Date post: | 24-Dec-2015 |
Category: |
Documents |
Upload: | annabella-bruce |
View: | 216 times |
Download: | 0 times |
OECD and the Evolution of Entrepreneurship Policy Université du Québec à Trois-Rivières
Anders Hoffmann, Ph.D.Creative Director, FORA Ministry of Economic and Business Affairs, Division for Research and Analysis
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Research, Statistics and Policy
• “Es ist nicht genug zu wissen, man muss es auch anwenden; es ist nicht genug zu wollen, man muss es auch tun”
Johann Wolfgang von Goethe, 1749-1832
• ”With data you are just another guy with an opinion”
FORA’s slogan
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Two levels of my work
• A political motivation:• Denmark aims at being one of the most
entrepreneurial economies in the OECD by 2015
• An analytical objective:• Develop a better understanding of the drivers of
entrepreneurship and support fact based policy formulation
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Political motivation: SME policy in Denmark
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Political motivation:Entrepreneurship policy
The Political Platform for the Danish Government, 2005
• The Government will draw up an ambitious, holistic and multi-year strategy to make Denmark a leading growth, knowledge and entrepreneurial society
• Our goal is for Denmark, by 2015, to be one of the societies in the world where most growth enterprises are launched
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Analytical objective
• Provide policy makers with a prioritised list of policy areas to promoting entrepreneurship
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Entrepreneurship
• Entrepreneurship cannot be seen as a single event.
General population
Want-to-be 30%
Entry 1%
Survival 70%
Exit 25%
Growth 5%GEM
Eurostat
ICE
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Defenitions need to come from the policy objectives?
• Job creation
• Economic growth, productivity improvement, and competitive innovation
• Poverty alleviation and social opportunities
• Others?
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Why is entrepreneurship important:Job creation and destruction - by age group
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8+
%
0
10
20
30
40
50
60
70
Pct.
Job Creation Job Destruction
New Plants
New firms
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Why is entrepreneurship important:Job creation - by different types
Employmentfirst year
Employment after 5 years
Average number of employees after 5 years
Entrepreneurs 34 100 14 700 0.8
Growth Entrepreneurs
3 200 12 300 15.0
Total 37 300 27 000
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Why is entrepreneurship important:Impact on productivity
• Growth Entrepreneurs had a 40% higher productivity (MFP) than the average Danish firm
• Growth Entrepreneurs had a higher share of highly educated people
• A doubling of the number of growth entrepreneurs would increase GDP by 0.6%
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Why is entrepreneurship important:- average wage level by firm type
260.000
270.000
280.000
290.000
300.000
310.000
320.000
GrowthEntrepreneurs
Existing firms Entrepreneurs Closing firms
10
00
DK
R
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Define performance based on policy objectives
• This study defines entrepreneurship as • entry and exit of firms and • creation of high growth firms,
…as analyses link these two stages in the entrepreneurship process directly to productivity growth (Audretsch and Thurik, 2000; Scarpetta et. al. 2002, OECD 2003, Brandt, 2004).
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Comparing PerformanceEntry of new firms
The EU:• EUROSTAT Business Demography provides start-up rates
for 11 countries (more countries will be available soon)
• The US:• Four main sources (US Census Bureau, Small Business
Administration and Bureau of Labour Statistics) of start-up rates - varying from around 10% to around 20%. The US data only includes employer firms
Apply the US definition in the EU (joint work with the OECD and Statistics Denmark)
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Comparing Performance- Creating New Firms (Business Demography)
0
2
4
6
8
10
12
14
GBR NOR ESP NLD FIN ITA PRT SWE
Pct.
DNK0
2
4
6
8
10
12
14
CAN USA
Pct.
DNK
0
2
4
6
8
10
12
14
GBR NOR ESP NLD FIN ITA PRT SWE
Pct.
DNK0
2
4
6
8
10
12
14
CAN USA
Pct.
DNK
EUROSTAT Employee-firms
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Comparing Performance - high-growth entrepreneurs/firms
• The share of firms with a growth rate (turnover and employment) higher than 60% over a three-year period and with a growth rate of at least 20% each year. (Based on Birch Gazelles definition)
• The data is from the Bureau Van Dijk (BvD)
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Comparing Performance- Generating High-Growth Entrepreneurs
0
5
10
15
20
25
30
35
40
Employment Turnover
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
“Concluding” on policy focus….
• Growth entrepreneurs create more jobs (at higher wages) and increase productivity
• A higher number of new firms does not automatically lead to a higher number of growth entrepreneurs!
• So why no focus on creating growth firms….
