watchesandclocks38295. 2673.14 Rubber andmiscellaneousplasticsproducts 30 244.3677.50 Miscellaneous manufacturingindustries 39 213.8181.31 Business services 73122.1883.48 Primary metalindustries 33 101.8185.30 Furniture and fixtures 25
1710.1899.09 Petroleum refining andrelatedindustries 29 10.1899.27 Transportationbyair 45 10.1899.46 Transportationservices 4710.1899.64 Apparel andaccessorystores 56 10.1899.82 Personal services 7210.18100.0 Total 55120
Indeed, comparedtolarge firms, small firms maybelessabletoexploit economies ofscaleandscope, orbemore financiallyconstrained (e g.,, Teece, 1986) whichmaycauseanegativeeffectonthecostofcapital (e g.
Ononehand, agemay affect theabilityofa firm tobuildareputationasacompetent, reliable and trustworthyinventing firm, andconsequentlymayhaveapositive impactonthechancetohaveitsinventionsacceptedbythemarket and profit (Danneels, 2002;
Forinstance, future researchcouldanalyzewhetherthepositiverelationshipbetweena firm's inventiveperformanceandsurvivalonlyholdsforthose firms that haveacquiredthedownstreamassetsneededtocommercialize their inventionstothe final customers. Finally, theresultsfromthispapermightalsohaveimplications for researchonventurecapital (VC.
Itiswellestablishedthat Venture capital (VC) iscrucialforsmallandyoung firms performance (Bottazzianddarin, 2002; Samilaandsorenson, 2011. The resultsofthisstudywouldsuggestthatthevcrolecouldbe particularlyimportantwhenmftarenotwellfunctioning, andso vertical integrationisabetteroptionforsmall firms inorderto profit fromtheirinventions.
Indeed, VCMIGHTPROVIDE financially-constrained small firms notonlywiththenecessaryresourcesto investintheacquisitionofdownstreamassets (e g.,, Stucki, 2014), but alsowiththemanagerialexpertiserequiredtocommercialize their productstothe final customers (e g.,
, Robsonandbennett, 2000. Hence, aninterestingavenueforfutureresearchcouldbe the explorationoftheroleplayedbyvcasapotentialsubstitute for MFT. 5. 3. Limitations Thisstudyhassomelimitations. First, weonlyconsideredsmes inventiveperformanceandprofitability, butotherperformancedim-ensions couldbeevaluated.
Futureresearch shouldthereforeinvestigatetowhatextentandunderwhatcon-tingenciestheseplayersselltheirideastoother firms ratherthan sellingtheirproductsto final customers. Inaddition, weemploya crosssectionalperspectiveinouranalysis. Theinvestigationofthe sameissueinalongitudinalperspectivecouldpotentiallyleadto Table6 OLSREGRESSIONESTIMATION (aftermatching) a b. Model 6. 1model6. 2 Inventiveperformance (Log) Profitability (Log) Technologyspecialist 0. 732**0. 738*(0
Ronen, J. Ed.),Entrepreneurship. Lexingtonbooks, Lexington, pp. 15 28. Beedles, W. L.,1992. Small firm equitycost:
Venturecapital, entrepreneurship, andeconomic growth. Rev. Econ. Stat. 93,338 349. Shane, S.,2002. Sellinguniversitytechnology: patternsfrommit. Manag.
OECD Studies on SMES and Entrepreneurship SMES, ENTREPRENEURSHIP AND INNOVATION OECD Studies on SMES and Entrepreneurship SMES, Entrepreneurship and Innovation ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD
such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences
OECD Studies on SMES and Entrepreneurship ISSN 2078-0982 (print) ISSN 2078-0990 (PDF)) Photo credits:
THE CONTRIBUTORS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 3 The Contributors This publication has been prepared under the leadership of Pier Carlo Padoan (Deputy Secretary-general and Chief Economist, OECD) and the management of Sergio
Arzeni (Director, Centre for Entrepreneurship, SMES and Local Development, OECD), with support from Jonathan Potter (Senior Economist at the Centre) and Mariarosa Lunati (Senior Economist at the Centre, currently responsible for
Entrepreneurship Indicators and Business Statistics in the Statistics Directorate OECD). The text was written by members of the Secretariat of the OECD Centre for Entrepreneurship, SMES and Local Development:
specifically, Jonathan Potter (front and back material and Chapter 1), Mariarosa Lunati and Marco Marchese (Chapter 2), Marco Marchese and Jonathan Potter (Chapter 3), Cristina
FOREWORD SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 5 Foreword The combined forces of globalisation, technological progress and growing market demand have created a new type of innovation:
New firms, small and medium-sized enterprises (SMES) and entrepreneurs are key players in this type of innovation.
That contribution to the economy is reflected in the rapid growth of some of these firms, the gazelles of the enterprise ecoystem.
But for economic growth and adaptation, it is vital to have incremental innovation from the broader bulk of SMES as well
Many areas are ripe for SME and entrepreneurship policy action, and fresh innovation policy is emerging in this field in OECD countries and other global economies.
This book presents the relevant data and policy information from 40 economies around the world,
and so provides an insight into the various challenges of stimulating the creation of new, innovative enterprises and increasing innovation in small and medium-sized firms.
Several countries are adopting a systemic policy approach in which SMES and entrepreneurship are supported as part of broad national innovation strategies.
Some countries are supporting clusters. New ways are being developed to help firms overcome the finance gap.
More than ever before governments are starting to use public procurement as a means of generating innovation in new enterprises and SMES.
the small and medium-sized enterprise sector accounts for 99%of firms in the OECD area,
instead in some high-potential enterprises, including the gazelles (new firms with rapid growth). And there are, of course, barriers to innovation in SMES.
and to furnish potential entrepreneurs with skills for successfully setting up ventures is only now becoming clear.
A major message is that small firms do not innovate by themselves but in collaboration with suppliers, customers, competitors,
And the quality of their local entrepreneurship environments the strength of local technology partners, the quality of local science-industry linkages, and so on is critical to generating local knowledge spillovers that FOREWORD SMES
A second course of policy action is to develop skills and capabilities for entrepreneurship and innovation in new firms and existing SMES.
Universities are increasingly providing entrepreneurship training, and this book establishes core principles in this area. The efforts of vocational training institutions and schools are also central to meeting the challenge.
But entrepreneurship education is confined not to the classroom or formal structures for learning. Employees also acquire entrepreneurship skills through interactions with their co-workers, suppliers,
clients and consultants on projects such as those to improve quality control methods or products. These interactions often take place through interactions between SMES and providers of
social entrepreneurship and social innovation. These fit well with the broader notion of innovation that governments are now beginning to adopt,
The goal of social entrepreneurs and enterprises is to provide innovative solutions to unsolved social problems;
and the main policy needs those that will render the enabling environment more favourable are identified.
and entrepreneurship to innovation in the 21st century and the role of policy in responding to the challenges they face,
One of the main planks of their efforts must be the promotion of innovation in SMES and of innovative new entrepreneurship,
The book is a flagship publication of the Centre for Entrepreneurship, SMES and Local Development of the OECD. It is intended to be part of a regular OECD series,
It draws in particular on the expertise and analysis of the OECD's Working Party on SMES and Entrepreneurship and the Directing Committee of the Local Economic and Employment Development Programme.
Pier Carlo Padoan, Deputy Secretary-general and Chief Economist, OECD ACKNOWLEDGEMENTS SMES ENTREPRENEURSHIP AND INNOVATION OECD 2010 7 Acknowledgements The following experts comprised the Scientific Advisory Group that helped guide preparation of this publication:
Professor Franco Malerba, Director of KITES (Centre on Knowledge, Internationalisation and Technology Studies), University of Bocconi, Italy Professor Jay Mitra, Director of the Centre for Entrepreneurship Research
, Essex Business school, University of Essex, United kingdom and Scientific Advisor on Entrepreneurship to the OECD Centre for Entrepreneurship, SMES and Local Development Professor Juan Roure, Professor of Entrepreneurship,
and Juan Luis Segurado, Senior Researcher on entrepreneurship and SME financing, at IESE Business school, University of Navarra, Barcelona, Spain Professor Luc Soete, Director of UNU-MERIT (the United nations
University Maastrict Economic and social Research and training centre on Innovation and Technology), Netherlands Karen Wilson, Senior Fellow at Kauffman Foundation and Director GV Partners, France Assistance in developing the Country Notes was provided by the following experts:
, Federal Institute of technology (KOF-ETHZ), Switzerland Kristoffer Astrup, Danish Enterprise and Construction Authority, Denmark Paul Atkinson, INSEAD, France Claudine Bichera de Oliveira
New zealand Michael Eilan, Israel Business Information Services Consulting, Israel Sirin Elci, Technopolis, Turkey Ilario Favaretto, University of Urbino, Italy ACKNOWLEDGEMENTS SMES
, E 8 NTREPRENEURSHIP AND INNOVATION OECD 2010 Yacov Fisher, Israel Business Information Services Consulting, Israel Claudia Gonzalez Brambila, Mexican Autonomous Institute of technology
Development and the Economy Hungary Lena Tsipouri, University of Athens, Greece Arnold Verbeek, Ideaconsult, Belgium Charles Wessner, National Academy of Science, Technology, Entrepreneurship and Innovation, USA David
Wolfe, University of Toronto, Canada Lee Woolgar, National Graduate Institute for Policy Studies, Japan Martin Wörter, Swiss Economic Institute Federal Institute of technology (KOF-ETHZ.
Entrepreneurship and Innovation held in Udine on 22-23 october 2009, organised by the OECD Centre for Entrepreneurship, SMES and ACKNOWLEDGEMENTS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 9 Local Development and the Udine Chamber of commerce.
The contributions of the participants are acknowledged gratefully as are the contributions of those who prepared background papers for the conference:
and accepted by the delegates to the OECD's Working Party on SMES and Entrepreneurship and the Directing Committee of the Local Economic and Employment Development Programme.
TABLE OF CONTENTS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 11 Table of contents Executive Summary...15 Chapter 1. Introduction...
25 What is the role of SMES and entrepreneurship in innovation?..32 Policy implications...38 Plan of the book...
41 Chapter 2. SMES, Entrepreneurship and Innovation: An Overview by Country...45 Introduction...46 Australia...
132 How knowledge affects entrepreneurship...132 The systemic approach to innovation...134 The geographical clustering of knowledge-intensive activities...
161 Chapter 4. Entrepreneurship Skills...163 The importance of entrepreneurship skills for SMES and start-ups...
164 Skills for entrepreneurship...165 How are acquired entrepreneurship skills?..167 Local skills ecosystems...180 Policy recommendations...
181 Notes...183 Bibliography...183 Chapter 5. Social Entrepreneurship and Social Innovation...185 Introduction...186 Social entrepreneurship...
188 Social innovation...195 Preliminary recommendations...205 Notes...207 Bibliography...208 Annex 5. A1. Definitions...
212 Annex A. Policy Recommendations: Strengthening Innovation through SMES and Entrepreneurship...216 TABLE OF CONTENTS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 13 Glossary...
219 Tables 3. 1. Business birth rate in HTM clusters...142 3. 2. Ranking of HTM clusters based on the composite indicator...
143 3. 3. Business birth rate in KISA clusters...143 3. 4. Ranking of KISA clusters based on the composite indicator...
143 3. 5. KTOS at a glance in Europe and the United states...146 3. 6. Activities, responsibilities and expected results of knowledge-transfer actors 148 4. 1. Classification of skills at work...
Definitions of social entrepreneurship...212 5. A2. Definitions of social innovation...214 Figures 3. 1. Distribution of HTM firms in the European union (Quantiles based on LQS) 137 3. 2. Distribution of KISA firms in the European union (Quantiles based on
148 SMES, Entrepreneurship and Innovation OECD 2010 15 Executive Summary Innovation is one of the most fundamental processes underpinning economic growth, the driver of growth in output per unit of labour
and capital invested, and an important basis for developing solutions to economic and social challenges such as climate change, ageing societies and poverty.
therefore working with governments around the globe to produce a set of policy recommendations, adapted to the current environment and based on sound analysis,
increasing the contribution of new entrepreneurial ventures and small and medium-sized enterprises (SMES) to innovation.
and entrepreneurship in new ventures is itself an important development. Whereas in the past innovation policy worked through investments in research and development,
a broader view now needs to be taken of where innovation occurs and the conditions needed to support it.
it is also the creation of a multitude of new products and services in all sectors of the economy,
In this framework, new firm creation through entrepreneurship (which typically generates new SME entities but occasionally also born large firms)
and their agents can boost innovation by improving environments for enterprise creation and innovation in small and medium-sized firms and strengthening the capabilities of entrepreneurs and SMES.
Sets out the role of SMES and entrepreneurship in innovation and the drivers of and influences on innovation performance.
Presents a set of country-level data on SMES, entrepreneurship and innovation performance, and a review of major policies and new policy developments in the field.
Examines three novel but also critical aspects of policies for SME innovation and innovative entrepreneurship: The participation of new and small firms within global and local knowledge flows,
The need for education and training systems to change so as to better foster the growth of entrepreneurial human capital.
The importance of social enterprises and social innovation and the need for an evolution in the governing institutional frameworks in order to facilitate their growth.
Major findings and messages The environment for innovation has changed; the importance of new and small firms to the innovation process has increased.
Increasing incomes, more niched market demand and changing technologies have reduced the structural disadvantages of small firm size stemming from their more limited economies of scale.
In addition, the knowledge economy, more open and distributed innovation, globalisation, a shift to non-technological innovation, the emergence of the Silicon valley Business model and a new imperative for social innovation and social entrepreneurship have given all
rise to a new entrepreneurial economy, as opposed to the managed economy of the past. New business ventures and SMES have a number of critical roles to play in supporting innovation.
New firm entry and SME growth contribute to upgrading the aggregate productivity of the economy by displacing firms with lower productivity
and placing incumbents under competitive threat. New spin-off ventures enable the commercialisation of knowledge that would
otherwise remain un-commercialised in large firms, universities and research organisations. Small firms on average do not appear to be more innovative after allowing for their size,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 17 shares of total activity accounted for by each of the sub-categories of micro,
Many new policies have been pursued to foster the creation of new innovative enterprises and encourage SME innovation in the countries reviewed.
angel investment) promoting more and better technologybased start-ups (technostarters) in and around universities. These programmes can provide inspiration for policy development in other countries.
but rather in collaboration with others, including with their suppliers and customers, and with universities and research organisations.
However, globalisation has created also new opportunities for domestic knowledge to be exploited overseas and for tapping into knowledge generated abroad, raising a new challenge:
to create linkages between SMES and foreign direct investment ventures; and to attract highly-skilled labour from abroad.
Higher education institutions are increasingly providing entrepreneurship education. This works best when entrepreneurship support is embedded within teaching,
entrepreneurship is seen as a strategic objective and ambition of the institutions, clear incentives and rewards are applied for academic staff engaged in entrepreneurship promotion,
support is provided for financial and human resources, and entrepreneurship-dedicated structures are in place such as chairs, centres and incubation facilities.
Start-up assistance and evaluations of support approaches should also be put in place surrounding the entrepreneurship courses.
Entrepreneurship is provided also increasingly in vocational education and training and schools. For example, apprenticeship programmes are good vehicles for developing entrepreneurship skills,
but SME participation in apprenticeship and other vocational training is limited relatively, potentially reflecting inappropriate training supply.
Shifts are also occurring in school curriculums aimed at fostering in students the ability and desire to act entrepreneurially.
As well as gaps in external provision of entrepreneurship training, in-house training of employees by SMES is much less common than for large firms.
Despite the general importance of vocational education and training (VET) to skills development in firms, enterprises with less than 50 employees provide significantly less employee training than larger firms.
This is even true for countries known for their strong training cultures such as Denmark, The netherlands, Norway and Sweden.
younger, better-educated workers in highly-skilled occupations such as managers, professionals and technicians have greater access to training opportunities than less educated routine
One of the problems is provided that externally entrepreneurship training approaches for managers and workers are geared not sufficiently to the how to nature of competences that firms require.
nevertheless provide a significant boost to the entrepreneurship skills of SME employees. This involves SMES bringing in outside firms
The final thematic chapter concerns social entrepreneurship and social innovation. Defining social entrepreneurship is given both challenging
the newness of the concept and differences in how it is conceived across countries, and important for the provision of appropriate legal and administrative environments.
The key characteristic of social EXECUTIVE SUMMARY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 19 entrepreneurship is that it aims to provide innovative solutions to unsolved social problems through some form of business.
It often goes hand in hand with social innovation processes. Social entrepreneurship is thought in fact best of as a vehicle and agent of social innovation,
although it is not the only one. Examples include individual social entrepreneurs, such as scientist Victoria G. Hale who founded the Institute For one World Health, collective organisations such as the Wonju Health and Social Care Cooperative in Korea,
and charities such as the Silai for Skills women's training and employment initiative in Bristol, United kingdom. Social enterprises, like associations or cooperatives, often need different support from that provided to traditional businesses.
Like social entrepreneurship social innovation has blurred boundaries. In global terms, however, social innovation is about social change in response to social needs and challenges.
and can deal with new relationships with stakeholders and territories. It seeks new answers to social problems by identifying
and delivering new services that improve the quality of life of individuals and communities and identifying and implementing new labour market integration processes, new competencies, new jobs,
Recommendations The main recommendation of the book is that policies to strengthen entrepreneurship and increase the innovation capabilities of SMES should be one of the main planks of government innovation strategies.
Furthermore, governments should target SMES and entrepreneurship as a major potential source of new jobs in the recovery from recession.
governments should introduce an innovation strategy for SMES and entrepreneurship. It should stress actions in four main areas (see Annex A,
pp. 216-217): 1. Promoting conducive entrepreneurship cultures and framework conditions. 2. Increasing the participation of new firms and SMES in knowledge flows. 3. Strengthening entrepreneurial human capital. 4. Improving the environment for social entrepreneurship and social
innovation. Favourable entrepreneurship cultures and framework conditions are the foundation of innovative entrepreneurship and social innovation.
This covers a range of issues and fields including securing stable macroeconomic policies, well-designed mainstream policies, enabling regulatory frameworks and tax regimes and positive attitudes to entrepreneurs and entrepreneurship.
The following key actions are recommended in this area: Foster positive attitudes in society to business start up and growth, including through education and the media.
and conditions of entrepreneurship and SME activity are taken into account in framework conditions and regulations affecting business.
As well as intellectual capital protection, sources of finance, competitive markets, human capital and so on, entrepreneurs and small firms need access to knowledge to innovate.
and exchanged within open and distributed innovation systems at global and local levels involving interactions among customers, suppliers, competitors,
Strengthen knowledge-based entrepreneurship by providing advice and training to start-up entrepreneurs who have strong technological knowledge
Use these partnerships to provide soft enterprise support infrastructure (e g. science parks and business incubators
collaborative research opportunities, services for knowledge transfer (e g. innovation brokers, labour mobility schemes, programmes for the commercialisation of university research),
and intelligence functions aimed at anticipating future needs and opportunities and acting on them through the partnership.
securing better local embedding of foreign direct investment ventures, and attracting highly-skilled labour from abroad:
and supporting SMES in EXECUTIVE SUMMARY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 21 their efforts to upgrade their R&d,
Embedding of foreign direct investment ventures should be promoted through integration of inward investment policies and cluster policies;
Learning processes are at the core of entrepreneurship and SME innovation. Yet many emerging and potential business creators are lacking entrepreneurship skills such as in risk assessment,
strategic thinking, networking, and motivating. These skills are also critical to innovation by employees in existing SMES.
Build up entrepreneurship education in universities and higher education institutions by smartly scaling-up, shifting the emphasis from business management to growth-oriented entrepreneurship,
introducing interactive teaching methods that incorporate practical experience and linking into wider networks including alumni networks and external economic development organisations.
Embed teaching of an entrepreneurship mindset in school curricula and accompany this with relevant teacher training
and teaching materials designed for entrepreneurship Reinforce training in SMES by launching in-company projects and increasing SME apprenticeships and developing the training function of small business support programmes,
Encouraging social entrepreneurship and social innovation will help in this respect. The key recommendations are to:
Improve financial, fiscal, legal and regulatory environments. Build environments that enable social enterprises to meet their economic and social goals.
Facilitate the development of a social investment marketplace, for example with fiscal incentives to attract investors, multiple forms of credit enhancement,
and seed funding programmes for individuals in EXECUTIVE SUMMARY SMES, E 22 NTREPRENEURSHIP AND INNOVATION OECD 2010 the early phases of social entrepreneurship projects.
Introduce public procurement measures that include socioenvironmental criteria. Experiment with innovative institutional arrangements between civil society, governments, financial institutions and social enterprise ventures.
Undertake research into social entrepreneurship and social innovation and their main components in order to assess the needs of the various entities belonging to the sector.
Work to create a clear definition of social innovation and an understanding of how to develop it.
Evaluate the impacts of social entrepreneurship and social innovation, using appropriate methods such as Social Return on Investment measures and balanced scorecards.
Provide training opportunities to social entrepreneurs and include social entrepreneurship in school and university curricula.
Introduce social clauses in public procurement procedures to encourage involvement of social enterprises in provision of social goods and services.
Establish social innovation funds, dedicated to specific fields where social innovation is needed (eldercare and climate change)
or to supporting promising experiments and models. Create incubators for social enterprises and social innovation intermediaries to bring together the skills
and expertise necessary to help sustain and develop social projects, provide a space to experiment,
SMES, Entrepreneurship and Innovation OECD 2010 23 Chapter 1 Introduction The introduction examines what is new about innovation in the 21st century
and the role played by SMES and entrepreneurship. An important shift has occurred from the managed to the entrepreneurial economy,
associated with a fall in the importance of economies of scale in production, management, finance and R&d. It is characterised by a series of trends encompassing the emergence of the knowledge economy
open innovation, global connections, non-technological innovation, the Silicon valley Business model and social entrepreneurship and social innovation.
SMES and new business ventures are important players in this new environment. They have a key role in processes of creative destruction, knowledge exploitation, breakthrough and incremental innovation,
and interactive learning. Ensuring they reach their full potential requires a new innovation policy approach that facilitates entrepreneurship and SME innovation.
Priorities include inserting new and small firms in knowledge transfer networks, strengthening entrepreneurship skills, and improving institutional environments for social entrepreneurship. 1. INTRODUCTION SMES, E 24 NTREPRENEURSHIP AND INNOVATION OECD 2010 The creation of new business ventures and innovation in existing
small and medium-sized enterprises (SMES) are critical parts of today's innovation process, and should take a central place in government strategies to promote innovation.
Despite their importance, however, SME and entrepreneurship support is embedded not yet fully in innovation policy, and the requirements for effective policies in this area are still not well enough understood.
New firms and innovating SMES are seen best as agents of change in the economy, introducing new products and services and more efficient ways of working.
They underpin the adaptation of our economies and societies to new challenges and drive economic development.
Not all new and small firms are equal in innovation, of course. On one hand there is a small group of highly innovative and high-growth-potential firms with important individual impacts on jobs and productivity.
But their numbers from the Entrepreneurship Indicators Project should not be exaggerated. They make up only a small minority of all SMES.
OECD figures for eleven OECD countries suggest for example that high-growth enterprises account for between only 2 and 8 per cent of all enterprises with 10 or more employees,
while gazelles account for less than 1 per cent of such enterprises. 1 They nonetheless generate large impacts.
Anyadike-Danes et al. 2009) calculate, for example, that the six per cent of UK businesses with the highest growth rates generated half of the new jobs created by existing businesses between 2002 and 2008.
Innovation is a source of the growth of these types of firms (Mason et al. 2009). 2 The Global Entrepreneurship Monitor survey in 53 countries suggests that only 6. 5%of new entrepreneurs are highexpectation entrepreneurs,
who expected to create 20 or more jobs in five years time. Almost 90%of all expected new jobs were foreseen by less than one-quarter of nascent and new entrepreneurs (Autio, 2007.
Many empirical studies have shown the aggregate relationships between entrepreneurship and SME activity and economic growth and job creation.
and business start-up rates are associated with more rapid economic growth (Audretsch and Thurik, 2001; Audretsch and Keilbach, 2005;
as new and small firms take up labour released by downsizing elsewhere in the economy and increase national and local competitiveness (Neumark et al.,
while in 1. INTRODUCTION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 25 2007 two-thirds of the entire pool of new jobs were created by firms aged between one and five years
This job creation function of entrepreneurship and SME development is of great relevance to the recovery from the global financial
and economic crisis since it is clear that policies enabling innovation in new and small businesses will have benefits not just for improving products
and services and increasing efficiency but also for meeting the job creation challenge of high unemployment. In the short to medium term there is a real opportunity for governments to use policies for entrepreneurship
and SME innovation to meet productivity and job creation objectives at the same time. There is growing, if still insufficient
recognition that entrepreneurship and small firm development promotes innovation and in so doing meets fundamental economic and social objectives.
and Entrepreneurship, aimed at policy makers and their advisors with direct responsibility for entrepreneurship and SME policy or working in other policy domains such as education,
innovation and social policy who could better realise their goals by adopting strategies that are more aware of and sensitive to the needs and opportunities of SMES and entrepreneurship.
