Studies in Business and Economics no.

18(2)/2023

DOI 10.2478/sbe-2023-0033
SBE no. 18(2) 2023

ENTREPRENEURSHIP IN ROMANIA:
OPPORTUNITIES AND CHALLENGES

LUCIAN Paul
Lucian Blaga University of Sibiu, Romania

ȘOAITĂ Antonela-Ioana
Lucian Blaga University of Sibiu, Romania

Abstract:
Is the development of entrepreneurship one of the solutions to the economic and
development problems facing Romania? The answer is related to the identification of solutions to
support its development. Romania is an Eastern European country that faces many problems, not only
economic ones, but also social and political ones, and which does not favor a coherent and predictable
entrepreneurial environment, which poses both opportunities and challenges for those who want to
start or develop a business. Today there are many entrepreneurs in Romania who have created
successful businesses in various fields, contributing to economic growth and new jobs. And yet,
Romania ranks last among the other EU member states in terms of entrepreneurial development.
Reducing the gap requires finding not only quick but also effective solutions to the problems they face
related to bureaucracy, corruption, legislation and financing access.

Key words: Entrepreneur, entrepreneurship, entrepreneurial environment, entrepreneurship

opportunities and challenges.

1. Introduction

The subject of entrepreneurship generates a multitude of discussions, analyses,

and studies, not only among those who researched and are researching the subject but also
at state level and at the level of international institutions. A multitude of definitions regarding
entrepreneurship has been given over time, each of them containing an element deemed
important, ranging from innovation and opportunity to risk. There is still no unanimously
recognized and accepted definition, however, this does not prevent us from embracing the
following definition of entrepreneurship "the creation of new organizations" (Gartner, 1989,
pp. 62).
Today the topic has become more and more important at the national level because
many countries want an accelerated development of entrepreneurship through competition.
They become aware of the fact that entrepreneurial activity and the creation of new

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companies represent engines of economic growth and innovation (Baumol, 1968, p. 64, Abu
Saifan, 2012, p. 22).
And "high ability entrepreneurs will create jobs, increase the average size of firms, raise
incentives for education and migration to urban agglomerations and the modern economy,
diversify an economy by uncovering its production possibilities, and demonstrate and
facilitate the adoption of new technology" ( Naude, 2008, p.35).
To be able to achieve the expected results, entrepreneurship is closely related to what needs
to be developed, namely the entrepreneurial environment. The term "entrepreneurial
environment" refers to a combination of factors that play a role in the development of
entrepreneurship. "A key role of the entrepreneurial environment is to help entrepreneurs
develop both propensity to enterprise and ability to enterprise" (Gnyawali & Fogel, 1994, p.
54).
"Entrepreneurial environment is a combination of factors that play a role in the
development of entrepreneurship. It refers to the overall economic, sociocultural, and
political factors that influence people's willingness and ability to undertake entrepreneurial
activities. Also, it refers to the availability of assistance and support services that facilitate
the start-up process" (Gnyawali & Fogel, 1994, p. 44).
The Romanian entrepreneurial environment today is in direct competition with
environments from other member countries in the single internal market. However, the
former has a modest development of those socio-cultural, economic, technological, and
political factors that can ensure the success of entrepreneurship, and similarly, the
conditions are not favorable for the initiation and development of businesses in terms of
legislation, access to financing, infrastructure, entrepreneurial education, and community
support.
In turn, the Global Entrepreneurship Monitor (GEM) also recognizes the influence of the
social, cultural, and political context; in particular, it includes factors that influence the
environment for entrepreneurship under the term "entrepreneurial framework" (GEM, 2018,
pp.15)
The paper takes as its starting point the concept of entrepreneurship, defines a
series of concepts related to it, and realizes a brief evolution of entrepreneurship in Romania,
after which it aims to provide an overview of the Romanian entrepreneurial environment
based on evaluations carried out at the international level by to GEM and the European
Union, with the aim of helping to define the importance and place that entrepreneurship
occupies or must occupy in the economic growth and economic development of society.

2. About entrepreneurs and entrepreneurship

Regarding the notion of entrepreneur and entrepreneurship, there are a multitude

of definitions that include a series of words such as successful businessman, business
ideas, to come up with something new different from others, risk-taking, and opportunities.
The definitions related to entrepreneurship are varied, depending on the perspective of the
approach: sociological, psychological, economic, anthropological, etc., but at the same time
complex.

