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Bright Heads and Seeking Capital

How expanded mindsets could enrich the Greater Region’s ecosystem? 30 million tons of coal and 21 million tons of crude steel – that’s what has been annually mined and processed in the montan-triangle back in the 1950s. Those days, the mining area composed by the geographical cornerstones Luxembourg, Saarbrücken and Nancy went through a uniform wave of industrialization. Jobs were equally created region wide and value-added grew across national borders. Then – during the course of the carbon crisis – contrasting economic developments evolved, which still hamper the realisation of a truly multilateral start-up ecosystem in 2018.
(Photo by Rob Lambert on Unsplash)

By contrasting economic policy approaches and differing linkages to supra-regional business cycles, the formerly uniform montan-triangle dispersed. Whereas Luxembourg’s economy underwent sharp interventions towards diversification, it’s French and German counterparts stagnated to a larger extend in this development. Among many other parameters, this is depicted by a tremendous growth of Luxembourg’s GDP by 85% between 2004 and 2015. Recognizing that the Grand Duchy’s total employment also prospered by 33% in this time frame, it becomes obvious that Saarland and Lorraine grew to a lesser extent and saw only moderately growing employment rates.

How this affects the regional ecosystem? One of the major means to an end of diversification in Luxembourg has been effective state-based promotion of entrepreneurship. Extensive grants were initiated, far-reaching partnerships formed and international businesses attracted to locate offices in the Grand Duchy. For years to come, however, suchlike evolvements will be restrained by two aspects that hamper a limitless entrepreneurial variety: narrow human capital and a growing but premature research landscape.

At the opposite side of the Greater Region, Lorraine and Saarland show exactly what has been brought up as a hampering factor in Luxembourg: large amounts of (highly skilled) labour, which is either unleashed by later fetching structural change or even obliged to migrate because long-established industries struggle to create future-oriented jobs. Interestingly though, these regional lead ventures formed what has described as one of Luxembourg’s constraints: a (in separate branches) fully developed and profound research landscape. Conversely however, Lorraine and Saarland seem to lack what is available in the Grand Duchy: later stage venture capital.

“Think about the potential economic momentum, if potential French and German founders consider the Grand Duchy as the place for performing tall funding rounds and investors from Luxembourg discover the vast range of highly promising investment targets on the downside of the border.”

Arguing that economic development, labour market conditions and economic structure prescribe entrepreneurial intentions; it becomes apparent that the mentioned dichotomy reflects not only economic parameters but also a cognitive dimension. Individual as well as collective cognitions largely preform the region’s entrepreneurial outgrowths. Mental models serve as cognitive scaffolds in recognizing and evaluating business opportunities. Current research stresses relating thereto that these perceptual filters can lead to closed minds by minimizing the probability to which objectively perceived business opportunities are recognized as subjectively feasible. Imagine one has never been in contact with entrepreneurs and always indoctrinated that a secure job in manufacturing industry promises a rosy future. How would such a potential founder decide, if opposed to an extensively prepared market scenario of digital maintenance within steel mills? Or if a founder, which permanently read in daily press about badly off preconditions for later stage VC-rounds within his region, recognizes a business opportunity as promising with a view to global markets?

Recent studies stress that mental models evolve in a semi-dynamic way and are permanently shaped by disposable information corridors. On the one hand, these corridors are prescribed by former and recent economic conditions. But on the other hand, it has been shown that they can be partly overwritten by state institutions, chambers and associations, regional lead ventures as well as former entrepreneurs – also within the Greater Region.

Taking this mental model perspective, the start-up ecosystem SaarLorLux could become a factual breeding ground for broad and supranational entrepreneurial evolvements. Despite – or even because of – it’s dichotomous old industrial history. Think about the potential economic momentum, if potential French and German founders consider the Grand Duchy as the place for performing tall funding rounds and investors from Luxembourg discover the vast range of highly promising investment targets on the downside of the border.

Methodology & about the Author
“Shared Mental Models as a Barrier to Entrepreneurship“ is the title of this article’s underlying Master thesis in Economic Geography at Heidelberg University. It was based on a comprehensive analysis of secondary statistical data and 21 interviews with founders, support actors and regional lead ventures in Saarland, Lorraine and Luxembourg.
Lukas Bieringer holds a Masters Degree in Economic Geography and Economics and joined a fast-growing FinTech based in Berlin following his studies. He recently works at KPMG as an associate in risk culture. His studies focus on the cognitive dimension of Entrepreneurship at the melting pot of structural change.

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