In the 'New Labour' economic trinity of incubators, enterprise and Cambridge, enterprise clearly represents the Holy Ghost. Tony Blair set out his stall in May 1998 by launching an IPPR report, The Entrepreneurial Society, at a Downing Street seminar. Since then the entrepreneurial spirit has (with the Prime Minister's blessing) infused the competitiveness White Paper: the DTI has set up the Small Business Services Agency and the Enterprise Unit to help spread the message to the economy as a whole.
This is a change not just of style but of substance - a gamble on entrepreneurial growing businesses being able to reach parts of UK plc that the old-established company sector could not. In a week when Gordon Brown will certainly reiterate his belief in the new trinity, it is worth asking what that faith is based on. How important is entrepreneurship, and how well fitted are UK managers to remake themselves in the new mould?
First, entrepreneurship does matter. According to the Global Entrepreneurship Monitor (GEM), a comparative research study carried out by London Business School and Babson College in the US, there is a strong link between new firm start-up rates and measures of economic prosperity, particularly changes in GDP and jobs. So boosting the number of start-ups would probably add to both. 'There are no countries with high start-up rates and low levels of economic growth,' notes the report.
But how easy is it to start a company? Not very, is the answer. In the short term, dot.com mania has brought a flurry of entrepreneurial activity, but boosting entrepreneurship depends on deeper cultural and educational factors - and here the news is mixed. In the GEM study, the UK is in the middle of a 10-nation league, well behind the leading group of the US (an easy champion), Canada and Israel. It is on a par with Italy's levels, but ahead of Germany, Denmark, France, Japan and Finland.
That sounds OK; but, says the LBS's Dr Michael Hay, co-author of the report, there aren't really three groups but two: the three leaders and the rest. 'The UK is a long way from moving up into the top group,' notes the report. What's more, the gap can't be closed by more of the same old same old: fundamental change is needed, particularly in education.
This comes out clearly in the GEM analysis, which suggests that today's 'British disease' is an 'entrepreneurial deficit' stopping it exploiting its strengths. Thus, in early 1999, only a third as many respondents as in the US saw good opportunities for start-ups in the next six months - fewer than anywhere except Japan.
Poor peripheral vision for opportunities is accompanied by ill-developed entrepreneurial capacities. The UK scores dismally on skills, motivation and respect for entrepreneurial activity. On the last count, only Japan did worse (a finding underlined by a recent newspaper report that the Scots think entrepreneurs are less valuable economically than plumbers or bus drivers).
The e-commerce frenzy has brought to light other weaknesses. While the UK likes to think of itself as the venture-capital capital of Europe (in fact Germany is catching up), there is a chronic mismatch between fund seekers and providers. Malcolm Holt, managing director of matchco.co.uk, a start-up which aims to improve the fit, points out that 99 per cent of entrepreneurs fail to attract venture funding, while poor hit-rates increase their caution still further.
Frustratingly, the UK has much of the entrepreneurial infrastructure (a good science base, government support and a reasonable funding climate), but not the capacities to exploit it. Building them to the levels of the US or Canada will, says Hay, take years, even generations.
In the meantime, are the roots of the enterprise culture deep enough to survive a sustained stock market setback? Good question, says Hay. He believes attitudes are changing, and cites the serious momentum behind technologies other than e-commerce - mobile telecoms and genomics, for example. But this has yet to reach critical mass. He'd like to see more inducements for individuals and organisations (particularly universities) to take the plunge.
'The big deal about entrepreneurship in the US is that it's not a big deal,' he says. 'It's an ordinary subject of conversation over the supper table. There's still a long way before we get to that situation here.'
Europe fights back in dot.com battle
At a debate organised by Oracle to accompany the launch of www.2becom.com, billed as an online marketplace to help European Internet entrepreneurs get started, 67 per cent of an industry audience sided with the motion: 'This house believes that UK/European dot.coms will resist US dot.com colonisation.'
No one attempted to deny that Europe had lost the first, business-to-consumer (b2c), round of the e-commerce contest. What swayed the debate was the contention that the much bigger second round, business-to-business (b2b), would be different.
Making the case, Mark Suster, American chief executive of construction e-business www.build-online.com, noted that venture capital was pouring into Europe, the capital markets were rewarding start-ups, attitudes were changing, and computer and mobile penetration was up to speed. Meanwhile, US b2b start-ups were too busy fighting for US predominance to spend time and effort figuring out the differences between 15 European markets. European companies, on the other hand, have figured out how to combine technological scale with local scope, and adding the US market was a relatively simple step.
'We lost b2c,' summed up Suster. 'But I've got news: b2b is a whole different kettle of fish - and Europe.com can win it.'