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The author who left his mark on the development of the theory of entrepreneurship
is Joseph Alois Schumpeter, who in 1912 published the work in German Theorie der
wirtschaftlichen Entwicklung (Theory of Economic Development) translated in 1934 into
English under the title "The Theory of Economic Development." The essence of the theory
developed by this author refers to the fact that economic development takes place within the
process of creating new opportunities through the process of "creative destruction".
“Carrying out of new combinations”: introduction of a new good, introduction of a new
method of production, opening of a new market, new source of supply of raw materials, and
carrying out of the new organization of any industry. (Schumpeter 1912, 1934, p. 66).
Entrepreneurship is a process that involves the existence, discovery, and exploitation of
entrepreneurial opportunities. “Entrepreneurial opportunities are those situations in which
new goods, services, raw materials, and organizing methods can be introduced and sold at
greater than the cost of production.” (Shane and Venkataraman, 2000, p. 220).
„Entrepreneurship is a purposeful activity to initiate, maintain and develop a profit-
oriented business.” (Cole, 1968, pp. 65). “Entrepreneurship is about opportunity, recognizing
it, seizing it and exploiting it- but it is also about failing sometimes.” (Allen, 2006, pp.32).
Entrepreneurship is to be defined as the “creation of new enterprise and entrepreneurship
research seeks to explain and facilitate the role of new enterprise in furthering economic
progress.” (Low &MacMillan, 1988, p.141). Stevenson defines entrepreneurship as “The
process by which individuals – either on their own or inside organizations – pursue
opportunities without regard to the resources they currently control” (Stevenson & Jarillo,
1990, p. 23).
Each of these definitions of entrepreneurship is different, but there is an attempt at
a common definition, namely: "the act of generating and developing an idea for validation".
(Prince, Chapman, Cassey, 2021, p.29)
However, there is another definition "Entrepreneurship is not a genetic trait; it is a skill that
most people can learn. It has become a very common vocation" (Scarborough & Cornwall,
2015, p.28) which can provide an answer to the question of whether an entrepreneur is a
person born to do something like this or entrepreneurship can be learned, but definition, we
should also add the "patience" to bring an idea to the end, without giving up along the way.
And as entrepreneurship is related to the entrepreneur, there are a multitude of definitions
that create the portrait of the entrepreneur.
An entrepreneur is the "one who creates a new business in the face of risk and
uncertainty for the purpose of achieving profit and growth by identifying opportunities and
assembling the necessary resources to capitalize on those opportunities." (Scarborough,
2012, pp.4). "Entrepreneurs are important agents of change in the global economy,
uprooting staid industries with fresh new business models that spot market opportunities
and deliver customers' desired products and services". (Scarborough & Cornwall, 2015,
pp.21. William Baumol (1968, p. 64) would write about the entrepreneur: “The entrepreneur
is at the same time one of the most intriguing and one of the most elusive characters in the
cats that constitutes the subject of economic analysis. He has long been recognized as the
apex of the hierarchy that determines the behavior of the firm and thereby bears a heavy
responsibility for the vitality of the free enterprise society.”

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Good functioning of entrepreneurship and obtaining the expected results requires the
existence of a national entrepreneurial framework consisting of Government Policies and
Procedures, Socioeconomic Conditions, Entrepreneurial and Business Skills, Financial
Support to Businesses, and Non-Financial Support to Businesses (Gnyawali & Fogel, 1994,
p . 46), the role and importance of each factor differs from one country to another, but it is
government policy that makes the difference.
The European Union is also concerned about entrepreneurship and its problems,
and Romania as a member country must also be concerned.
The European Union was and is aware of the immense development potential generated by
entrepreneurship, strongly supporting its development. The European Commission gave a
definition to entrepreneurship in order to be directly involved in supporting its development,
namely, "entrepreneurship is an individual's ability to turn ideas into action. It includes
creativity, innovation, risk-taking, ability to plan and manage projects in order to achieve
objectives''. (Institute of Entrepreneurship Development, European Commission). European
Entrepreneurship or Entrepreneurship refers to "the common principles of all fields and
sectors of society, economy, and culture of the Member States of the European Union. It
promotes European values and supports inclusion and equal opportunities". (Institute of
Entrepreneurship Development, European Commission).
According to European regulations, there are four types of entrepreneurship: small
business, scalable startups, large company or intrapreneurship, and social
entrepreneurship. The term startup did not have an official definition - usually, it is defined
according to 3 criteria, namely: AGE (younger than ten years/ five years depending on the
sector); INNOVATION (in the product, service, or business model); AIM TO SCALE
(intention to grow number of employees and/or markets operated in) (Steigertahl & Mauer,
2018, pp.7).
Later the definition was completed as follows - "A startup is an independent
organization, which is younger than five years and is aimed at creating, improving and
expanding a scalable, innovative, technology-enabled product with high and rapid growth."
(European Startup Network, Startup Definition). "Startup Europe is an initiative of the
European Commission to connect high-tech startups, scaleups, investors, accelerators,
corporate networks, universities, and the media." (European Commission, Startup Europe).
The data definition of startups shows that their development environment is
extremely complicated and quite difficult to evaluate, but the data of the European
Commission reveal the portrait of such an entrepreneur, namely: the majority are male and
have skills acquired as a result of university education or practical knowledge and relevant
experience.
Regarding the Startup Nations program, it was conceived by the Portuguese government
during its EU presidency in early 2021 and subsequently launched by the European
Commission in the spring of the same year. It includes eight policy areas to support the
creation and growth of innovative start-ups.