This chapter sets the context. It focuses on two key questions and draws out the policy implications of each:
which relies much more strongly than in the past on entrepreneurship and SMES, but institutions and policies have yet to fully adapt to this new reality.
developing entrepreneurial human capital and bringing about social entrepreneurship and social innovation. The chapter starts by examining how global trends towards the knowledge economy, open innovation,
global connections and non-technological innovation and the emergence of national and regional economic models and new types of social innovation have increased the importance of SMES and entrepreneurship to innovation.
It then discusses how SMES and entrepreneurship contribute to innovation by driving processes of creative destruction,
commercialising research, making break through and incremental innovations, participating in interactive learning processes and working in different modes of innovation.
The change can be resumed as a shift from the Managed economy to the Entrepreneurial Economy (Thurik, 2009;
In the latter, entrepreneurship is one of the foundations of innovation. 1. INTRODUCTION SMES, E 26 NTREPRENEURSHIP AND INNOVATION OECD 2010 New and small firms have become critical innovation players because of their ability to recognise
and exploit the commercial opportunities emerging from technological, competitive and market changes. Furthermore, economies of scale in research and development are no longer the barriers they once were to small firm participation in innovation.
while the massive shift from manufacturing to services is bringing with it new types of non-technological innovation that render economies of scale in R&d far less significant.
In presenting the shift from the managed to the entrepreneurial economy, Thurik (2009) distinguishes between three major historical phases of innovation and contrasts the importance of SMES and entrepreneurship in each. 1. The Schumpeter Mark I regime.
Schumpeter's initial view was developed in the first decades of the 20th century. Schumpeter in this period saw the entrepreneur as playing a major role in challenging incumbent firms by introducing new inventions rendering current technologies and products obsolete
exploiting high price elasticities of demand (Schumpeter, 1942). Innovation from the 1940s to the 1970s fits this model:
In this new environment, established and large firms were seen to outperform new and smaller firms in innovation because of a close link between infirm R&d spending and innovation. 3. The Entrepreneurial Economy.
From the late 1970s to today the structures and operations of advanced economies have again been changing.
and entrepreneurship in today's economy is reduced the importance of economies of scale and scope in production,
Changing markets, increased competition and new technologies have reduced product life times, demanding more rapid creation of products and their more rapid destruction.
Thus a major force in the emergence of the entrepreneurial economy has been a reduction in the product standardisation that was the force of large firms in the middle of the 20th century.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 27 reducing the transaction costs associated with managing different parts of the production process,
i e. the capacity of firms and economies to specialise, able to produce output for niche markets,
Nevertheless, what has emerged is an environment in which entrepreneurship and SMES have moved up the agenda.
A number of further associated trends have changed the way that innovation is carried out in the 21st century,
the knowledge economy; open innovation; global connections; non-technological innovation; the Silicon valley Business model, and social innovation and social entrepreneurship.
These are discussed in turn. The knowledge economy One of the features of the transition from the 20th to the 21st century has been the emergence of the knowledge economy,
which has significant implications for the importance of new and small firms in innovation and how they innovate.
One of the reasons for its arrival has been the out-sourcing of standardised production from high-to low-labourcost countries
and hence a shift in the specialisation of advanced-economy firms towards more knowledge-based activities that are tied more closely to local knowledge resources and capabilities.
the knowledge economy is not just an advanced world phenomenon. Emerging economies as well are engaging more with science
and technology and ideasbased production as firms around the world all seek to achieve product differentiation and greater productive efficiency.
In this new environment, it is the creativity and adaptability in applying knowledge provided by SMES
and entrepreneurship that have made them essential drivers of innovation, growth and employment creation. The major feature of the knowledge economy is increased the importance of knowledge as a factor of production.
As Romer (1986) points out, there is something particular about knowledge as a factor: It is non-rival, cheap to share,
pervasive and generates an aggregate learning curve effect that increases the productivity of new knowledge investments.
This is what is seen now generally by economists to be the major factor behind the bulk of economic growth, the growth that is not due to additions to capital and labour stocks.
Some of the ideas driving economic growth may be the result of scientific breakthroughs in large firms and universities,
but the capacity of entrepreneurs to commercialise this type of invention through spin-off enterprises and knowledge transfers is critical.
Indeed, one of the reasons that new start-ups and small firms have become more important today is that innovation in the knowledge economy is coming from creativity and the unexpected,
and opened up innovation to new enterprises and SMES that participate in knowledge transfer networks with universities, large firms and other players.
and transport and communications have improved. Cross-national trade and investment have increased therefore, escalating competition and specialisation.
This puts a premium on innovation. At the same time, innovation itself is globalising (Archibugi and Iammarino, 1997.
This has important consequences for innovation in new and small firms. Above all, globalisation has increased the importance of cross-border collaboration in innovation both in obtaining inputs for innovation (ideas, finance, skills,
technologies) from abroad and in exploiting its outputs (products and services, patents, licenses, etc.)in foreign markets.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 29 make a major difference, such as changes in product design or packaging, product placement, product promotion or pricing.
For example, it may involve SMES in tracking competitors'actions through electronic monitoring of news and information services or the introduction of total quality management techniques on the work floor.
non-technological innovation is equally important to services and manufacturing (European commission, 2007). This is very significant
because the services sector has seen a dramatic rise in its share of economic value added in recent years (rising for example from 55%to 70%of Japanese
The new European union Services Directive is part of a move to redress the balance in Europe by removing legal and administrative barriers to the full tradability of services within the European Single Market.
The Silicon valley Business model There have been changes in the entrepreneurship environment in some very dynamic national
and local innovation environments that have made it easier for new start-ups to gather the resources required to become viable businesses
logistics, product service and ancillary corporate services. Cohen (2010) calls this the Silicon valley business model, for where it first developed into a significant economic force.
The Silicon valley environment has not been replicated in its intensity, but many of its important features have been taken up to a significant degree in the most innovative national and local environments of the 21st century.
Venture capital firms can now provide capital quickly to the most promising ventures whether or not they are in a large firm context.
Their initial contributions can release further funding downstream if important milestones are met. Venture capitalists can also
if needed, help round up teams of engineers and other key staff from other firms. Engineers and other key staff may shift as groups,
and servicing can similarly be resolved in the market in highly entrepreneurial environments. Whilst this favours the SME, large corporations are adapting to become important players within this type of business model rather than treating it solely as a threat.
Many are involved in buying the firms with the most promising technologies and markets in their areas,
hence providing an exit to the original innovators and venture capital investors. They may also be involved even more closely for example in venture investing
provision of complementary assets and technologies, and even the provision of key people, including the would-be innovating entrepreneur.
significantly increasing the prospects of major innovation in small firms. 1. INTRODUCTION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 31 Social entrepreneurship and social innovation So far,
the discussion has been oriented implicitly around the creation of economic value added. But a further ramification of a broader notion of innovation is need the to consider its social contribution.
Social entrepreneurship is defined by its paramount logic of providing entrepreneurial business solutions to social challenges.
but can occur either through or independent of business ventures. Social entrepreneurship and social innovation are of fundamental importance today
because welfare states are changing. New social needs are emerging as people live longer, healthcare possibilities improve,
But state budgets are not keeping pace with the growing needs and expectations, particularly with the consequences of the global financial and economic crisis,
which has opened up a gap for the entrepreneurial supply of social goods and services. This too can be seen as part of the above-mentioned shift from the managed to the entrepreneurial economy.
The managed economy was a mass production society based on stable employment in large firms and a central role of unions and employers in regulating the economy and society in partnership with government.
The social contract included regulation of labour markets and a strong welfare state. The reduced power of large firms and unions,
and arguably the reduced capacity of government to raise taxes in an era of mobile capital,
Social entrepreneurs and social enterprises such as nonprofit organisations have stepped into this breach (OECD, 2003; Noya and Clarence, 2007.
They generate new goods and services such as environmental protection and services to the individual. At the same time many address problems of unemployment and the social problems of poor neighbourhoods.
Furthermore, whilst many of the goods and services offered through social enterprise and social innovation seek to fill gaps in purely public provision by welfare states,
social entrepreneurship is also now usefully entering fields where there is some public or private sector provision,
But there are also some differences in opportunities and constraints. Social enterprises may have greater problems accessing capital markets, for example,
since they are understood not well by traditional banks. They may also need special support for human capital development,
Taken together, the trends outlined above the shift from the managed to the entrepreneurial economy, the growth of the knowledge economy
open innovation, increased global connections, non-technological innovation, the Silicon valley business model, and social innovation and entrepreneurship represent an important change in the environment in
which innovation takes place. What has emerged is an economy in which SMES and entrepreneurship are now critical players in a broader, more distributed innovation process.
The next section looks more closely at the role that SMES and entrepreneurship now play in innovation,
before we examine the implications for policy. 1. INTRODUCTION SMES, E 32 NTREPRENEURSHIP AND INNOVATION OECD 2010 What is the role of SMES and entrepreneurship in innovation?
The major function of SMES and entrepreneurship in innovation is the introduction of advances in products, processes, organisational methods and marketing techniques into the economy.
This occurs at two basic levels: making breakthrough innovations that push forward the technological frontier; and adopting incremental innovations that bring the economy closer to its technological frontier.
The ideas for these innovations may be developed internally by the SME or start-up, or they may be accessed from external sources.
Another function of SMES and entrepreneurship in innovation is to provide ideas and inputs to ideas generation that are exploited by large firms, universities/research organisations and other small firms.
There are nonetheless several ways of thinking about these contributions, revealing different aspects of the innovation process.
It is useful to start by considering how a number of seminal authors have seen the connection between entrepreneurship and innovation (see also Ahmad and Seymour
It is entrepreneurs who bring about change in an economy by providing new combinations: new or improved goods, methods of production, markets, sources of supply of inputs, organisation of an industry,
They disrupt markets, leading to long-run evolutionary growth in the economy. The entrepreneur as an opportunity identifier.
Kirzner (1973,1997) stressed the role of entrepreneurs as discoverers and early exploiters of previously-unnoticed profit opportunities.
They gain temporary monopolies until the attention that they draw to the opportunity leads to competitor entry,
which eliminates the profit. Innovation occurs as entrepreneurs discover new opportunities. But as opposed to Schumpeter's view of the entrepreneur as a disruptor of markets and instigator of evolutionary economic development
this is a static view: the entrepreneur facilitates matching of supply and demand and the achievement of equilibrium following shocks.
The entrepreneur as a risk taker. Knight (1921) focused on a related aspect of the role of entrepreneurs in innovation.
Here the entrepreneur is seen as facilitating economic adjustment by predicting where new profit opportunities will open up
processes and business models to fit at the risk of failure. The entrepreneur innovates by experimenting.
although Drucker's main focus is more on firm strategy and competitiveness than aggregate economic growth.
Like Schumpeter, Baumol (2002) adopts a dynamic framework examining the relationship between entrepreneurship, innovation and economic growth.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 33 ties to existing technologies. Large firms are seen to undertake more incremental innovation, based on systematic research in their existing development channels.
All of these authors identify essential roles for entrepreneurship in innovation: in both static and dynamic frameworks;
discovering opportunities, taking risks, shifting resources and creating breakthrough innovations and these roles moreover are not mutually exclusive.
But in which settings is entrepreneurship to be found? There are many competing views and some degree of confusion in this area.
Entrepreneurs are those persons (business owners) who seek to generate value, through the creation or expansion of economic activity,
Entrepreneurial activity is the enterprising human action in pursuit of the generation of value, through the creation or expansion of economic activity,
Entrepreneurship is associated the phenomenon with entrepreneurial activity. The definition of entrepreneurship is therefore not synonymous with either SMES or business start-up,
but reflects instead the human action behind innovation. Entrepreneurial activity may occur in start-up enterprises SMES, large firms or public sector organisations.
What is important is that people are enterprising in the creation of value through innovation. Our emphasis in this book is on two parts of the spectrum, namely the new start-up venture
(which is generally but not always of small size) and the small and medium-sized enterprise.
Our focus in both cases is on entrepreneurship and innovation i e. the generation of value from the identification and exploitation of new products, processes and markets.
We are concerned not then with new firm and SME operation and management per se but with innovation-oriented entrepreneurship within new firms and SMES.
It is oriented this innovation activity that promotes economic growth and solves social problems. In order to understand more fully how start-up enterprises
and SMES contribute to innovation and identify the public policy implications, it is useful to consider the following (overlapping) aspects of the modern innovation process in more detail:
creative destruction; knowledge spillovers and entrepreneurship; large and small firm roles in breakthrough and incremental innovation;
distributed and open innovation; and the Science-Technology-Innovation (STI) and Doing-Using-Interacting (DUI) modes of innovation.
Creative destruction Venture creation and SME growth renew economies by forcing the contraction, exit or upgrading of incumbent competitors.
thus increasing the average productivity of the economy and driving economic growth. There is also an indirect impact,
and enterprise churning (measured for example by net entry: entry minus exits)( Bartelsman et al. 2009). ) The creative destruction process is particularly important in recession and recovery,
At the same time productivity may be enhanced as new firms bring better products and services and better technologies into the economy.
Knowledge spillovers New venture creation and knowledge exchanges between knowledge-generating organisations and SMES also enable the commercialisation of knowledge that would
which many economists understand economic growth. Investments in new knowledge are seen to spill over in part to other agents,
increasing their returns to innovation and driving further investment and growth. Knowledge built up in universities,
large firms and research organisations does not spill over automatically, however. It may remain unexploited. The new start-up enterprise is one of the significant players in commercialising knowledge.
This largely occurs as individuals leave universities research organisations and large corporations to start enterprises based on knowledge they developed there in the form of spin-off companies,
but also as external entrepreneurs commercialise ideas from these sources. Both public policy makers and firms and research organisations themselves have become increasingly interested to support such commercialisation, seeing spin-offs as one of the key ways to exploit untapped knowledge,
the University of British columbia has a venture fund, the University of Guelph has raised money for commercialisation by listing its intellectual property portfolio on the stock market,
and a range of entrepreneurship boot camps, mentoring programmes, entrepreneurship resource centres and entrepreneurship courses for researchers have been introduced (Mcnaughton, 2008).
and represent only a small proportion of new enterprise starts. Callan (2001) reports that academic spinoffs accounted for no more than 2%of new firm creation across eight OECD countries,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 35 offs high-growth firms on average, while they also tend to grow slowly (Lindholm-Dahlstrand,
and the University of Waterloo in Canada are key drivers of entrepreneurship in their areas through spin-offs (84 spin-offs in Madison;
Considering entrepreneurship as all venture start-ups, Audretsch et al. 2006) and Acs et al. 2004,2005, 2009) suggest that commercialisation of knowledge by new start-ups explains part of the link between entrepreneurship
and economic growth through their role in promoting knowledge spillovers. The relationship may involve not just the role of new start-ups in exploiting knowledge themselves but also the role of new enterprises and SMES as participants in knowledge exchange networks within innovation systems, stimulating knowledge transfers from universities and other
sources to a broader group of firms. There is cross-country empirical evidence from 20 OECD countries of a link,
with entrepreneurship acting to convert knowledge into growth by exploiting spillover originating in a country's R&d stock (Acs et al.,
2004). ) Breakthrough and incremental innovation There is lively debate over the relative roles and importance of SMES and large firms in innovation.
and new ventures are active in breakthrough innovation in sectors such as biotechnology and information and communication technologies.
i e. driven by social capital networks or networks stemming from location in clusters. It is particularly important for new and small firms that they draw on networks
Within any innovation system, a close articulation is needed 1. INTRODUCTION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 37 between
Modes of innovation A key distinction needs to be made between the role of SMES and entrepreneurship in the Science,
and by closer interaction with users of products and services outside the organisation. The result is localised innovation with usability in addressing problems faced by the firm.
and economies combine them to varying degrees, the distinction serves to highlight the need for a holistic innovation approach that recognises the importance of both kinds of processes and differences in the types of barriers that affect SMES and start-ups under each.
Whereas typical problems for STI-based innovation are under-investment in scientific research, lack of connections between science and industry and poor access to finance for knowledge-based start-ups,
and human capital to absorb knowledge. 1. INTRODUCTION SMES, E 38 NTREPRENEURSHIP AND INNOVATION OECD 2010 Policy implications As is clear from the above discussion,
SMES and entrepreneurship are fundamental to the modern innovation process. Yet their place is established not fully in today's innovation policies.
This state of affairs arises as a consequence of the shift from the managed to the entrepreneurial economy
innovation policy in the entrepreneurial economy must expand to include new types of actions for entrepreneurship and SMES.
this is still too often understood as being about investment in science and R&d policies, leaving aside the crucial issues of diffusion and exploitation of research
and excluding large parts of the non-technology economy. It is typified by the European union Barcelona Summit headline goal of achieving an increase in the proportion of European GDP invested in research and development from 1. 9%in 2002 to 3. 0%in 2010.
Large-scale research subsidies to national champions, other large firms and basic-research silos in national universities and research organisations are not the most effective way to generate innovation in an environment where knowledge
Entrepreneurship cultures. With entrepreneurship at a premium, it is important for policy to engender conducive cultures and attitudes where possible.
For example, education systems, the media and business support organisations can help foster entrepreneurial motivations (Potter et al.
SME and entrepreneurship framework conditions. There should not be unnecessary obstacles to SMES and entrepreneurship in the institutions of the economy such as taxation, social security, bankruptcy legislation, competition policy,
product market regulation, labour market regulation, finance markets and intellectual property protection. OECD research shows for example how unbalanced taxes on company profits
and losses and high average tax rates on SMES relative to large firms can diminish SME and entrepreneurship activity (OECD, 2009).
Firm dynamics. Since the entry and growth of SMES drives productivity improvements by replacing less productive contracting and exiting firms,
policy should promote entry and exit and competition in the market. Furthermore, the process of creative destruction is pronounced most in periods of economic crisis and recovery,
as the global economy is 1. INTRODUCTION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 39 experiencing today.
As the incumbent firm stock is contracted, room is created for innovative firms to enter and grow when demand picks back up.
It is critically important that incumbents are protected not over at such a time since this would block the potential for new business models
and technologies to emerge in the new and small firm sector. This illustrates a timely opportunity for well-designed policies to achieve two objectives at the same time:
the creation of jobs in SMES in response to an aggregate demand stimulus or targeted employment
and investment subsidies and the improvement of productivity by helping new and small firms to carry innovations into the economy.
Access to finance. Research clearly identifies a finance gap in many locations for new and small firms involved in the early stages of innovation, especially in the market for highrisk capital.
Policy responses such as grants, loans, loan guarantees, mezzanine finance, seed capital, venture capital, business angel finance and investor readiness programmes need to be explored (OECD,
One of the contributions of new firms and SMES to the economy is breakthrough innovation.
which could contribute more to the economy if they begin to innovate incrementally and strengthen their non-technological innovation.
They require a different type of innovation support to high-growth-potential enterprises focused more on increasing their capacity to absorb knowledge from outside the firm.
One of the key drivers of SME innovation and innovative entrepreneurship is knowledge exchange between and among explorers and exploiters, particularly for the exploitation of new, science-based knowledge.
Examples of relevant policy approaches include creation of science parks and business incubators, encouraging mobility of staff between universities and industry,
Entrepreneurship skills. Another often overlooked factor affecting the propensity for successful business start-up is the degree to
which motivated people possess adequate entrepreneurship skills. This includes small business management skills (such as business planning and accounting), strategic skills (such as decision-making and opportunity recognition),
and entrepreneurial traits (such as leadership and creativity). It implies the need for a change in curriculums, pedagogies,
Social entrepreneurship and social innovation. Entrepreneurship is not only about profitmaking. Social entrepreneurship and social innovation are important features of a broader vision of innovation
and are expanding at a rapid pace. Institutional arrangements, however, are often not well adapted to the needs and modus operandi of these organisations and approaches.
National legal, financial and fiscal frameworks for social enterprises therefore need to be reviewed and adjusted and accompanied by capacity building, skills development and network creation for social entrepreneurs.
This is not a comprehensive account of all areas of policy intervention for SMES, entrepreneurship and innovation
but rather a form of priority list for policy in adapting to new forms of innovation.
and entrepreneurship, recognising both the potential of SMES and entrepreneurship in innovation and the barriers that policy needs to overcome (see Annex A). The next chapters will examine the major issues in more detail.
Evidence is presented on what can be measured in this new area. Three themes are explored then which are of major importance but merit more attention than traditionally received:
and facilitating social entrepreneurship and social innovation. Chapter 2 provides data on SME innovation performance
and constraints across 40 economies and examines the major and new policies that have been introduced. Among the issues identified, it underlines the relevance of three major policy areas highlighted in this introduction,
competitors, customers, research organisations and others. It also shows that the quality of local environments for knowledge generation
and transfer counts and that they are particularly favourable in innovation clusters. Policy can reinforce this.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 41 example through embedding of foreign direct investment, attraction of highly-skilled labour from overseas and building cross-national SME alliances.
while entrepreneurship skills are needed to start successful firms, they are understood not well or supported. They may be imparted through school education, universities and vocational training colleges.
small enterprises tend to do less than large firms and there is a particular SME skills gap among older and routine workers.
Finally, Chapter 5 examines social innovation and social entrepreneurship. While there is a growing interest in the area
and gives some telling examples of social entrepreneurship and social innovation that offer inspiration for wider adoption.
Notes 1. High-growth enterprises, as measured by employment, are enterprises with average annualised growth in employees greater than 20%a year over a three year period and with ten or more employees at the beginning of the observation period.
Gazelles as measured by employment, are enterprises which have been employers for a period of up to five years,
with average annualised growth in employees greater than 20%a year over a three-year period and with ten or more employees at the beginning of the period. 2. See also NESTA (2009). 3. The OECD/Eurostat Entrepreneurship
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or to a major policy in the field of entrepreneurship, SMES and innovation. Examples are given of recent policy innovations that are of interest because of their novelty or proved effectiveness.
and burdens on creating a start-up. 2. SMES, ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY SMES, E 46 NTREPRENEURSHIP AND INNOVATION OECD 2010 Introduction The following chapter presents key figures on the SME sector and the innovation performance of small
Each country section also illustrates the main policy initiatives to promote innovative entrepreneurship and innovation activities in SMES.
Information was collected by national experts and delegates to the OECD Working Party on SMES and Entrepreneurship and OECD Local Economic and Employment Development Committee.
Structural indicators of the enterprise population Data are drawn from the OECD dataset Business Statistics by Size Class,
number of enterprises/establishments and employment; number of persons engaged/number of employees. The dataset follows the International Standard Industrial Classification (ISIC) Rev. 3 for the classification of economic activities (see Annex 2. A1.
The breakdown of enterprises by size class used by national bureaus of statistics varies across countries,
as indicated below. 2. SMES, ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 47 Box 2. 2. Firm size classifications by country Innovation activities of enterprises The OECD Oslo
Manual, Third Edition, defines innovation as the implementation of a new or significantly improved product (good or service),
or a new process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.
i e. the introduction of new or significantly improved products or production processes developed by the enterprise itself or by the group to
which the enterprise belongs. A group consists of two or more legally defined enterprises under common ownership.
Also, innovation surveys typically cover firms with more than 20 employees, and therefore exclude micro enterprises.
OECD Product Market Regulation (PMR) indicators The PMR indicators measure the economy-wide regulatory environment in OECD countries.
Qualitative information on country laws and regulations collected through a questionnaire in 1998,2003 and 2008, has been turned into quantitative indicators.
state control, barriers to entrepreneurship, and barriers to trade and investment. The indicator Barriers to entrepreneurship measures different regulations in the domain of entrepreneurship and is composed of three sub-indicators:
Administrative burdens to the creation of new firms (low-level indicators are: administrative burdens for corporations, administrative burdens for sole proprietor firms, sector-specific administrative burdens;
Regulatory and administrative opacity (low-level indicators are: licenses and permits system, communication and simplification of rules and procedures;
and Barriers to competition (low-level indicators are: legal barriers, antitrust exemptions, barriers in network sectors and barriers in services.
More information about the OECD PMR Indicators is available at: www. oecd. org/document/1/0, 3343, en 2649 34323 2367297 1 1 1 1, 00. html. Micro Small Medium SME Large EU countries, Iceland, Norway,
Ausindustry administers and delivers a range of over 30 business support programmes involving innovation grants, tax and duty concessions, small business development, industry support and venture capital worth AUD 2
COMET aims to increase the uptake of innovative products, processes and services by early-growth-stage companies, spin-offs and individual entrepreneurs.
The Small Business Advisory Service is an AUD 46 million programme that provides low-cost advisory services to small businesses;
additional support and advisory services have been provided during the global financial crisis. The Small Business Support Line, also created in response to the crisis,
and referral that assist with services that include but are limited not to finance and cash-flow management;
and improve their market opportunities. Enterprise Connect Launched in May 2008, Enterprise Connect is an Australian government initiative.
Administered by the Department of Innovation, Industry, Science and Research, it aims to provide comprehensive support to SMES in Australia.
