By: Gary Napadov, C’Pher Gresham and Daniel Hunkeler
Last Tuesday, the Thunderbird European Business and Culture (Thunderbird EBCC) hosted the “Europe: Crisis, Uncertainty… Opportunity!” event, building on the timely theme of a continent steeped in history, now embroiled in crisis, that presents many risks as well as plentiful and unlimited opportunities.
Students had the honor of welcoming Dr. Robert D. Hisrich, the Garvin Professor of Global Entrepreneurship and Director of the Walker Center for Global Entrepreneurship at Thunderbird, as he discussed the current business climate in Europe, the history leading up to the current situation, and reflected his personal and ongoing experience in European business.
Having lived and done business in for many years in Europe, Dr. Hisrich offered up his sincere insights and anecdotes. Hisrich’s passion for Europe started with a first stay in Ireland, the Celtic Tiger, in 1984, continuing with stints throughout Europe, with particular interest in Hungary, Romania, Slovenia, and Russia.
“I have a great passion for Europe, I love the food, I love the people, I love the wines… I look forward to going back.”
Commenting on the European Union, what Dr. Hisrich called a “funny phenomenon”, Hisrich did not hesitate to blame its primary purpose of creating a seamless market as the reason for its ultimate failure. Further, Histrich outlined the following difficulties with the EU:
- History – For something like the EU to work you have to forget about history. When entering Europe, you have to be aware of the past. And just because there’s a Union, does not mean thousands of years of history have gone wayside.
- Flow of Capital – To have an open market, you must have free flow of capital. Would sharing a currency really encourage this flow of capital? Dr. Hisrich believes not. The major flow of capital happens at the macro level, between banks and businesses, not at the micro level.
- Labor system – There is still no free flow of labor and the labor and bankruptcy laws are really tough on entrepreneurship. The labor laws put much of the power into the employee’s hands and not into the employer’s hands.
- There are no common product standards.
Another factor at play is that unlike the entrepreneurial start-up culture of the United States, Europeans tend to have a psychological mindset that is risk averse and failure is highly stigmatized. In regards to new business formation in Europe, Dr. Hisrich referred to an analysis done by the Bruegel think-tank in 2007. According to that study, out of the 500 largest companies established between 1950-2007, only 12 are European, compared to 52 from the US. And the list of European entrepreneurs is small, and with the exception of Sir Richard Branson, those that have been successful do not want to be interviewed and do not get much publicity.
But despite all the risk and uncertainty in Europe, Professor Hisrich is confident in Europe’s potential for opportunities to do business. As to what specific countries, Hisrich sees Eastern Europe as more favorable than Western Europe, largely because some of those countries are not in the European Union or are not yet fully integrated into the EU. So if one can leverage the cultures and the business climate, you can create a thriving business – especially in Eastern Europe. This area of Europe is developing rapidly and is open to outside investment.
“I love the developing economies. That’s where all the money is going to be made in the future… I like Russia. I love Ukraine… I think Ukraine is the next big five.”
There are big opportunities in Eastern Europe because of the still evolving infrastructure, development of distribution channels, and privatization of markets. So where are all these opportunities you ask? “I like the service sector the best…when economies are developing the service sector is the last that is there” says Hisrich. So the following areas are worthy of consideration:
- Business to business services, business supply, distribution
- Business Education and seminars
- Product import/export from US and others
- Consumer foods retail (ice cream, pizza)
- Hospitality, leisure, and travel
Dr. Hisrich offered the following recommendations for a successful European business venture:
- If you can, invest gradually and turn institution voids into opportunities
- Find a trusted local business partner, and that person MUST be politically connected.
- If you don’t speak the language, get a translator, and make sure YOU pay the translator
- Embrace the big market opportunities and feel good about filling a product or service void
Thank you Dr. Hisrich for sharing your insights and we look forward to working with you again as continue to fulfill EBCC’s mission of bringing Europe back into the daily business education discourse. Stay tuned for event information as we welcome Nimrod Kovács, serial entrepreneur, investor, and philanthropist from Budapest, Hungary.
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