Croatia still has a low level of research transfer to the business sector and a limiting business climate, shows the latest GEM survey for 2021, presented on Tuesday.

The survey – What makes Croatia a (non)entrepreneurial country? – confirms that the business climate in Croatia is still more limiting than stimulating.

According to experts, only two components (availability and quality of telecommunications and transport infrastructure and the dynamics of the domestic market) have a stimulating effect on entrepreneurial activity.

Croatia has been participating in the Global Entrepreneurship Monitor (GEM), the world’s largest entrepreneurship survey, since 2002. The survey is conducted in Croatia by CEPOR – Center for SME Development Policy and Entrepreneurship.

Presenting the survey results, Professor Sanja Pfeifer from Osijek University said that it was encouraging that in the past 20 years early entrepreneurial activity in Croatia had caught up with the dynamics of entrepreneurial activity indicators in the EU, however, changes to the perception of the business climate are insignificant.

She underscored progress on early entrepreneurial activity, including start-up businesses and new ventures, noting that Croatia was above the EU average in that regard.

As for areas where the need for change is still visible, she pointed to mature businesses.

Regarding the business climate, Croatia is showing some progress but it is still lagging behind other EU countries, said Pfeifer.

She noted that it is necessary to increase the share of businesses that are started out of opportunity rather than out of necessity.

The research indicates that Croatia still has a low motivation index (more people starting a business out of necessity compared with other EU countries), a low density of “adult” companies (57% of the EU average), but also a stable indicator of high employee entrepreneurial activity (in the top five EU countries).

The key components that limit the quality of the business climate are government policies on the regulatory framework, the presence of significant barriers to market entry, a low level of research transfer to the business sector, and insufficient contribution of primary and secondary education in developing entrepreneurial competencies.

Social values of entrepreneurship in Croatia are still below the average ratings of respondents in the EU. Thus, about 60% of respondents believe that being an entrepreneur is a good career choice, which is in line with the fact that Croatia ranks high in the EU in terms of expressed intention to start a business.

However, such an optimistic approach to entrepreneurship is jeopardized by an extremely low perception of whether successful entrepreneurs are regarded highly in society.

In 2021 and 2020, Croatia ranked the last among EU countries covered by the GEM survey in terms of the perception of the social status of successful entrepreneurs, lagging behind the EU average by about 15 percentage points.

Measured through total early activity – TEA index (business ventures up to 42 months of age) and the activity of “adult” businesses (business ventures older than 42 months of activity), Croatia’s entrepreneurial activity has stable but varied tendencies of change compared to the EU average, with an above-average share of early entrepreneurial activity and below-average participation of “adult” companies.

In 2021, with 12.4% of new business ventures, Croatia was above the EU average (8.4%).

The research also showed that in 2021, the most common reason for shutting down a business was non-profitability (20.5%), followed by new opportunities (15.1%), which is significantly above the EU average (10.1%).

Entrepreneurial demographics indicate that Croatia is still a significantly more “male” country in terms of entrepreneurial activity (the ratio of male and female start-ups is 1.7), which is approximately at the level of the EU average (1.5).

The state secretary at the Ministry of Economy and Sustainable Development, Nataša Mikus-Zigman, said that the ministry was working to maximize the absorption of EU funds for entrepreneurial projects, as well as for research to develop measures to improve competitiveness on the global market.