With funding of AUD 50 million per annum, Enterprise Connect provides a national network of services for SMES through two main channels
the Manufacturing Centres and the Innovation Centres. There are six of each. The Innovation Centres and their locations are the Creative Industries Innovation Centre in Sydney;
the Remote Enterprise Centre in Alice Springs; and the Defence Industry Innovation Centre in Dandenong.
These Centres provide a number of services for SMES, including business reviews at no cost to them.
These reviews identify strengths and opportunities for the firm, benchmark against best practices, and furnish access to world-class business tools, processes and technology.
Enterprise Connect encourages SMES to adopt the recommendations of the business review by contributing half the cost of adoption, up to a maximum of AUD 20 000.
Finally, Enterprise Connect also runs both the Workshops Industry Intelligence and Networking programme, to help SMES network within their sector;
to provide a referral service linking firms to experts within industries. 2. AUSTRALIA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 49 Australia Notes:
20 30 40 50%Lack of access to additional funds Lack of skilled persons within business or labour market Lack of access to knowledge or technology Uncertain demand for new
goods or services Marketing innovation Organisational innovation Micro0 20 40 60%A. Structural indicators on enterprise population,
2006 Number of enterprises Total employment Value added Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total
35.1 48.9 33.6 40.1 2. AUSTRIA SMES, E 50 NTREPRENEURSHIP AND INNOVATION OECD 2010 Austria In Austria, a number of linked policies work in unison to foster entrepreneurship
Seedfinancing The Seedfinancing programme fosters the creation of small innovative firms via mezzanine capital paid to those firms in the form of a loan of up to EUR 1 million.
Loan repayment rates depend on the firm's success (up to a maximum of 50%of annual profit.
and start-up coaching and early links with private venture capital funds. A 2004 evaluation showed that approximately half of the firms selected for the programme fail.
Private venture capital funds feature a similar failure rate. Given the earlier stage of the firms financed by the programme,
often preventing traditional bank financing and even access to private venture capital funds. Participation in the programme acts as a signal to private investors, crowding them in rather than out.
and business and to enhance the potential for start-ups by anchoring entrepreneurship as an interesting academic exit option.
other companies and venture capital funds can be co-owners. In biyearly meetings of the centres, knowledge and best practice are shared,
Evaluators confirm good performance, even in international comparisons with university incubators. The programme is administered by the agency FFG (Austrian Research Promotion Agency.
2. AUSTRIA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 51 Austria A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment Value added
(factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 44 341 76.8 207
30 40 50%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
. 5 2003 2008 Austria EU19 OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise
group Lack of finance from sources outside enterprise Markets dominated by established enterprises 2. BELGIUM SMES,
E 52 NTREPRENEURSHIP AND INNOVATION OECD 2010 Belgium Belgian policy to promote innovative entrepreneurship or innovation activities is designed largely
and actions to improve the business environment. This includes actions for administrative simplification as well as a tax measure to support the hiring of R&d personnel in young innovative companies.
At the regional level, initial support for incubators and business innovation centres and financial measures have in the past few years shifted towards a more strategic emphasis on fostering commercialisation of the academic research base, on supporting entrepreneurship
(regional entrepreneurship action plans) and on providing access to finance (business angel networks. In Flanders, the Participation Company Flanders works to boost the innovativeness of regional SMES, by leveraging additional risk capital for new ventures (Vinnof:
the Flemish Innovation Fund, capital of EUR 50 million) or existing SMES (ARKIMEDES: approximately EUR 36 million per annum.
In Wallonia, a pre-activity grant can be applied for by individuals who propose to create a new firm based on an original idea (EUR 136 million per annum),
and an innovation grant aims to support SMES'innovation activities (EUR 500 000 per annum) through support for consulting missions, the production of prototypes or the acquisition of necessary research equipment.
Flemish Cooperative Innovation Networks (VIS) This initiative aims at stimulating technological innovation in Flemish enterprises, primarily SMES
by increasing awareness, improving access to technological knowledge and supporting diffusion of knowledge in enterprises.
Walloon Pre-activity Grant The Walloon Pre-activity Grant is available to individuals who propose a project for the creation of a new firm based on an original and realistic idea in almost any sector of the economy.
In comparison, the projects that have not been supported by the scheme have achieved a creation rate of 11%.2. BELGIUM SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 53 Belgium A. Structural indicators on enterprise population
, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro 93 693 88.7 298 290 93.6 92.4 194 309 21.4 555 404 34.1 29.5 12.2 24.9 19.5
Share of turnover due to new-tomarket product innovation 0 10 20 30 40 50 60%Universities or HEI Suppliers Clients or customers Competitors
commercial labs. or private institutes Lack of qualified personnel Difficulty in finding co-operation partners for innovation Lack of funds within enterprise or enterprise group Uncertain demand
for innovative goods or services 0 5 10 15 20 25%0 0. 5 1. 0 1. 5 2. 0 2. 5
Each year, qualified SMES from all industrial sectors access a range of NRC-IRAP services including technical and business-oriented advisory services, competitive intelligence, non-repayable financial support
demand for the programme's services and financial support has exceeded supply. NRC-IRAP has seen also an increase in demand for more complex multi-year projects requiring greater funding per project.
In response to this unmet demand, as part of Canada's Economic Action Plan 2009, NRC-IRAP received an additional investment of CAN 200 million over two years to stimulate innovation in Canadian SMES.
The programme also received an additional CAN 45 million for the financial year 2009-10 as part of the Economic Action Plan's specific effort to stimulate job creation and the economy in Southern Ontario.
NRC-IRAP is committed to using all of this funding to improve the longterm competitiveness of Canadian firms
there was a demonstrated CAN 1. 88 investment from the client and other sources at the initial stages of a project.
supporting the innovative capabilities of SMES in Canada by helping them develop clean technologies. 2. CANADA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 55 Canada A. Structural indicators on enterprise
population, 2008 Number of business establishments Total employment Industry Services Total Industry Services Total No. firms%No. firms%%No. engaged%No. engaged%%Micro 136 788 72.1
Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007. Chart D: OECD, Product Market Regulation Database. statlink2 http://dx. doi. org/10.1787/812772716231 B. Innovation performance of SMES and large firms, 2002-041
AND INNOVATION OECD 2010 Czech republic Entrepreneurship and enterprise innovation policy in the Czech republic is anchored institutionally within the Ministry of Industry and Trade.
The major public policy targeted at stimulating innovationbased growth of Czech firms is implemented through the European Regional Development Fund-co-financed Operational Programme Enterprise and Innovation 2007-2013 (OPEI.
The OPEI can be characterised as a complementary set of sub-programmes rather than one general entrepreneurship policy.
of which focus on different areas of public intervention in the enterprise sector with the overall aim of improving the competitiveness of Czech firms.
creation of firms (2. 6%),development of firms (8%),efficient energy (4. 0%),innovations (22.4%),environment for business and innovations (35.4%)and business development services
SME financing and technology upgrade assistance, ICT and innovation systems, strategic services and R&d function development support,
and consulting and assistance services. In addition, a large component of the programme supports the development of a collaborative environment in
which companies can enhance their international competitiveness through strategic co-operation (clusters and technology platforms).
Technology centres and centres of strategic business support services One of the major challenges of the business sector in the Czech economy is to move up the value chain
This has been pursued mainly through the promotion of business support services especially in sectors of strategic relevance to the Czech economy such as automotive, machinery engineering, electronics, life sciences and information and communication technologies.
and business support services have been targeted at export-oriented companies through subsidies for operation costs and training and retraining schemes.
which collectively represent investments of EUR 817.6 million. State aid in the form of a business activity subsidy reached EUR 191.9 million
CZECH REPUBLIC SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 57 Czech republic A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor
costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 286 335 93.2 552 982
60%50 Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
2008 Czech republic EU19 OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack
of finance from sources outside enterprise Markets dominated by established enterprises Large 2. DENMARK SMES, E 58 NTREPRENEURSHIP AND INNOVATION OECD 2010 Denmark With the Danish Globalisation Strategy,
contains 350 specific initiatives that introduce reforms in key areas such as education and training, innovation, research and entrepreneurship.
Among other things, the Strategy aims at making substantial improvements in the framework conditions for growth and innovation in new and existing enterprises.
and are a key piece in the new framework of business services. Their role is to support the creation
and expansion of highgrowth start-ups by providing free and impartial assistance referring enterprises to private advisors and relevant government agencies and organisations.
This setup also meets the government's intention to strengthen the private market for business advisory services.
Ten per cent of these funds are reserved for bonuses that are allocated to the centres based on the performance of their customers.
While the previous part of the funding allows financing of existing products and services, the latter part is devoted to the development of new products and services.
Programme for user-driven innovation The Programme for user-driven innovation has a yearly budget of DKK 100 million and runs for 2007-09.
The programme should also result in the development of new products, services and concepts, as well as in an increase of the qualifications of the employees taking part in the innovation processes of the beneficiary companies and public institutions.
The programme is administered by Danish Enterprise and Construction Authority, which is part of the Ministry for Economic and Business Affairs. 2. DENMARK SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 59 Denmark A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry
Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 48 191 83.3 136 365 88.4 87.0
40 50%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of finance from sources outside
enterprise Uncertain demand for innovative goods or services Denmark 2. FINLAND SMES, E 60 NTREPRENEURSHIP AND INNOVATION OECD 2010 Finland In Finland,
support for innovative entrepreneurship and the innovation activities of SMES is based on a systemic policy approach.
Tekes directed approximately 26%of the total funding for businesses to the smallest enterprises employing less than ten employees, approximately EUR 75 million in 2008.
and the Economy (TEM) is building a modern growth entrepreneurship policy that seeks to create first-rate conditions for Finnish growth ventures.
the Funding for Young Innovative Enterprises programme (NIY) and the Startup Accelerator scheme (VIGO. Funding for Young Innovative Enterprises and Start-up Accelerator The Funding for Young Innovative Enterprises programme aims to increase the number of enterprises that seek fast growth and internationalisation.
The selection criteria for the funding programme focus on the applicant's capabilities and potential, the quality and potential of the business idea, ambition and potential for growth and international markets, the team's and owners'commitment,
and the competence of the key persons involved in the enterprise. The beneficiary must be an independent small enterprise,
which has been in operation for less than six years and with less than 50 employees, and willing to seek
business plan preparation (1-6 months/up to EUR 50 000), early growth (6-24 months/up to EUR 250 000) and rapid growth (1
The maximum funding is EUR 1 million per enterprise and it may take the form of a grant, loan, or risk capital.
personnel costs, travel costs, materials and equipment, external services. At each stage, the funding decision involves external panel evaluation,
Under the Start-up Accelerator scheme, a number of qualified, private start-up accelerators are committed to providing potential growth enterprises with world-class expertise and access to substantial,
such as serial entrepreneurs, to become mentors and active developers in new ventures. Such experts are positioned well to offer high-quality advice
and to prepare them to be more investment-ready for venture capital placements. The first three start-up accelerators were selected by a steering committee in June 2009.
These accelerators are focusing on growth enterprise development in different industries that include: life sciences, information and communication technologies, media technologies and spin-offs from research projects.
Another two or three private accelerator partners are to be selected, which will target innovative start-ups in the clean tech, energy, services and welfare areas. 2. FINLAND SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 61 Finland A. Structural indicators on enterprise
population, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged
%%Industry Services Total Micro 61 546 89.9 136 752 94.1 92.8 96 059 16.7 204 320 27.9 23.0 11.4 28.5
19.4 Small 5 394 7. 9 7 157 4. 9 5. 9 107 756 18.7 141 935 19.4 19.1 13.8
19.9 16.7 Medium 1 232 1. 8 1 084 0. 7 1. 1 124 620 21.7 106 600 14.6
17.7 18.5 16.2 17.4 SMES 68 172 99.6 144 993 99.8 99.7 328 435 57.1 452 855 61.8 59.7 43.8
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants, commercial labs. or private institutes Government or public research institutes 0 0. 5 1. 0 1. 5 2. 0 2. 5 2003 2008 Finland
EU19 OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of finance from sources
outside enterprise Uncertain demand for innovative goods or services Difficulty in finding co-operation partners for innovation 0 10 20 30 40 50 60
Pôles de compétitivité In late 2004 The french government introduced pôles de compétitivité (competitiveness poles) to encourage entrepreneurship and SME innovation in the country.
These poles are associations of enterprises and research and training centres that share a development strategy implemented through joint projects.
thus to encourage co-operation and collaboration among key local development stakeholders around related industries in a specific geographical area.
and share the risk of R&d and innovation investments with other local partners. 2. FRANCE SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 63 France A. Structural indicators on enterprise population
, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro 628 371 89.8 1 757 870 94.2 93.0 1 200 393 21.6 2 473 272 25.9 24.3
60 80%SMES Large Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
EU19 OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of finance from sources
outside enterprise Market dominated by established enterprises Difficulty in finding co-operation partners for innovation 0 10 20 30 40 50%Firms collaborating in innovation activities Process innovation Product innovation Non
and further improved the overall policy environment to foster high-tech entrepreneurship and SME development. To do so the government joined together with the Kfw banking group and the industrial corporations BASF
The amount of capital provided by the fund's investors totalled EUR 272 million. The fund invests venture capital in young,
high-opportunity technological companies implementing promising research results in an entrepreneurial manner. In an initial step, successful applicants receive up to EUR 500 000 in risk capital and management coaching.
In a subsequent financing round, the fund can provide selected participating companies with an additional EUR 500 000.
demonstrating the success of the concept in stimulating the early-stage venture capital market. Exist EXIST is a support programme of the Federal Ministry of Economy and Technology.
It is designed specifically to improve the entrepreneurial environment at universities and research institutes and to increase the number of technology and knowledge-based company formations.
The EXIST programme is also a component of the government's High-tech Strategy for Germany
The first, Culture of Entrepreneurship, aims at promoting entrepreneurship among university employees and students. Projects at universities and non-university research institutes can apply for financial support in the form of a non-repayable grant over a three-year period.
university graduates and students to develop their business ideas into business plans and to advance their ideas for products and services.
The entrepreneurs receive a subsistence grant from EUR 800 to EUR 2 500 per month for a maximum period of 12 months;
The total amount of grants in 2008 was EUR 9. 7 million. 2. GERMANY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 65 Germany A. Structural indicators on enterprise population
2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro 311 230 72.7 1 199 186 86.2 83.0 1 064 132 11.7 3 179 320 24.3 19.1
30%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
EU19 OECD 0 5 10 15 20%Lack of qualified personnel Lack of information on technology Lack of funds within enterprise or enterprise group Lack of finance
from sources outside enterprise 2. GREECE SMES, E 66 NTREPRENEURSHIP AND INNOVATION OECD 2010 Greece The National Strategic Reference Framework 2007-2013,
is geared towards transforming Greece into a highly competitive and open economy. The Operational Programme Competitiveness and Entrepreneurship (OPCE) and five Regional Operational Programmes are the main tools for improving competitiveness and entrepreneurship and fostering innovation.
The total of EUR 732 million part of which goes to innovative start-ups, are allocated to two priorities of the OPCE (Priority 1:
Improvement of the entrepreneurial environment) as well as to threads of the five regional operational programmes related to entrepreneurship and digital convergence.
of which the most relevant for entrepreneurship includes support of a broad range of infrastructures (clusters, large-scale research and innovation platforms,
and networks in advanced research sectors), the creation of intermediary organisations and the set up of incentives for venture capital funds and of grant schemes for special categories of entrepreneurs (e g. the youth and women's entrepreneurship).
Creation Support to New Innovative Enterprises In the 2000-07 programming period the General Secretariat for Research and Technology of the Ministry of Development launched programmes such as ELEFTHO (business incubators
), TECHNOCELLS (research-based technology parks and business incubators), Poles of Innovation (industry-university cooperative research), PRAXE (research spin-offs) and the Zone of Innovation framework programme.
The Creation Support to New Innovative Enterprises programme for 2007-13 builds on this past experience
on the other hand, aim to support SMES in the manufacturing sector and software industry, in buying innovative consulting services and know-how from so-called innovation agents,
and exchanged for consulting services from the innovation agents. The applications are selected on the basis of their date of registration and availability of funds in the relevant operational programme.
who can cash it from the funding authorities. 2. GREECE SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 67 Greece A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment
Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 91 979
40 50 60%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
Greece EU19 OECD 0 5 10 15 20 25 30 35 40 45 50 55 60%No need to innovate because no demand for innovations Lack
of qualified personnel Lack of information on technology Lack of information on markets Markets dominated by established enterprises Uncertain demand for innovative goods or services 2. HUNGARY SMES
and R&d activities implemented in close co-operation by enterprises, universities and research institutes. It also promotes the establishment of up-to-date research infrastructure and patent right procedures in certain high-priority areas.
and technology parks accommodating research activities and innovative enterprises, and to develop already existing institutions.
direct support facilities and special tax allowances for innovative, early-stage enterprises; establishing and developing technological incubators;
helping the early stage and growth phase of innovative enterprises by venture capital funds and financial instruments, e g. the New Hungary Venture capital Programme (HUF 40.5 billion;
improving SMES'knowledge of intellectual property protection and industrial law, e g. VIVACE+Programme. The latter is managed by the Hungarian Patent office (HPO) and funded by the National Office for Research and Technology (NKTH) with a two-year budget of HUF 109.5 million.
and orientation services on industrial property protection and HPO has been able to bolster its existing regional partner network,
which promotes innovative initiatives to be implemented by small enterprises, and to stimulate demand for innovation facilitating services.
The grant scheme was announced in mid-2008 by the National Office for Research and Technology (NKTH) and will operate for a period of three years with a total fund of HUF 12 billion. 2. HUNGARY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 69 Hungary A. Structural
indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms
%%No. engaged%No. engaged%%Industry Services Total Micro 117 391 89.8 399 447 95.7 94.3 229 320 21.5 679 206 44.7 35.2
7. 2 27.8 15.1 Small 10 477 8. 0 15 655 3. 7 4. 8 211 002 19.8 287 495
50 60%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Medium Large Small Consultants,
. 5 2003 2008 Hungary EU19 OECD 0 5 10 15 20 25 30 35%Lack of qualified personnel Lack of funds within enterprise
or enterprise group Lack of finance from sources outside enterprise Markets dominated by established enterprises Uncertain demand for innovative goods or services 2. ICELAND SMES,
Icetec operates a series of business incubators that can house up to nine companies, usually chosen from the biotech sector.
Within an incubator, these companies are exposed to innovative business ideas and concepts. In addition the Icelandic Technological Institute runs a unit named the Service Centre for Entrepreneurs and SMES (IMRPA.
The Service Centre for Entrepreneurs and SMES also provides regional support through programmes that aim to provide knowledge on how to make business plans and foster business knowledge within rural communities.
New Business Venture Fund The government launched a programme in 1998 entitled the New Business Venture Fund,
The official purpose of the Fund is to strengthen Iceland's economy and increase internationalisation.
the Fund participates in innovation-oriented investment projects and assists SMES in developing their marketing skills.
or grants in the start-up, early or developing stages of SMES, in return for approximately 20-25%ownership equity. 2. ICELAND SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 71 Iceland A. Structural indicators
on enterprise population, 2005 Number of enterprises Industry Services Total No. firms%No. firms%%Micro 5 620 89.6 9 226 90.5 90.1 Small 525
SMES Large Share of turnover due to new-tomarket product innovations 0 10 20 30 40 50%Universities or HEI Suppliers Clients or customers
of funds within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established enterprises Uncertain demand for innovative goods or services 2. IRELAND
SMES, E 72 NTREPRENEURSHIP AND INNOVATION OECD 2010 Ireland Creating a leading innovative economy has been identified as a key priority of The irish government.
policy in agriculture, health, environment, marine and natural resources; foreign direct investment; increasing output; tech transfer;
and the development of a fourth level in the higher education sector into an integrated framework,
and quantities of research undertaken by enterprises both directly and in co-operation with third-level institutions.
The second biggest allocation is to Enterprise STI, EUR 1. 29 billion between 2006 and 2013.
) and Enterprise Ireland (responsible for developing world-class Irish indigenous enterprises. A key challenge is to strengthen the links between the public research infrastructure and industry,
and the low research absorption capability of enterprises. Four key initiatives have been put in place to address this. i) Centres for Science, Engineering and Technology (CSETS) This investment programme links scientists and engineers across academia and industry.
CSETS grants can total EUR 25 million over five years per project to exploit opportunities for discovery
and innovation that smaller research projects cannot. Current CSETS are in pharma-biology, digital enterprise, nanotechnology, regenerative medicine, telecommunications, software engineering, biomedical diagnostics,
next-generation localisation and sensor webs. ii) Technology Transfer Offices (TTOS) A fund of EUR 30 million has been made available to improve the knowledge flow between higher education and the enterprise sector.
The aim is to ensure better economic returns from R&d investments. iii) Research and development Fund This is a EUR 500 million grant scheme available to enterprises to support their R&d.
It offers up to 45%funding for R&d activities (50 %if they are collaborative). The programme was launched in the spring of 2008 and so far 174 proposals have been approved;
services and food. iv) Innovation Vouchers The voucher initiative offers businesses with limited experience of R&d the chance to collaborate with any of the 22 higher education institutes,
to obtain an innovation solution to an enterprise need. It also stimulates the development of relationships between SMES and the higher education institutes,
and ultimately the development of new products and services. A total of EUR 10 million is available for the scheme.
To date 1 623 vouchers have been issued. 2. IRELAND SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 73 Ireland A. Structural indicators on enterprise population
2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro1 2 556 46.8 74 758 84.0 81.8 13 020 5. 7 210 474 25.1 20.9 2. 1
1. Data only reflect enterprises with 3 or more persons engaged. 2. As%of all firms within size class. 3. 2002-04.4.
40 50%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
Ireland EU19 OECD 0 5 10 15 20 25%Lack of funds within enterprise or enterprise group Lack of finance from sources outside enterprise Markets
dominated by established enterprises Uncertain demand for innovative goods or services 2. ITALY SMES, E 74 NTREPRENEURSHIP AND INNOVATION OECD 2010 Italy Promoting the design of large innovative industrial projects is one of the most important recent changes in Italian industrial and innovation policies.
The projects will favour partnerships and synergies among universities, research centres, private companies, private investment equity, and local governments.
and long run by coordinating R&d activities carried out by consortia of large, medium and small enterprises in collaboration with public and private research units.
These calls for tender fund R&d projects that seek to develop prototypes in one of the thematic areas specified by each Industrial Innovative Project.
Only 30 projects were funded with R&d investments of about EUR 500 million. Additionally, 50 projects from 420 firms,
Only 25 projects were funded with investments of about EUR 450 million, of which EUR 180 million were state contributions.
The overall investment value is EUR 2. 2 billion. The selected projects concern new products and processes (158), firm co-operation systems (34),
and new distributive formats and logistic systems (45). 2. ITALY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 75 Italy A. Structural indicators on enterprise population, 2007
Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services
Firms collaborating in innovation activities Share of turnover due to new-tomarket product innovations3 0 10 20 30%Universities or HEI Suppliers Clients or customers Competitors
25%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established enterprises Uncertain demand
for innovative goods or services Firms with new-tomarket product innovations 2. JAPAN SMES, E 76 NTREPRENEURSHIP AND INNOVATION OECD 2010 Japan Small Business
such as patent fee reductions, loan guarantees, capital investment loans, and loans for facilities. Funding recipients should have less than 300 employees or capital below JPY 300 million.
The majority of schemes target venture companies and SMES. The number of projects awarded to participants over time has been relatively stable.
and it funds around a quarter of the number of projects awarded in the United states. Support for Development of Networks between Upstream and Downstream Companies Japan resembles other OECD countries in the types of policies it implements to promote innovative entrepreneurship and innovation
which is operated by the Small and Medium Enterprise Agency, seeks to contribute to the manufacturing capabilities of Japanese industry by creating networks between SME companies that possess core basic technologies with downstream normal industry,
Through co-ordinators, communication and interaction is facilitated via targeted forums, seminars and matching events, enabling companies to collaborate
particularly SMES, appears relatively unique to Japan. 2. JAPAN SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 77 Japan A. Structural indicators on enterprise population, 2007 Number of establishments Total
employment Value added Industry Services Total Industry Services Total Industry%%%No. engaged%%%Micro1 117 231 45.4 725 025 8. 4 4
1. For manufacturing, data only reflect enterprises with 4 or more persons engaged. 2. As%of SMES with new product sales. 3. Index scale of 0-6 from least to most restrictive.
the Small and Medium Business Administration (SMBA) operates numerous schemes that are targeted all at assisting SMES in the areas of entrepreneurship, human resources, financing, marketing and innovation.
The Kibo Technology Fund achieves these aims through the provision of services such as a technology guarantee scheme, technology appraisal, technologically innovative business certification,
across many industries and by 2008 more than 180 888 evaluations had been made. 2. KOREA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 79 Korea A. Structural indicators on enterprise population, 2006
Number of establishments Total employment Value added Industry Services Total Industry Services Total(%)No. engaged%%%Industry Services Total Micro1 59 223 49.4
1. For manufacturing, data only reflect enterprises with 5 or more persons engaged. 2. As%of all firms within size class. 3. As%of total turnover. 4. Index scale of 0-6 from least to most restrictive.
