Policy brief

Setting up a business: from the will to the deed

Since 2000, the creation of new business has increased sharply in France, rising from about 200,000 a year to more than 800,000 in 2019, with an acceleration over the last two years. Indeed, the emergence of limited companies and partnerships alone have doubled during this period. But the general increase is only partly due to the development of microenterprises.

Published on : 23/04/2020

Temps de lecture

3 minutes

Despite such dynamism, according to the international Global Entrepreneurship Monitor (GEM) survey, the proportion of new entrepreneurs in France is below the OECD average, on the same level as Germany, but lower than in the United Kingdom and the United States. Paradoxically, the willingness to undertake entrepreneurship in France may reach an exceptionally high level, even higher than in the United States; in 2018, this desire already appeared to represent 18.6% of people aged eighteen to sixty-four, compared with 12.1% in the United States. Such a statistic would suggest that there is a large latent reserve of entrepreneurs in France. .

How, then, can the large difference in France between the desire to create a business, and the act of creating a business be explained? This report attempts to answer the question, using the most recent individual data available from the GEM survey (2014 at the time of this writing), by modelling the probability of becoming an entrepreneur, and breaking down the transition to entrepreneurship into two stages: the will to start a business, and the act of starting a business. Several results can be highlighted. France tends to underperform in the creation of businesses, even when controlled by a set of individual characteristics. But this lower take-up cannot be explained by population structure; rather, by a "country effect", which includes a set of institutional, regulatory, economic, and cultural factors. The Pact law promulgated in May 2019, whose effects will be assessed over time, and once the Covid crisis is behind us, could reduce this country effect by improving conditions for the creation and development of businesses.

Since Schumpeter, many studies have highlighted the positive role of entrepreneurship on economic growth. They have also stressed the importance of entrepreneurship in the dynamics of innovation. A better understanding of the motivations and conditions for entrepreneurship and business demographics helps to explain growth differentials among countries. It also contributes to the formulation of reforms aimed at encouraging business creation in the wake of the Pact law promulgated in May 2019.

A country's entrepreneurial dynamism is not only measured by its rate of business creation; it is also characterized by people's attitudes and aspirations towards entrepreneurship. The Global Monitoring Entrepreneurship (GEM), the oldest and largest international database on entrepreneurship, which has surveyed more than 200,000 people in OECD countries every year since 1999, is studying precisely this topic. The survey identifies individuals and their characteristics in successive phases of entrepreneurship.

For this report, three econometric models relating to each of the stages - the willingness to start a business, the move to action and the creation of a business - are estimated for the 29 OECD countries over two periods, 2002-2004 and 2012-2014.