Entrepreneurs in Romania, whether they are just starting out or have a growing business, correctly perceive the business opportunities in the market but fear failure and see difficult access to finance as a significant barrier to business development. These are two of the main conclusions included in the Country Report on Entrepreneurship – research conducted by the UBB-FSEGA research team, within the international project Global Entrepreneurship Monitor (GEM).
“The Global Entrepreneurship Monitor (GEM) is a global project that provides a comprehensive analysis of the entrepreneurial environment around the world, focusing on the unique challenges and opportunities that each member country of this project faces in developing a competitive entrepreneurial environment. Romania rejoined the project two years ago, and the annual research conducted by the team of Babeș-Bolyai University of Cluj-Napoca (UBB), through the expertise of the faculty in charge – FSEGA, brings extremely relevant data, especially in the context in which, in a world in continuous transformation, entrepreneurial initiative is no longer just an option, but an indispensable factor of economic and social development. When we talk about universities, we must be careful and I hope to implement things appropriately, according to the set of international practices. Harvard University, for example, is not an entrepreneurial university, but one of advanced research and education, with entrepreneurial components. Following such international practices, UBB is a university of advanced research and education, with important entrepreneurial components: a transversal course in entrepreneurship for all students/employees, a business incubator for students/employees, student entrepreneurial societies, entrepreneurship and technology and knowledge transfer offices, etc. In this way, some graduates can be entrepreneurs, often with disruptive innovations, not just incremental ones, others very good employees, capable, according to the Bologna commitment, of working flexibly in various fields/occupations, beyond their initial specializations (with possible minimal professional reconversion courses), and others, through advanced research that does not have immediate practical applications, will be able to change paradigms in the future and bring new markets. Otherwise, if they are limitedly and bureaucratically linked to the existing labor market at a given time, they will have high employability in the short term, but unemployed in the medium-long term, and if we force entrepreneurial models in universities, without advanced exploratory research, potential innovations will be mostly incremental, not disruptive! Therefore, things must be done properly, according to international good practices, and I hope this country report will help in this regard,” declares professor doctor psych. Daniel David, Rector of UBB Cluj.
“The 2022-2023 country report produced by the GEM Romania team highlights the current state of entrepreneurship in Romania, examining the strengths, challenges and how it compares to other nations in Eastern Europe. In addition, the report identifies the main areas of opportunity that could catalyze entrepreneurial success in Romania”, explains prof. univ. dr. Tünde Petra Szabó, coordinator of the FSEGA research team that produced the report for Romania.
Compared to Eastern European countries, in Romania, the entrepreneurial potential is competitive, with the perception of good opportunities for new companies being high. Thus, 63.75% of Romanians see favorable conditions for starting a business in the next six months, and 62.68% of Romanians declare that they have the skills and knowledge necessary to launch a business. Despite these strengths, there are also barriers, one of which is the fear of failure, which affects 58.05% of the adult population, a relatively high figure compared to other Eastern European countries. Romania ranks fifth worldwide in terms of this indicator, which demonstrates that cultural and economic factors create an environment in which the costs of failure are perceived as prohibitively high, the GEM Romania report shows.
The positive self-assessment of entrepreneurial potential reflects Romania’s educational initiatives, as well as the relatively high level of fundamental and practical business knowledge. In addition, the low business interruption rate (1.05%), one of the lowest in Eastern Europe, further highlights the resilience of Romanian entrepreneurs, the report shows.
The biggest opportunity for Romanian entrepreneurs lies in digital transformation, especially in the wake of the COVID-19 pandemic. The shift to digital business models presents vast potential for innovation and market expansion. The pandemic has stimulated the adoption of digital technologies, with 19.88% of Romanian start-up entrepreneurs reporting using digital technologies as part of their business strategies. This trend highlights an opportunity for Romania to harness digital transformation to increase productivity and expand global reach.
Over 63% of Romanians believe that there are favorable conditions for starting a business in the area where they live
According to the report, the early stage entrepreneurial activity (TEA) rate for Romania stands at 8.25%, slightly below the GEM Global average of 12.94%. This figure suggests a moderate level of engagement in new business activities compared to similar countries around the world. The established business owner (EBO) rate is higher at 8.6%, indicating a stable but cautious entrepreneurial community, in which fewer entrepreneurs launch new companies. But those who do tend to maintain their businesses beyond the initial stages. Economic conditions, cultural attitudes towards risk, and a generally cautious economic environment are important factors shaping the entrepreneurial context in Romania.
In Romania, 46.20% of the population aged 18-64 knows someone who has started a business in the last two years. This rate is lower than in Croatia, Poland, Slovakia and Hungary, and places Romania in 37th place out of 49 countries participating in the GEM Global research in 2022.
Romania fares better in terms of identifying business opportunities, ranking 14th. In Romania, 63.75% of the adult population believe that there are good conditions to start a business in the area they live in, in the next six months. Although this rate is lower than the rate in Poland (72.26%), it is higher than in Hungary (27.23%) and Slovakia (29.37%) and similar to that in Croatia (60.02%).
According to the GEM results, 51.5% of early-stage entrepreneurs in Romania operate in consumer services, 21.2% in business services, 21% in manufacturing, and 6.3% in extractive industries. Established entrepreneurs, in turn, operate in a proportion of 30.4% in consumer services, 24.5% in business services, 35.4% in manufacturing, and 9.7% in extractive industries.