Brussels, 13th December – Europe has to do a better job at nurturing start-ups and attracting talent, especially in the tech sphere, if it wants to claim the status of “global leader” in innovation. This was the conclusion of speakers at the European Business Summit, held in Egmont Palace in Brussels on the 28th and 29th of November 2023.
Influential speakers and stakeholders, delving deep into crucial themes shaping Europe’s business landscape, including supply chain issues, high energy costs, climate change urgency, global politics, and using AI strategically, looked toward collective solutions to address these challenges.
Risk-taking Reluctance
You cannot lead the innovation without having the innovators. – Anu Bradford, Distinguished Professor of Columbia Law School.
In the European Union, the fear of punitive insolvency laws deters businesses from taking on substantial risks, according to Anu Bradford, Professor of Law at Columbia University and author of The Brussels Effect, which outlines how the EU exports its regulation. Unlike the US, where companies often rebound from failure multiple times, the taboo around bankruptcy in Europe stifles disruptive innovation.
For migrants, especially entrepreneurs, these regulatory hurdles can be particularly burdensome, according to a study from the OECD. For example in Germany, a regulation exists stating that individuals who have declared bankruptcy are prohibited from holding the position of a CEO indefinitely.
To foster a more vibrant entrepreneurial landscape and attract global talent, Europe must reconsider its stance on bankruptcy, Bradford stated. It must encourage risk-taking and offer support for those willing to innovate. This will foster a more conducive environment for startups, promoting a balance between regulation and innovation.
Promoting Innovation in the Digital Sphere
When I entered the EP I always thought to approach regulation with the notion of regulation for innovation. We need to acknowledge the fact that European innovation has helped us build the single market. – Eva Maydell, MEP
Promoting European digital businesses and attracting talent from third countries is critical for the continent’s technological advancement and global competitiveness. Marc Lemaître, Directorate-General for DG Research and Innovation at the European Commission, noted that Europe requires not just investment in industry, but in research and innovation, aiming to reach the 3% GDP target.
There is a perception that the EU is not a place to go for innovation, according to Markus Reinisch, Vice President for Public Policy Europe at META, commented, pointing out the slow adoption of tech from Threads (which will only launch in the EU tomorrow, after launching in July in the US and elsewhere) to Quantum Computing.
These comments were met with resistance from panellists, with Eva Maydell, MEP emphasising finding a balance between regulation and innovation, reframing regulation “for” innovation, and noting that it was regulation that built the single market in the first place. Lemaître pointed out that the EU also has the world’s only publicly funded equity programme for start-ups in the form of the European Innovation Council.
Nurturing and Attracting Talent
Europe needs to redouble efforts to attract talent and innovation by creating an environment for research, investment, and collaboration. The European Green Deal is an excellent piece of regulation that has supported green initiatives and a forward-looking approach to technology, but a second phase is needed to reinforce the competitiveness of European Green businesses in the face of huge subsidies from other countries, pointed out Sven Giegold, German State Secretary at the Federal Ministry for Economic Affairs and Climate Action.
Creating a forward-looking approach to technology could attract global talent that prioritises sustainability, innovation, and responsible global engagement. This could help plug the talent drain from Europe and third countries around the world to the United States.
Bradford noted that immigrants and those with migrant backgrounds are disproportionately represented among founders of top tech companies, including 65% of AI companies. This demonstrates how America is winning the global talent competition, with the EU seen as a less attractive candidate due to tougher immigration approaches.
But Antonio Grasso, Public Affairs Director at the European Digital SME Alliance, was quick to counter this narrative, stating that there are many small to medium digital businesses in the EU that have been bubbling under the surface and who are now poised to disrupt the market in the next five years.
Grasso also noted that these SMEs shouldn’t be burdened by the cost of regulation that is aimed at bigger tech companies that have the resources to implement them. Instead, initiatives should aim to support and empower these entities, ensuring that regulatory frameworks don’t impede their growth and innovation and fully harness their growth potential.
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The 23rd edition of the European Business Summit took place at the Egmont Palace in Brussels, bringing together high-level speakers from the realms of business, policy, and academia. The Summit delved into the diverse array of challenges currently confronting Europe and the business community, serving as a platform for conversation of the most pressing issues for business in Europe.