A few months ago the Spanish Government approved a law to support the creation and growth of emerging companies, the law of startupswith which it seeks to place Spain at the level of its neighboring countries in terms of attracting talent, investment and innovative entrepreneurship.
It is known that innovative entrepreneurship, when it generates economic and social value, acts as a lever of change, which pushes society towards higher levels of well-being. Thus, the new standard has an impact, precisely, on improving the context conditions to encourage entrepreneurship in terms of innovation and productivity, and thus structure a more entrepreneurial society.
Public authorities constitute an important element within this context and, in addition, they have the capacity to influence the behavior of other actors in the entrepreneurial ecosystem.
The law of startups comes at an opportune momentin a post-covid-19 situation in need of illusion and ambition to face the challenges set by Europe and by the Sustainable Development Goals (SDG) of the 2030 Agenda. Thus, the law begins with the expectation of revitalizing the fabric Spanish business through the creation of new, innovative and scalable companies.
This legal text is characterized by:
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The promotion of greater inter-institutional collaboration (between public administrations, universities, public research organizations and technology centers).
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The offer of a range of tax advantages (for investment, for attracting talent).
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Greater precision for the definition of a start-up company.
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Measures aimed at improving bureaucratic agility (telematic facilities, reduction of administrative costs for business creation).
Fifteen years without being able to leave the valley
The law is announced after Spain has gone through a period of business decapitalization. According to recent data from the INE (National Institute of Statistics), Spanish business demography has recovered the volume of active companies it had before the global financial crisis of 2008.
The population of 3,422,239 active companies in 2008 fell to 3,119,000 operating companies in 2013, causing a business decapitalization of 9% during that five-year period. Since then, there has been a gradual recovery until reach a figure of 3,430,663 operating companies at the end of 2021. This has been mainly due to a recent decrease in the rates of closing deals and a slight increase in the rates of creation of new companies.
Despite the fact that this important recovery in the number of companies has taken place, we must clarify that almost two million of them do not employ any wage earner, that 83% employ two or fewer workers and that approximately half are forced to close before of its first five years of existence.
Regardless of this panorama, a law that contributes to prosper and increase the well-being of citizens by developing the context conditions to improve the quantity and quality of entrepreneurial activity is always welcome.
Other entrepreneurs cannot be neglected
Not all entrepreneurs suffer the consequences of the crisis in the same way. The international consortium Global Entrepreneurship Monitor (GEM) has brought to light a recent study that analyzes the situation of women entrepreneurs in more than 50 countries. There are two facts that stand out:
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The report highlights that the closure of businesses among women residing in upper-middle-income countries has increased by 74% during the pandemic period while, among men, this increase in business closures has been 34%. .
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Only 2.7% of women (compared to 4.7% of men) venture to undertake information and communication technologies), a sector that attracts a large part of the investments of business angels (early investors) and venture capital.
a matter of age
In countries such as Korea, Israel or Norway, the entrepreneurial activity of the population aged over 34 years is greater compared to the entrepreneurial activity expressed by the group aged under 34 years.
In this regard, the latest report (2021-2022) of the Spanish Entrepreneurship Observatory (GEM Spain report 2021-2022 indicates that the percentage of the population in the 18-24 age range that has been encouraged to start a business in Spain is 2.9%. Meanwhile, the percentage for the age group 55-64 years is 3.9%.
These trends, ultimately, reflect the existence of certain disparities (by sex and age) that invoke the need to consider and support underrepresented groups(the missing entrepreneurs either missing entrepreneurs), to build a more inclusive entrepreneurial ecosystem. To this we should add a more sustainable vision to move towards a transformative enterprise.
Towards a “transformative” entrepreneurship
The law of startups It is designed to favor the conditions for the creation and growth of innovative and scalable companies, which will result in increased employment, productivity and economic growth.
It cannot be ignored that women and the senior population also undertakegenerating employment, productivity and economic growth.
An inclusive and sustainable entrepreneurship is also possible. In other words, a transforming undertaking that goes beyond the optimization of benefits.
It is still early and more time is needed to assess the results of the application of this new law, but in addition to promoting innovative entrepreneurship (for the purpose of economic results), in the future it will be necessary to observe where these other trends of transformative entrepreneurship point (for the purpose of social impact).
Inaki Peña LegazkueProfessor, Department of Economics and Finance, University of Deusto
This article was originally published on The Conversation. read the original.
