Introduction, Small Business and Southern Europe’s Economic problems.
Because my Arizona business law firm represents businesses and start ups, both locally and from around the world, I was curious about the role entrepreneurs, start ups, and small and medium size businesses play in their national economies around the world. Surprisingly, one of the first articles that I found attributed the financial problems of Greece, Italy and Spain, in part, to the predominant role that small businesses play in their economic systems. In this article Mr. Yglesias, writing for Slate.com, states that too many workers work for too many small firms. 58% work for firms with fewer than 10 employees and 75% work for firms with fewer than 50 employees. In contrast in the United States only 11% of workers are employed by companies with fewer than 10 workers and only one-third work for firms with fewer than 50 workers.
Although not expressly stated, one problem seems to be that local regulations do more than foster small businesses, they protect and coddle them through restrictive licenses. Ironically, protecting local firms from globalization seems to have destroyed the national economy. Like it or not the economies of scale provided by larger global organizations appear to serve not only the public but also the country as a whole. This is not exactly what I wanted to hear when I set out to write this article. But, as small business – or starting one’s own business – is often spoken of reverentially, like parent-hood, it is good to get the perspective. Still, as the Slate article makes clear, business smallness is not the only, or necessarily the major, cause of southern Europe’s economic problems; poorly functioning institutions which favor personal connections over finely drawn regulations, policies and procedures, contribute to the problem.
England and the United Kingdom
United States of America
So, what have we learned? Well, as the song goes. “God bless the USA.” We have a common culture which is accepting of the entrepreneurial spirit, individual business ownership, risk-taking and failure. We have mostly uniform and non- oppressive laws that make national business success possible. The United States is still the place to be for start ups, and immigrants -- if we let them -- will bring their money here to invest it in business enterprise.
But, before we get too proud of ourselves: I thought of my client from Uganda. According to international entrepreneurship.com Uganda in 2004, Uganda had the highest TEA index in the world: 31.6. And, according to Fast Company.com 29.3% of the business activity in Uganda was conducted by entrepreneurs or managers of a new enterprise. Many of the entrepreneurs in Uganda are women, including my client, who owns and manages a company which makes composite blocks for construction.