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3. Entrepreneurship in Romania

Until 1989, entrepreneurship hardly existed at all. After 1989, when Romania started
to take small steps towards the market economy, the development of the private sector
began. This development was the consequence of the collapse of the state economy and
the accelerated growth of unemployment, which resulted in the appearance of the first
private business. The restructuring of the economy generated many unemployed people,
and some of them discovered their own entrepreneurial skills in order to survive.
A legislative framework was also needed to regulate the activity, this being
represented by Law no. 31/1990 regarding commercial companies still valid today, its last
update took place in 2023. The period of transition to the market economy allowed the
emergence of the first entrepreneurs, who exploited the existing loopholes in the legislation,
the opening of borders, the lack of customs duties for a period, the lack of an economic
development model for Romania to follow as well as the needs the population that wanted
access to consumer goods that they lacked in the last 50 years and for which they also had
the necessary money.
Romanian entrepreneurship recorded negative results in development until the
moment of accession to the EU, although after 2000 the governments tried to create a
favorable environment for the development of entrepreneurship with the start of Romania's
European path. For this purpose, Law no. 346/2004 regarding the stimulation of the
establishment and development of small and medium enterprises.
The EU membership that began in 2007 has led to a series of positive changes
regarding the development of entrepreneurship in Romania. First of all, Romania's alignment
with the community acquis made the legislative framework more transparent and stable, a
fact that contributed to the development of a much-improved business climate, however still
lacking in terms of bureaucracy, business establishment procedures, or the protection of
business rights and intellectual property. Still, the overall trend was that of an approach
towards normalizing the relations of state institutions with the private sector. Further support
was related to the new financing system with the help of European funds, funds that were
supposed to support entrepreneurs directly in terms of innovation, modernization, and
internationalization. EU membership has generated a rather significant problem related to
the workforce as well. The skilled workforce that Romania had at its disposal, but which was
also rather poorly paid, attracted investments and created a favorable environment for the
development of entrepreneurship. Many Romanian and foreign entrepreneurs have
benefited from this skilled workforce in the development and management of their
businesses. The fact that it was poorly paid and a certain attitude of entrepreneurs towards
employees led to an increase in the number of migrants to other EU member countries who
benefited from its qualifications with disastrous effects on the development of Romanian
entrepreneurship.
Romania benefited from the recognition of the importance of entrepreneurship
development after the 2008 crisis by the European Commission, which adopted regulations
in 2012 to support the "More entrepreneurs for Europe" challenge. (European Commission,
Entrepreneurship 2020 Action Plan Reigniting the entrepreneurial spirit in Europe -
Communication from the Commission to the European Parliament, the Council, the

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European Economic and Social Committee, and the Committee of the Regions available at
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52012DC0795.
Over time, Romania has also created an entrepreneurial environment, an
environment subject to various evaluations by international and European institutes.
Such a comparative assessment of national entrepreneurial conditions is made by the
Global Entrepreneurship Monitor (GEM). It defines the entrepreneurial context of the
economy based on a number of characteristics, called Entrepreneurial Conditions-
Framework (EFC).

