, notably R&D and 
innovation,  European  governance,  the  EU  sustainability  agenda,  the  functioning  of 
the  Internal  Market,  the  Employment  Guidelines,  taxation  and  competition  policy. 
The  Commission  will  increase  the  entrepreneurship  orientation  in  its  support 
programmes46 and make access to them more business-friendly. 

5. 

CONCRETE RESULTS FOR EUROPE’S ENTREPRENEURS 

The  Action  Plan  sets  out  generic  objectives  to  be  achieved  by  EU  and  Member 
States’  policy-makers  in  the  five  strategic  areas.  Targets,  indicators  and  timetables 
for making progress will be defined under the key actions to be carried out. 

(1)  More people to be informed about entrepreneurship and have the opportunity 

to acquire entrepreneurial skills through education and promotion activities; 

(2) 

(3) 

(4) 

(5) 

A  fair  environment  for  risk-taking  and  no  unreasonable  barriers  for  new 
entrepreneurs who start or take over a firm; 

Ensuring top-class support, specifically for cross-border trade and innovation, 
for entrepreneurs from all backgrounds and sectors; 

Sufficient  finance  and  guarantees  to  finance  all  viable  entrepreneurial 
ventures,  also  under  the  ‘Basel  II’  capital  adequacy  framework  and  greater 
neutrality in the tax treatment of different financing options; 

A substantial reduction of regulation and administrative procedures and better 
consideration of SME needs in policy-making. 

The actions taken in the context of the Action Plan need to show results in terms of 
their impact on entrepreneurial performance in the EU: 

45 

46 

Except  actions  related  to  taxation,  which  will  be  carried  out  under  Articles  93  and  211  of  the Treaty 
Establishing the European Community, OJ 325/33, 24.12.2002. 
Structural Funds, notably the EQUAL Programme, the Framework Programmes for RTD, Asia Invest, 
AL Invest, EU Japan Centre and Training, Education and Youth Programmes. 

17 

 
 
  
 
                                                 
More  entrepreneurial  mindsets:  More  people  expressing  a  preference  for 
entrepreneurship;  more  business  start-ups,  including  from  disadvantaged  groups  or 
regions,  more  new  entrepreneurs  taking  over  existing  businesses  and  more  fresh 
starts made after a failure. 

Better business performance translating into more competitiveness and growth: 
Stronger  balance  sheets,  more  private  sector  innovation,  more  SMEs  trading  in  the 
Internal Market, more job creation and more fast-growing enterprises. 

A better business climate: Less time and cost needed to comply with regulation and 
administration. 

Progress at EU level on the Action Plan’s objectives and the targets set within key 
actions, and also their impact on performance will be periodically assessed. Because 
of the key role of Member States in achieving progress, the Commission will also 
assess their actions taken in the five strategic areas. Hereby, it must be remembered 
that reducing barriers and delivering public support services is in the hands of policy-
makers, so the first results can be expected relatively quickly. More entrepreneurial 
attitudes and skills depend on the take-up of policy by citizens, which can only bear 
fruit in the longer term. 

Reports  on  the  Action  Plan  will  be  integrated  into  the  reporting  mechanism  for 
implementing the European Charter for Small Enterprises. From 2005 onwards, the 
Commission will thus draw up a report on progress made towards the objectives set 
within the present Action Plan and the key actions, both at EU level and within the 
Member States, and on the Charter action lines. 

18 

 
 
  
 
ANNEX I - PROPOSALS FOR KEY ACTIONS FOR 2006 AND BEYOND 

Conducting entrepreneurship campaigns 

To  create  more  positive  attitudes  towards  entrepreneurship  in  society  at  large,  the 
Commission will support the organisation of awareness campaigns. Campaigns can 
present  role  models,  success  stories  and  portraits  of  failures  in  the  media.  Such 
campaigns  will  highlight  the  positive  contribution  of  entrepreneurship  to  society’s 
needs  (corporate  social  responsibility  or  CSR).  Campaigns  are  best  organised  at 
regional  and  national  level,  with  the  Commission  providing  a  European  label, 
organising  supportive  events  and  improving  links  among  the  different  campaigns 
organised  throughout  the  EU  in  order  to  boost  the  visibility  and  co-ordination  of 
regional  and  national  activities.  This  work  will  build  on  successful  practices 
identified in the pilot action on organising Entrepreneurship Days under the PAXIS 
programme. 

