European companies are falling behind their American counterparts in innovation and technology because of a “mindset issue,” says Nicolai Tangen, CEO of the $1.6 trillion Norges Bank Investment Management.
In an interview with the Financial Times, Tangen said there’s a gap in “the general level of ambition” between Europeans and Americans that has led to U.S. shares substantially outperforming their competitors across the Atlantic.
“We are not very ambitious. I should be careful about talking about work-life balance, but the Americans just work harder,” he said.
The Norwegian Sovereign Wealth Fund, the largest in the world, has more than 11,000 investments in 72 countries — about 71% of which are in equities. Last quarter, the fund reported a record $213 billion in profit, boosted by its holdings in booming tech stocks like Microsoft, Apple, and Nvidia.
U.S. shares make up almost half of all the fund’s equities portfolio, Tangen told the FT. That’s up from 32% in 2013. The U.K., in contrast, accounted for 6% of its equities, down from 15% a decade ago.
The chasm in work-life balance between the U.S. and European countries is wide. The European Union, for example, has a mandated four-week paid vacation period across all 27 of its countries. Some countries also require additional paid days off on top of that required period. Meanwhile, in the U.S., nearly one-third of employees say they don’t have any access to paid time off (PTO), according to a 2023 report.
And those who do have PTO don’t always use it. The same report found that 765 million vacation days go unused by Americans each year.
In 2022, Americans worked an average of 1,811 hours for the year, while in the U.K people worked 1,532; in France they worked 1,511 hours, and in Germany people worked an annual average of 1,341 hours that year, according to the Organization for Economic Cooperation and Development.
Another major difference between the two work cultures is the acceptance of business risks, especially when things go awry, Tangen told the FT.
“You go bust in America, you get another chance,” he said. “In Europe, you’re dead.”