International Horizon Scanning: Small Business and Entrepreneurship Policy

1
International Horizon Scanning Small Business
and Entrepreneurship Policy Some interim findings
Professor Ian Stone Policy Research Team,
CfE Durham Business School Invitation to
Fostering Entrepreneurship Seminar Narrow Water
Castle Warrenpoint 14 March 2007
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The IHS Project

• Project undertaken for DTI (SBS) still in
  process
• 12 selected countries
• Report on evidence base, policy developments and
  specific initiatives
• Articles, papers, reports and documents incl.
  internet search and direct contacts
• Highlight policy ideas of potential interest to
  the UK
• Assess transferability of ideas to UK context
• Develop briefing service concept(?)

3
Relation to other work

• Stevenson Lündstrom
• Early 2000s benchmarking/categorisation of
  policy, range of OECD countries follow-up
  analysis identifying best practice components
• EU BEST projects Sector/Directorate reports
• Identify examples of best practice in different
  countries some assessment of transferability
  disseminates good practice pools ideas and
  experience between countries
• GEM
• Identifies index weaknesses and strengths panel
  experts periodically identify general gaps and
  policy needs for individual countries
• IHS
• Identifies specific approaches/initiatives that
  have potential to add policy value in UK
  specifically looks to bring in ideas from outside
  (as done by NZ)

4
Broad trends in policy scope and thrust

• In terms of SL 2001 policy framework,
  preliminary trends in countries investigated
• Reinforcement of trend adding entrepreneurship
  promotion onto SME policy
• Recognition of importance of entrepreneurial
  culture as adjunct to policies on obstacles etc
  (e.g. Finland)
• increasing recognition of need to influence
  potential entrepreneurs - part of overall shift
  to supporting individual agents rather than
  firms (Zoltan Acs 2005) and feeding through
  into actual policy support content
• Shifts in targeting of specific groups
• Unemployed, ethnic minority groups, young people
  addressed but small budgets bottom-up policy
  emphasis jobs and social inclusion agendas
• Women consistently receiving more policy
  attention and activity (espec. Scandinavian
  countries)
• Significant recent growth in interest in
  supporting high growth, knowledge-based and
  innovative start-ups/small firms (France,
  Netherlands one of 3 Pillars of
  entrepreneurship policy and Canada)
• Generic entrepreneurship policy
• Entrepreneurial education, barriers to entry,
  seed capital etc for new businesses, start-up
  business support (incl. networks, mentoring,
  incubators), under-represented groups.
• Greater sophistication online streamlining and
  standardising of information-related support
  services (contracts of employees, wizards for
  licenses and permits, flow charts to set-up,
  e-mentoring) accommodating spatial
  differentiation (national, regional, local)

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Some interim observations

• Focus upon innovation, high growth,
  knowledge-based enterprise
• Add-on characteristics little evidence of
  conceptual thinking about processes involved in
  innovation and entrepreneurship and integration
  of policy (confirming Stevenson 2006)
• Important local/regional dimension also in the
  sense that enabling policies for the
  entrepreneurial economy are increasingly
  implemented at that level (including around
  Universities) (Acs 2005)
• Deficient evaluation
• Often altogether absent, or output-based rather
  than outcomes/impact makes it difficult to
  assess value for possible transfer. NZ notable
  exception.
• Tendency for policy convergence
• Deliberate infrastructure for systematic exchange
  of policy ideas common institutional
  arrangements (e.g. within EU) new Commonwealth
  and US less restricted in this sense (e.g. NZ
  import substitution initiative)
• Scope of Government consultations widening
• Small business view increasingly obtained through
  channels outsider traditional representative
  organisations (e.g. Test panels etc of recognised
  business people)

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Observations (continued)

• Scope of Government consultations widening
• Small business view increasingly obtained through
  channels outsider traditional representative
  organisations (e.g. Test panels etc of recognised
  business people)
• Widening scope of entrepreneurship concept
• Education programmes increasingly look beyond
  skills for starting own business to broader
  definitions of enterprise promoting
  enterprising behaviour/people affects skills,
  design of learning process etc. (Finland)
• Interest and activity relating to key topics
• Frequent references to the concept of fear of
  failure, but little research practical action
  largely confined to changing arrangements (and
  perceptions) relating to bankruptcy little
  practical interest discovered in relation to
  home-based enterprise (apart from Australia) or
  the challenge of an ageing society.

