Internet Entrepreneurship in Europe

Internet Entrepreneurship in Europe

Venture Failure and the Timing of Telecommunications Reform

Niko Marcel Waesche

From its launch in 1997, the Frankfurt technology stock exchange developed spectacularly as did other European technology exchanges. Many Europeans thought that a new age of entrepreneurship had dawned. Following the downturn, however, the search for blame began. Much of this blame was undifferentiated and subjective. Public policy lessons were not drawn. Written by a well-known commentator of the European venture capital community, this book analyses the rise and decline of European internet entrepreneurship. The effects of both the public promotion of venture capital investments as well as the timing of telecommunications reform are examined in detail in various European countries, in particular in Germany and Sweden. The book contains a wealth of unique data on the failure of European internet ventures and draws several technology and telecommunications policy conclusions.

Chapter 2: The Global Growth of the Internet and the Role of the United States

Niko Marcel Waesche

Subjects: business and management, entrepreneurship


This study seeks to understand how, in the so-called New Economy, a global innovation opportunity related to national innovation policy. Specifically, the international diffusion of the internet in the late 1990s is examined. Then, its reception by new ventures in particular European countries, especially Germany, is studied. The entrepreneurial response was conditioned by national innovation policy, including telecommunications liberalization. In the first part of this book, comprised of Chapters 2 and 3, the worldwide diffusion of the internet and the role of the United States are examined. Then, in Part II, the European entrepreneurial response and innovation policy are addressed. Three interrelated aspects need to be reviewed when seeking to explain the internationalization of the internet. First, the internet’s infrastructure costs were shared, making its use distance-insensitive. This was due to its origins as a government-supported academic research network, but it was also dependent on the ‘unregulation’ of leased line data services. The issues associated with cost sharing and leased data lines will be explored in Chapter 3. Second, the internet was a horizontal technology which was applied to a broad set of sectors and industries. It offered the potential to lower transaction and inventory costs by connecting large and small enterprises to each other and to consumers in seamless business webs.1 Due to its horizontal applicability, the internet tended to follow the interconnected international economy and connected previous company-only and country-only networks to each other. Finally, the internet was, in terms of its technology, architecture...

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