How many times do you hear the following gripe? “Government red tape is stifling British business, we need to be more like the US”. Then thereâ€™s the classic, “its too difficult for companies to obtain finance in this country. If you need backing you are better off going to the US.” Thereâ€™s an implicit belief that the US economy provides a more enterprising culture, and that for your average entrepreneur, the US is the place to be. No wonder, goes the argument, that the US economy enjoys a higher level of GDP per capita and that productivity is higher.
But all these deeply held views could be false. According to a report published on the Cambridge MIT institute web site produced in conjunction with the CBI, American managers are even more concerned than Brits over red tape, and more American business leaders cited difficulty in obtaining funding as a major barrier to business.
The report was produced after surveying 3,600 companies on both side of the Atlantic. It seemed to cover the entire gamut of issues that determine efficiency. The survey found that UK business and universities are doing more to link up with each other than in the US, that British companies face more competition from abroad, a higher proportion of British companies get government support and, most significantly of all, US companies are more worried than their British counterparts about particular constraints including ‘red tape’ (legislation, taxation, regulation), access to finance, and the availability of skilled labour.
But it’s not all a one-way street. Take business and universities working together. The Brits might be engaged in more link-ups, but American businesses seem to feel they get more out of University collaboration. It’s similar with government support for R&D. More British firms make use of government schemes, but when American firms actually get federal government support, it tends to be more meaningful and worth a lot more money. And while British firms face more competition from abroad, the domestic level of corporate rivalry is so fierce in the US, that American firms do, on the whole, face more competition than their British counterparts.
The findings of this report are surprising. We wonder whether the results could partially be explained by US mangers simply having higher expectations. So while US firms cite difficulty in finding finance as a major handicap, we wonder whether that this is down to American business wanting and expecting more funding in the first place.
Culturally, the US is in our view still a lot more conducive to entrepreneurialism. Risk takers are accorded more respect and there is a greater degree of forgiveness for business failure – although not for dishonesty.
The American dream does encourage risk taking, and business is stronger as a result.
© Investment & Business News 2013