Figure 1. National Entrepreneurial Framework Conditions Summary

A1. Entrepreneurial Finance: there are sufficient funds for new startups
A 2. Ease of Access to Entrepreneurial Finance: those funds era easy to access
B1. Government Policy - Support and Relevance: policies promote and support startups
B2. Government Policy – Taxes and Bureaucracy: new businesses are not overburdened
C. Government Entrepreneurial Programs: quality support programs are widely available
D1. Entrepreneurial Education at School: schools introduce entrepreneurial ideas
D2. Entrepreneurial Education Post School: colleges offer courses on how to start a
business
E. Research and Development Transfers: research is easily transferred to new
businesses
F. Commercial and Professional infrastructure quality services are available and
affordable
G1. Ease of Entry- Market Dynamics: markets are free, open, and growing
G2. Ease of Entry – Burdens and Regulations: regulations encourage not restrict entry
H. Physical infrastructure: good–quality, available and affordable
I. Social and Cultural Norms: encourage and celebrate entrepreneurship
Source: Global Entrepreneurship Monitor 2022/2023 Global Report pp. 106 available at
https://www.gemconsortium.org/reports/latest-global-report.

Based on the evaluation of these framework conditions existing at the national level,
the National Entrepreneurship Context Indices - NECI are calculated, which are based on
the EFC scores of each economy.
The last evaluation made by GEM shows that Romania occupies a modest position among
the evaluated countries. Romania does not have a tradition regarding the evaluations made
by GEM, the first participation being in the 2021/2022 Report, in which it is in position 40,
and in the evaluation prepared in 2022/2023 it climbed to position 36, and the index of
context (NECI) increased to 4.2 from 4.0 in one year. The progress made by Romania in a
way shows the increase of interest in entrepreneurship. The report on the entrepreneurial
framework contains an analysis of a group of countries with a GDP/capita between 20,000-
40,000 dollars, which also includes Romania, including a number of 16 countries, 8 of which
are European, and 7 EU members. The scores represent each framework condition and
they range on a scale from 0 to 10. As such, an average score of 5.0 can be considered

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adequate or sufficient for that condition. (GEM, Global Report Adapting to a "New Normal"
2022/2023 pp. 182).

Figure 2. National Entrepreneurial Context Index (NECI) 2022

Source: Global Entrepreneurship Monitor 2022/2023 Global Report Adapting to a" New
Normal" 2022/2023, pp. 109 available at https://www.gemconsortium.org/reports/latest-
global-report.

The analysis shows that Romania has made progress in terms of Physical
Infrastructure (5.8 scores) occupying the place (11/16), other good results are recorded by
Commercial and Professional Infrastructure (5.7 scores) (6/16) and bad results are recorded
related to Entrepreneurial Education at School (2.4 scores) (11/16) and Government Policy:
Support and Relevance (3.0 score) (11/16) to which we could add Research and
Development Transfers (3.3 scores) (12/16). The analysis also shows the lack of interest of

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the government in measures to support entrepreneurship in terms of Entrepreneurial

Finance (3.9 scores) (9/16) and Ease of Access to Entrepreneurial Finance (3.9 scores)
(9/16) and which is directly related to the lack of entrepreneurship programs that had to be
created by the government.
The fact that many of the framework conditions (EFC) depend directly on the
influence of the government, their condition and evolution show how the government sets
its priorities and expenditures according to the assumed objectives. Thus, the expenses
related to everything that means entrepreneurship, especially entrepreneurial education and
the development of entrepreneurial programs should be seen as mandatory objectives
assumed by any government, they should be included in any development strategy.
For its part, the European Union supports entrepreneurship and entrepreneurs through
various policies and programs created at the European level that aim to increase access to
financing through the European Investment Fund and through programs such as the SME
Instrument and the Horizon 2020 Program, promoting innovation and research through the
EU Framework Program for Research and Innovation, training and professional
development of entrepreneurs through EU-funded learning and training programs and
supporting entrepreneurs' access to external markets through trade agreements concluded
with other countries and regions, to which add the EU's desire to reduce bureaucracy and
simplify regulations for entrepreneurs in member countries. The ultimate goal of all
measures taken by the EU is to stimulate innovation and economic growth.
The European Union (EU) uses several common criteria to rank member countries
in terms of entrepreneurship development, using various indices and international reports to
assess the level of entrepreneurship development in an EU member country.
At the European level, in order to be able to measure entrepreneurial development as
correctly and easily as possible, the European Index of Digital Entrepreneurship Systems
(EIDES) was created. The index measures both physical and digital conditions for stand-up,
start-up, and scale-up businesses in EU member states.
The eight pillars of the indices that represent the general and systemic framework on the
basis of which the European Index of Digital Entrepreneurship Systems (EIDES) is
calculated are 1. Culture and informal institutions, 2. Formal institutions, regulation, and
taxation 3. Market conditions 4 Physical infrastructure 5. Human capital 6. Knowledge
creation and dissemination 7. Finance 8. Networking and support.
The index measures the framework conditions in three stages of entrepreneurial
development: stand-up, start-up, and scale-up. The Stand-up stage refers to the self-
selection of individuals into entrepreneurship. The Start-up stage is the subsequent creation
of new start-ups. The Scale-up stage refers to the expansion of start-ups that have
discovered a business model with high growth potential. The European Index of digital
entrepreneurship systems (EIDES) can finally provide a useful picture of national
entrepreneurship systems, and the general framework conditions that regulate the way in
which national entrepreneurship dynamics can be produced.