E 80 NTREPRENEURSHIP AND INNOVATION OECD 2010 Luxembourg National Credit and Investment Society The National Credit and Investment Society (SNCI) is owned a state bank that specialises in financing medium
With resources standing at EUR 580 million in 2005, the Society provides financing through equipment loans, medium-and longterm loans, innovation loans, financing of foreign investments, equity loans and participating
The National Credit and Investment Society also provides start-up loans of between EUR 5 000 and EUR 250 000 to new firms upon presentation of a business plan and reciprocal funding from the beneficiary of at least 15%.
The Society is made up of EUR 2. 5 million in paid-in capital, 50%contributed by the SNCI,
It can offer its entire range of services to all sectors (including SMES) of the Luxembourg economy.
These services include information and assistance on all forms of innovation and business start-ups. It also manages a number of pilot projects such as cluster programmes,
and assists in the drawing up of business plans. Luxinnovation operates numerous business networks, including the entrepreneurship network 1, 2,
3, Go, which helps link entrepreneurs together to encourage the dissemination of best practices; the Business and Innovation Centres network;
Another programme undertaken by Luxinnovation is the ECOSTART enterprise and innovation centre. This centre is located in Foetz
Finally, the INNO-START network assists in the creation of innovative enterprises by bringing the Ministry of the Economy and Foreign Trade, the Ministry of SME and Tourism,
the Chamber of commerce and the Chamber of Skilled Crafts together with entrepreneurs so as to accelerate the process of enterprise creation,
and also to promote the creation of enterprises based on technological innovation. 2. LUXEMBOURG SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 81 Luxembourg A. Structural indicators on enterprise population, 2007 Number
of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total
30 40%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
2008 Luxembourg EU19 OECD 0 5 10 15 20 25%Lack of qualified personnel Lack of funds within enterprise or enterprise group Uncertain demand
for innovative goods or services Markets dominated by established enterprises 2. MEXICO SMES, E 82 NTREPRENEURSHIP AND INNOVATION OECD 2010 Mexico AVANCE In 2003 Mexico started operating AVANCE,
and exploiting business opportunities based on scientific and/or technological developments. This initiative supports the stages of the innovation process of firms
it has promoted the creation of business angel and venture capital funds, which had been virtually absent in the country.
Business schools, to advance the entrepreneurship culture of the country through formal education; Strategic Alliances and Innovation Networks for Competitiveness, to support the collaboration of industry and academia for innovative projects;
and thereby increase Mexico's competitiveness. 2. MEXICO SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 83 Mexico A. Structural indicators on enterprise population, 2003 Number of establishments Total employment
Industry Services Total Industry Services Total No. firms%No. firms%%No. engaged%No. engaged%%Micro 315 727 91.2 2 158 750 96.9 96.1 827
Through a very simple procedure, SMES (in the manufacturing and services sectors) can apply for a voucher at the Innovation Agency any day of the year.
and can be used by SMES to buy services from public technology and innovation centres, for example for a feasibility study or for answering a specific technological problem.
The projects that receive funding are based regionally public-private partnerships consisting of (applied science) universities, incubators, innovation intermediaries, banks, companies and other actors.
which aims to promote and mobilise the Dutch venture capital market to the benefit of high-tech starters;
In addition to these operational action lines, the programme has an institutional pillar focused on improving the environment in
which starters operate, particularly in the universities. 2. THE NETHERLANDS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 85 The netherlands A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment
Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 114 175
40 50 60%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
EU19 OECD 0 5 10%Lack of qualified personnel Lack of funds within enterprise or enterprise group Markets dominated by established enterprises Lack of finance from sources
outside enterprise 2. NEW ZEALAND SMES, E 86 NTREPRENEURSHIP AND INNOVATION OECD 2010 New zealand Technz Technz is a business investment programme designed to support companies
and people undertaking research and development in projects that result in new products, processes and services. It is administered by the Foundation for Research
Science and Technology (FRST. Following an evaluation of the programme in 2008, Technz is administered now via two simplified
Firms apply for support on an on-demand basis and funding is provided typically on a matched basis,
and offers a range of programmes, services and events. Better By design operates out of New zealand Trade and Enterprise, New zealand's national economic development agency.
Companies apply for the Design Integration Programme through business advisors who may meet with them prior to the beginning of the application process to determine
opportunities and potential projects; it then assists with implementation. Each company follows its own plan to implement best practice design and innovation,
and developing new branding and communication strategies. Design Integration Funding is available to client companies that have completed the Design 360 assessment and planning process.
and external costs associated with prototyping. 2. NEW ZEALAND SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 87 New zealand A. Structural indicators on enterprise population, 2008 Number of enterprises Number
of employees Industry Services Total Industry Services Total%%%Micro 67 447 91.0 229 204 94.1 93.3 799 84 19.6 180 850
In the case of industrial R&d contracts, the programme stimulates co-operation between a demand client firm and one or more supplier firms.
which play important roles in supplier networks. 2. NORWAY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 89 Norway A. Structural indicators on enterprise population, 2006 Number of enterprises
Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro
%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
EU19 OECD 0 5 10 15 20%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of finance from sources outside enterprise
Markets dominated by established enterprises 2. POLAND SMES, E 90 NTREPRENEURSHIP AND INNOVATION OECD 2010 Poland The Innovative Economy Operational Programme 2007-2013 is the main vehicle in Poland for pursuing the objectives of the Lisbon Strategy.
It provides the practical framework for allocating and distributing EUR 8. 25 billion of EU structural funds over the seven-year period,
The purpose of the Innovative Economy Operational Programme is to improve the coherence of policies toward innovation that fall within the competence of the Ministries of Economy, Science, Tourism and Informatisation.
In particular, it aims to adapt the activities of the science sector to the needs of enterprises especially SMES
and business sectors in order to more effectively transfer advances in science to the wider economy. The science base of the economy both its R&d
and its supporting infrastructure will receive more than a quarter of the total funding. Measures to strengthen the commercialisation of new ideas will receive around half of the total,
Much of this funding will benefit enterprises and SMES who will have preference in the allocation of around EUR 3. 65 billion.
All projects and programmes undertaken as part of the Innovative Economy Operational Programme are expected to be subject to formal evaluation.
Its main purposes are to strengthen the fight against IPR infringement by training staff in the main services charged with enforcing IPR,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 91 Poland A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry
Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 376 230 92.5 1 048 190 97.3
40 50 60%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
personnel Lack of funds within enterprise or enterprise group Lack of finance from sources outside enterprise Uncertain demand for innovative goods or services Markets dominated by established enterprises
provides a network of regional platforms that brings together the demand and supply of venture capital, seeks to encourage innovation and entrepreneurship,
and contributes to facilitating technology transfer. The demand side includes universities, incubators, development agencies and other regional partners,
while the supply side comprises venture capital companies. FINCRESCE, also launched in the second half of 2006,
provides solutions to optimise financing conditions for companies pursuing innovative growth strategies. Finally, FINTRANS, launched in June 2009,
while also providing conditions to facilitate business success. Implementation of these programmes is carried out by the Small and Medium-sized Enterprises and Innovation Support Institute (IAPMEI).
This institute acts under the authority of the Portuguese Ministry for Economy, Innovation and Development and aims at supporting the enhancement of SMES'capabilities, fostering SME investment,
COMPETE includes the Incentive schemes (IS) to support company investments that lead to innovation in technological and non-technological areas:
These initiatives aim at supporting companies in their efforts to raise their technical, technological and innovation capacities, both in relation to the production of new products and services and at the organisational,
or technological services can receive financing of up to EUR 25 000 (nonrefundable incentive). COMPETE also includes the Collective Efficiency Strategies (EEC),
and networking among enterprises (including SMES) and between enterprises and relevant support institutions (namely R&td,
Collective Efficiency Strategies'formal recognition allows the submission of investment projects and respective action programmes,
and 8 clusters) foresee an eligible investment of around EUR 2 000 million, of which around one-quarter goes to anchor projects involving over 500 actors.
The Small and Medium-sized Enterprises and Innovation Support Institute also plays a major role as funding agency
and manager of support schemes to promote innovation in companies under the National Strategic Reference Framework. 2. PORTUGAL SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 93 Portugal A. Structural indicators
on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro 194 120 88.5 625 593 96.6 94.5 395 591 29.7 993 417 49.9 41.8 16.2 29.6 24
. 2 Small 21 409 9. 8 19 285 3. 0 4. 7 411 860 30.9 351 517 17.6 23.0 25.3
30 40%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
EU19 OECD 0 5 10 15 20 25 30 35%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of information
on markets Markets dominated by established enterprises 2. SLOVAK REPUBLIC SMES, E 94 NTREPRENEURSHIP AND INNOVATION OECD 2010 Slovak Republic National Agency for Development
including the Ministry of Economy of the Slovak Republic, the Slovak Association of Entrepreneurs and the Slovak Association of Crafts.
the company was created to help increase the amount of venture capital investment for SMES in the Slovak economy.
The services provided by the Seed Capital Company include the provision of share capital, follow-up financing, guaranteed and non-guaranteed loans, subordinate and convertible loans, arrangement of syndicate financing and firm
To the year 2006, the Seed Capital Company had received requests from SMES totalling SKK 9. 1 billion.
The European Investment Bank earmarked EUR 50 million for the Slovak Guarantee and Development Bank in 2009.
these schemes collectively provided 773 loans to SMES totalling over SKK 3. 8 billion. 2. SLOVAK REPUBLIC SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 95 Slovak Republic A. Structural
indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms
%%No. engaged%No. engaged%%Industry Services Total Micro 7 584 54.5 34 697 79.0 73.1 34 050 6. 3 111 907 24.6
50 60%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
EU19 OECD 0 5 10 15 20 25%Lack of funds within enterprise or enterprise group Difficulty in finding co-operation partners for innovation Lack
of finance from sources outside enterprise Markets dominated by established enterprises 2. SPAIN SMES, E 96 NTREPRENEURSHIP AND INNOVATION OECD 2010 Spain Inno-Empresa The Inno-Empresa programme 2007-13 replaced the previous SME Consolidation
and Competitiveness Plan 2000-06 and was included in 2006 as part of both the Spanish National Reform programme and the Entrepreneurship Programme.
with EUR 163 million worth of subsidies and EUR 400 million in leveraged investments. NEOTEC NEOTEC is a programme that aims to encourage the creation and consolidation of new technology-based firms in Spain.
and the venture capital market by facilitating loans to risk-capital societies interested in sharing the risk with the firms.
the investment cannot exceed EUR 500 000 per company. From 2002 to 2007, NEOTEC approved 257 projects, for which EUR 171 million were invested and EUR 81 million committed. 2. SPAIN SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010
97 Spain A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services
Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 587 972 85.8 1 923 591 94.9 92.6 1 636 784
29.5 3 819 307 43.8 38.3 18.9 34.6 27.5 Small 84 145 12.3 91 376 4. 5 6. 5 1
or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
. 0 2003 2008 Spain EU19 OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise
group Lack of finance from sources outside enterprise Markets dominated by established enterprises Uncertain demand for innovative goods or services 2. SWEDEN SMES,
E 98 NTREPRENEURSHIP AND INNOVATION OECD 2010 Sweden National policy addressing innovative entrepreneurship and/or innovation activities of SMES is based on mix of direct support programmes,
Tillväxtverket, which includes ALMI Sweden's SME and Entrepreneurship Agency; VINNOVA (Swedish Governmental Agency for Innovation Systems;
The newly established Swedish Agency for Economic and Regional Growth Tillväxtverket supports entrepreneurship and SMES.
Its tasks are to fund the needs-driven research required by a competitive business and industrial sector and a thriving economy,
A third important government agency addressing innovative entrepreneurship is the Innovationsbron. The main task is to increase the commercialisation of research results and ideas.
This is done partly by assisting Swedish incubators (SEK 50 million) and providing seed financing for innovative new firms.
Sweden has a long history of large (private) R&d investments and successful innovations, while the entrepreneurial climate and activities are limited very.
and almost 50%of the firms have applied for patents. 2. SWEDEN SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 99 Sweden A. Structural indicators on enterprise population, 2007 Number of enterprises Total
employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 123
Suppliers Clients or customers Competitors Firms within the group Large Medium Small Small Medium Large Consultants,
EU19 OECD 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise group Lack of finance from sources
outside enterprise Markets dominated by established enterprises 2. SWITZERLAND SMES, E 100 NTREPRENEURSHIP AND INNOVATION OECD 2010 Switzerland The CTI (Swiss Federal Innovation Promotion Agency) is the most important innovation promotion government agency in Switzerland.
Among its main tasks is the promotion of entrepreneurship in The swiss economy. The most important entrepreneurship programmes are the CTI Start-up programme and Venturelab.
The overall budget for the entrepreneurship promotion programme of the CTI amounts to about CHF 11 million in 2008;
CHF 3. 7 million of this amount is used for funding Venturelab and about CHF 7. 3 million for the Start-up programme.
Concrete measures include the provision of coaches that teach entrepreneurs essential skills such as drawing up a business plan,
Further, according to selected firm variables (profit, turnover, employment growth, third-party funding and profit turnover ratio),
and to inspire students for entrepreneurship. Services for students include semester courses to orient the students for entrepreneurship
and workshops where important tools for prospective entrepreneurs are taught. For existing start-ups Venturelab gives five-day intensive courses and advisory services.
Finally, Venturelab offers entrepreneurs the possibility to participate in a networking workshop in Boston. The initiative focuses on the best projects, accompanying them with professional consulting that pays more attention to practice than to theoretical concepts.
Four per cent of the participants attended courses on Venture Training, 11%participated in the Venture Plan module, 15%attended courses on Venture Challenge and 70%courses on Venture Ideas.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 101 Switzerland A. Structural indicators on enterprise population Number of enterprises, 2005 Total employment, 2001 Industry Services Total Industry
Services Total No. firms%No. firms%%No. engaged%No. engaged%%Micro 57 569 95.1 160 019 98.6 97.7 201 510 19.4 547 436 36.3
E 102 NTREPRENEURSHIP AND INNOVATION OECD 2010 Turkey Young Entrepreneur Development Programme The Young Entrepreneur Development Programme was designed to help increase awareness of entrepreneurship,
During a 66-hour course, students are assisted with developing their business ideas and business plans. Financial support is provided to programme participants under the New Entrepreneur Support once they complete their business plans successfully
and decide to create their start-ups. Start-up costs are financed up to EUR 2 000. Fixed investment costs are financed also through grants and soft loans.
Another policy measure for promoting technology-based entrepreneurship began in 2008 under the R&d Support Law No. 5746.
According to the Law, the programme is implemented by all public administrations with an R&d budget. Up to EUR 50 000 is provided per beneficiary.
and Technological Innovation The pioneering programme in the field of innovative entrepreneurship/SME innovation is the Support Programme for R&d and Technological Innovation of KOSGEB, the Small and Medium Sized Industry Development Organisation.
and innovation activities of SMES and promotes the creation of technology-based companies in KOSGEB incubators (called Technology Development Centres TEKMERS and Virtual Technology Incubators DTIS).
so as to improve these ideas by developing prototypes, start production and market products at the national and international levels.
The programme has been the major tool for start-up technology-based enterprises in Turkey and for improving university-industry co-operation.
This TEKMER hosted 161 enterprises between 1992 and 2009, and its success rate has been 82%.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 103 Turkey A. Structural indicators on enterprise population, 2006 Number of enterprises Total employment Value added (factor costs) Industry
Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 383 577 93.8 1 889 647 99.1
Share of turnover due to new-tomarket product innovations2 0 10 20 30%Universities or HEI Suppliers Clients or customers Competitors Firms within the group Small
%Lack of qualified personnel Difficulty in finding co-operation partners for innovation Markets dominated by established enterprises Uncertain demand for innovative goods or services Firms with new
-tomarket product innovations Lack of funds within enterprise or enterprise group Lack of finance from sources outside enterprise 2. UNITED KINGDOM SMES, E 104 NTREPRENEURSHIP AND INNOVATION
At a more operational level both enterprise and innovation policy are now increasingly being regionalised
Also, the creation of Regional Venture capital programmes has addressed the problem of lack of risk capital, particularly in more peripheral areas.
Key themes in the Board's investments relate to energy technologies, biotechnology, and projects focused on the low carbon economy.
Support for innovation activity is also increasingly being provided by the Regional Development Agencies, which now all have regional innovation strategies.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 105 United kingdom A. Structural indicators on enterprise population, 2007 Number of enterprises Total employment Value added (factor costs) Industry
Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry Services Total Micro 332 909 85.0 1 135 703 88.8
activities 0 10 20 30 40%Universities or HEI Firms within the group Suppliers Clients or customers Competitors Small Medium Large SME Large Consultants,
) The Small Business Innovation Research (SBIR) programme is gated a double innovation programme providing competition-based awards to small private sector companies of about USD 100 000
and later awards of about USD 750 000 to develop prototypes. Created in 1982 through the Small Business Innovation Development Act, the SBIR programme offers about USD 2. 5 billion a year in awards.
In a recent USD 5 million assessment of the programme, the US National Academies found that the SBIR programme encourages new entrepreneurship needed to bring innovative ideas from the laboratory to the market by providing scarce pre
-venture capital funding on a competitive basis. Further, by creating new information about the feasibility and commercial potential of technologies held by small innovative firms, SBIR awards aid investors in identifying firms with promising technologies.
when teamed up with at least one small or medium-sized for-profit company, or may participate as a member within a joint venture led by a small or medium-sized company.
help to advance the commercialisation of successful prototypes funded by the SBIR programme. Both programmes are highly competitive,
and cost sharing. 2. UNITED STATES SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 107 United states A. Structural indicators on enterprise population Number of enterprises, 2005 Number of employees, 2004
Industry Services Total Industry Services Total No. firms%No. firms%%%Micro 852 946 74.7 2 489 243 78.3 77.4 1 392 813
1. Average level of financial investment by that source; includes all start-up firms. 2. Expressed as a proportion of the total startup firms with new financial injections. 3. Index scale of 0-6 from least to most restrictive.
These mechanisms provide financial as well as technical and managerial support to innovative enterprises. They focus on different lines of action,
strategic partnership between universities or technological institutes and enterprises; technology-based entrepreneurship; incubators and technological parks;
hiring of academic researchers by the private sector. The Innovation Law supports all kind of activities involved in an innovative process.
It even allows the federal government to participate as a minority shareholder in innovative enterprises operating in highpriority sectors.
In addition, the Goodwill Law provides a wide range of fiscal incentives or subventions for investments and hiring in R&d activities.
The policy has had a high impact on R&d investments within the private sector. Brazil registered an increase from BRL 1. 5 billion undertaken by 130 enterprises in 2006 to BRL 4. 8 billion undertaken by 291 enterprises in 2007.
In these two years fiscal benefits amounted to over BRL 1 billion to investors. A third complementary mechanism, the Pro-Innova programme, was created in 2008
in order to raise awareness among entrepreneurs about the legal tools, facilities, and mechanisms available to support innovative initiatives.
and addresses MSMES (micro small and medium sized enterprises) trying to implement any managerial, commercial or technical innovation in their products, services or processes.
Any item related to technical innovation and to new investments stated in the business plan of the enterprise is eligible to be financed by this programme.
It is now being operated by local agents in nine states of the country. 2. BRAZIL SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 109 Brazil Notes:
OECD, Indicators of Product Market Regulation. statlink2 http://dx. doi. org/10.1787/812752261347 A. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most
2010 Chile As a part of the government strategy to promote economic growth a National Innovation for Competitiveness Council (CNIC) was established in 2005.
This fund supports numerous programmes, including the promotion of entrepreneurship and innovation among private companies.
In order to specifically target SMES, the government launched in 2007 an ambitious entrepreneurship agenda, Chile Emprende Contigo (Chile undertakes with you).
institutional development to create an environment favourable to SMES; funding; entrepreneurship; innovation and training; and support to indebted entrepreneurs.
The total resources committed for the period 2007-2010 amounts to USD 620 million. Two important innovation and entrepreneurship programmes are targeted specifically to SMES.
One is Innova Chile, hosted by the Production Promotion Corporation (CORFO). Although it supports an ample range of enterprises,
a significant share of its resources is given to SMES. The second one is Chile Emprende,
which supports micro and small enterprises. This is hosted by a CORFO's subsidiary, the Technical Co-operation Service (SERCOTEC.
This assists existing enterprises in their effort to develop innovative projects through individual entrepreneurial innovation
The third line is Innovative Entrepreneurship, which supports potential businesses. Specific products are the provision of seed capital, support to business incubators and spin-off projects, technology promotion organisations and development of professional training centres.
Finally, Innova Chile sponsors the diffusion and transfer of technology. This is done through technological nodes, specialised consultancy,
Chile Emprende Chile Emprende is targeted to existing micro and small enterprises in order to promote public-private partnership, entrepreneurial association and improvement of managerial practices.
social capital and competitive environments. The programme favours training in innovation in the context of regional development plans, provides consultancy services to micro and small enterprises, supports the attendance of small entrepreneurs at meetings and internships,
and provides funding to the evaluation and certification of labour skills. The execution of specific projects is made through consultancy firms and technical training organisations. 2. CHILE SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 111 Chile Notes:
1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey. 2. Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands
OECD, Indicators of Product Market Regulation. statlink2 http://dx. doi. org/10.1787/812782022743 A. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most
%and enterprises'own capital accounted for the majority of project funding, i e. 74.5%.%The programme's other main activities are to coordinate
university science parks, incubators and software parks across China. At the national level alone, by 2008 53 high-technology development zones, 62 university science parks, about 200 business incubators and 35 software parks had been developed through governmental support.
In the period 1992-2005, the revenue, industrial value added and profit of the enterprises operating in the 53 development zones grew at an average annual rate of 47.0%,30.5%and 38.2%,respectively.
In 2005,41 990 enterprises operated in the 53 development zones, employing over 5. 2 million employees.
The industrial value added generated in these development zones accounted for 8. 95%of the total value added of the whole country.
Foreign direct investment (FDI) in the zones reached USD 61.88 billion in 2005, accounting for 10%of FDI to China in the same period.
The Torch Programme played an indispensable role in promoting entrepreneurship and start-up companies through its administrative arm and the university science parks and incubators.
From 1991 to 2002, the number of the incubators at the regional and national level combined increased from 43 to 436.
Likewise, the number of tenant companies hosted in these incubators ballooned from 500 in 1991 to 23 373 in 2002,
and enterprises'own capital accounted for 7%,%3%,28%and 62%,respectively, of the capital raised by these enterprises.
The firms achieved fast growth in terms of employment, sales revenues and export after being funded. By the end of 2006,145 provincial governments and municipal governments across China had set up their own funds to support innovation of SMES.
In total, more than 500 organisations at the provincial and local level are engaged in managing these innovation funds. 2. CHINA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 113 China Notes:
OECD, Indicators of Product Market Regulation. statlink2 http://dx. doi. org/10.1787/812783644886 B. Barriers to entrepreneurship, 2008 Index scale of 0-6
and entrepreneurship has been launched in Estonia. Innovative, growth-oriented companies can now receive higher support grants/loans from Enterprise Estonia,
export marketing support, and/or guarantees for export-oriented companies from Kredex (the Credit and Export Guarantee Fund founded in 2001 to improve the financing of enterprises in Estonia).
Additionally, in 2006 the Estonian Development Fund was launched to intervene as a co-investor with private equity funds in favour of high-growth and export-oriented companies in Estonia.
The first investments were made by the Fund in the spring of 2008. Estonian policy has given a great deal of attention to entrepreneurship awareness raising among key stakeholders,
including entrepreneurs themselves, the general public, policy makers and even school children. A programme of innovation awareness has also been developed by Enterprise Estonia;
launched during the 2004-06 period, it will continue over 2007-13. The Year of Innovation project ran throughout 2009 with a range of activities favouring the creation of new innovative products or services.
It was launched by the Estonian Ministry of Economic Affairs and Communication on the basis of the Innovation Awareness programme.
Technology Investment The Technology Investment programme supports (up to 40%of co-financing for SMES, 20%for large companies) the acquisition of both tangible assets and the intangible assets that are required to bring these acquired
tangible assets into use. This is the first time such support has been given in Estonia and in addition to the measures developing export and knowledge and skills, this is expected to strengthen companies in the long run.
Financing of the competence centres by Enterprise Estonia was not as stable as expected during the first years of the programme.
However, in June 2009, EUR 83 million in additional funds were made available by Enterprise Estonia to invest in eight competence centres (the five original and three new centres) until 2013.2.
