Entrepreneurship in the Netherlands
Entrepreneurship in the Netherlands is considered to be of vital importance to the development of economic growth and employment and the productivity of the Dutch Private sector is attributable to the entry and departure of companies. In the Netherlands the number of annual business startups have almost doubled since 1987.
The most favorable aspects of the Dutch entrepreneurial climate are: the availability of financial capital, the positive attitude of young people to labor mobility, the access to physical infrastructure and the diminished barriers for entrepreneurship. The least favorable aspects are: transfer of knowledge from universities to new and small enterprises, the administrative barriers for business startups and the extent to which both the Dutch welfare state and the educational system provide encouragement for people to take initiative and be self-sufficient.
The importance of entrepreneurship and self-employment in the Netherlands is being acknowledged on great scale by both economist and those who create policy. High degrees of entrepreneurship and self-employment are assumed to contribute to economic growth and job creation. One of the priorities of the Dutch Ministry of Economic Affairs is to encourage (innovative) entrepreneurship. Globalization and increasing concurrence are forcing more flexible working relations where entrepreneurship can come in as a new perspective. In the last years, the number of starting entrepreneurs in the Netherlands increased in all sectors. In the range of starting entrepreneurs, The Netherlands is in the middle of all EU countries. About one tenth of the working population over the last 5 years is entrepreneur. The Netherlands invites and dually supports female entrepreneurs, as well as other minority groups.
• In 2004, the share of entrepreneurs in the Dutch working population has increased slightly from 10.8% to 11.4%, after it remained stable in the years before, and this is slightly lower than the EU average (11.6%).
• During the period 2001-2003, the percentage of new entries (birth rate) in the total business sector had decreased, but in 2004, a positive development was seen. The percentage of exits remained stable in 2003 and 2004. So in total, the number of enterprises had increased by 1.5% in 2003 and by 2.3% in 2004.
• The early-stage Entrepreneurial Activity index (TEA) had also decreased in the period 2001-2003 from 6.4 to 3.6, but increased in 2004 to 5.1.
• In 2005, the level of entrepreneurial activity in the Netherlands was 4.4 and this is lower than in 2004. This dip in 2005 is most probably related to the economic development. The doubts in the beginning of 2005, whether the economic development would improve, have probably had a negative effect on the intentions of people to start an enterprise (nascents). The rate of nascents dropped from 3.0 in 2004 to 2.5 in 2005. The rate of young business dropped from 2.2 to 1.9.
• The Netherlands was the leading EU nation in terms of new capital raised in stock markets as a % of GDP and above average in terms of high-tech venture capital investment. The total of formal and informal venture capital as a % GDP in the Netherlands is second only to that of the USA amongst high GDP countries and only US and Sweden have more domestic venture capital funds but as with the UK this is focused more on later stage and buy-outs than start-ups (Bosma (2003), EU (2001)).
• European Patent Office high-tech patent applications by the Netherlands at 35.8 per million of the population was second only to Finland in the EU and outstripped both the USA and Japan. The Netherlands also ranked third in the EU behind Finland and Sweden in terms of US patent office high-tech applications. In terms of innovative capacity the EU innovation surveys reveal that Dutch performance for small firms is above average and somewhat better relatively than performance for its medium and larger firms.
• A report published in April 2006 by Statistics Netherlands (CBS) identifies a lack of entrepreneurship as a “sticking point” in the Netherlands. The report looks at 70 indicators to map out the economic performance and associated business climate in the 20 countries. The Netherlands scores well in terms of secondary indicators such as the functioning of government and infrastructure. The country does less well when it comes to driving economic growth. The report cites a lack of innovation and entrepreneurship as the main restraints in this regard. They also said a major hindrance for start up entrepreneurs is that there are too few providers of venture capital.
• In relation to innovation, the CBS said, the Netherlands can not only learn from the example set by the Scandinavian countries and Germany, but also from Hungary where companies cooperate better to renew products and production processes. Sweden, the US and Korea are much better than the Netherlands in relation to making capital available for businesses.