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Table 1. 2020 EIDES Digital Scores for the EU27 Countries Plus the UK

Source: European Commission, European Index of Digital Entrepreneurship Systems

(EIDES), 2020, pp.31 available at https://joint-research-centre.ec.europa.eu/european-
index-digital-entrepreneurship-systems-eides_en.

In the 2020 report, Romania made progress compared to 2018 and is still at the
bottom of the ranking, being part of the group of "delayed" countries along with Bulgaria,
Croatia, Greece, Hungary, Lithuania, and Slovakia. The position occupied by Romania as a
whole, 26th out of 27, reflects the state's lack of interest in entrepreneurship. The analysis
carried out over the 3 years shows a group of countries, considered leaders after the
analysis of the 8 pillars, each having a pillar with special results, namely: Denmark pillar 4,

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Sweden pillar 3, Netherlands pillar 1, Finland pillar 5, Germany pillar 6 and Ireland pillar 3,
England being excluded. There are countries where the political power supports
entrepreneurship, which has old traditions in the field. And the last places are occupied by
Bulgaria, Greece, Croatia, Romania, and Slovakia. Three of them come from a more radical
part of the communist system, which excluded private property and therefore
entrepreneurship, and thus have an education system that is far behind the European
average and found their way to the market economy with difficulty, while Greece and Croatia
are grateful for the status of tourist destinations. As far as Romania is concerned the only
pillar on which it has made progress is related to Physical infrastructure (58.7 score)
(European Commission, European Index of Digital Entrepreneurship Systems (EIDES),
2020 pp. 88). Pillar scores range from 0 to 100. Romania has registered a fairly large
increase, it is approaching 1000 km of highway, not that it is a lot in general, but it is a lot for
Romania, but there are still problems related to Internet access and energy infrastructure,
the last without major investments in the last 30 years. And the weakest pillar is represented
by Culture and Informal Institutions (score of 19.9) being recognized Romania's problems
related to corruption, and corruption ensures us one of the first places at the European level
and we can say that there is widespread corruption at all levels according to the international
evaluation. Romania occupies a modest position in terms of Market conditions with a score
of 19.4 because there is no support from the state. Human capital with a score of 20.2 shows
a low level of the quality of the education system, the level of education of the population,
and entrepreneurial education and shows that it occupies a modest position in the group of
laggards to which it belongs.
Timid progress is still registered by Romania in terms of formal institutions,
regulation, and taxation through the desire to align with the EU requirements to establish a
good relationship between the regulatory framework and entrepreneurship through a system
of laws friendly to the business environment.
Also, the Finance pillar has made progress, but not enough in the issue of ensuring access
to financing sources, which shows the superficial involvement of the government.

4. Entrepreneurship challenges and opportunities in Romania

It is generally acknowledged that entrepreneurship is a multifaceted aspect, which

can be analyzed directly as "the resource, process, and state of being" (Naudé, 2013, p.4),
and its measurement is complicated because the evolutions at the national level, are quite
difficult to compare with what is happening at the international level.
Following the analysis of the conditions, criteria, and indices that place Romania in a rather
bad position in the international and European rankings regarding evaluations of the
entrepreneurial environment, we have identified the following aspects that generate
challenges, namely:
The most important criterion is related to government policy. Government policies
and institutions are crucial because they issue the appropriate rules for such a game and
create some mechanisms to make the market and finance run smoothly (High, 2009, 15).
They should create a predictable, transparent, coherent, and friendly business environment
for entrepreneurs. However, most of the time the political power that is responsible for