ESTONIA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 115 Estonia A. Structural indicators on enterprise population
2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro 9 059 71.5 31 433 88.7 84.2 31 415 15.8 77 504 32.4 24.8 10.3 28.7 20.5
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants, commercial labs. or private institutes Government or public research institutes 0 5 10 15 20 25 30%Lack of qualified personnel Lack of funds within enterprise or enterprise
group Lack of finance from sources outside enterprise Markets dominated by established enterprises 0 0. 5 1. 0 1. 5 2. 0 2
. 5 3. 0 Estonia OECD average OECD emerging markets5 Euro area6 2. INDIA SMES, E 116 NTREPRENEURSHIP AND INNOVATION OECD 2010 India The Science and Technology Policy of 2003 was a landmark initiative in that it ended India's historic emphasis on highly protective strategy for domestic
The development of a robust legal framework conducive to the establishment of a highquality technology environment reflects the strength of the role of government and rule of law in India's innovation and entrepreneurship.
and support innovation and entrepreneurship in this sector. In 1998 the Indian Parliament passed legislation by way of an Electronic commerce Act,
and Technology. 1986 also saw passage of the Environment Protection Act, which was supplanted by the Manufacture,
and services overseeing basic research activities, education and legal aspects relating to genetics and genomics.
which would provide a one-stop-shop for biosafety clearance of genetically modified products and services.
biotechnology and nanotechnology. 2. INDIA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 117 India Notes: 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey. 2. Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands
OECD, Indicators of Product Market Regulation. statlink2 http://dx. doi. org/10.1787/813210106531 A. Barriers to entrepreneurship, India 2007 and OECD 2008 Index scale
and medium-sized enterprises (MSMES) in Indonesia. The national policy to address this problem is to provide direct financial support to entrepreneurs and start-up SMES.
state-owned enterprises'(SOES) obligation to support SMES, and a revolving fund programme (Iptekda) for empowering new entrepreneurs and start-up SMES.
or do not have a credit history) through a partnership programme, up to a maximum 60%of the total cost of the investment;
and technical skill improvement through mentoring programmes, up to a maximum of 40%of the total cost of the investment.
The former scheme is managed directly by state-owned enterprises or SOE-affiliated entities, while the latter is managed through third parties or foundations.
Both programmes have contributed to enhancing the resilience of Indonesia's SMES, faced with the economic crisis of 1998 and the financial crises of 2009.
From 1998 to 2006, LIPI (Indonesian Institute of Sciences) has launched 389 projects with a total investment of IDR 54.46 million (USD 5. 4 million;
or expected returns on investment) and those that cannot yet meet bank requirements. Secondly, Iptekda has assisted successfully non-bankable SMES in financing
Innovation Centre for Micro, Small and Medium Enterprises The Innovation Centre for Micro, Small and Medium Enterprises is a pioneering national institution that implements the policy of promoting technopreneurship and strengthening the competitiveness of MSMES.
The Centre was created in 2008 with a strong legal foundation through presidential and Coordinating Ministry for Economy decrees.
These intermediary institutions provide integrated services in the areas of technology, human resource capacity building, business network development,
and programmes as a result of sharing ideas in the meetings regularly facilitated by the Innovation Centre. 2. INDONESIA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 119 Indonesia Notes:
OECD, Indicators of Product Market Regulation. statlink2 http://dx. doi. org/10.1787/813210634131 A. Barriers to entrepreneurship, Indonesia 2007 and OECD 2008 Index scale
E 120 NTREPRENEURSHIP AND INNOVATION OECD 2010 Israel Incubator programme The main Israeli programme promoting innovative entrepreneurship is the Incubator programme,
The programme, managed by the Centre of Incubators for Technological Initiative, currently includes 26 such incubators, 22
of which have been privatised. The annual budget for 2008 was about USD 45 million. Overall, since the first companies graduated from the system in 1993,61%secured follow-on funding
the private sector has invested over USD 2. 5 billion in incubator graduates. Potential entrepreneurs first have to be accepted by the incubator
and then apply for funding to the Office of the Chief Scientist (OCS) in the Ministry of Industry Trade and Labor,
which runs the incubator programme. The OCS screening process includes on-site visits by specialists who determine
The OCS Incubators Committee awards grants of up to USD 500 000 over two years, or up to USD 750 000 over three years for biotechnology companies.
with the rest coming from the incubator management company. The OCS does not intervene in the equity arrangements between the entrepreneur and the incubator,
but the entrepreneur is entitled to at least 30%of equity in the company. Yozma programme The most successful and original programme in Israel's relatively long history of innovation policy was the Yozma programme
which virtually established the thriving Israeli venture capital industry. The lessons from Yozma are being studied closely now as the government plans direct involvement in a new biotechnology venture capital fund,
the first government policy involving direct intervention in the private equity market for innovation since the 1990s.
Established with a budget of USD 100 million in 1993, Yozma made ten investments in USD 20-25 million venture capital funds,
and 15 direct investments in technology start-ups. Yozma contributed towards 40%of the ten funds'total investment
while the rest came from foreign investors, creating a total of USD 210 million for investment in start-ups.
To minimise and spread risk the new funds syndicated many of their investments to a far larger extent than funds would consider today.
In addition, Yozma offered the foreign investors in these small funds insurance of 80%of their risk as well as the option of buying out the government's share within five years.
In eight of the ten new venture capital funds both general and limited partners exercised this option,
and nine of the 15 companies that enjoyed direct Yozma investment either went public or were acquired.
which allowed the fledgling Israeli venture capitalists to make companies public at a size that would be impossible today. 2. ISRAEL SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 121 Israel Notes:
Israel 2009. statlink2 http://dx. doi. org/10.1787/813271727207 A. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive B. Administrative
2010 Russian Federation Since mid-1990s the Russian government has taken initiatives to stimulate innovative activities of SMES and innovative entrepreneurship.
Russia does not yet have a comprehensive policy on innovative entrepreneurship and SME development, but nevertheless several policy initiatives are being realised, among which:
commercialisation support, venture financing, and infrastructure development. As concerns support to commercialisation, the bulk of government funds is distributed through two organisations:
the Foundation for the Assistance to Small Innovation Enterprises; and the Russian Corporation of Nanotechnologies (RUSNANO.
Foundation for the Assistance of Small Innovation Enterprises The Foundation for the Assistance to Small Innovation Enterprises was organised by the federal government in 1994.
The main activity of the Foundation is the support of the commercialisation process through direct financing to small innovative enterprises.
Enterprises supported by the Foundation commercialised around 3 500 patented inventions. In the future the Foundation is planning to finance earlier-stage company R&d
and to develop co-operation with venture capital funds. RUSNANO RUSNANO was organised by the federal government in 2007,
Moreover, RUSNANO participates in financing of infrastructure projects for innovative entrepreneurship. Venture Funds In 2006 the Ministry for Economic Development launched a programme for regional venture funds in 19 Russian regions.
The regional and federal budgets for these funds amount to USD 150 million, in equal proportion.
These are closed-end investment funds in high-risk ventures on condition that private investors match the sums.
Overall capitalisation of venture funds in Russian regions totals about USD 300 million. Meanwhile the Russian Venture Company (RVC) was established also in 2006 and financed by the federal budget;
its current capitalisation is about USD 900 million. RVC plays the role of the Federal Fund of venture fund (fund-of-funds model), stimulating venture investment and financial support of the high-tech sector. 2. RUSSIAN FEDERATION SMES, ENTREPRENEURSHIP
AND INNOVATION OECD 2010 123 Russian Federation A. Definition of SMES Size Employees Annual turnover Micro 1-15 Up to 1. 7 million euro
Department of state Regulation in the Economy of the Russian Federation. Charts B and C: Ministry of Economic Development and Trade of the Russian Federation.
Growth in the number of employees in SMES, 2001-2007 Thousands of people D. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive E. Administrative
, Science and Technology (MHEST) and the Ministry of the Economy (ME) have been supporting R&d and innovation activities in SMES through co-financing R&d projects, innovative research investments, research infrastructure, participation
Its goal is to stimulate the investment of micro and small enterprises in R&d new technologies, products and processes.
The R&d activity can be carried out within the enterprise, or in co-operation with other enterprises and/or public R&d institutions.
Because Slovenia is a relatively small country, openness is a key factor for its future success
processes and services. In the context of international co-operation incentives ME measures aim to help innovative companies enter international markets.
promoting the further involvement of Slovenian enterprises in defence R&d, development and investment projects, support to strategic R&d projects in the business sector,
Ministry of Economy and Ministry of Defence are participating by contributing through their own resources.
and investment projects and support of strategic R&d projects. The latter was to be the single largest TIA programme, with more than EUR 109 million for the period 2009-12.
Besides the traditional programmes to support young researchers and young researchers from the business sector, the Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments (PAEFI) has two main programmes:
Other smaller programmes focus on the entrepreneurial education of different target groups. 2. SLOVENIA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 125 Slovenia A. Structural indicators on enterprise population
, 2007 Number of enterprises Total employment Value added (factor costs) Industry Services Total Industry Services Total(%)No. firms%No. firms%%No. engaged%No. engaged%%Industry
Services Total Micro 31 384 89.6 61 114 94.4 92.7 63 600 19.8 111 149 38.6 28.7 14.1 31.4 22.6
or HEI Suppliers Clients or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants,
OECD average OECD emerging markets5 0 5 10 15 20 25 30 35 40 Euro area6%Lack of funds within enterprise or enterprise
group Lack of qualified personnel Lack of finance from sources outside enterprise Markets dominated by established enterprises 2. SOUTH AFRICA SMES, E 126 NTREPRENEURSHIP AND INNOVATION
small and medium enterprises (MSMES) is an important policy issue in South africa. The Department of Trade and Industry (DTI) has various strategies
It focuses specifically on the concluding phase of basic research to produce a pre-production prototype,
and also assists enterprises in the commercialisation of products and/or processes. The Support Programme for Industrial Innovation also provides managerial
and technical support to enterprises in order to facilitate innovative MSME development. The product process development and the matching schemes of this programme are aimed at providing grant assistance.
Even though it is a pioneering programme in the South african context, one that addresses an essential demand in industry,
and investment by MSMES increased significantly: from ZAR 21.3 million (2006/07) to ZAR 75.8 million (USD 10.8 million) in 2007/08. 2. SOUTH AFRICA SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 127 South africa Notes:
1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey. 2. Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands
OECD, Indicators of Product Market Regulation. statlink2 http://dx. doi. org/10.1787/813570382740 A. Barriers to entrepreneurship, South africa 2007 and OECD 2008 Index scale
ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY SMES, E 128 NTREPRENEURSHIP AND INNOVATION OECD 2010 ANNEX 2. A1 Notes on the Country Data The structural data on businesses presented in the chapter
repair of motor vehicles, motorcycles and personal and household goods H. Hotels and restaurants I. Transport, storage and communications J. Financial intermediation K. Real estate, renting and business activities L
Most data presented refer to the nonfinancial business economy, i e. ISIC Rev. 3/NACE Sections C to I and K and is subdivided into Industry (Sections C, D,
E and F) and Services (Sections G h i and K). Totals refer to Industry and Services,
In Table A, for Number of enterprises, Total employment and Value added, Industry includes ISIC Rev. 3 categories C, D, E,
and F. Services includes ISIC Rev. 3 categories G h i and K. 2. SMES, ENTREPRENEURSHIP AND INNOVATION:
AN OVERVIEW BY COUNTRY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 129 Austria: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F and Services includes categories G h i and K. For Total employment and Value added,
Industry includes NACE categories D, E, and F. Services includes categories G h i and K. Belgium:
In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories D, E,
and F. Services includes NACE categories G h i and K. Canada: In Table A, for Number of business establishments, Industry includes NAICS 2002 categories 21,22,
23 and 31-33 while Services includes NAICS 2002 categories 42,44-45,48-49,53, 54,56 and 72.
For total employment, Industry includes NAICS 2002 categories 21,22, 23 and 31-33 while Services includes NAICS 2002 categories 42,44-45,48-49,53, 56 and 72.
Czech republic: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C, D,
E and F and Services includes categories G h i and K. Denmark: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F and Services includes categories G h i and K. For Total employment Industry and Value added includes NACE categories D, E,
and F. Services includes categories G h i and K. Estonia: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F and Services includes categories G h i and K. For Total employment and Value added,
Industry includes NACE categories D, E and F while Services includes G h i and K. Finland:
In Table A, for Number of enterprises, Industry includes NACE categories C, D, E and F and Services includes categories G h i and K. For Total employment and Value added,
Industry includes NACE categories D, E, and F. Services includes categories G h i and K. France:
In Table A, for Number of enterprises, Industry includes NACE categories D, E and F and Services includes categories G h i and K. For Total employment and Value added,
Industry includes NACE categories C, D, E, and F. Services includes categories G h i and K. Germany:
In Table A, for Number of enterprises, Total employment, Industry includes NACE categories C, D, E,
and F. Services includes NACE categories G h i and K. For Value added, Industry includes NACE categories C,
D and F. Services includes categories G h i and K. Greece: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories D
and E. Services includes NACE categories G h i and K. Hungary: In Table A, for Number of enterprises and Total employment, Industry includes NACE categories D,
E and F. Services includes NACE categories G h i and K. For Value added, Industry includes NACE categories D,
E and F. Services includes categories H, I and K. Iceland: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F. Services includes NACE categories G h i and K. Ireland: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C
and D. Services includes NACE categories G h i and K. Italy: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C, D, E,
and F. Services includes NACE categories G h i and K. Japan: In Table A, for all variables, Industry includes ISIC Rev. 3 category D. Services is not available.
Korea: In Table A, for Number of establishments, Total employment and Value added, Industry includes ISIC Rev. 3 categories C
and D. Services is not available. 2. SMES, ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY SMES, E 130 NTREPRENEURSHIP AND INNOVATION OECD 2010 Luxembourg:
In Table A, for Number of enterprises, Industry includes NACE categories C, D and E and Services includes categories G h i and K. For Total employment and for Value added,
Industry includes NACE category D and Services includes categories G and K. Mexico: In Table A, for Number of establishments and Total employment, Industry includes NACE categories D
and F. Services includes NACE categories G, H and K. Netherlands: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F. For Total employment it includes NACE categories D, E and F. For Value added it includes categories D
and F. Services includes NACE categories G h i and K. New zealand: In Table A, for Number of enterprises and Number of employees, Industry includes ISIC Rev. 3 categories C, D, E,
and F. Services includes ISIC Rev. 3 categories G h i and K. Norway: In Table A, for Number of enterprises, Total employment and Value added, Industry includes ISIC Rev. 3 categories C, D, E,
and F. Services includes ISIC Rev. 3 categories G h i and K. Poland: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C, D, E,
and F. Services includes NACE categories G h i and K. Portugal: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F. For Total employment and Value added it includes NACE categories D and F. Services includes NACE categories G h i and K. Slovak Republic:
In Table A, for Number of enterprises, Total employment and Value added, Industry includes ISIC Rev. 3 categories C, D, E,
and F. Services includes NACE categories G, I and K. Slovenia: In Table A, for Number of enterprises, Industry includes NACE categories C, D,
E and F and Services includes categories G h i and K. For Total Employment and Value added,
Industry includes NACE categories D and F while Services includes G h i and K. Spain: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C, D, E,
and F. Services includes NACE categories G h i and K. Sweden: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C, D, E,
and F. Services includes NACE categories G h i and K. Switzerland: In Table A, for Number of enterprises and Total employment, Industry includes ISIC Rev. 3 categories C, D, E,
and F. Services includes ISIC Rev. 3 categories G h i and K. Turkey: In Table A, for Number of enterprises and Value added, Industry includes NACE categories C, D, E,
and F and Services includes NACE categories G h i and K. For Total employment NACE categories C,
D and F and Services includes NACE categories G, H and I. United kingdom: In Table A, for Number of enterprises, Total employment and Value added, Industry includes NACE categories C, D, E,
and F. Services includes NACE categories G h i and K. United states: In Table A, for Number of enterprises, Industry includes ISIC Rev. 3 categories C, D, E,
and F. Services includes ISIC Rev. 3 categories G h i and K. For number of employees,
Industry includes ISIC Rev. 3 categories C, E, and F. Services includes ISIC Rev. 3 categories H and K. SMES,
Entrepreneurship and Innovation OECD 2010 131 Chapter 3 Knowledge Flows Knowledge affects the market entry,
market success and innovation potential of a firm. The contribution of knowledge to entrepreneurship is understood best through a systemic approach to innovation,
which differs from the linear approach by taking innovation as a process that does not occur solely within corporate boundaries,
but instead requires a web of relationships among firms, research organisations and governments. Knowledge flows are the quintessence of an innovation system,
strengthening the performance of local SMES and underpinning the overall efficiency and vitality of the system.
A vast empirical literature shows that knowledge spillovers decay with distance and therefore lie behind the process of localised industrial agglomeration in knowledge-and technology-intensive sectors.
However, in a time of globalisation, local innovation systems should not be insulated from global sources of knowledge.
Cross-border alliances, FDI embedding and attraction of overseas skilled workers are three of the main channels through
which global knowledge flows can revitalise local innovation systems. 3. KNOWLEDGE FLOWS SMES, E 132 NTREPRENEURSHIP AND INNOVATION OECD 2010 Introduction This chapter examines the contribution of knowledge, especially knowledge flows, to the success of new and small firms and to the vitality of innovation systems.
It espouses a systemic approach to innovation, here seen as a process that does not occur solely within the physical boundaries of a firm,
but also benefits from external linkages among firms and between firms and research organisations. The chapter proceeds as follows.
The first section is a literature review on how prior knowledge affects market entry, market success and the innovation potential of a firm.
The following section introduces the concept of the innovation system that inspires the chapter. This concept is corroborated also by evidence on the concentration of firms in knowledge-and technology-intensive activities in both manufacturing and services.
The following sections make the argument that knowledge flows underpin the industrial agglomeration process and the vitality of an innovation system, especially in knowledge-intensive sectors.
Conclusions and policy recommendations are offered then. How knowledge affects entrepreneurship Studies investigating the determinants of the entrepreneurial process have focused traditionally on either personal traits or external constraints.
Another strand of the entrepreneurship literature, however, looks at the role of knowledge in facilitating business entry and performance.
Taking the first strand personal traits selfachievement, risk-taking and self-confidence have been among the most common features seen as prominent in the character of an entrepreneur (Mcclelland,
1961). ) Part of the economic literature has stressed also the importance of social factors for choosing an entrepreneurial career.
For instance, Djankov et al. 2007) find that many entrepreneurs have family members and/or friends who are also entrepreneurs,
thereby underscoring the importance of social networks. Adragna and Lusardi (2008), on the other hand, single out gender and age as the key determinants of entrepreneurship;
whereas Lazear (2005) finds that a variegated educational and occupational background increases the likelihood of becoming an entrepreneur (i e. the jacks-of-all-trades theory.
As to external constraints the second strand of the literature heavy labour market regulations and market entry requirements are deemed traditionally to discourage entrepreneurship,
as does contract enforcement. Liquidity constraints and credit rationing undermine entrepreneurship, pushing wealthy people towards an entrepreneurial career and deterring those without the necessary financial resources (Evans and Jovanovic, 1989).
The thread between the two strands of personal profiles and external constraints is the implicit assumption of a condition of market equilibrium, in
which entrepreneurial opportunities either do not exist or are distributed randomly across the population (Shane and Venkataraman, 2000).
If so, opportunities will have the same value for everyone and the answer to who will become entrepreneurs will ultimately depend on external factors or inherent personal characteristics.
But for entrepreneurship to happen the values that 3. KNOWLEDGE FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 133 economic agents give to opportunities must necessarily be different.
Were everyone to assign the same value to an entrepreneurial opportunity, any and all would try to harness it,
which would diminish the entrepreneurial profit to the point where present costs outweigh expected returns. One can only conclude, then,
that different beliefs about existing opportunities underpin the very entrepreneurial process. What make entrepreneurial opportunities different across the population are different degrees of knowledge
which is where the third strand comes in. The information that individuals dispose of will vary with regard to market inefficiencies, new technologies or new combinations of existing resources, each
of which is a source of entrepreneurial opportunity (Drucker, 1985). Entrepreneurship can therefore be regarded as a process that finds new relationships between inputs and outputs by dealing with missing or incomplete information.
Knowledge, mainly prior knowledge, plays a crucial role in coping with scattered information and is a key determinant of market entry
and market success. Postentry learning about one's own efficiency also matters (Jovanovic, 1989), but there is a knowledge barrier in every industry
which makes a certain degree of previous knowledge necessary to receive, process and synthesise the available information (Cohen and Levinthal, 1990).
Entrepreneurs have a stock of knowledge that will influence the industry they enter, as well as the probability of survival and success in that industry.
Company and university spin-offs are prominent examples of the role of knowledge in the entrepreneurial process.
Company spin-offs harness both technological and market knowledge accrued in the parent company to launch their business.
Indeed, even when company spin-offs enter new market segments different from those of the parent company,
they tend to introduce innovations originally developed in the latter (Christensen, 1993). On the other hand, university spin-offs are synonymous with knowledge-based organisations,
traditional start-ups also very often exploit knowledge accrued in previous experience as customers or suppliers to enter downstream or upstream industries (Hippel, 1988).
when new opportunities caused by inefficiencies or the emergence of new technologies matches the prior knowledge of individuals,
and market functioning as proved by the frequency of the multi-venture process, i e. the creation of more than one firm by the same entrepreneur throughout his/her life (Ronstadt, 1988).
The systemic approach to innovation Knowledge is crucial for entrepreneurship and triggers the business innovation process.
but rather in collaboration with other organisations, including enterprises (e g. suppliers and customers), universities, research organisations, etc.
The attitude and behaviour of firms with regard to innovation is affected not only by relationships with the external environment (firms, suppliers, research institutes, etc.
The main consequence of a systemic approach to innovation is that the entrepreneurship and innovation performance of a locality,
which points to a potential virtuous cycle effect between innovation through external linkages and innovation through internal investments in R&d.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 135 capacity to codify and implement new knowledge into their business operations.
especially basic and pre-competitive knowledge. 2. Competence building, including provision of education and training, creation of human capital, production and reproduction of skills,
etc. 3. Articulation of demand-driven quality requirements. 4. Creation and change of organisations needed for the development of new fields of innovation, including support to create new firms
IPR laws, R&d subsidies, environment regulations, etc..7. Incubation activities that provide facilities, business services and administrative support to new innovative efforts. 8. Finance, both debt-and equity-based,
that can facilitate the process of innovation, as well as other activities aimed at the commercialisation of knowledge (e g. technology licensing).
9. Provision of technology-oriented consultancy services (e g. technology transfer, university-based technology centres assessing commercialisation opportunities, etc..
The success of these clusters in entrepreneurship and innovation has in large part stemmed from strong local knowledge generation, diffusion and absorption capacities in the form of leading universities and research organisations, strong concentrations
and compare their performance based on indicators of their entrepreneurship vitality. However, they remain preliminary and exploratory
ENTREPRENEURSHIP AND INNOVATION OECD 2010 137 European union The first two maps show the agglomeration of HTM
which is a basic statistical measure indicating the geographical concentration of a particular activity in a particular locality as compared to a reference economy (EU27 in this case).
which might indicate the local presence of green-field (newly established) foreign direct investment. Examples include Mazowieckie and Wielkopolskie in Poland;
which are characterised by a different spatial pattern as against HTM enterprises. First of all, there is a large number of KISA concentrations in the UK,(e g.
FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 139 cluster around large metropolitan areas, including London, Paris, Milan, Stockholm, Brussels, and Dublin.
Two distinct types of map were calculated for each distribution of US firms by economic activity. The first type illustrates the basic characteristics of firm spatial distribution based on quantiles;
territorial grid and methodology adopted for Figure 3. 3. This map provides empirical evidence on the uneven distribution of US firms in knowledge-intensive services.
High-High low-Low Low-High High-low 3. KNOWLEDGE FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 141 Figure 3. 6, based on the same methodology
Consolidated clusters of knowledgeintensive services firms (dark grey areas) are found in a large area of California including San francisco, Los angeles and San diego,
a) an enterprise birth indicator (share of firms less than 5 years old; b) an economic growth indicator (average rate of turnover;
c) an employment growth indicator (average rate of employment growth; d) profitability (average return on total assets;
e) financial constraints to growth (average liquidity ratio and average solvency ratio. In the case of the US clusters, given data source constraints for this country, the composite indicator is limited to the first three variables in the list.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 143 Table 3. 2. Ranking of HTM clusters based on the composite indicator Source:
E 144 NTREPRENEURSHIP AND INNOVATION OECD 2010 The role of local knowledge flows for spatial agglomerations and local innovation systems The above section illustrated the phenomenon of spatial clustering of economic activity
Tacit knowledge is created not just a priori through investments in education and training or the attraction and retention of qualified labour,
but is generated also by the very interaction process between customers and suppliers or between users and producers,
In a study on the US economy, Jaffe et al. 1993) find that patents are more likely to cite other patents
Analysis of the impact of R&d investment on patent production provides similar results (Bottazzi and Peri, 2003;
and radio and TV communications are concentrated all highly in the three states of Massachusetts, California and New york (Audretsch and Feldman, 1996).
when knowledge spillovers take 3. KNOWLEDGE FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 145 place between sectors that share competences, rather than within one specific sector.
) For instance, Feldman and Audretsch (1999) find that the diversity among complementary economic activities with a common science base is more conducive to innovation in terms of returns to R&d investments than narrow sector specialisation.
Winters and Stam (2007), in an analysis of high-tech enterprises, show for instance that innovation networks positively affect both product
which makes entrepreneurship a process that strongly hinges on knowledge spillovers (Acs et al.,2006). ) A form of knowledge flows:
Another, more questionable argument is that European universities are more reluctant to apply for patents for which they do not perceive a concrete licensing opportunity.
