A contemporary take on entrepreneurship

Entrepreneurship to have a broader scope from 1 november onwards

Opinion by Tine Holvoet, Senior Research Associate at Vlerick Business School

In 2018, do you really need to set up a public or private limited company to have an entrepreneurial way of life? Company law reform is making contemporary entrepreneurship more inclusive. The term now also covers SMEs, social entrepreneurs, micro-entrepreneurs, growth companies, start-ups, P2P entrepreneurs and freelancers. After all, a strong entrepreneurship culture reflects real life and places a wide range of entrepreneurial stories in the spotlight. This allows successful entrepreneurship and the resulting added value to be understood and defined on a broader basis. Role models are emerging within a bigger picture and the jargon is being supplemented with less generic business lingo. And – independently of the status of an organisation – the debate should still include employment, self-development and innovation, surely the source of the endless fascination for the subject?

From 1 November 2018 onwards, the term ‘entrepreneurship’ will have a broader scope. By reforming company law, Minister Koen Geens and his cabinet will be moving away from an obsolete and narrow concept of entrepreneurship. Until now, only forms such as public or private limited companies actually counted as ‘real’ entrepreneurship. As a result of the change in the law, liberal professions (such as law firms or architecture studios), farms and non-profit organisations will finally count as fully-fledged companies too. The perspective of entrepreneurship within the legal framework is already being expanded as a result. This expansion responds to the plea for a more varied understanding of entrepreneurship, advice which we have been explicitly formulating since 2012 on the basis of research carried out by Vlerick Business School.

The picture also needs a little polishing, so to speak, as successful entrepreneurship in Flanders is not greatly appreciated in comparison with our neighbouring countries. According to the Global Entrepreneurship Monitor, only 57% of Flemish people feel that successful entrepreneurs have a high status. The self-perception is also problematic. In 2015, just 3 in 10 Flemish people felt that they had sufficient knowledge and skills to start a business. The level of self-confidence is so low that it stands out in comparison with other countries, certainly when it comes to women: 79% of the women questioned did not have sufficient confidence in their own knowledge, skills and experience to start a business. The fail forward campaigns of the past few years came not a day too soon.

What else is wrong? A lack of role models? Half the Flemish respondents stated that the media paid insufficient attention to success stories regarding new organisations and entrepreneurs. The feeling that successful entrepreneurs are only portrayed as role models to a limited extent ties in with an analysis of the TV news during the period 2003-2014, which we carried out at Vlerick Business School (Holvoet, Van Steen, Bosma & Crijns, 2014). This reveals that very little attention is paid to entrepreneurship. The majority of the reports were about business creation (the start-up) as the only scenario for an entrepreneurial way of life. There was very little coverage of takeovers and even less of so-called heterodox professional careers (where entrepreneurship and employment are alternated or combined on a flexible basis), let alone intrapreneurship or entrepreneurial employees. The entrepreneurial process is generally described in linear terms, mostly as a one-shot story of success or failure and not as a series of parallel and alternative efforts which may nor may not succeed, for example. And no, non-profit organisations and NGOs are not featured in the business news.

Is there a deliberate attempt to avoid complexity? Entrepreneurs are invariably offset against a “problematic” opposite: dull employees or – even worse – the unemployed. The social and ethnic backgrounds of the represented entrepreneurs are monotonous. Only a small minority of the discussed role models were women (20% of the interviewed entrepreneurs in the TV news, 6.5% in the examined newspaper articles during the period 2003-2014 (see Holvoet, Van Steen, Crijns, 2016)). In addition, the personal networks of the entrepreneurs (both successful and unsuccessful) were rarely brought to light. Entrepreneurship was also consistently reported as a political objective: more entrepreneurship is better, in contrast to statements in the UK where more entrepreneurship is not necessarily worded as a positive political objective but as a result of the crisis and decreasing opportunities on the labour market, for example.