Fostering the creation of more fast-growing enterprises (gazelles) 

To stimulate more gazelles, the Commission aims to increase understanding of how 
more  of  these  enterprises  could  emerge  in  a  European  context.  It  will  encourage 
more  research  by  bringing  together  business  schools  with  a  view  to  analysing  the 
success  of  existing  gazelles  and  the  barriers  preventing  potential  gazelles  from 
turning into real ones. This work should lead not only to more focus on gazelles in 
analysis  and  research,  but  also  to  integrating  the  findings  in  teaching  modules  in 
business schools to encourage their use in business practice. The Commission will, 
under  the  open  method  of  co-ordination,  exchange  experience  on  Member  States’ 
policies  to  help  pre-gazelles  to  grow.  This  will  cover  proven  practices  to  help 
entrepreneurs  identify  and  exploit  opportunities  for  rapid  expansion,  including 
mentoring schemes, entrepreneurial learning networks and support schemes for pre-
gazelles,  such  as  specific  business  incubators  or  accelerators  and  support  for  early 
and rapid internationalisation. 

Promoting entrepreneurship in social sectors 

Based  on  an  analysis  of  the  specific  needs  and  constraints  of  non-profit  and 
commercial enterprises providing social (such as health care, education, and welfare 
services) and environmental services, the Commission will benchmark conditions in 
the  Member  States  for  providing  these  services  and  present  recommendations  and 
guidance  on  improving  the  conditions  under  which  enterprises  operate  in  these 
sectors (in terms of promotion and legislation) within the framework of their public 
service  obligations  and  quality  requirements  specific  to  the  services  provided. 
Subject to the outcome of the study, further action may comprise EU-wide promotion 
of  better  conditions  for  enterprises  delivering  social  and  environmental  services, 
policy  conclusions  or  even  legal  instruments  (e.g.  a  Recommendation  or  voluntary 
Regulation). 

19 

 
 
  
 
Enabling micro-enterprises to recruit by reducing the complexity of regulations 

The  ability  of  micro-enterprises  to  recruit  and  manage  their  staff  is  affected  by  the 
degree of complexity of staff rules and regulations.47 For micro-enterprises with little 
or  no  experience  in  dealing  with  these  issues,  this  may  imply  heavy  constraints  in 
terms of time and costs. Building on the experience by the National Action Plans for 
employment48  and  the  Commission’s  ongoing  work  on  the  requirements  for  hiring 
the  first  employee,  the  Commission  will,  together  with  external  experts,  further 
compare  national  practices  and  identify  ways  to  facilitate  recruitment  by  micro-
enterprises  across  the  EU  on  the  requirements  for  hiring  the  first  employee.  Other 
relevant regulatory issues for micro-enterprises will be defined and addressed later. 

Facilitating SMEs’ access to public markets 

To  improve  SMEs’  access  to  public  procurement,  the  Commission  will  encourage 
Member  States  to  collect  and  exchange  good  practices  applied  by  contracting 
authorities  that  aim  at  increasing  the  participation  of  SMEs  to  public  contracts.  At 
EU  level,  the  recently  agreed  public  procurement  directives  not  only  reduce  the 
number  of  applicable  directives  for  public  contracts,  but  also  provide  for 
simplification and modernisation of the procurement regime itself. The Commission 
will  provide  guidance  regarding  the  interpretation  of  these  directives  and  their 
implementation  into  national  legislation  by  Member  States.  This  will  enable 
contracting  authorities  to  use  the  adopted  facilities  based  on  these  directives  to  the 
fullest.  In  addition,  the  Commission  will  issue  an  Action  Plan  on  electronic 
procurement  to  address  issues  resulting  from  the  implementation  of  the  new 
provisions on the use of electronic means in public procurement. The EIC Network 
can assist SMEs by providing information and raising the understanding and capacity 
of SMEs to secure public contracts.  

47 

48 

Guideline 2 ‘Job creation and entrepreneurship’ of the ‘European guidelines for employment policies of 
the Member States’ -Council Decision (2003/578/EC) of 22.07.2003, OJ L 197 of 05.08.2003 p. 13-21-
stresses the need to simplify and reduce administrative burdens for hiring staff. 
Every  Member  States  draws  up  a  National  Action  Plan,  which  describes  how  the  Employment 
Guidelines are put into national practice. 

20