3. KNOWLEDGE FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 147 the United kingdom or Denmark, where there is a more consolidated licensing tradition (average licensing revenues are at approximately EUR 300 000),
The role of global knowledge flows for local innovation systems Local knowledge flows are crucial to entrepreneurship
Globalisation has underpinned the contribution of global knowledge flows to national and local competitiveness by creating new opportunities for knowledge generated abroad to be exploited locally
have equity investments in new firms, and commercialise R&d results. The establishment of KTOS has also been encouraged,
This poses a challenge to the fairness of a system in which large companies disproportionally benefit from publicly funded research and in which start-up opportunities are diminished accordingly (Kneller, 2007.
Production and sale of goods and services jointly developed with PRO; employment of high-skilled workforce;
support university entrepreneurship. Participate in transfer activities; identify criteria for risk sharing; support investments in R&d.
New financial services for R&d; investments in technology-based start-ups; appropriate evaluation of research intangibles. Intermediary institutions (Development agencies, incubators, science parks, etc.
Facilitate the match between providers and users of technology; carry out technology transfer activities; coordinate R&d financial tools;
support technology start-ups. Analyse and select research results; propose strategic orientations for research activities; promote the valorisation of research results;
creation of new opportunities for PROS; fostered R&d culture among firms. Figure 3. 7. Figure 3. 8. Source:
ENTREPRENEURSHIP AND INNOVATION OECD 2010 149 The reference is the priority date, which corresponds to the first filing worldwide
b) small economies (Australia, in our case) are more likely to engage in international collaborations
ii) knowledge transfers from foreign direct investment (FDI; and iii) attraction of skilled labour. All three can contribute to the generation, transmission and exploitation of knowledge,
thus increasing technological development and entrepreneurship in terms of potentially exploitable new products, services and organisational methods.
Small firms may not be aware of overseas opportunities or may be too inward-looking to look for knowledge sources abroad.
and delivery of effective support instruments as a recent OECD review of entrepreneurship and SME support systems in various OECD regions shows (Potter,
Knowledge transfers from foreign direct investment Another important source of global knowledge is inward foreign direct investment (FDI.
which can spin off into the host economy to drive productivity improvements and innovations in local firms and organisations.
if multinationals are plugged into the local economy through effective linkages with local firms and research organisations.
The establishment of spin-off enterprises from multinational companies and the normal flows of workers and managers between companies within the local labour market are some of the clearest examples of passive knowledge transfers.
and development agencies have developed initiatives to improve the linkages of inward FDI with the rest of the economy.
and then linking foreign investors up with local enterprises and technology/research institutes. The encouragement of corporate spin outs from FDI is another option
ENTREPRENEURSHIP AND INNOVATION OECD 2010 151 that foreign multinationals are often less reluctant to allow spin-offs than normally thought,
The attraction of foreign skilled workers Renowned examples of attractive local economies, such as Silicon valley and Austin in the United states or Dublin in Europe, are witness to the importance of attracting foreign highskilled workers to stimulate entrepreneurship.
But it is also important in everyday economies. For receiving places, the inflow of foreign talent has positive effects on the number of skilled workers
First of all, economic opportunities are clearly important. However, these often do not correspond to a single good job offer,
if proper career advancement opportunities are given. Policy can best influence such opportunities by building up strong innovative and highly productive sectors and clusters and by supporting local skills
knowledge institutions, specialist finance, and knowledge networks. Secondly, people climate has received increasing attention as an element of the attractiveness of a place.
and technologies is a critical input to the entrepreneurial venture and can be acquired through the participation of entrepreneurs and SMES in local and global knowledge flows.
as demonstrated by the multi-venture process. It is also critical to the innovation performance of SMES.
and technological knowledge acquired in their source organisations for their success. The innovation system concept is helpful in understanding how policy can promote innovative entrepreneurship
and knowledge exploitation (large and small enterprises) parts of an innovation system. There are two main action areas for policy.
and entrepreneurship performance and help open new growth trajectories and fend off lock ins and other systemic failures.
Similarly, investment readiness 3. KNOWLEDGE FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 153 programmes are appropriate for later stages of business development in which equity finance is involved.
Emphasis also needs to be placed on a new set of entrepreneurship skills that move away from traditional business management competences
proactive orientation to change and innovation, foresight ability with regard to new market opportunities, etc. Schemes that target these skills can go a long way toward both enhancing business survival and nurturing the emergence of high-growth SMES.
Moreover, these programmes can help embed multinationals in the local economy by encouraging managers or skilled workers of the foreign affiliate to set out their own business.
Cluster programmes continue to receive much attention from national and local policy makers in light of the importance of agglomeration economies and of helping firms to link up with each other and with research organisations at the local level.
about 200 business incubators and 35 software parks (see China's Country Note). Cooperatives and business consortia can also support small-firm upgrading through, for example, joint technology purchase.
Such associations can include customers, suppliers and technology institutions. Universities need to be involved actively in the innovation system.
and so be given the opportunity to unfold their third mission to contribute to the development of their region (OECD, 2007c;
Universities and 3. KNOWLEDGE FLOWS SMES, E 154 NTREPRENEURSHIP AND INNOVATION OECD 2010 other research institutes can foster entrepreneurship by generating and diffusing innovations and supplying highly skilled
Indeed, the centrality of this role increases with the growing importance of knowledgebased activities in the globalised economy.
and exploit new products and services, and higher education institutions can play an important supporting function through the transfer of knowledge.
In Australia, for instance, Enterprise Connect is a programme that runs six manufacturing network centres and five innovation centres.
The two together provide a number of services for SMES, including no-cost business reviews for the identification of market opportunities and access to world-class technologies, job placement of researchers within SMES,
and linkages to more technologically advanced firms or business experts (see Australia's Country Note).
although marked inter-firm labour mobility can deter private investments in training, especially in SMES. University-industry staff exchange programmes should also be considered,
Considering that every technology implies several possible entrepreneurial opportunities often in more than one industry, policies should target broader technologies with potential multiple industrial applications rather than more narrowly defined sectors.
ENTREPRENEURSHIP AND INNOVATION OECD 2010 155 fertilising technologies, through a comprehensive approach in which two key programmes are the Small Business Innovation Research (SBIR) and the Technology Innovation Programme (TIP.
and help bring forward the commercialisation potential of successful prototypes funded by SBIR, so the two programmes are complementary (see the United states Country Note).
and risks and costs associated with international networking by setting up legal services or guarantee schemes,
Inward foreign direct investment is also an important though sometimes overlooked source of new knowledge for the local economy
and policies should strive to embed it by developing linkages between FDI ventures and local firms and research organisations.
except for the broad distinction between high-tech manufacturing and knowledge-intensive services introduced in the section on the spatial concentration of innovative industries. 2. These categories use NACE classifications. HTM comprises:
electronics-communications (32; scientific instruments (33. KISA comprises: post and telecommunications (64; computer and related activities (72;
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J. H. Marchese and A. Hofer (forthcoming 2010), Local Strategies for Entrepreneurship and Small Business Development, OECD, Paris. Potter, J. and G. Miranda (eds.)(
2009), Clusters, Innovation and Entrepreneurship, OECD, Paris. Piccaluga, A. and R. Pietrabissa (2009), International Dynamics of University-Industry Knowledge Transfer paper presented at the OECD Conference SMES, Entrepreneurship
Culture and Competition in Silicon valley and Route 128, Harvard university Press, Boston. Shane, S. and S. Venkataraman (2000), The Promise of Entrepreneurship as a Field of Research, Academy of Management Review, Vol. 25, No. 1, pp. 217-226.
Winters, R. and E. Stam (2007), Innovation Networks Of high-Tech SMES: Creation of Knowledge But No Creation Of value, Jena Economic Research Papers, No. 2007-042.3.
and can consider all sectors of economic activity. There are no exclusion thresholds in terms of enterprise size, unless national limitations reduce the coverage of administrative data sources.
Given national data source constraints there is plenty of information at the firm level about sector, legal status, ownership and an array of financial and economic variables.
A wide range of entrepreneurship, economic performance and financial indicators can be calculated at the local level from the ORBIS database:
return on capital employed; return on total assets, etc. While economic performance and profitability indicators can be calculated from the ORBIS database at different levels of industry
ENTREPRENEURSHIP AND INNOVATION OECD 2010 159 necessarily imply the effective establishment of the company as an active economic unit,
or administrative location of the company as a proxy for the place where the company concentrates its economic activity.
or legal headquarters may diverge from the place where it carries out its core economic activities.
where the latter is assumed conventionally to include all active enterprises resident in a given country. Under-coverage is induced generally by threshold effects in
turnover, employees, value added) by classification variables (economic activity, firm size and location. Such a deviation potentially generates biased economic indicators.
these types of indicators should be favoured. 3. KNOWLEDGE FLOWS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 161 ANNEX 3. A2 The LISA Methodology The LISA (Local Indicator of Spatial
or a rich and efficient infrastructure endowment, that is to say, driven by sharing rather than learning agglomeration economies.
SMES, Entrepreneurship and Innovation OECD 2010 163 Chapter 4 Entrepreneurship Skills This chapter describes the role of entrepreneurship skills in driving successful new venture creation
vocational training and the use of knowledge-intensive service activities and small business support in the provision of entrepreneurship skills.
Policy recommendations are provided. 4. ENTREPRENEURSHIP SKILLS SMES E 164 NTREPRENEURSHIP AND INNOVATION OECD 2010 The importance of entrepreneurship skills for SMES and start-ups Learning processes are at the core of entrepreneurship and SME development.
They are essential for the formation of a new business, its survival and growth as well as for the upgrading of existing SMES.
The OECD defines entrepreneurship as human action in pursuit of the generation of value by identifying and exploiting new products, processes or markets.
So a process of transforming opportunities into value is at the heart of entrepreneurship and applies to all of new firm founders, small business managers and SME workforces supporting introduction of innovations.
and this comes from entrepreneurship skills. Three key questions guide the debate on entrepreneurship and SME learning and the role of public policy:
What skills are needed? How is the necessary learning and preparedness acquired? How can entrepreneurship skills be fostered through government intervention?
Entrepreneurship often appears to be spontaneous; there are numerous examples of successful entrepreneurs who did not undergo any special training
or are selftaught. Yet people with viable business ideas can also be hindered in their steps into entrepreneurship by a lack of appropriate skills and behaviours.
The evidence suggests that new entrepreneurs often face problems, for instance in presenting their business case to potential investors
as industry is transformed into a low-carbon economy. Green and silver jobs are expected to grow
and there will be a marked shift towards business services jobs in advanced economies (CEDEFOP, 2008a). The level of skills is expected also to increase.
Entrepreneurship skills will also be at a premium. These are not basic skills; they are sophisticated more,
requiring greater capacities to transform ideas into value in a changing business environment. Training for this skill is, first of all, not usually part of a formal education curriculum.
Second, such skill is brought not usually out in the industry training 4. ENTREPRENEURSHIP SKILLS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 165 system.
it is time to give entrepreneurship skills greater attention. Skills for entrepreneurship1 Skills refers to the abilities
Converging skills require several of the other skills plus skills specific to entrepreneurship, or for adjusting to the green transformation of jobs or indeed new green jobs.
Entrepreneurship skills as defined in Table 4. 1, are specific skills that are required for creating
and running new business ventures or innovative projects in existing firms. They involve risk assessment
For example technical engineering services can be crucial for radical innovation in manufacturing and services sectors (Martinez-Fernandez and Miles, 2006.
Entrepreneurship skills, which are part of this broad group, include two components related to innovation: an active component comprising the entrepreneur's propensity to drive innovation,
) Entrepreneurship involves both the impulse to create and innovate and the recognition of innovation from others
and the desire to implement innovation (e g. starting a new venture, finding new markets, introducing new organisational models)
The requirements for successful entrepreneurship can be further unbundled into the three elements set out in Box 4. 1:
knowledge, skills and attitudes. 4. ENTREPRENEURSHIP SKILLS SMES, E 166 NTREPRENEURSHIP AND INNOVATION OECD 2010 Table 4. 1. Classification of skills at work Source:
Social and communication Motivation and appreciation of people's characteristics for working individually and in teams;
appreciation and communication through networks and value-chain partners (e g. ability to reach consensus and agreements,
Multi-language and cultural Ability to communicate in more than one language, appreciation of the cultural characteristics of different ethnic groups (e g. communications by a customer representative selling products/services in different countries,
CONVERGING SKILLS Entrepreneurship Specific skills for creating and running new business ventures and innovative projects in existing firms,
such as risk assessment and warranting, strategic thinking, self-confidence, the ability to make the best of personal networks,
Green Specific skills to modify products, services or operations due to climate change adjustments, requirements or regulations (e g. water purification and site remediation planning/engineering in mining, solar panels
They are tuned in to recognise available opportunities that can be significant for their personal, professional and/or business activities.
(and unlearn) from life situations inside and outside the work environment. Source: Adapted from Green et al.
ENTREPRENEURSHIP SKILLS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 167 Entrepreneurship skills are considered here as converging,
Indeed, with respect to the latter, firms are now more aware of the need to train their workforce in entrepreneurship skills.
a recent survey of SMES in New zealand shows that entrepreneurship activities in the firm are the activities most linked with firms'skills upgrading initiatives (OECD, 2010b, forthcoming.
How are acquired entrepreneurship skills? Entrepreneurship skills are understood best in relation to lifelong learning, where the individual acquires skills through their life history.
In formal education, entrepreneurship training can be provided at different levels, from primary and secondary schools, to vocational colleges and tertiary and university education.
The focus and objectives may of course vary. Entrepreneurship education in schools tends to be about embedding an entrepreneurial mindset.
The aim is to foster more positive attitudes to this career road that students may carry with them into their later careers,
or run an enterprise more probable and increasing people's willingness to be enterprising at work.
Entrepreneurship teaching in higher education also seeks to do this but may in addition seek to impart more technical-related skills such as in management and business planning.
This section therefore explores entrepreneurship skills provision both in the formal education system (focusing on higher education,
vocational education and schools) and in work environments (focusing on informal entrepreneurship learning at work through the involvement of workers in knowledge-intensive service activities
and entrepreneurship training by SME support organisations). Universities and higher education institutions Entrepreneurship teaching OECD work shows that third-level (higher education) entrepreneurship teaching activities are increasing (Potter, 2008.
Until recently, entrepreneurship education was provided very rarely. Now, however, it is a rapidly evolving field with emerging new approaches that meet increased demand from students and the need for tailored teaching.
More universities, faculties and students are becoming involved and the variety of content and pedagogies is increasing.
There are nonetheless some international differences in the extent and nature of entrepreneurship teaching provision, with North american universities leading the way in introducing
and refining approaches. Survey work reported in Solomon (2008) examined the types of entrepreneurship teaching offered in the United states. This showed that the most common courses in the broad field of entrepreneurship were in entrepreneurship
small business management and new venture creation. In order, the most common methods of teaching methods were business plans, discussions, guest speakers, case studies and lectures by business owners.
Some 60%of instructors developed their own sets of course materials. Structures 4. ENTREPRENEURSHIP SKILLS SMES, E 168 NTREPRENEURSHIP AND INNOVATION OECD 2010 for entrepreneurship teaching are also often in place,
with approximately one-third of colleges and universities having an entrepreneurship centre, and one-third having an entrepreneurship professor or chair.
Management of entrepreneurship courses tended to be housed in existing academic departments (41%)or business schools (31%;%although entrepreneurship centres or departments of small business and entrepreneurship were managing 23%of entrepreneurship courses.
Research comparing entrepreneurship education across universities from the United states, Canada and Denmark suggests that entrepreneurship education provision in US universities is advanced relatively (Hoffman et al.
2008). ) Entrepreneurship education was compared among selected universities in the three countries, on five important dimensions of teaching activities:
educational scope (the breadth of programmes offered, how courses are spread across undergraduate and postgraduate levels, etc.);
educational setup (the extent to which guest lecturers, practical experiences, private businesses, and experimental teaching activities are involved, etc.);
institutional characteristics (interaction between faculties, prioritisation of entrepreneurship, allocation of funding, incentives to students and teachers, etc.;
outreach (scope of university networks co-operation with incubators, alumni networks, access to experienced practitioners, access to venture capital) and evaluation (degree of monitoring and assessment of entrepreneurship activities.
The work found that on average, the US universities were strongest on these five dimensions, although Canada performed equally well in terms of educational scope and outreach.
The Danish universities were weaker on all dimensions. For example, at Stanford university and Cornell University in the United states, student participation in entrepreneurship programmes was 15%and 20%respectively.
In comparison, the participation rate at the Canadian universities was between 5%and 7, %while none of the Danish universities reported participation rates above 2. 5%.Despite the rapid growth in entrepreneurship teaching in higher education, there are a number of issues that need to be addressed in adapting universities to the needs of a more entrepreneurial economy (Potter,
2008). ) Two major issues are scaling up provision in order to offer courses to a larger number of students,
and shifting towards more interactive and experiential teaching methods in the entrepreneurship domain. In terms of provision, while many universities now offer entrepreneurship teaching, the numbers of students participating remains a small share.
This is associated with two barriers. Firstly, entrepreneurship teaching is confined often to certain departments and centres, in particular business and engineering schools and new university centres of entrepreneurship,
whereas potential entrepreneurs come from a wide variety of disciplines. Secondly, entrepreneurship teaching is often not well rewarded
either for students or for staff. Courses are offered often to students as optional complementary modules with no credits for their degrees.
and promotion and those not working on core activities can find it difficult to justify strong investments in what may be seen by their hierarchies and peers as side projects, whatever the expressed interest of the students.
Teaching approaches must also evolve to accommodate how entrepreneurship skills are learned best rather than be tethered to traditional classroom forms.
including virtual and real business creations, business plan competitions, strategy games and discussions with entrepreneurs. These methods are placed better than classroom lectures to develop 4. ENTREPRENEURSHIP SKILLS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 169 entrepreneurial behaviours.
The use of these methods can be promoted by greater networking among universities and faculties. Inappropriate constraints to the participation of entrepreneurs in entrepreneurship teaching programmes are another challenge.
Entrepreneurship support frameworks A recent OECD study in eastern Germany revealed that higher education institutions in the six eastern German regions (länder) are engaged actively in supporting entrepreneurship not just through entrepreneurship teaching but also through support for enterprise
start-ups by students and staff. Indeed entrepreneurship teaching can have a greater positive impact on the rate of new firm creation
if closely linked to start-up support. The eastern German universities either use government schemes, private sector funding
or are about to establish an entrepreneurship chair or a professorship. More than two-thirds have established dedicated start-up support services,
in the form of entrepreneurship centres and technology transfer units, which offer would-be entrepreneurs and those already in the start-up process consultation and access to networks and premises.
In addition the majority of the universities provide direct support to start-up: mentoring, grants, incubation facilities. A clear strength to build on is the presence of people teachers, researchers,
and university staff with a clear interest in entrepreneurship support. All of these developments demonstrate the importance given to the creation of new growth potential ventures out of universities.
The study identified the important role of public policy in initiating and enhancing entrepreneurship support in universities across the following six areas.
Strategy: There is clear role for public policy in opening up universities towards their third mission,
Public policy can facilitate their introduction by adding entrepreneurship support to the list of performance criteria on
Public kickoff funding for entrepreneurship support infrastructure is common to many OECD countries. Yet, it is the balance between a minimum long-term financing for staff costs and overheads and the openness to private sector involvement in the financing of entrepreneurship chairs and incubation facilities
which proves to be successful. Support infrastructure: Universities will need to find their place in existing start-up and entrepreneurship support systems.
Networking and incentives for clear referral systems can be useful to increase the effectiveness and efficiency of start-up support and to reduce duplication, confusion and waste of resources.
Entrepreneurship education: The exchange of good practice in creative teaching methods allows for improvement and innovation.
Another important area for public policy intervention is curricula development and the integration of entrepreneurship courses, such as creativity classes.
A key success factor for university entrepreneurship support lies in private sector collaboration. Universities can create a protected environment for nascent entrepreneurship.
This can be an important stimulus for students and researchers to make a first step towards the creation of a venture.
Yet, in order to avoid over protection, early exposure to market conditions is advisable. 4. ENTREPRENEURSHIP SKILLS SMES, E 170 NTREPRENEURSHIP AND INNOVATION OECD 2010 Evaluation:
Public policy organisations and universities will need to work hand in hand in developing a monitoring and evaluation system
which demonstrates the socioeconomic impact of university entrepreneurship support and reveals needs for changes. The work has developed also a criteria list of good practice across the six dimensions from an assessment of existing literature and case studies of university entrepreneurship support.
Policy makers and university management can use these criteria to self-assess and reorient their current approaches (Box 4. 2). Box 4. 2. Entrepreneurship support in universities:
Criteria for good practice Strategy 1. A broad understanding of entrepreneurship is a strategic objective of the university,
and there is top-down support for it. 2. Objectives of entrepreneurship education and start-up support include generating entrepreneurial attitudes, behaviour and skills,
as well as enhancing growth entrepreneurship (both high-tech and low-tech). 3. There are clear incentives and rewards for entrepreneurship educators, professors and researchers,
who actively support graduate entrepreneurship (mentoring, sharing of research results, etc.).4. Recruitment and career development of academic staff take into account entrepreneurial attitudes,
behaviour and experience as well as entrepreneurship support activities. Resources 1. A minimum long-term financing of staff costs and overheads for graduate entrepreneurship is agreed as part of the university's budget. 2. Self-sufficiency of university internal entrepreneurship support is a goal. 3
. Human resource development for entrepreneurship educators and staff involved in entrepreneurship start-up support is in place.
Support infrastructure 1. An entrepreneurship-dedicated structure within the university (chair, department, support centre) is in place,
which closely collaborates, coordinates and integrates facultyinternal entrepreneurship support and ensures viable cross-faculty collaboration. 2. Facilities for business incubation either exist on the campus
or assistance is offered to gain access to external facilities. 3. There is close co-operation and referral between university-internal and external business start-up and entrepreneurship support organisations;
roles are defined clearly. Entrepreneurship education 1. Entrepreneurship education is integrated progressively in curricula and the use of entrepreneurial pedagogies is advocated across faculties. 2. The entrepreneurship education offer is communicated widely,
and measures are undertaken to increase the rate and capacity of take-up. 3. A suite of courses exists,
which uses creative teaching methods and is tailored to the needs of undergraduate, graduate and postgraduate students. 4. ENTREPRENEURSHIP SKILLS SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 171 Vocational education and training Vocational education and training (VET) is a type of task-oriented technical education widely used to prepare future self-employed entrepreneurs and SME employees.
Vocational training colleges have had traditionally a craft focus. Many of the craft occupations are pursued in practice by the self-employed
and people working in micro businesses, for example plumbers, painters, electricians and information technology specialists. Other people go on to work in larger SMES
and may benefit from training provided before employment or in lifelong learning activities whilst in employment.
In addition to courses entirely taught in vocational education institutions, an important element of the system is apprenticeships,
Since 2002 the demand for apprenticeship positions has exceeded constantly their supply, both in eastern and western Germany (Zwick, 2007.
As a third example, Box 4. 2. Entrepreneurship support in universities: Criteria for good practice (cont.
business support organisations and firms are a key component of entrepreneurship education. 6. Results of entrepreneurship research are integrated into entrepreneurship education messages.
Start-up support 1. Entrepreneurship education activities and start-up support are integrated closely. 2. Team building is facilitated actively by university staff. 3. Access to private financing is facilitated through networking
and dedicated events. 4. Mentoring by professors and entrepreneurs is offered. 5. Entrepreneurship support in universities is integrated closely into external business support partnerships and networks,
Evaluation 1. Regular stocktaking and performance checking of entrepreneurship activities is undertaken. 2. Evaluation of entrepreneurship activities is formalised
and long-term (alumni and post-start-up) monitoring of the impact. 4. ENTREPRENEURSHIP SKILLS SMES, E 172 NTREPRENEURSHIP AND INNOVATION OECD 2010 the Australian Apprenticeships, bring together the traditional apprenticeship and the traineeship systems.
and for this reason the apprenticeship could be seen as a vehicle to promote entrepreneurship skills.
Traditional apprenticeship programmes aim to train skilled employees and do not explicitly train entrepreneurship skills,
however, and would need to be expanded to impart entrepreneurship skills in a wider sense. Interaction with vocational training institutions tends to be more important for skills development in small firms than in larger ones,
However, improving entrepreneurship skills in SMES through vocational education and training is challenging due to obstacles to SMES in accessing formal training.
and there is a low participation from micro and small enterprises and from unskilled, semiskilled and older employees.