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
From policy objectives to policy areas
“The most important policy implication is that the stimulation of productive entrepreneurship is a much more straightforward and feasible undertaking than previously recognised”
William J. Baumol in Kaufmann Though Book 2005
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Key Policy Areas for Stimulating High-growth Firms Methodology
1. The framework conditions for entrepreneurship are defined and quantified
2. The empirical links between the indicators measuring the framework conditions and the indicators measuring high growth are tested
3. Identify key policy areas for enhancing entrepreneurship performance based on regression and comparative techniques
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
The framework conditions are defined- what constitutes a high-growth firm
A great idea
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
The framework conditions are defined- what constitutes a high-growth firm
The rightpeople
A great idea
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
The framework conditions are defined- what constitutes a high-growth firm
The rightpeople
Financialbacking
A great idea
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
The framework conditions are defined- what constitutes a high-growth firm
IncentivesCulture
The rightpeople
Financialbacking
A great idea
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Opportunities Capital Ability CultureIncentives
Total measureof the business environmentfor entreprenurship
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Entry Barriers/deregulation
Venture capital
Stock markets
Wealth & bequest tax
Restartposibilities
LoansTrad. Business
educationPersonal
Income tax
Bankruptcylegislation
Business tax &Fiscal incentive
Laubor marketregulation
Entrepreneurialmotivation
Administrative burdens
Opportunities Capital Ability CultureIncentives
Total measureof the business environmentfor entreprenurship
Initiatives towardsSpecific groups
Social securitydiscrimination
Business AngelsTechnology
transfer
EntrepreneurshipInfrastructure
(public)
Access to foreignmarkets
Entrepreneurshipeducation
CommunicationAbout heroes
Capital taxesProcurement
regulationEntrepreneurship
Infrastructure(private)
Private demandfactors
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
The framework conditions are quantified
• A quality assessment of indicators has highlighted 61 indicators - 18 policy areas quantified.
• Composite indicators are almost an art form in itself and highly controversial.
• The methods suggested in the Handbook on Constructing Composite Indicators: Methodology and User Guide published by the OECD and the Joint Research Centre of the EU Commission in Ispra
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Links between performance and framework conditions
BelgiumDenmark
United Kingdom
FinlandFrance
Greece
Netherlands
Italy
Korea
Norway
Switzerland
Spain
Sweden
Germany
United States
Austria
R2 = 0.58
0
20
40
60
80
100
0 20 40 60 80 100
Simple average of framework condition indicators
Sha
re o
f hi
gh-g
row
th f
irm
s
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Identifying key policy areas for enhancing entrepreneurship performance
0
20
40
60
80
100Tech transfer regulation
Entry barriers
Access to foreign markets
Loans
Venture capital
Exit markets
Wealth & bequest tax
Capital taxes
Restart possibilities
Entrepreneurship education
Traditional business education
Entrepreneurship Infrastructure
Personal income tax
Business tax & fiscal incentive
Bankruptcy legislation
Administrative burdens
Labour market regulation
Entrepreneurial motivation
US value EU average
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
-10 0
Income taxes
Administrative burdens - start
Incentives
Bankruptcy
Business taxes
10 20-20-30-40-50 30-60-70-80
Administrative burdens - growth
Labour market regulation
Distance between Denmark and the top countries
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
100
Change DK Change DK–T4Change T4
- 10 100- 10 100- 10
Income taxes
Administrative burdens - startup
Incentives
Bankruptcy
Business taxes
Administrative burdens - growth
Labour market regulation
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Identify key policy areas- An example: Venture capital
Correlation 0.59
R2 0.34
Observation 28
Estimate t-stat P-value
Intercept -0.029 -1.82 0.08
Venture capital 0.002 3.69 0.00
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Not correlated with performance
Significant correlated with performance
High priority among the Top-4
Bankruptcy LegislationLabour Market RegulationAccess BarriersVenture Capital
Entrepreneurship EducationRestart PossibilitiesIncome TaxCorporate TaxCultureEntrepreneurship Infrastructure
Low priority among the Top-4
Access to Int. MarketsBusiness EducationWealth and Bequest TaxKnowledge TransferAdm. Burdens Loan CapitalStock MarketsCapital Tax
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Selected Conclusions
• Europe lack growth firms not start-ups
• Entrepreneurship policy can generate both jobs and higher productivity especially if it is targeted towards high-growth
• More new firms do not mean more high-growth!
• Important policy areas can be identified
Copyright 2007 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk
Contact information
• www.foranet.dk
• http://ice.foranet.dk/
• www.oecd.org/statistics/industry-services/entrepreneurship