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government policy takes various measures depending on certain political situations. Political
decision-makers have not always taken the best measures to support the entrepreneurial
environment, although in certain periods more and more consistent quality support programs
have been developed, which promote and support entrepreneurship. We know that political
power is responsible for the legislative system, and the many changes made to the tax code
did not really support entrepreneurship in a coherent way. The high level of taxation,
burdensome tax requirements, and regulatory system are a real frustration for
entrepreneurs. There are also periods when entrepreneurship is supported as it is in this
period in the agricultural, IT, and construction sectors. Even if the dialogue with the
authorities, especially with the fiscal ones, has developed in a positive way, it still does not
rise to the level of the entrepreneurs' expectations. Entrepreneurs often complain that the
political power does not fully understand the challenges they face and does not consult them
when decisions are made related to the entrepreneurial environment and that there is no
long-term vision at the government level regarding the development of entrepreneurship,
which did not lead to the expected results.
Second, bureaucracy, which we could argue is the main culprit of most of the
problems related to the establishment and operation of a company, the negative impact of
the bureaucracy being also recognized by the European institutions. Behind this there is a
large number of public officials, either from the public administration, from finance, or from
other public institutions with decision-making powers and which are based in operation on a
system of laws with many loopholes that allow a multitude of interpretations, that, in most
cases, the officials avoid, either because they don't want to assume responsibility, or
because they don't know the legislation, which more often than not leads to situations of
blocking of a company’s activity, instead of offering some solutions or alternatives.
Bureaucracy means taxes and administrative barriers that negatively affect the development
of entrepreneurial activity. Administrative barriers imply the time lost for bureaucratic things,
time that could be used by the entrepreneur to solve the problems he is actually facing;
Right next to high bureaucracy we find corruption, as an extremely dense
administrative apparatus also generates a lot of corruption, corruption not understood by the
entrepreneur who faces many obstacles from the officials in the proper functioning of his
company's activity. The phenomenon of corruption is known and often complained about,
including at European institutions’ level. Romania is making sustained efforts to reduce it,
but the results are still not visible. According to an EU study in Romania, corruption is a real
obstacle to economic growth, as 97% of the representatives of the business environment in
Romania claim that the problem of corruption is widespread at the national level. In addition,
88% of them see corruption as an impediment to the normal development of the companies'
activity, and 23% of the business environment claims that in recent years corruption has
prevented them from winning a public tender or a public procurement contract. Corruption
is the one that diverts resources from the purpose for which they were allocated, being used
for other interests that do not correspond to Romania's development needs. Corruption also
contributes to an ineffective judicial system that can lead to delays and uncertainties in
resolving commercial disputes, something that is often reported not only by Romanian
entrepreneurs but also by foreign ones;

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Another problem is the lack of infrastructure. First of all, the road and rail transport
infrastructure is insufficiently developed in many regions of Romania, which makes it
unattractive for entrepreneurs because it does not allow a quick movement of goods at
reasonable prices. The same can be said with regards to the utility infrastructure, especially
in the field of energy, which is insufficiently developed in many areas of the country and does
not allow the development of entrepreneurial activity in various fields, to which we could also
add limited access to the Internet, even if it is high speed;
Access to financing is a real problem for the Romanian entrepreneur. Access is
limited largely due to a banking sector that is often closed to entrepreneurial financing and
especially to those at the beginning of the road, not wanting to take any risks for innovative
projects or if these are assumed, the interest rates are discouraging to say the least. The
same is the situation where the state offers financing through banks or guarantees loans to
banks and yet they maintain the same discouraging practices. However, the state makes
efforts to ensure financing through European funds, where there are other obstacles from
what we call Authorities of Management responsible for drawing up the financing guidelines,
guidelines full of bureaucracy that complicate the problems even more, and the officials
avoid assuming responsibility. Proof in this sense is represented by the low degree of
absorption of European funds. Also, the lack of alternative financing instruments and venture
capital investors limits financing options for entrepreneurs;
The lack of qualified and quality labor in many fields has become a current and real
problem for entrepreneurs. The problem of the labor force from the point of view of
entrepreneurship is that the wage demands of the employees are not correlated with the
knowledge, skills, and professionalism that they have in or they must have in a domain.
Entrepreneurs say that the lack of qualification means time and investment in training the
workforce. Entrepreneurs find it difficult to find the right employee because they are often
dissatisfied with wages and working conditions. The exodus of young people who prefer to
go to work abroad rather than stay in the country, even if the companies started to offer more
attractive salaries. We must not only blame the labor force for the created situation but also
a certain mentality of Romanian entrepreneurs who, before entering the EU, did not pay the
labor force at a reasonable level. The future of Romania is quite gloomy and I think that this
will pass from a country of emigrants to one of immigrants. By the end of 2022, there were
113,520 non-EU citizens in the country, an increase of 110% in 5 years;
A lack of an entrepreneurial culture, although efforts are being made to develop it.
The corresponding progress is not recorded because there is a lack of traditions generated
by 50 years of communism. Romania's problem is the fact that entrepreneurship is still young
and the problems it faces make it unattractive because no one has the necessary patience
to complete a project either well or without results;
An education system with many problems for which the importance of
entrepreneurship for economic development is still at the beginning not understanding the
need to introduce entrepreneurial education in schools. The Romanian educational system
often offers limited or non-existent entrepreneurial education. We share the opinion that we
have an education system in our country that prepares good employees, not businessmen.
The education system does not yet really ensure a connection between the school and the
business environment, this being only at the beginning. The need for entrepreneurial