Meeting the challenge of providing more relevant entrepreneurship teaching in vocational education therefore requires changes in programmes
The business plan should not be as central to the teaching process as is usually the case,
and opportunities that arise at various stages of business development. Programmes should not be overloaded with information that will not be used in practice such as regulatory environments, industry trends, balance sheet and ratio analysis
venture capital finance, product life cycles and so on. 4. ENTREPRENEURSHIP SKILLS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 173 And more experiential learning methods should be developed for example drawing on the entrepreneurship skills created in drama,
debating, drawing and networking exercises. The literature also offers some suggestions about how vocational education and training needs to be adapted to better meet the needs of SME workforces.
policy measures should target both workers and enterprises, not providing financial incentives alone but also allowing freedom of choice and market transparency;
or seminar-based workshops to jumpstart innovation, entrepreneurship and creativity in an SME. Owner-managers do not see themselves as having time to participate in long academic styled programmes
) Schools The need for people to have new skills for entrepreneurship is accompanied by a need for shifts in school curriculums
As Cooney (2009) points out, this is not just about business start-up or positive attitudes to entrepreneurs and entrepreneurship.
It is also based on the view that students who receive entrepreneurship education as part of their schooling show improved school attendance
to look for opportunities to make things happen, to have the self-confidence to achieve their goals,
Introduce entrepreneurship as a key competence in school curricula. Ensure that the importance of entrepreneurship is reflected in teacher training.
Step up co-operation with the business community for entrepreneurship education at all levels. The emphasis is therefore at three levels:
introducing entrepreneurship into the curriculum, developing teaching methods appropriate to the subject (such as virtual business creation games)
and drawing on entrepreneurs in the business community as resources for teaching. Furthermore, entrepreneurship teaching should not be separated from the study of other disciplines,
but incorporated into a wide range of teaching activities. 4. ENTREPRENEURSHIP SKILLS SMES, E 174 NTREPRENEURSHIP AND INNOVATION OECD 2010 A number of European countries have recognised already the benefits of an entrepreneurship education
and implemented policies to ensure that school students receive it (Cooney, 2009). In Finland for example, entrepreneurship education is a thematic entity, not a subject.
In 2004 the Finnish Ministry of Education produced an Action Plan for Entrepreneurship Education that covered all levels of the education system,
and working together with the Ministry of Trade and Industry appointed a working group entitled From Higher education Institutes to Entrepreneur.
The Ministry of Education also appointed an Entrepreneurship Steering Group to ensure that the agreed programme of action was implemented properly.
In Norway, entrepreneurship is included in the curricula at all levels, and three government departments are involved in its delivery (Ministry of Education and Research,
Ministry of Trade and Industry and Ministry of Local government and Regional Development. In addition to co-operation between ministries and directorates, there are also partnership agreements with businesses as part of the action plan.
and foster a culture for entrepreneurship. Scotland has launched also an entrepreneurship education called Determined to Succeed (Box 4. 3). Box 4. 3. Scotland's Determined to Succeed entrepreneurship education strategy Scotland's Determined to Succeed entrepreneurship education strategy
details the actions that needed to be taken by the Scottish government to embed entrepreneurship into the national schooling system.
The strategy is part of a long-term drive to build an enterprise culture in Scotland that will give young people a better chance of realising their full potential
and will give the economy of Scotland the skills, new ventures and entrepreneurs it needs for growth.
As part of its action plan, the strategy contains a section entitled What success will look like
and all have staff with responsibility for delivering enterprise in education. An annual reporting process ensures examples of good practice can be shared
All local authorities have communications strategies which keep parents informed of how they can support their child's learning.
can use experiences in enterprise to reflect on other learning and make connections; are self-motivating
4. ENTREPRENEURSHIP SKILLS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 175 Box 4. 3. Scotland's Determined to Succeed entrepreneurship education strategy (cont.
3) Responsible citizens have knowledge and understanding of the nature of work and social and economic enterprise;
understand the roles, rights and responsibilities of individuals as employees, managers, employers, entrepreneurs, investors, customers and global citizens;
as well as national and global economies. 4) Effective contributors have an understanding and appreciation of the world of work, the value of different occupations and entrepreneurship and their contributions to the economy and to society;
have knowledge and understanding of wealth creation and wealth distribution both nationally and globally; are willing to take the initiative and lead;
In examining the different entrepreneurship education policies currently being pursued by different governments, it can be argued that the Scottish strategy is among the clearest in terms of
what stakeholders needs to be involved, and what regular measurement systems need to be embedded into the overall process.
Further details of the Scottish strategy on entrepreneurship education can be found at www. ltscotland. org. uk/enterpriseineducation/index. asp.
Cooney (2009). 4. ENTREPRENEURSHIP SKILLS SMES, E 176 NTREPRENEURSHIP AND INNOVATION OECD 2010 The European commission has assessed recently the degree to
which entrepreneurship has been included as a key competence in national curricula for secondary education in various European countries in line with the Oslo Agenda for Entrepreneurship Education in Europe (European commission, 2007).
Poland and the UK) entrepreneurship is recognised already a objective and is embedded explicitly in national curricula,
but that despite an increasing spread of elements of entrepreneurship in secondary teaching, only a small minority of countries have established well entrepreneurship education in the curriculum.
Embedding entrepreneurship further into school teaching will require in addition incentives and support to teachers involved in entrepreneurship activities as well as support to nonprofit organisations that are active in this area.
Training in SMES Studies of training outcomes have shown clearly the positive effect of general training by SMES.
Across the EU-15 countries, data from the Eurostat Continuing vocational training Survey show that employees in enterprises with less than 50 employees receive significantly less in-company training than employees in larger firms.
younger, better educated workers in high-skilled occupations (such as managers, professionals and technicians) have greater access to training opportunities than less-educated older workers
Examples of cost issues are involved the paperwork, the cost of preparation and planning of activities, investment in the training itself,
Such an emphasis on employee-driven learning and trial-and-error behaviour can obviously be detrimental to both the firm and the employee. 4. ENTREPRENEURSHIP SKILLS SMES
ENTREPRENEURSHIP AND INNOVATION OECD 2010 177 SMES, however, can be highly innovative, despite limited investment in formal training and strategic planning of training (Muller and Zenker, 2001).
For example, entrepreneurial skills can be acquired through in-house team work for development of a new product.
This provides an opportunity for employees to learn from others in different companies. In addition to enhancing SMES'efficiency, innovative potential and growth prospects,
rapidly changing operational environments and evolving business concepts (OECD, 2006, p. 47). This results in co-production of knowledge by the different workers involved, constituting a critical nexus of today's networking economy.
Alternatively, internal projects can be undertaken, for example to improve work processes (such as quality control, marketing and product development) with SME employees learning from or together with their co-workers.
Many entrepreneurship skills are acquired in the process of knowledge co-production; they range from analytical and problem-solving skills to creative thinking to integration of technical knowledge.
and structured environment (e g. in an education or training institution or on the job) and is designated explicitly as learning (in terms of objectives, time or resources).
although it includes a greater component of knowledge intensity and interactive skills. 4. ENTREPRENEURSHIP SKILLS SMES,
Until now the attention of policy makers has tended to be on the contribution of knowledge workers to entrepreneurship and innovation.
However, when opportunities are created, routine workers can also make an important contribution to transforming SME activities to a context of increased knowledge intensity and innovation activity.
and where the component of knowledge production is high are an example of the sophisticated entrepreneurship skills that can be learned at work
especially in the context of the new green growth economy and in occupations that depart from previous rigid conceptions of job profiles (Miles et al.,
and new entrepreneurship skills through formal (contractual) and informal (networking) activities, where professionals interact with their embedded knowledge in pursuit of new or improved solutions to current needs of the firm;
Entrepreneurship policies should pay more attention to this way of developing entrepreneurship skills, however, so that measures can better correspond to how SMES actually upgrade skills that are relevant to their production,
operations and entrepreneurship processes. One way of encouraging this would be to introduce innovation vouchers,
Enterprise Ireland for example has introduced vouchers worth 5 000 EUR to enable SMES to get support for new product and process development, new business model development, new service delivery and customer
Similar schemes are reported in Chapter 2 for Greece, The netherlands, Portugal, the United kingdom and Slovenia. 4. ENTREPRENEURSHIP SKILLS SMES
ENTREPRENEURSHIP AND INNOVATION OECD 2010 179 Small business support There is a number of small-business-specific support programmes aimed at developing entrepreneurship skills in SMES
and the investment activity of local governments in private sector development, for instance through smart infrastructure such as HEI networked business incubators,
One of the reasons is the opportunity that on-the-job training gave to novice entrepreneurs to discuss work problems and test out solutions with real entrepreneurs and experts.
external to the firm, provided for owners and managers of independent enterprises with 250 employees or fewer,
p. 6). Evaluations of these measures indicate that networking opportunities, combined with dedicated one-to-one attention
sharing of experiences that provide an opportunity to achieve business insights by learning from others in similar positions;
or external consultants that work with the business owner or managers to think about processes, business models or solutions to specific problems.
SMES tend 4. ENTREPRENEURSHIP SKILLS SMES, E 180 NTREPRENEURSHIP AND INNOVATION OECD 2010 to participate in these activities on an informal basis and through interactions with companies and organisations in their network.
even if critical for the entrepreneurship and innovation process of the firm and to upgrade professionals'skills,
Business counselling activities are found in professional services such as financial, marketing, legal, personnel development, training, recruitment and business management services.
Examples from this group include the provision of management skills for integrating e-commerce into the core business.
They may also include legal advice to a firm/organisation on the design of new business structures to support innovation in products or services or the protection and commercialisation of new intellectual property.
Another example could be the training of key personnel in knowledge management for commercialisation of new products and services through public support;
and on the way the services are offered (Hall and Lansbury, 2006). The concept of skill ecosystems directs attention to the interdependency of multiple actors
Effective entrepreneurship skill formation policy also demands an appreciation of workforce development as an alternative to traditional approaches centred on the provision of training in discrete competencies.
The role of local networks and skills ecosystems in encouraging SMES to participate more fully in entrepreneurship training activities has received little attention in policy design.
it tends to be seen as a local resource by both enterprises and employees. This, and the positive effects of local networks and connectivity in achieving the vitality of local economies,
suggests that a local policy orientation might be useful in promoting greater entrepreneurship training cultures in SMES. 4. ENTREPRENEURSHIP SKILLS SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 181 An example of an organisation providing entrepreneurship training in a local skills ecosystem is provided in Box 4. 4 below.
Policy recommendations Build up entrepreneurship education in universities and higher education institutions. Scale up, smartly. Increase the number of entrepreneurship courses
and participating students where there is evidence of success. Make sure that the entrepreneurship teaching fulfils high quality standards
and is extended across subjects to reach a wide range of potential entrepreneurs. Provide training, encouragement and support for staff embarking on entrepreneurship teaching activities.
Facilitate teaching activities for existing and former entrepreneurs. Encourage growth-oriented entrepreneurship. Shift emphasis from business management to enterprise growth challenges,
including finance and internationalisation. Teach the skills required for growth including opportunity identification, risk taking, strategy making,
leadership, negotiation, networking, building strategic alliances, and intellectual property protection. Introduce interactive teaching methods that incorporate practical experience.
Encourage learning by doing in contrast to more traditional forms of academic learning. Introduce cross-functional problem-solving approaches that replicate the bundle of activities
and functions that need to be applied in entrepreneurship situations, rather than breaking up teaching into separate business functions as in traditional management courses.
Involve entrepreneurs in the design and teaching of entrepreneurship courses. Expose students to entrepreneur role models,
for example by using entrepreneurs as mentors, speakers and interview subjects. Provide students with opportunities to work in existing SMES
and to add value to these firms through Box 4. 4. Formaper Formaper, the training agency of the Milan Chamber of commerce, Industry, Craft and Agriculture, works to meet the training demand of its 325 000 registered enterprises.
The institutional task is to contribute to the development of an entrepreneurial culture, building on specific know-how acquired in the most dynamic and vital of Italian regions,
The overall objective is to support sustainable economic and social development through the provision of high-quality training and consulting services.
Typical assignments include delivering tailored training and support services for the following fields of expertise:
and entrepreneurship development training programmes for owners, managers and consultants in business planning, financial services, ICT and marketing.
Public administration. 4. ENTREPRENEURSHIP SKILLS SMES, E 182 NTREPRENEURSHIP AND INNOVATION OECD 2010 placements and consulting projects.
Develop case studies tailored to the environment that students will face. Link into wider networks. Tap into the resources of alumni networks to help fund and support entrepreneurship programmes
for example by asking alumni to get involved in teaching, using them to support links to companies for placements,
and teachers and providing support for the interinstitution mobility of entrepreneurship teachers. Strengthen VET programmes for business founders, SME managers and SME workforces.
Target both workers and enterprises; limit administrative burdens; increase transparency and clarity of objectives and information to employers and employees;
Embed an entrepreneurship mindset through the school education system. Develop the training function of small business support programmes including programmes for business succession,
Include entrepreneurship activities in school curricula; develop interactive materials and activities and involve entrepreneurs and businesses;
incentives and support to teachers involved in entrepreneurship activities. Reinforce training in SMES Use these
launch projects to impart entrepreneurship skills across all occupations around product and process development initiatives;
broaden the focus of entrepreneurship skills development projects to encompass all occupations and not just management;
since they are ideal for entrepreneurship skills development. Increase the use of informal learning sources.
Tap into knowledge-intensive service activities (KISA) processes to increase the entrepreneurship skills acquisition of SME workforces.
such as in programme design and management. 4. ENTREPRENEURSHIP SKILLS SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 183 Create integrated training strategies combining training located in higher education, vocational education and training,
Note 1. Skills for entrepreneurship refer to those capabilities involved in firm creation or in realising a new product, service or activity.
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Paper presented at the OECD Conference on SMES, Entrepreneurship and Innovation, Udine, Italy, 22-23 october 2009, OECD LEED Programme, Paris Dawe, S. and N. Nguyen (2007
European commission (2006), Management Capacity Building, Enterprise and Industry Directorate-General, Brussels. European commission (2007), Assessment of Compliance with the Entrepreneurship Education Objective in the Context of the 2006 Spring
Council Conclusions, Directorate General for Enterprise and Industry, Brussels. Gibb, A. 2002), In Pursuit of a New‘Enterprise'and‘Entrepreneurship'Paradigm for Learning:
Gibb, A. 2009), The Small Business and Entrepreneurship Challenge to Vocational education: Revolution or Evolution? Paper presented at the OECD Conference on SMES, Entrepreneurship and Innovation, Udine, Italy, 22-23 october 2009, OECD LEED Programme, Paris. Gibb Dyer, W. Jr.
1993), Towards a Theory of Entrepreneurial Careers, Entrepreneurship Theory and Practice, Vol. 19, No. 2, pp. 7-21.
Green, L.,B. Jones and I. Miles (2007), Global Review of Innovation Intelligence and Policy Studies:
Skills for Innovation, EC DG Enterprise and Industry, Brussels. Hall, D. and R. D. Lansbury (2006), Skills in Australia:
Henry, C.,F. Hill and C. Leitch (2003), Entrepreneurship Education and Training, Ashgate, Aldershot. Hoffman, A n. Vibholt, M. Larsen and M. Moffet (2008), Benchmarking Entrepreneurship Education across US, Canadian and Danish Universities, in J. Potter (ed.),Entrepreneurship and Higher education, OECD
, Paris, Ch. 6, pp. 139-164. Itkonen, K. 2009), Developing Entrepreneurship in Small Enterprises The Succession Process Supported by Apprenticeship Training as a Context for Learning in M.-L. Stenström and P. Tynjälä (eds.
Towards Integration of Work and Learning: Strategies for Connectivity and Transformation, Springer, United kingdom, pp. 153-170.
Lazear E. P. 2004), Balanced Skills and Entrepreneurship, American Economic Review, Vol. 94, No. 2, Papers and Proceedings of the One hundred Sixteenth Annual Meeting of the American
2007), Enterprise Training in Europe Comparative Studies on Cultures, Markets and Public Support Initiatives, LIT-Verlag, Vienna. 4. ENTREPRENEURSHIP SKILLS SMES, E 184
NTREPRENEURSHIP AND INNOVATION OECD 2010 Martinez-Fernandez, C. 2005), Knowledge Intensive Service Activities (KISA) in Innovation of Mining Technology Services in Australia, University of Western
2006), Knowledge Intensive Service Activities (KISA) in Software Innovation, International Journal of Services Technology and Management, IJSTM Special Issue, Vol. 7, No. 2, pp
Martinez-Fernandez C.,M. Receretnam and S. Sharpe (2007), Manufacturing Innovation in the New Urban Economy:
Miles, I.,B. Jones, T. Dunnewijk, H. Meijers, A. van Zon and B. Kotteik (2008), Innovation in the European Service Economy Scenarios and Implications for Skills and Knowledge
, ETEPS AISBL, Brussels. Minniti, M. and W. Byrgave (2001), A Dynamic Model of Entrepreneurial Learning, Entrepreneurship Theory and Practice, Vol. 25, No. 3, pp. 5-16.
Muller, E. and A. Zenker (2001), Business Services as Actors of Knowledge Transformation: The Role of KIBS in Regional and National Innovation Systems, Research Policy, Vol. 30, pp. 1501-1516.
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Paris. OECD (2010a, forthcoming), Leveraging Training and Skills Development in SMES, OECD, Paris. Potter, J. ed.)(2008), Entrepreneurship and Higher education, OECD, Paris. Smilor, R
. 1997), Entrepreneurship: Reflections on a Subversive activity, Journal of Business Venturing, Vol. 12, No. 5, pp. 341-346.
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SMES, Entrepreneurship and Innovation OECD 2010 185 Chapter 5 Social Entrepreneurship and Social Innovation The chapter outlines social entrepreneurship and social innovation before going on to provide concrete examples.
and have an important role to play in the provision of tailored support to aid their development. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
E 186 NTREPRENEURSHIP AND INNOVATION OECD 2010 Introduction Social entrepreneurship and social innovation have garnered, in the past decade particular attention from policy makers, academics, practitioners,
p. 1). If economic globalisation offers opportunities to improve living conditions, it also implies substantial and continuous restructuring
and change most especially in a time of economic crisis and a renewed or new approach, not only to the new social challenges but also to the old ones that have not yet been met successfully.
Competition keeps increasing and as a consequence all territories have to engage more strongly in innovation, both technological and social,
and in entrepreneurship, both commercial (for-profit businesses pursuing as a primary objective economic value and its appropriation) and social (primarily aiming at addressing and satisfying unmet social needs,
The most urgent challenge for national governments, local authorities, policy makers and economic stakeholders is therefore to help the less well-off adapt to new and changing situations
so that once the economy has recovered the benefits can be diffused widely. Social entrepreneurship and social innovation are part of the solution,
as they both explicitly aim to provide innovative solutions to unsolved social problems, putting social value creation at the heart of their mission
Even if social entrepreneurship as an activity is developing quickly around the world (Box 5. 1) and social innovations are appearing everywhere
A term like social entrepreneurship tends to overlap with terms such as social economy, third sector, nonprofit sector, social enterprise and social entrepreneur, some
social entrepreneurship and social enterprise do not have the same meaning in the United states as in Europe for example,
The same confusion exists over social innovation. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 187 There is,
therefore, a need for greater conceptual clarity to be developed around these areas. This chapter examines social entrepreneurship
and social innovation and explores their meaning, as well as considering concrete examples of both. It is divided into two sections:
the first focuses on social entrepreneurship and the second on social innovation. It also provides recommendations as to how to most effectively support social entrepreneurship
and promote social innovation. Box 5. 1. The growth of social entrepreneurship While empirical evidence shows that social entrepreneurship is growing in many countries,
measuring it like measuring the social economy, the third sector and the nonprofit sector is difficult.
This is due not only to the variety of the entities belonging to the field, but also to the fact that these entities vary according to the geographical context
and that countries recognise social entrepreneurship differently. The Social Entrepreneurship Monitor is a special report of the Global Entrepreneurship Monitor (GEM) UK project to estimate the percentage of social entrepreneurs in UK society using population survey data.
The GEM report found that 1. 2 million people, which corresponds to 3. 2%of the working-age UK population,
could be classified as social entrepreneurs (defined in the survey as being involved in founding and running a social venture younger than 42 months).
As the comparable number for commercial entrepreneurship is 6. 2%,this points to the importance of social entrepreneurship.
According to the report, social entrepreneurs in the United kingdom are more likely to be women, young,
the number of social entrepreneurship entities developed from 1 176 in 1999 to 30 000 in 2008,
and this sector contributed JPY 10 trillion (USD 110 097 billion according to OECD STAT) to the economy in 2005,
When referring explicitly to social enterprises, undoubtedly a major expression of social entrepreneurship, recent UK data released by the Third Sector in July 2009 (www. cabinetoffice. gov. uk/media/231495/factoids. pdf) refer to an estimated average (2005-07) of 61
800 social enterprises in England. In 2005 social enterprises had a turnover of GBP 27 billion
and contributed GBP 8. 4 billion to the UK economy. In 2007/08 540 000 people were employed in the third sector as a whole in England.
In Italy, according to a recent estimate (2009) provided by the Iris network www. irisnetwork. it,
there are 15 000 social enterprises employing 350 000 employees, serving 5 million users and with an economic turnover of EUR 10 billion.
In Korea from 2007 to 2009, the Korean Ministry of Labor has certified 251 organisations as social enterprises (36 in October 2007;
8 in July 2009) out of 515 organisations that applied (data elaborated for OECD by the Korea Labor Institute and the Research Institute of Social Enterprise.
Moving to the social economy, a recent report by CIRIEC (2007) clearly shows its diversity in European countries.
and analysis of the different definitions of social economy existing in the 25 countries included in the study.
The report presents the main figures for the social economy in the European union, by 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
E 188 NTREPRENEURSHIP AND INNOVATION OECD 2010 Social entrepreneurship The concept of social entrepreneurship is defined still poorly
it could also be seen as a unique opportunity for researchers from different fields and disciplines, such as entrepreneurship, sociology and organisational theory,
What is social entrepreneurship? Social entrepreneurship can be defined as entrepreneurship that aims to provide innovative solutions to unsolved social problems.
Therefore it often goes hand in hand with social innovation processes, aimed at improving people's lives by promoting social changes.
Social entrepreneurship is, therefore, about solving social problems rather than exploiting market opportunities. Social currency is the motivation of social entrepreneurs who all have one thing in common:
the innovative use of resources Box 5. 1. The growth of social entrepreneurship (cont. country and globally, differentiating three groups of organisations:
cooperatives and similar accepted forms; mutual societies and similar forms; and finally, associations, foundations and other related nonprofit forms.
The main conclusion to be drawn is that the social economy in Europe is very important in both human and economic terms, over 11 million paid employees,
Nonprofit wages actually exceed for-profit wages in many of the fields where both sectors operate;
the Global 300 is the 10th largest economy in the world (ICA, Annual Report, 2006). 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 189 to pursue opportunities to catalyze social change (Mair and Ganly, 2010).
Social entrepreneurs are in pursuit of sustainable solutions to problems of neglected positive externalities (Santos, 2009, p. 1). 2 The challenge of defining social entrepreneurship Defining
what social entrepreneurship is poses important challenges and the growing interest in social entrepreneurship by policy makers as well as social investors means that it cannot be undefined left.
Policy makers and investors need clarity: unclear landscapes and boundaries can limit their support, which is critical to the smooth development of these fields.
or analysing the landscape of social entrepreneurship, or to adopt a more inclusive or more exclusive definition of it, remains an important discussion in the field:
Given that social entrepreneurship is still an evolving field of practices, it might be best to avoid narrowly defining it,
so as to avoid excluding initiatives that may be entitled to be considered social entrepreneurship even if they have not met all of the essential characteristics.
A great variety of definitions of social entrepreneurship and social entrepreneurs has been provided since the early 1980s (see Annex 5. A1 for a noncomprehensive list of definitions).
But according to some authors the theoretical underpinnings of social entrepreneurship have not yet been explored adequately (see for e g.
Authors such as Neck, Brush and Allen (2009, p. 15) suggest that a lack of agreement on what defines social entrepreneurship
Careful analysis of the growing literature reveals a perceived risk that the term social entrepreneurship could become very inclusive and,
instead on the landscape of social entrepreneurship to suggest a typology of entrepreneurial ventures in order to identify those that could be included in the social entrepreneurship field (Neck et al.,
2009), 4 or have identified sets of primary and secondary characteristics of social entrepreneurship (Brouard and Larivet,
2009). 5 Social entrepreneurship theories It appears that a consensus over the boundaries of social entrepreneurship remains elusive (Nicholls, 2006, p. 7),
but also that a certain clarity has begun to emerge in recent years. Arguably, a good balance between the need to include some concepts
when referring to social 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 190 NTREPRENEURSHIP AND INNOVATION OECD 2010 entrepreneurship:
social value, social mission, social wealth, social change, social impact, social innovation, sustainability, creativity and a business approach.
1. Is social entrepreneurship an individual or a collective phenomenon? That is, should one focus on individual social entrepreneurs rather than on collective social entrepreneurship initiatives?
It appears that social entrepreneurship can be both an individual and a collective phenomenon. The reality,
as some concrete examples will demonstrate later on, presents us with a few outstanding individual social entrepreneurs, many lesser-known ones,
Those initiatives include a number of social enterprises, which are owned often collectively and managed in the form of a cooperative,
2006). 2. is shaped social entrepreneurship by social value rather than economic value? The answer would be that,
in order to pursue the social mission of social entrepreneurship initiatives, the creation of social value is the essential feature of the initiatives,
the novelty represented by social enterprises and social entrepreneurship is that the economic value serves social objectives.
