1. ENTREPRENEURS What is an entrepreneur? –Innovator entrepreneur –Inventor –Owner –Manager Relationship between institutional framework and entrepreneurs –Individual motivation of entrepreneur: make money, get power, social consideration –Effects of entrepreneur in collective well-being

2. In FRANCO REGIME the institutional framework produced entrepreneurial behavior negative for society: low competition, corruption, unconcern for quality or technological improvements, public interferences (INI) The “Plan de Estabilización” improved the situation somewhat DEMOCRACY produces another type of entrepreneur: higher competition, foreign firms, freedom of association, European Union

3. SPANISH FIRMS A. Dimension and productivity There are more small enterprises (SME) (PYMES) Problems produced: –Limit the productivity because SME has less capitalization, innovation, and labor qualification –Limit their presence in foreign markets –Globalization intensifies the problem

4. Benefits: easy adaptation, high flexibility, less production costs Processes of firm merger Spanish firm structure, 2005 (%) (a) Tendency to export: Exportations/Sales (%) (b) Tendency to import: Importations/Sales (%) (c) Average value of productivity

5. B. Property and control Very concentrated Low development of stock-exchange markets Effects: (+) favor management (-) assume few risks, short-run benefits Exceptions: few big firms with crossed shares participation

6. Crossed shares participation in the Spanish entrepreneur framework (may of 2003): bank, energy and telecommunications (heavy lines show share participations higher than 10 %) Telefónica BBVA Iberdrola Repsol YPFGas Natural Endesa La CaixaCaja Madrid Ono SCH Unión Fenosa Cepsa

7. C. Organization and productive integration Firms Markets (costs of organization) transaction) Great externalization in Spain Higher integration in: –Small firms –Distribution and commercialization (direct sales) ≠ Europe ↓ competence ↓ competitiveness

8. D. Internationalization Foreign firms in Spain: –+ bigger –+ concentrated –+ market share –staff + qualified and stable –+ importation –+ innovators and technological Spanish firms abroad: –> exportations since ½ 1980`s –> direct investment since ½ 1990`s

9. E. Profitability and financing Efficiency and organization Profitability Competition Financing Profitability: –↓ 1980 because of higher competition in EU –↑ in last years because of higher efficiency Financing: –High debt situation in 1970`s because of low i –Financing problems in 1980’s because of ↑i –Since ½ 1990`s better situation because of ↓i

10. Evolution of profitability in Spain and EU-8 1986-2004 (%)