THE CITY OF BYTES: ENTREPRENEURSHIP IN PARIS AS A RESPONSE TO UNEMPLOYMENT

Abstract

France has sought in recent years to actively promote entrepreneurship through its young Office of the Digital Economy, established only two years ago in 2012. The push for more entrepreneurship in Paris is a clear response to France’s unemployment problem, which has especially affected youth. This thesis examines how best to support entrepreneurship in Paris with the specific objective of creating jobs. Entrepreneurship indeed has the potential to solve part of France’s unemployment problem: small firms and new firms both create jobs at a higher rate. Curiously, France has a large number of small businesses, more than any other country in Europe, but few that scale up. In order to find ways in which to encourage scaling up, it is important to understand why some regions become thriving entrepreneurial clusters and others do not; the theory of “entrepreneurial ecosystems” has sought to do precisely this. As the case of Silicon Valley, the epitome of a successful entrepreneurial ecosystem, illustrates, clusters emerge from social networks between individuals working in the same industry, which allow for the rapid dissemination of ideas. These social networks arguably form through trust, and so this understanding of entrepreneurial ecosystems predicts that generalized trust is related to entrepreneurship. One problem that emerges repeatedly in the study of entrepreneurship’s causes and effects, however, has been finding an operational definition of entrepreneurship; I offer a new measure of entrepreneurship that narrows the concept of “selfemployment” to only include individuals who are self-employed and who also employ other people—individuals whom I call “job creators.” Using this metric, I study the relationship between the culture of an individual’s region, including trust, and his or her likelihood of being a “job creator.” A relationship was found between being a job creator and at least three regional variables: the average levels of self-reported trust in the individual’s region, the average interest in creativity in the region, and the average political involvedness in the region. Building on this understanding of entrepreneurial ecosystems, there are two ways in which the French government could best promote entrepreneurship. First, France could modify tax rules, which currently disincentivize growth. Second, France could institute long-term cultural change—which it is already pursuing. On the whole, France’s current policies toward entrepreneurship are more positive than some entrepreneurs have argued, but the French government must ensure that entrepreneurs’ attitudes toward the government are equally positive, in order to promote trust.