International Horizon Scanning: Small Business and Entrepreneurship Policy Some interim findings

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

2. 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 S&L 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)

5. 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)

6. 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.

7. Transferability • Concept built into research process: • Review actions/initiatives/debates/researchin 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.

8. 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%). • Women’s 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

9. 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. • Women’s 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.

10. 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.

11. 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.

12. 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 one’s 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.

13. 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

14. 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.

15. 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.

16. 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.

17. 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.