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Transferability

• Concept built into research process
• Review actions/initiatives/debates/research in
  target country to identify what is new,
  innovative, particularly effective, etc.
• Consider findings in context of UK to identify
  elements potentially matching areas of defined
  policy interest
• Draw up long list of initiatives, etc.
• Consult with DTI(SBS) and sift towards a
  shortlist
• Undertake more intensive investigation of
  initiative etc to (1) better understand the
  element and its potential contribution in UK
  context (historical/cultural, administrative,
  institutional, fit in terms of current structure
  of practice, taxation etc.)
• Identify key elements for potential transfer
• UK performs well in entrepreneurship policy index
  measures Rep Ireland/N Ireland context(s)
  different - following list of promising leads
  thus may not match.

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Interim long list
Finance

• Escalator (NZ)
• government agency linking SMEs with growth
  potential to brokers, to grow number of small
  businesses using equity to raise funds.
• Venture Capital Database (Swe)
• helps entrepreneurs identify risk capital
  companies, based on information on the companies,
  size of fund and conditions of involvement.
• NUTEK CapTec programme (Swe)
• annual meeting-place for young innovative firms
  and investors.
• Tax savings scheme (Dk)
• permits prospective business owners to start
  saving before starting up, with these savings
  exempt from tax (33/59).
• Womens Loan Fund (NZ)
• offers small interest-free loans to women for
  business development, funded by
  non-interest-bearing deposits by the public.
• Loan Support Scheme for Women Entrepreneurs (Swe)
• offers small loans to women, combined with
  advisory services and business development
  training
• Guarantee Fund on the Initiative of Women (FGIF,
  Fr)
• guarantees loans to female entrepreneurs, mainly
  unemployed professional women for the creation,
  take-over or the development of a business

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Female entrepreneurship

• NUTEK Business Advisors (Swe)
• advise and support new/nascent female-owned
  businesses, and foster a more positive image of
  female entrepreneurship. Linked to other
  policies e.g. beneficial terms for women coming
  off benefit mentoring and networking schemes.
• Womens resource centres (Swe)
• network of centres, which offer programmes to
  foster entrepreneurship among women.

Ethnic entrepreneurs

• Swedish Association of Ethnic Entrepreneurs (Swe)
• supports ethnic minority groups to form
  businesses through 17 regional offices
  counselling, assistance, access to financing,
  positive promotion of ethnic entrepreneurs,
  lobbying of governments and banks.

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Consultation and regulation (I)

• Business Cost Calculator (Aus)
• downloadable tool to calculate impact of new
  policies on small business in a consistent,
  standardised manner, which must be used when new
  regulations are proposed.
• Regulation Reduction Incentive Fund (Aus)
• one-off awards to local government if they can
  prove that they have managed to reduce compliance
  costs for small business (using Business Cost
  Calculator).
• Small Business Advisory Group (NZ)
• scores government (marks out of 10) on progress
  made to reduce the impact of legislation and
  regulation .
• Test Panel (Fr)
• 400 entrepreneurs, comment on new
  legislation/regulation online standardised
  qualitative/quantitative questions to obtain
  rapid response.

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Consultation and regulation (II)

• Permit Pilot (Ger)
• advises businesses on permit-related issues will
  arbitrate between businesses and the relevant
  government department, if necessary.
• Permit simplification (Neth)
• merger of 25 permits from 3 layers of government
  into a single permit, allowing applicants to use
  online form to apply only for those permits which
  are relevant to them.
• Enterprise Zones (Neth)
• partnership between vocational universities and
  local authorities provides go-between to
  negotiate with government to reduce compliance
  burdens (particularly high-growth SMEs).
• Database of contradictory regulations (Neth)
• entrepreneurs submit reports of inconsistent or
  contradictory applications of regulations, with
  the correct interpretations of the rules provided
  by experts.