The expansion of the legal framework demonstrates the government's positive change in attitude towards entrepreneurship. Entrepreneurship itself is in transition and this is clearly evident. You could even say that the thinking about entrepreneurship is in itself becoming entrepreneurial and that Minister Koen Geens is portraying himself as a true intrapreneur here: “Entrepreneurship is passion. Whether this takes place within a company context or within a non-profit organisation with a social objective, everyone involved gets up early, runs around all day and still isn't tired in the evening. As a result, I am pleased that these reforms allow us to support their passion and help to eliminate any unfair treatment. With their organisation or company, it is these people who create growth, jobs and prosperity. As the Minister of Justice, it is also my task to offer them the best possible business environment by changing the company law to suit the modern age.” Here, he touches indirectly upon new themes: how does entrepreneurship bring about fundamental changes in society? What is the impact of (social) entrepreneurship on wellbeing?

From 1 November, the Belgian legislator will therefore count over one million ‘companies’, 150,247 of which are non-profit organisations with a legal status (as registered on 1 January 2018). However, is it right to include non-profit organisations? Graydon's data makes it possible to document this policy choice. In an impressive report, Graydon has already charted the importance of non-profits. We gain insights into the numbers and categories, the number of jobs created and the economic health of the organisations in our country. Graydon’s scores allow us to compare the impact of non-profit organisations with that of ‘companies’.

What comes to light? Our intuition was correct when we started substantiating the decision in favour of this expansion back in 2012. To put it even more strongly, we can presume that the Federal Public Service (FPS) Economy, the Agency for Innovation and Entrepreneurship (VLAIO) and all the business organisations will also follow the Justice cabinet's decision once it becomes apparent that the so-called non-profit sector accounts for no less than 39.49% of large companies (+100 employees) in Belgium (19.03% of which even have between 500 and 999 employees). In addition, over the past 10 years non-profit organisations have accounted for 45.4% (!) of the total number of new jobs in Belgium. Not only are non-profit organisations outstanding employers, they also enjoy unusually good financial health and have considerable reserves. Surely the question should be how we could integrate this model as an alternative blockbuster in the Gazelle typology? And how it is possible that non-profit organisations were not already regarded as fully-fledged participants in the debate? Hardcore silo thinking, surely? 

From now on, how can we detect and enhance these best practices? Can we guarantee that the entrepreneurs in non-profit organisations will receive fair treatment? After all, you see it in every business school: the only executives who cannot fall back on subsidy-based support (which is available to SMEs) are managing a non-profit organisation or NGO. Will this change and will subsidisation soon exceed statutory limits? What about tax benefits? Graydon reveals that non-profit organisations have huge reserves. With regard to all the non-profit organisations which publish their annual accounts, Graydon notes a volume of 19.6 billion euros (!) in cash investments and liquid assets. Although this could certainly be regarded as positive, it does give rise to the question as to whether these available funds are being managed and invested efficiently. It is clear that this change in the law is only the catalyst for a new arsenal of smart incentives for employment and innovation.

Finally, I would like to make one important observation. The positive signals mentioned above come from the active non-profit organisations, and in particular the small group of big players which publish details of their turnover. However, Graydon points out that around 45% (!) of the non-profits are no longer active and are therefore leading a dormant and inactive existence. Measurement means management. Thankfully, by means of the new insolvency act of 11 August 2017, the legislator has now ensured that inactive companies can be detected more quickly and taken out of circulation if appropriate. An invitation for some digital spring cleaning in the Central Database for Enterprises!

Tine Holvoet is respected for her multidisciplinary approach. During the period 2012-2015, she advised the Flemish government on the entrepreneurship culture (STORE Enterprise and Regional Economy Centre). With her contribution to the Global Entrepreneurship Monitor, she built up an international network and provided an annual assessment of entrepreneurial attitudes, activities and ambitions in Belgium. Since 2016, she has been focusing on entrepreneurship and disruption in the financial sector.

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