Fabian Bernhard, Associate Professor in Family Business at the EDHEC Business School in Paris

„In the USA, the entrepreneurs are the superstars“

Professor Doctor Fabian Bernhard is Professor of Management and Business Psychology. For the past ten years he has lived mostly in Paris, where he teaches at the Faculty of Economics of the EDHEC Business School. In Germany, he cooperates with the Institute for SME Research at the University of Mannheim and currently also with the Faculty of Psychology at the Goethe University Frankfurt. In an interview Fabian explains why family businesses fascinate him, what he understands by Entrepreneurial Spirit and why Germany needs a culture of failure.

Hello Fabian, can you describe your field of activity and what your contact points are with the topics freelance work and entrepreneurship.

Within the framework of my professorship for management, I deal intensively with entrepreneurship. My special focus is on family businesses. I am particularly interested in the interdependence of family and business, which in most cases is stronger than expected. There are various reasons for this. For one thing, the family is by far the most important source of financing for the vast majority of start-ups – or at least the close family circle. On the other hand, there is a strong link between the family and the personnel factor: it is not uncommon for family members to hold the first employee positions at the beginning of the start-up and to help recruit additional employees.
In addition, self-employment often requires longer working hours, greater flexibility or other sacrifices, for which there must be understanding on the part of the family.

You have been living and teaching in France for several years. What differences do you see in the importance of the middle class?

Germany traditionally has a positive image of small and medium-sized businesses and family businesses. Politicians and trade associations never stop emphasising the importance of the SME sector as the “backbone of the German economy”. In France, there is sometimes a somewhat envious view of Germany’s strong economic power, which, thanks to many small and medium-sized enterprises, also has an impact in structurally weaker regions. In the French economy, this middle class is sometimes missing. There are some very large companies which are protected and courted by the state, and a large number of micro-enterprises and self-employed people. However, the typical middle class, i.e. the link between micro and large enterprises, is rather weak.

Are there differences in economic structure – or in mentality?

Yes, there are. Paris is the centre of the French economy, especially in terms of start-ups and business start-ups. It is where most companies, their customers and the capital needed for investment are located. In Germany the approach is much more decentralised. Berlin likes to define itself as a start-up haven, but there are also very successful start-ups in Hamburg, Munich, Cologne and other parts of the country. In France, on the other hand, one MUST be in Paris to be successful in the long term.

Regarding the mentality: founding has become hip. But I have the feeling that in Germany, it’s mainly students and graduates of economics and business studies who see it that way. Alumni from other faculties often still prefer a permanent position. In France, many graduates of engineering universities also enjoy the entrepreneurial spirit and independence. In recent years, German universities have increasingly been trying to catch up in this area, for example by establishing hubs for natural scientists.

You speak of Entrepreneurial Spirit. What do you understand by this? Can you describe why a constantly changing world needs this mindset?

For me the Entrepreneurial Spirit describes the passion to do things differently and better. It is characterised by a healthy dose of optimism – and the willingness to take calculated risks. Very important: It motivates to “untertake”. For companies that want to survive in the long term – especially for family businesses that have to reinvent themselves again and again over generations to adapt to the new conditions of a constantly changing world – a continuous entrepreneurial and founding spirit is essential. Without this mindset, they will quickly be overtaken by the competition and disappear from the market.

Can you learn this way of thinking? What impulses can you give?

This question has been controversially discussed for a long time. Of course it helps to come from an entrepreneurial family and to take up the business sense with your mother’s milk. Just as teacher children are statistically increasingly opting for the teaching profession, many founders come from families with an entrepreneurial past. But from a scientific point of view, there are a number of study results that show that innovation and entrepreneurship can also be effectively taught at university. All major business schools and the top MBA institutions now offer outstanding entrepreneurship programmes. Also in my research and teaching at EDHEC in France I and my students deal with the topics of entrepreneurship.

What is more important to your students: a career with a large corporation or building up their own company?

Here in Paris I see a growing community of freelancers. Some of my students are already actively working as freelancers during their studies – from Python programmers to student management consultants – or are pursuing a professional self-employment after graduation. Especially for Generation Z, this goal seems to be increasingly desirable. And in France, especially in Paris, this development is supported by the establishment of an increasing number of co-working spaces and start-up hubs. Added to this is the strong start-up scene. For example, Station F, the largest start-up campus in the world, is located in the middle of Paris. Covid-19 and the realisation that it is also possible to work quite well on one’s own, reinforce the trend towards freelance work. But even big companies have recognised this. Large consulting firms and corporations are increasingly trying to meet the desire of the new generation for more independent development in order to attract the best graduates. Whether the trend in Covid-19 times will continue or the desire for permanent employment will return among the future generation of students, the future will show.

Self-realisation is one thing. What other motives are there for going freelance?

Self-employment not only promises freedom and flexibility, but also attracts people with the apparent promise of greater financial independence. Studies show that this is indeed true for some self-employed people – but by far not for all. This has first and foremost to do with the industry. Many independent consultants are happier with their work-life balance. Self-employment offers them the chance to earn more money and take on more responsibility. However, the path to self-employment is not always voluntary. Especially people who have no opportunities on the primary labour market (for example, immigrants with limited career prospects) are often forced to become self-employed.

Back to the entrepreneurial spirit: Do you recognise the spirit described above in freelancers too? Is freelancing a necessary intermediate step to entrepreneurship?

The desire to become self-employed, to try out and realise one’s own ideas, to take on responsibility and to organise one’s own work – these are all potential motivating factors that can be found among company founders and also among the self-employed.

The USA is considered a country with a strong entrepreneurial spirit. What can we learn from them?

Well, the Germans are no strangers to entrepreneurship. There were and are many great entrepreneurs in this country. But they are much less likely to present their achievements in public in a pompous way. In the Anglo-Saxon cultural area, on the other hand, and especially in the USA, the entrepreneurs are the superstars. Showcased entrepreneurship and the spirit of entrepreneurship are very much appreciated; every child knows famous entrepreneurs such as Steve Jobs, Elon Musk, Bill Gates or Jeff Bezos. They are role models to be followed. As a result, business start-ups are already popular in college.

In Germany, on the other hand, famous founders are far less well known among schoolchildren and they don’t have that rock star status as in the USA. Traditionally, financially successful entrepreneurs are viewed with suspicion by public opinion. In the USA, success is less met with reflex envy and more often with admiration. But I think I can see that something has changed in recent years. The trend towards new self-employment is slowly spilling over from the US, as evidenced not least by the success of television formats such as “The Lion’s Den”, in which founders vie for funding for their start-up ideas. Start-ups are becoming “cool” again – something that is economically and politically desired. However, there is a danger that the corona crisis, with problems for many small and micro-entrepreneurs, will reverse this trend.

Does Germany need a culture of failure?

In Germany, and especially in France, failure as a founder and insolvency is seen as personal failure. The entrepreneur has to cope with the stigma of failure and is quickly considered “burned” by investors and banks. In the USA, failures and setbacks are dealt with differently. There, failure is seen more as part of entrepreneurship. There are many examples of successful entrepreneurs who first failed, but then quickly got a second chance. Risk, but also creditor protection, is seen differently there. Ultimately, it is difficult to judge what is better. Perhaps German founders and investors are more careful and cautious in their risk assessment. This may lead to fewer capital misjudgments – but it also leads to missed opportunities and innovations.

Fabian Bernhard on linkedin

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