Economists and management experts may have divergent views on entrepreneurship, but many agree that it is the major driver of economic growth and the main source of new employment. World economic growth has slowed since the financial crisis of 2008. The debts of government and private sectors worldwide are growing fast but there are few signs of increasing ability to pay them. Against such a background it is worth looking at entrepreneurship and seeking wisdom from the old capitalist countries in Europe.

The word entrepreneur itself is European, believed to have been coined by a French economist in the 1730s. By the 19th century certain characteristics were grouped under the label entrepreneurship. The most obvious form of entrepreneurship is that of starting new businesses. It also refers to entrepreneurial activities within a firm. Many scholars think that entrepreneurship consists of the traits embodied by entrepreneurs, which include: a readiness to take risks, acumen in speculating, the spirit of innovation, excellence at execution, and social responsibility. Of those, the spirit of innovation gets to the heart of the matter; the others play an important role in putting that into action.

Thanks to the policy of reform and opening up, the Chinese economy grew 9.5 percent a year from 1978 to 2010 and has become the second largest after that of the US. Questions are now being raised about the sustainability of this unprecedented growth, which is largely the fruit of government-related investment, and the entrepreneurship of Chinese and foreign investors.

Starting new businesses is the main form of entrepreneurship. Older generations of entrepreneurs in China -township enterprises in the 1980s and exporters (foreign direct investment or private companies) in the 1990s and 2000s - have made a great contribution to China's growth in GDP but, unfortunately, they have not made a great contribution to technological progress. In fact, in their short lives they have consumed a lot of the country's resources and caused great environmental pollution, and are now under pressure to survive in the new highly competitive environment.

They have flourished largely as a result of their willingness to take risks, their acumen in speculation, aided by China's cheap labor and the country's market mechanisms. But most lack the spirit of continuous innovation and social responsibility.

Since Europe has lived under the regime of the market place for many a year, its enterprises cannot count on the institutional bonuses brought about by the introduction of market rules or on cheap labor. What they can count on is their ability to continuously innovate and their social responsibility. Many European family businesses, large or small, have been passed down over several generations and are at the forefront of technological innovation.

China's older generation of entrepreneurs still demonstrate a willingness to take risks and an acumen in speculating, characteristics that sadly seem to be lacking in younger people.

According to "GEM Global Report 2010", there are more entrepreneurs in the 25-34 age group than any other age range. But in China many of these young people find the idea of a stable job in government or with State-owned firms attractive, and they worry about how they can afford a new house. With high house prices, that means going deep into debt, which in turn engenders an unwillingness to take risks.

There are three particularly noticeable factors behind this trend.

First, many resources are in the hands of government or State-owned companies in which entrepreneurship is given little encouragement and there is little space for private entrepreneurs.

Second, the whole culture and institutional system increasingly encourages stability, not creativity. The economist Joseph Schumpeter called entrepreneurship "creative destruction", something that contrasts with stability, a characteristic Chinese culture regards as overwhelmingly important. What's more, Chinese can stomach acts of omission but not failure.

Third, although the number of poor people in China has dwindled, the social welfare and social safety nets are still full of gaping holes. In the 1980s poverty was prevalent, so many people had little to lose in taking risks. Because people are more well off these days, they are less inclined to do anything that will put that at risk.

Europe has much to teach us. First, most European countries have built a framework within which the private sector can flourish, and they have developed laws to limit monopolies. At the same time they are particularly careful about the way they handle the State-owned sector.

Second, putting an emphasis on freedom, with a love of scientific thinking and respecting personal choice, not only do they welcome creativity, but they tolerate failure.

Third, although many experts criticize social welfare in Europe, saying it places a heavy burden on their societies, that system keeps people from worrying about essential needs, liberating their creative spirits and spurring them to take more risks.

Since entrepreneurship also refers to entrepreneurial activities in a firm, China can learn from European training systems and human resource management that have been built to motivate employees to improve and to innovate.

China's family firms can also learn from European experience on how to introduce formal management systems, on how to keep entrepreneurial traditions and even on how to pass firms on to later generations.

In fact, in recent years the term entrepreneurship has been extended to include social and political forms of entrepreneurial activity, in which China can learn even more from Europe.

The author is a research fellow of the CEIBS Lujiazui International Finance Research Center. The views do not necessarily reflect those of China Daily.