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education, especially among young people, is also seen in the education laws, laws that
over time had to include a specific set of skills and competencies that can be applied in all
aspects of life, not just in business, including how to identify opportunities or what risks to
take. Training in the field of entrepreneurship is necessary to ensure the development of the
skills and knowledge necessary to be successful in the business environment;
Another problem is the lack of encouragement for entrepreneurship, which we think
is complemented by the desire to avoid taking risks. Entrepreneurship means taking risks
and accepting failure, which is sometimes inevitable, but the conservative mentality that still
exists in our society regarding failure contributes to the limitation of entrepreneurial initiative.
In Romania, there is, as they say, a traditional culture of risk aversion, which can slow down
the establishment and development of businesses. The evaluations carried out show that
Romania is in first place for fear of failure;
In terms of innovation, Romania's efforts are quite modest, and the position it
occupies says it all - last at the European level.

Figure 3. Performance of EU Member States’ Innovation systems-2023

Source: European Innovation Scoreboard 2023 available at

https://op.europa.eu/en/publication-detail/-/publication/5d1b30d5-1ba9-11ee-806b-
01aa75ed71a1/language-en/format-PDF/source-search.

An in-depth analysis of Romania regarding its innovation profile highlights significant

gaps compared to the average of EU countries in all four dimensions of the EIS, gaps that
are maintained and actually widening (Ogrean & Herciu, 2022, p. 322).
The last position occupied by Romania is also due to the lack of financing for what is called
the innovative entrepreneur, and his support should be achieved through "the policy maker
that he/she possesses instruments that can effectively influence the allocation of
entrepreneurial resources" (Baumol, 1993, p.203). The decision-makers in Romania did not
take the appropriate legislative measures to encourage innovation, except where there is

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European funding and the EU had an interest. I support the opinion that Romania's last place
in the EU rankings is justified, among other things, by a traditional culture of conformity.
Romania has never allocated more than 0.28 of GDP for research, development, and
innovation in during 2010-2020 (Eurostat, Organization for Economic Cooperation and
Development OECD, available at online data cod: GBA_NABSFIN07) (GBA- Government
Budget Allocation; NABS -Nomenclature for the Analysis and Comparison of Scientific
Programs and Budgets) and in 2022 only 0.12% of GDP was allocated, far below the
European average of 0.66% of GDP.
The informational society and digitization are other unresolved problems in
Romania. Romania recognized their importance rather late and realized its lagging behind
when the COVID-19 virus pandemic started. Digitization is an objective that can only be
achieved through European funds and assumed only through the NPRR. According to the
2023 Country Report for Romania, only 28% of people aged between 16 and 74 have at
least basic digital skills, compared to the EU average of 54%. Only 53% of SMEs have a
basic level of digitization, compared to the EU average of 69%. Romania is below the EU
average in terms of the availability of digital public services for both citizens and businesses.
At the European level, entrepreneurship based on technology and digitization has become
a strong trend that emphasizes innovation, emerging technologies, start-ups, and the
development of digital businesses. (European Commission, 2023 Country Report Romania,
pp.47, available at https://economy-finance.ec.europa.eu/system/files/2023-
05/RO_SWD_2023_623_en.pdf ). According to 2022 EC data, Romania ranks last in the EU
in terms of the value of the digital economy and society index (DESI), our country has the
lowest DESI growth rate during 2015-2022, thus moving further away from the other EU
countries (European Commission, Digital Economy and Society Index (DESI) 2022 pp. 3
available at https://digital -strategy.ec.europa.eu/en/policies/countries-digitization-
performance).
The lack of mentoring and support networks is another problem that Romanian
entrepreneurs face, but recently there have been organizations, associations, and support
programs for entrepreneurs that offer consultancy and mentoring. Lack of learning and
networking opportunities can affect the development of entrepreneurs and the growth of their
businesses;
Limited access to international markets is still a problem for many Romanian
businesses, although Romania is a member of the internal single market. There is no
support from the state to encourage this for markets other than the European one,
entrepreneurs face a lack of information regarding constraints related to exports, tariffs, and
trade regulations can make it difficult to expand business and exploit global opportunities.
However, Romania has opportunities as well; perhaps fewer than challenges, but
which exist, namely: still low costs regarding the opening and running of the business, labor
and utilities costs are reasonable, the existence of financing programs and grants available
at the government level, both for entrepreneurs Romanians but also for foreigners, a growing
internal market which offers opportunities for entrepreneurs, a rather well-educated and
talented workforce, especially in the fields of technology and engineering and which can
develop innovative products and services. To these a potential for growth and innovation
can be added, particularly in sectors such as information technology and communications,