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Routes off unemployment

• Springboard (Aus)
• aimed at young unemployed, using less aggressive,
  transitional approach centred on personal
  mentoring and training in business skills. Loan
  finance offer open for some time after
  participants leave programme

Home-based business

• Online self-directed learning site (Aus)
• aimed mainly at home-based entrepreneurs, covers
  basic management issues such as identifying goals
  or estimating ones required income in the first
  year of operation.

Bankruptcy/failure

• Mandataire (Fr)
• a judge, accountant or similar senior
  professional devises an agreement between an
  ailing business and its creditors potentially
  expensive, it increases probability that a
  business will be rescued.

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Mentoring

• e-mentoring (Aus)
• focused on skilled self-employed (association
  professional engineers) pilot explored mentoring
  via e-mail following initial f2f meeting
  (business planning, advice etc).
• e-mentoring (Dk)
• found to be an effective means of engaging ethnic
  and migrant entrepreneurs with a limited
  knowledge of the economic or cultural context.

Online support

• Grant Wizard/Licence Wizard (Aus)
• short online questionnaire to determine which
  grants users are eligible for, or which licences
  they require.
• Online archive of seminars and presentations
  (Aus)
• video/audio files, to facilitate access for those
  small business owners unable to attend on the day

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Entrepreneurship education

• Youth Entrepreneurship Challenge (Can)
• 3-year programme involving
• (1) schools, where entrepreneurship is deeply
  embedded in curricular/extra-curricular
  activities
• (2) parents, entrepreneurs and elected officials
• (3) internet support incl. networks, management
  skills training, mentoring and access to
  micro-credit.
• International Danish Entrepreneurship Academy
  (Dk)
• public/private partners for increasing competence
  of entrepreneurs, targeting current HE students
  (34 universities) uses indicators of innovation
  knowledge and competencies, integrated into
  course design, and liaises between students and
  businesses.
• Utrecht Academy of Entrepreneurship (Neth)
• individualised programme to each student,
  consisting of selections from 80 workshops taught
  by local entrepreneurs, aimed at helping
  vocational students become self-employed.

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Social enterprise

• Co-operative enterprises (Swe)
• information and promotion campaign TV
  commercials and training programmes for public
  sector workers aimed particularly at young
  people

Procurement

• Government procurement (Dk)
• integrates e-tendering with invoicing and
  payments on a single website.
• Government procurement (Can)
• online access/regional network of offices to help
  SMEs more effectively compete with larger
  organisations simplifies processes and
  facilitates more efficient monitoring and
  feedback mechanisms.

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Research

• Small Business research website (Can)
• portal/forum for a wide range of researchers
  working in the field, drawing together official
  reports, statistics and links to other research.
  
• Research issue (Can)
• the character and thus distinctive needs of the
  younger new breed of entrepreneurs.
• Entrepreneurship Index (Dk)
• annual research exercise benchmarking framework
  conditions against the most entrepreneurial
  nations, to help identify the most suitable
  environment for growth.
• Routes off unemployment (NZ)
• research shows take-up of schemes low (few
  unemployed have skills, education and
  self-confidence for start-up) but for
  (self-selecting) subgroup, schemes work to
  providing a more rapid route and longer period
  out of unemployment.

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Conclusions and Lessons?

• Choice of approach in learning from experience
  elsewhere
• (1) explore initiatives, debates etc in national
  context
• (2) target specific topics rather than countries
• First option more time intensive with seemingly
  substantial redundant information but permits
  greater understanding through identification of
  system elements (link with structure,
  complementary initiatives, identification of
  policy evolution, etc.)
• Findings often reassuring re- present approaches
  in UK
• Only small number of transferable incremental
  improvements needed to repay project investment
  costs.