Socio-Cultural Factors that Affect Entrepreneurship in Europe

As it is often said, there has been a number of socio-cultural factors that affect entrepreneurship in Europe and this is evidently the case with how the economic upsurge of these societies has majorly influenced employment and financial blossoming in every corner of socio-political operation.

The History of Entrepreneurship in Europe

From the 1940s to the 1980s large enterprises in Europe was clearly the dominant form of business organization. Small businesses were believed to be less efficient than their larger counterparts and only marginally involved in innovative activities. This has gradually changed to the extent that, at present, national and supranational policy-makers have given strong priority to entrepreneurship and small and medium-sized enterprises.

The outlook of the European economies has undergone a transformation from the managed to the entrepreneurial economy. This sharp change of direction has been primarily driven by a combination of factors including: the growing importance of the knowledge-economy in terms of occupational choices, factors of production and changing patterns of commercial activities; concerns for high unemployment rates, declining international competitiveness in comparison to the USA and Japan and rates of economic growth as well as an evidence of shifting patterns of consumer demand.

Evidently, a new vision of the EU’s economic strategy has been conceived in terms of the belief that economic, social and environmental goals must go hand in hand in the 21st century. In the center of this vision is the innovative entrepreneur who is believed to be a major ingredient for the revitalization of European economies.

The subject of entrepreneurship has been the topic of scholarship and research in a variety of academic fields. The interdisciplinary nature of scholarship reflects the subject as entrepreneurship itself is a multifaceted social and economic phenomenon. However, since there is no explicit horizontal entrepreneurship policy domain at the European level, the topic has not caught sufficient attention from European Union public policy analysts.

Socio-Cultural Effects of Entrepreneurship

The creation of an European entrepreneurial economy is envisioned as a response to these economic imperatives. It is acknowledged that 99 per cent of the European enterprises are SMEs. The cell of the knowledge-economy and the driver of future economic growth are considered entrepreneurial ventures in high-growth sectors such as health and well-being, sustainable energy and eco-innovation, knowledge and education

Below are some of the socio-cultural factors that affect entrepreneurship in Europe:

  • Education

Education significantly affects the lifestyle of a population of any country in the world, the way of their thinking, their attitude toward work, etc. The level of education varies among countries. However, in many countries, the level of education has a tendency to increase.

Education level and level of literacy of population of a given country are indicators of the quality of their potential workforce. Economic potential and progress of any country depend on the education of its population. Analogously, education has notably impact on international business and entrepreneurship.

The market potential of any country primarily depends on education. The counties rich in educational facilities, such Germany and England, are more likely to attract high-tech industries than the less educated countries such as Romania and Poland.

The technology level of the company’s products may depend on the education level of the local population; The level of education and the level of literacy of population in a given country considerable determine the way of marketing research, packaging and advertising conducted by multinational companies.

  • Cultural and Racial Attitudes

The social and government attitudes towards the entrepreneurial spirit, especially towards foreign companies and their products, are one of the social factors that may have a significant impact on the performance of businesses in Europe.

The social and governments attitudes of the particular country in Europe towards foreign companies and their products can range from complete acceptance and trust to complete distrust and antagonism. Analogously, if the society of a given country is friendly towards foreign business, multinational companies will certainly benefit from a supportive local environment.

Read Also: Influence of Culture in Entrepreneurship

On another hand, if social attitudes of a given country are antagonistic, the multinational companies may face difficulties, such as boycotts of their products. The antagonistic social attitude that companies may face in some foreign countries is often the result of their government’s position towards some political issues.

  • Customer Preferences

One other socio-cultural factors that affect entrepreneurship in Europe is the needs and tastes of consumers in various countries are significantly becoming similar. According to some experts, this social trend is known as global convergence. As a result of the spread of global communication and facilitated travel opportunities, certain social behaviors are getting similar globally. Today, people around the world watch same movies, listen to the same music, play the same video games and use the same Internet websites.

Consequently, the needs, tastes, and habits become identical on a global level. The global convergence is most present among the younger population. Therefore, many multinational companies with global strategy offer same or very similar products in many various countries. As result, global market convergence is created whereby the world is considered as a global market of same products and services.

Therefore, is very significant for multinational companies to modify their product and promotion strategies that will suit the preferences of the population of the different countries. The multinational company should implement strategies that will be appropriate for a given socio-cultural environment.

  • Religious Beliefs

In many countries around the world, religion plays a significant role in people’s life. Religion even determines the way people think of work. Consequently, religion considerably affects on business activity and corporate culture. Many companies adapt their working process according to a predominant religion of a given country in terms of the holidays, working hours, food habits, a way of dressing, etc.

From the perspective of the multinational company, religion is an important social factor that should take in consideration when some company decides to operate in a given country. Religion, through its effects on people, affects a multinational company and its operations. Multinational companies, for instance, should be aware of religious holidays in each country where they operate.

The most of the Islamic countries have significantly lower productivity during the month of the Ramadan fast. Likewise, the pace of work in many Asian countries is slow down during the celebrations of the Chinese New Year. The situation is similar during the Easter holidays in many European countries as well.

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