Lithuanian entrepreneurship: Young business and risk-shunning businesspeople

“The barriers are in our heads. Both infrastructure and market environment are favourable enough, we are not behind countries we want to equal,” said Paulius Lukauskas, director of Versli Lietuva, during  presentation of the results. “But we have a higher index of risk-taking fear. We should have more trust.”

Asked if they though their businesses were innovative, Lithuanian respondents said yes much less often than Latvians. “We are one of the leaders in terms of ideas carried out inside organizations. We have no shortage of ideas, we can carry them out, all we need is more courage. Besides, we must start seeing ourselves as part of a bigger market. We are part of the European Union, the market is huge,” Lukauskas says.

One of the study authors, Vilnius University International Business School deputy director Erika Vaiginienė, says that Lithuanian higher education institutions are the ones that should make the greatest effort. Study experts gave “very good” scores to the Lithuanian goods market, labour market and financial market were judged “good,” infrastructure – “excellent.” Market size received a score of 7.

On a par with Chinese, Croatians, and Russians

The study has revealed that Lithuania is among economies boasting biggest share of young (18 to 24-year-old) businesspeople. Similar situation is observed in Latin America. This indicates great potential to develop and grow, since youths usually come up with innovative business ideas and can create new jobs.

Moreover, Lithuania is number one in Europe in terms of new businesses (running for under 3.5 years). Latin America is far ahead of Lithuania. Almost half of the respondents said they came up with a business idea drawing on their experience in other companies.

Other countries, oriented towards efficiency like Lithuania, include Argentina, Bosnia and Herzegovina, Brazil, Chile, China, Croatia, Latvia, Poland, Malaysia, Mexico, Romania, Russia, Slovakia, Thailand, Turkey, Hungary. These countries use effective production methods in order to increase productivity and bring down costs; also they seek economy of scale; their markets are dominated by big companies, while niche markets are taken up by small and medium businesses.

Among innovation-oriented economies are Ireland, Australia, the Czech Republic, Denmark, Greece, Spain, Japan, the United States, the United Kingdom, the United Arab Emyrates, Korea, the Netherlands, Norway, Portugal, France, Singapore, Slovenia, Finland, Sweden, Taiwan, Germany. These strive towards innovation and greater added value; they see expansion of service sectors; competition is driven by innovation; their governments implement entrepreneurship programs, their education, infrastructure, and finance are directed towards entrepreneurship; their home markets are open.

Algeria, Bangladesh, Iran, Pakistan, and Venezuela are economies dependent on raw materials. Companies here compete with prices, their operations are based on means of production, unskilled labour, and natural resources.

The GEM study was carried out last autumn in 54 countries. To analyse basic conditions for starting a business in Lithuania, investigators polled 36 experts from finance, education, business, and other areas. In order to determine the role of individuals in various entrepreneurial stages, RAIT pollster interviewed 2003 country residents between 18 and 64 years old.

The study, that follows special methodology, is to be repeated yearly at least until 2014. The project budget is 200 thousand litas a year.

According to Lukauskas, the study has revealed a rather good situation in youth business and also paints a much better image of a businessperson than usually perceived in the public imagination. Based on the polls, a statistical Lithuanian businessperson is a well-educated, vigorous, and hard-working creator of new jobs. However, three out of ten respondents were convinced that businesspeople care only about their valets, less 14 percent though honesty was inherent to businesspeople, 23 percent said they were ethical.

“Lithuanian businessperson is a good soldier,” Vilnius University International Business School head Julius Niedvaras sums up the findings. He is convinced that by employing available means – incentive systems, developing business receptivity, etc – Lithuania could go far and join the ranks of innovative countries.

Too shy to take up business

RAIT poll has showed that mere 8 percent of Lithuanians would like to take up their own business. Ten times more – 84 percent – have no plans of setting up their own companies.

Compared to 2007, the number of non-business-prone people increased considerably. Five years ago, there were 70 percent of those, while 10 percent were thinking of doing their own business.

As the main reason for their willingness to start a business, most quoted desire to be independent (40 percent). Every fourth respondent wanted to make more money. 6 percent quoted self-fulfilment.

Those reluctant to take up business, too, were asked to give reasons. These were varied, lack of money being the most popular of them (30 percent). Over a fifth (22 percent) claimed they were too old to start a business, a little less said they felt no need or desire for it. 13 percent think they haven't got enough ideas, knowledge, or experience. The majority of Lithuanians (82 percent) think that starting a business in the country is difficult.

If they were free to choose, 25 percent of Lithuanians would like to have their own business or freelance. Most would opt for hired position or public service.