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renewable energies, the food industry, and tourism, sectors recognized as important by the
Romanian state and in which the state must make investments in order to become and more
attractive and especially in the development of their infrastructure.

5. Conclusions

In conclusion, Romanian entrepreneurship is facing many more problems than

those evaluated and many of which are related to the national specificity, the lack of an
entrepreneurial tradition and which negatively affect its development. Romania suffers from
a lack of entrepreneurial tradition due to the 50 years of communism that did not promote
creativity, innovation, and the spirit of enterprise.
A large part of the problems are old and without a solution up until now, a fact that
places us in the last part of the rankings drawn up by international and European evaluations
regarding entrepreneurship, but it seems that there is interest in changing the situation. We
surmise that there are solutions, at least partial, to all problems, but there is a lack of what
is called the political will of the political power. Political will means a ministry of
entrepreneurship and long-term entrepreneurship development strategies with real funding
sources. The lack of interest of the Romanian state regarding the development of
entrepreneurship contributes to deepening the gaps that separate us from the other EU
countries in this field. We are not in a position to predict whether the EU has the time and
availability necessary to wait for Romania and other member countries lagging behind in the
development of entrepreneurship and especially in the innovation sector, or whether it is
looking for solutions to finance where there are good conditions for the development of
entrepreneurship. This has as a consequence a continuation of the migration of the well-
qualified labor force in top fields from Romania to the economies with entrepreneurial
potential and with negative effects on Romania, which remains only a labor force supplier.
Romania must continue the process of supporting entrepreneurship, and the most important
task rests with the government, which must have the ability to identify weak areas and then
formulate policies and programs to strengthen the weaker areas. (Gnyawali & Fogel, 1994,
p. 58). In doing so, the country will help entrepreneurs in facing multiple challenges such as
risk-taking, not only to become an entrepreneur but also to expand into other markets by
developing mentoring, training and training programs, and other tax facilities for start-ups.
"Government officials frequently search for mechanisms to enhance entrepreneurial activity
in their regions, whether those mechanisms are tax policies, financing subsidies or other
tools" (Shane, 2005, pp.1). This means that the state must get involved through appropriate
policies, legislative stability, investments to improve infrastructure, including transport
networks, logistics especially in the field of energy and communications, a real collaboration
with entrepreneurs to solve their problems, eliminate existing administrative obstacles,
create more accessible sources of financing and fight corruption, and Romanian
entrepreneurs have the opportunity to contribute significantly to economic growth,
innovation, and job creation in the country and the development of local communities.
The most worrying thing remains the last place that Romania occupies in terms of
innovation at the European level and that says a lot about the old and new problems that we
still have and what we need to do for the development of entrepreneurship and especially

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the innovative that has growth potential with positive effects in the economic and social
development of the country but needs adequate support from the state without which nothing
can be done.
We don't think that for Romania, an Eastern European country, entrepreneurship is
the only solution to the economic problems it faces, especially the ones related to economic
growth, but I think it is necessary to attract foreign capital, in addition to adopting measures
to support entrepreneurship.
Stimulating the entrepreneurial spirit, we believe, represents a solution for the large
number of young people who are not working at the moment and who have not completed
their studies, who do not have the appropriate qualification but who may want to do
something and do not know how and for whom the state must think much deeper support
programs than Startup Nation - which is a pretty good program to start with.

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