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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.
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Chapter 4: Institutional Reform and Political Compromise

Niko Marcel Waesche


The division of this book into two parts, the first international, and the second national, is deceiving. The objective of the first part was to show in what ways the two realms have been fused into one. Formerly separate marketspaces have become enmeshed by technology to such an extent that domestic agents such as small firms could, in theory, become ‘instant internationalizers’. But it is also the objective of this book to discuss ways in which the international and the national remain distinct despite the opportunities presented by the internet, hence the division of the volume into two parts. To show distinctiveness, we will depart from the worldwide perspective and zoom into one geographic segment of the global network: Europe, and here, specifically, the German economy. As outlined in the Introduction, Germany is interesting because of the apparent reversal of entrepreneurial dynamism towards the end of the 1990s. While small German firms have been at home in the world market for decades, the economy seemed to have become rigid and unentrepreneurial in recent times. In terms of telecommunications policy, Germany embarked much more slowly on liberalization than the first-tier reformers, the USA, the UK, Japan and Scandinavia. Enterprises in the IT industry were regarded as domestic adopters and not global leaders, with the exception of a single company, SAP. This seemed to suddenly have changed in the last years of the 1990s, as numerous internet ventures were founded and listed on the stock exchange. The new Frankfurt stock exchange...

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