In this sense, social entrepreneurship creates blended value that consists of economic, social and environmental value components (Emerson,
2003). 3. is located social entrepreneurship only in the nonprofit sector, or can it also be found in the for-profit and public sectors?
While many social entrepreneurship initiatives can be found in the nonprofit sector, some social entrepreneurship attitudes also concern other sectors:
the for-profit sector (for-profit business reaching outstanding, concrete levels of social responsibility and a high level of creation of social value) and the public sector6 (central and local authorities engaging in
or promoting socially innovative programmes and measures in partnership with the other sectors). 4. Does social entrepreneurship aim to achieve incremental social impacts,
or is meant it to produce radical social transformations only? While the debate here is an ongoing one,
it seems that if social entrepreneurship is a way to improve the quality of life of individuals and communities through social value creation and innovative paths,
it is not essential to establish whether its impact has to be incremental or radical.
Radical changes are, of course, desirable and possible, but they are not easy to achieve and cannot happen regularly.
Social entrepreneurship aims therefore, at pursuing both radical and incremental social changes. 5. Is social entrepreneurship a local phenomenon or a global one?
While many initiatives happen at the local level, their impact and the repercussions that flow from that impact cannot be isolated,
The clearest examples of this would be the increasing amount of venture philanthropy made available in Europe,
North american and Japan to support local social entrepreneurship initiatives (Mair and Garley, 2010). 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 191
in creating jobs and in providing goods and services, obviously also has a social impact
Social change (whether radical or limited), not the exploitation of a market opportunity to increase personal wealth, is the explicit goal of social entrepreneurs and their business mission.
What distinguishes social entrepreneurship from commercial entrepreneurship is the predominant focus on value creation rather than on value appropriation.
in order to engage with their environment in coherent ways. They need to choose either value creation
Box 5. 2. Social entrepreneurship attitudes in the for-profit sector Corporate social responsibility (CSR) is a concept distinct from that of social entrepreneurship;
Still, some commercial business can have significant CSR initiatives in the social entrepreneurship field, most especially if they support the development of this sector.
shareholder funds of about EUR 120 million (one of the largest capitalisations in its field;
A scheme for advancing payments from the Campania Region to a consortium of nonprofits that won a regional auction for provision of healthcare services to old and disadvantaged people;
servicing over 8 000 3-year-olds and employing over 2 000 women. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
E 192 NTREPRENEURSHIP AND INNOVATION OECD 2010 Social entrepreneurship practices Having considered the theoretical approach to social entrepreneurship,
7 in this particular case the core mission is to provide health services, but in conjunction with preventing illness through a wider approach to the different factors influencing illness (poor housing and diet).
Box 5. 2. Social entrepreneurship attitudes in the for-profit sector (cont. A project for setting up residences to host mentally disabled people who have outlived their parents.
The cooperative focuses not only on providing healthcare services, but also on addressing wider health issues, such as poor housing and diet.
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 193 Health-related problems are at the core of the initiative of pharmaceutical scientist Victoria G. Hale,
One that can readily be seen is the capacity-building opportunities offered to healthcare workers and scientists,
Silai for Skills (Box 5. 5) provides an enlightening example of how social enterprises (here with the legal status of a registered charity) pursue multiple social goals to empower people.
One World Health also creates interesting opportunities for industry government and academia, and developing world partners.
One World Health's nonprofit model benefits industry by offering dual market opportunities through its role as global development partner and by taking responsibility for markets in developing countries.
/5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 194 NTREPRENEURSHIP AND INNOVATION OECD 2010 a deprived area.
This is very often the case for social enterprises that choose to go where traditional for-profit business do not,
but where services are needed most by a local population that is not always in a position to pay for the services that traditional for-profit business would provide at a higher price.
In fact, as social enterprises can mix their financial resources combining public subsidies, grants and donations, market revenues and (limited) voluntary work,
they can provide services at a lower, more affordable, price. SIEL Beu (Box 5. 6) is a French social enterprise promoted by Ashoka, an organisation
whose main aim is to support social entrepreneurs in building their activity. Disease prevention among elderly people,
training for healthcare professionals and training to help companies prevent accidents through regular physical activities in the workplace demonstrates the importance of the services it delivers.
This innovative social enterprise (a registered charity) has as its main objective to help build women's skills,
For those seeking further help in finding education and learning opportunities locally and help with career planning and job applications, the project offers information, advice,
and guidance services free of charge to all (students and non-students alike). A wide range of courses in practical, specialised fields in fashion and art design (garment making),
so that all students can have access to the services regardless of their financial situation. A new development for Silai for Skills is an enterprise unit in
which current and past students can receive counselling and training on setting up a new business,
www. silai. org. uk/index. htm. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 195 and because of the quality of the services offered by SIEL Bleu,
The french government has lent its support to the services offered by the association. Social innovation The financial and economic crisis makes creativity
and innovation in general and social innovation in particular even more important to foster sustainable growth, secure jobs and boost competitiveness.
This multi-stakeholder Forum was created in April 2000 with the main Box 5. 6. SIEL Bleu (France) In 1997, SIEL Bleu (acronym for Sport,
a commercial venture created to help companies prevent accidents and muscular-skeletal disorders among its workers through regular physical activity exercises in the workplace.
build funding mechanisms (it self-finances 70%of its 6 million EUR annual budget by selling its services to institutional care providers;
and healthcare insurance companies that help to pay for SIEL Bleu's services. Moreover, SIEL Bleu makes sure to keep its costs low
If someone is need in of its services but is unable to pay for them, the association works with the person to reach a compromise.
www. sielbleu. org. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 196 NTREPRENEURSHIP AND INNOVATION OECD 2010 objective of facilitating international dissemination
and can deal with new relationships with stakeholders and territories: Social innovation seeks new answers to social problems by:
identifying and delivering new services that improve the quality of life of individuals and communities; identifying and implementing new labour market integration processes, new competencies, new jobs,
One instance of this is the relationship that some kinds of social enterprises put into motion by including local authorities,
as shareholders, in their governance system. Examples include The french SCIC société coopérative d'intérêt collectif
are likely to have a positive impact on local development in terms of social capital, sustainable employment,
provision of services of general interest and so on. The local authorities play a direct role here in the local development dynamics by supporting projects explicitly seeking to make a positive impact in the territories in
as social innovation finally aims to provide social change for improving people's quality of life. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 197 Many of the elements presented in the OECD definition have been taken into account by other definitions at a later stage.
Like social entrepreneurship social innovation has blurred boundaries. Nevertheless, the term has been used widely to refer to different ideas
As with social entrepreneurship, a balance between inclusive and exclusive definitions has to be found.
consumption and distribution and generate further ideas and innovations (like the move to a low-carbon economy or the creation of a preventative system of criminal justice)( Caulier-Grice and Mulgan, 2009).
In order to address complex social issues and challenges (NESTA, 2007) transformative action is needed across the various sectors involved (nonprofit, for-profit, and government.
Indeed, meeting the economic and social challenges of the coming decades will increasingly require fundamental improvements in public services,
and innovation in the nonprofit sector or for profit private sector that improves public services or provides new ones.
Social innovation from the third sector (voluntary and community groups and social enterprises) may be spun-in'to mainstream public services provision (NESTA, 2008b,
p. 1). Social networks based on Information and Communication Technologies (ICT) are also gaining importance both as social innovation in themselves and as producers of social change (De Biase, 2009),
The increased use of ICT by social enterprises and by civil society is strengthening the links between technological innovation
While in the past emphasis was placed on the nonprofit sector as the homeland of social innovation, the private and the public 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
because it does not have a profit-making dimension as its main goal, and can therefore pay attention to long-term social issues. 11 At the same time the nonprofit/social economy sector is increasingly adopting an entrepreneurial approach to further pursue its social objectives
(which has been identified as the new wave of social entrepreneurship, as underlined by the GEM symposium in September 2009).
It is important to recognise that successful social innovation requires a range of actors. In the initial stages it relies on highly skilled individual champions and the enthusiastic support of a small but dedicated and influential community.
There must be acknowledgment of a need or demand within society, and then the effective supply,
represents a very innovative partnership among different actors to support social enterprise development, and is a social innovation worth underlining. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 199 Social Impact Bonds will be piloted in 2010 in the United kingdom in the context of reducing re-offending by ex-offenders.
The field of social innovation is an evolving one: social innovations keep appearing. Here we give a sense of the variety of initiatives,
it is the result of the joint efforts of multiple stakeholders. Box 5. 7. Individual Development Accounts (IDAS) IDAS are matched savings accounts held with financial institutions usually banks and credit unions but also nonprofit organisations
the Corporation for Enterprise Development (CFED), started a trend in 1997. It created and obtained foundation financing for the American dream Demonstration (ADD), a large-scale,
and services promoting home ownership, educating renters and landlords, improving existing housing stock, and developing and managing affordable housing.
Currently, they provide direct services to more than 10 000 low-income households annually. Asset building for low-income people programmes have also been developed in countries such as Chinese Taipei and Singapore,
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 200 NTREPRENEURSHIP AND INNOVATION OECD 2010 Box 5. 8. Bank Palmas (Brazil) In 1998 the first
including a lack of basic services such as water, electricity, transport and health services, the Association of Residents of Conjunto Palmeiras proposed a community bank as way of helping themselves.
which allows productive entrepreneurial activities within the community, e g. commerce, industry and services, to exchange currency each time it is necessary to replenish stocks of products that are produced not in the neighbourhood.
The Bank has developed also an economic system that has an alternative micro credit line (for producers and consumers
to raise awareness of the community benefits of consuming local goods and services, and the wider benefits of the solidarity economy;
to help build a network of local producers and traders; and to promote the development of local cooperatives.
In 2005, an agreement to enter into partnership with the Secretaria Nacional de Economia Solidária (National Secretariat of Solidarity Economy)
www. banquepalmas. fr. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 201 Bank Palmas represents a powerful example of a social innovation
Community banks represent a hybrid economy locally connected but market driven which helps to promote the attractiveness of an area and the proper development of the community.
Supported by the Brazilian National Secretariat for Economic Solidarity, partner of several Brazilian traditional banks, supported by global networks of social economy organisations;
and third, the investment is based on a commitment from government to use a portion of the public spending savings resulting from improved social outcomes to pay back the private investors, potentially more than their initial outlay.
The Social Impact Bonds are an example of a new financial tool to facilitate a more efficient market in social investment.
which is an investment fund specifically targeting social enterprises. It aims to fund hundreds of projects with a social and/or environmental objective during its 15-year lifetime.
this fund will enable capital to be provided to social enterprises during their creation, operation and development phases.
Through Equisol, Ile-de-france home to 15%of the social enterprises in France will be the first French region to cover all of the financing needs of the social enterprise sector.
including micro-credit, repayable advances and bank guarantees, available to social enterprises. To be eligible
the activities or the headquarters of a social enterprise must be based in the Ile-de-france region.
The originality of this partnership is built around the innovative relationship of the stakeholders involved, which shows, once again, that social innovation is often the result of networks and partnerships.
and has been extended to networks of social economy organisations. Source: www. iledefrance. fr. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 202 NTREPRENEURSHIP AND INNOVATION OECD 2010 The following provides an outstanding example of how social media
and social networks can contribute to connect people and good causes. In this case a web based platform has opened up the boundaries of donation mechanisms to support among others also social enterprises and socially innovative initiatives.
Box 5. 10. Social Impact Bonds (United kingdom) Social Finance was created from the Commission on Unclaimed Assets,
The Commission had recommended that a Social Investment Bank be established to accelerate the flow of nongovernmental pools of capital to address social issues.
Social Finance provides access to new sources of capital to tackle those issues. In some areas, government spending is tied up in meeting the high costs of the consequences of deeprooted social problems;
Social Finance developed a new social investment product, the Social Impact Bond, to target such social problems.
The bonds raise investment to fund prevention programmes. Investors receive returns from government when targets are met on improved social outcomes,
This will drive significant investment into addressing the causes of deep-rooted social problems and create a new way of working between government and socially motivated investors.
which connects nonprofit organisations, sociallyresponsible companies and engaged individuals in a unique environment of shared interests.
fundraising, engagement and communication. This global platform has levelled the playing field for receiving and giving donations, embracing the breadth
and power of Web 2. 0. It was founded as a mission-based, for-profit enterprise, in Dublin in 2005 by a serial entrepreneur, Peter Conlon,
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 203 Box 5. 11. ammado:
and does not apply only to countries physically distant from donors or developing economies but also to organisations in developed countries:
www. ammado. com/.5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 204 NTREPRENEURSHIP AND INNOVATION OECD 2010 The discussion now turns to the increased interest in social innovation
President Obama asked Congress to allocate USD 50 million in seed capital for the Social Innovation Fund,
and then provide the capital needed to replicate their success in communities around the country that are facing similar challenges.
including education, healthcare and economic opportunity. It will partner with foundations, philanthropists and corporations that commit matching resources, funding and technical assistance.
Challenge Lab looks at the contribution innovation can make to services, with an initial 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES,
ENTREPRENEURSHIP AND INNOVATION OECD 2010 205 focus on ageing, health and climate change; Methods Lab examines how public service innovation can be fostered;
and entrepreneurship are considered also critical factors for economic development in Portugal, a view reflected in the recently approved Portuguese Government Programme.
the Specific Programme to Support Social Economy Development (PADES), which includes support for social innovation,
which aims to support the modernisation of institutions and job creation through the annual inclusion of 1 000 qualified young people in social economy institutions.
France launched in December 2009 A large Loan facility at the national level (Grand emprunt) to finance investment projects
in order to increase growth in some priority areas as a response to the economic crisis. EUR 35 billion will be invested by the state
The Large Loan facility will create a fund of EUR 100 million to support social entrepreneurship
Preliminary recommendations Social entrepreneurship and social innovation aim to meet unsatisfied social needs and to respond to social challenges.
Social entrepreneurship is a vehicle and agent, though not the only one, of social innovation;
social innovation very often originates inside the social entrepreneurship sector and can be taken up by other sectors later on.
Social entrepreneurship Build enabling environments and implement supporting policies Specific enabling environments (legal, fiscal, regulatory) might be needed for social entrepreneurs
Social enterprises, like associations or cooperatives, need an ad hoc legal status and regulatory measures designed in order to allow them to fulfil their social and economic goals while pursuing medium and long-term sustainability on the market.
Provide sustainable finance A social capital marketplace should be fostered. Policy measures should include offering fiscal incentives to attract investors;
Seed 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 206 NTREPRENEURSHIP AND INNOVATION OECD 2010 funding is critical in the early phases of a project as it covers the costs linked to a startup and also the costs of capital investments.
This could be provided through small loans or grants. Support further research Governments should support further research into the field of social entrepreneurship and its main components (social enterprises, social economy organisations, social venture business, nonprofit organisations, etc.
in order to assess the different needs of the entities belonging to the sector. Provide training opportunities to social entrepreneurs
and include social entrepreneurship in school and university curricula Social entrepreneurs might need special training to help them hone
and develop their entrepreneurial and creative skills. At the same time a culture of inclusive entrepreneurship needs to be nurtured to encourage role models of successful businesses
and to include social entrepreneurship in school and university curricula. Support market development for social enterprise
and provide training for public officials and social enterprises to deal with public tenders Public procurement measures should be developed further
so that social enterprises can consolidate and expand their growth. European procurement law allows local authorities to insert certain social clauses in their procurement procedures terms of reference,
for example to encourage the employment of long-term unemployed or disadvantaged people. Involving social enterprises in public service delivery can bring many community benefits.
However, public officials are often not well acquainted with those benefits, while some small social enterprises are not familiar with public tenders
and need skills and networks to successfully compete in public bids. Training both for public officials working on procurement
and for social enterprises should be provided and encouraged. Evaluate the impact of social entrepreneurship in selected areas This will require the identification of quantitative and qualitative measurement tools
including the social return on investment measures and the balanced scorecard. Social innovation Support further research Governments should support further research in the field of social innovation.
More work is needed to develop a clear definition of social innovation, and to increase a general knowledge
and understanding of its key elements and components and of the conditions that can help design, develop
Create incubators for social innovations and foster the emergence of intermediaries who can connect social demand with the supply of social innovations Incubators play a critical role in spreading social innovations,
as they bring together the skills and expertise necessary to help sustain and develop a social enterprise;
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 207 provide a space to experiment
and assess new ideas in practice; allow fast learning across a community of innovators; and, establish clear pathways for scaling up the most promising models.
they must be embedded across sectors the state, the private sector and the social economy/nonprofit sector.
and the identification of quantitative and qualitative measurement tools, including Social Return on Investment measures and the balanced scorecard.
Notes 1. Kerlin (2006) analyses the commonalities and differences of the notion of social enterprise in the United states and Europe
The broader definition of social enterprises in the United states (a wide spectrum of entities along a continuum from profit-oriented business engaged in socially beneficial activities (corporate philanthropies) to dual purpose business that mediate
profit goals with social objectives (hybrids) to nonprofit organisations engaged in mission supporting commercial activity (social purpose organisations)( 2006, p. 2) and the narrower one in the EU (usually enterprises
i e. the community, voluntary and social enterprise sector) can be explained by the differences in the history and in the institutional and legal frameworks for social enterprises in the two regions of the world.
social entrepreneurship and social enterprise were used in an interchangeable way until recently and that social entrepreneurship was seen as the process through which social entrepreneurs created social enterprises.
More recently though, the notions have been differentiated: social entrepreneurs in the United states are individuals launching activities dedicated to a social mission,
while in Europe the emphasis is put more on the result of the activities of social entrepreneurs that is, on the social enterprises themselves,
As far as the notion of social entrepreneurship is concerned, while the Americans tend to stress the blurred boundaries among institutional and legal forms,
Europeans tend to stress the fact that social entrepreneurship is located inside the third sector. With reference to the notion of social enterprises,
while in the European context this usually indicates nonprofit entities pursuing the benefit of the community through the provision of goods and services,
in the USA they are seen as nonprofit organisations more oriented towards the market and developing‘earned income strategies'as a response to decreasing public subsidies
Here social entrepreneurship gives its full contribution. An example of this is the Unis-Cité initiative in France:
this social enterprise was created to offer young people opportunities for civic service in order not only to increase their skills
and then influence governments to act in the field. 3. In 2006 Light identified four components of social entrepreneurship:
opportunities for disrupting the equilibrium; and organisations which seek to bring about change (Light, 2008, p. 17.
were formed based on the analysis of the 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 208 NTREPRENEURSHIP AND INNOVATION OECD 2010 existing literature at that time,
which had led him to a very inclusive definition of social entrepreneurship. Thus he suggested that it is an effort by an individual, group, network,
This resulted in a more exclusive (that is narrow) definition of social entrepreneurship based on the idea that there are special sets of attitudes,
3) opportunities for grand changes come in waves; 4) socially entrepreneurial organisations are built to make changes. 4. Neck et al.
2009) focus on the landscape of social entrepreneurship rather than on defining it. In order to do so, they analyse four types of entrepreneurial forms;
social purpose ventures; traditional ventures; social consequences ventures; and enterprising nonprofits. Each of these has its own characteristics.
They argue that only social purpose ventures (for-profit) and enterprising nonprofits belong to the landscape of social entrepreneurship.
Regardless of profit orientation, social entrepreneurs identify opportunities to solve social problems: both people and planet problems (p. 18). 5. Brouard and Larivet (2009) analyse most of the existing definitions of social entrepreneurship
and identify a set of primary and secondary characteristics of it. The primary characteristics are as follows:
social entrepreneurship represents a variety of activities and processes; it wants to create and sustain social value;
it encourages more entrepreneurial approaches for social use; it displays various degrees of innovation and change;
it is constrained by the external environment (p. 10. Among the secondary characteristics that is, less recurring features one can find various degrees of positive social transformation;
various uses of business concepts, principles and models tools; a variety of legal forms, etc.
p. 10. Building on these characteristics, the authors define social entrepreneurship as follows: Social entrepreneurship is a concept
which represents a variety of activities and processes to create and sustain social value by using more entrepreneurial and innovative approaches
and constrained by the external environment (p. 11). 6. The public sector may be included because of the entrepreneurial nature of some of its social projects,
which it employs in creating social value for the public good. 7. Somehow the ideal type of social enterprise. 8. The specific objectives of the Forum on Social Innovations are:
to identify some key locally led actions for social innovation that are recognised as being successful in meeting their objectives
A comprehensive debate on the contribution of social economy organisations to local development through long-term projects, not constrained by the need of making profits in the short term,
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SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 212 NTREPRENEURSHIP AND INNOVATION OECD 2010 ANNEX 5. A1 Definitions Table 5a. 1. Definitions of social
entrepreneurship Author (s) Year Definition Fowler 2000 Social entrepreneurship is the creation of viable (socioeconomic structures, relations, institutions,
p. 649) CCSE 2001 Defines‘social entrepreneurship'broadly to encompass a variety of initiatives which fall into two broad categories.
First, in the for-profit sector, social entrepreneurship encompasses activities emphasising the importance of a socially engaged private sector,
'Second, it refers to activities encouraging more entrepreneurial approaches in the not-for-profit sector in order to increase organisational effectiveness and foster long-term sustainability.
p. 1) Dees, Emerson and Economy 2002 Social entrepreneurship is not about starting a business
p. 326) Hibbert, Hogg and Quinn 2002 Social entrepreneurship can be defined loosely as the use of entrepreneurial behaviour for social ends rather than for-profits objectives,
or alternatively, that profits generated are used for the benefit of a specific disadvantaged group. p. 288) Institute for Social Entrepreneurs 2002 Social entrepreneurship is the art of simultaneously pursuing both a financial and a social return on investment (the‘double bottom line'.(
'p. 1) Thompson 2002 Although social entrepreneurship is in evidence in many profit-seeking businesses sometimes in their strategies and activities, sometimes through donations of money and time.
p. 413) Lasprogata and Cotton 2003 Social entrepreneurship means nonprofit organisations that apply entrepreneurial strategies to sustain themselves financially
while having a greater impact on their social mission (i e. the‘double bottom line').'p. 69) Mair and Noboa 2003 SE Social entrepreneurship is seen as the innovative use of resource combinations to pursue opportunities aiming at the creation of organisations
and/or practices that yield and sustain social benefits. p. 5) Pomerantz 2003 Social entrepreneurship can be defined as the development of innovative, mission-supporting, earned income,
job creating or licensing ventures undertaken by individual social entrepreneurs, non profit organisations, or nonprofits in association with for-profits.
p. 25) Sullivan Mort, Weerawardena and Carnegie 2003 Social entrepreneurship, the entrepreneurship leading to the establishment of new social enterprise,
and the continued innovation in existing ones. p. 76) Conceptualises social entrepreneurship as a multidimensional construct involving the expression of entrepreneurially virtuous behaviour to achieve the social mission, a coherent unity of purpose and action in the face of moral complexity,
the ability to recognise social value-creating opportunities and key decision-making characteristics of innovativeness, proactiveness and risk-taking.
p. 76) Mair and Marti 2004 The innovative use of resources to explore and exploit opportunities that meet a social need in a sustainable manner.
p. 3) Haugh 2005 Social entrepreneurship is the process of creating social enterprise. p. 3) Roberts and Woods 2005 Social entrepreneurship is the construction,
evaluation and pursuit of opportunities for transformative social change carried out by visionary, passionately dedicated individuals.
p. 49) Seelos and Mair 2005 Social entrepreneurship creates new models for the provision of products
and services that cater directly to basic human needs that remain unsatisfied by current economic or social institutions.
pp. 243-244) 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 213 Table 5a. 1. Definitions of social entrepreneurship (cont.
Source: Brouard and Larivet, 2009. Author (s) Year Definition GEM 2006 Social entrepreneurship is any attempt at new social enterprise activity or new enterprise creation such as self employment, a new enterprise,
or the expansion of an existing social enterprise by an individual, teams of individuals or established social enterprise, with social or community goals as its base and where the profit is invested in the activity
or venture itself rather than returned to investors. p. 5) Leadbeater 2006 One way to define social entrepreneurship would be through
what motivates the actors, i e. they want to create social value and put higher value on their social mission than financial One another way to define social entrepreneurship would be through outcomes:
anyone who creates lasting social value through entrepreneurial activities is a social entrepreneur. p. 241) Mair and Marti 2006 First, we view social entrepreneurship as a process of creating value by combining resources in new ways.
Second, these resource combinations are intended primarily to explore and exploit opportunities to create social value by stimulating social change
or meeting social needs. And third, when viewed as a process, social entrepreneurship involves the offering of services
and products but can also refer to the creation of new organisations. p. 37) Nicholls 2006 Innovative and effective activities that focus strategically on resolving social market failures and creating new opportunities to add social value systematically by using a range of resources
and organisational formats to maximise social impacts and bring about changes. p. 23) Peredo and Mclean 2006 Social entrepreneurship is exercised where some person or group:
1) aim (s) at creating social value, either exclusively or at least in some prominent way;
2) show (s) a capacity to recognise and take advantage of opportunities to create that value(‘envision');
'3) employ (s) innovation, ranging from outright invention to adapting someone else's novelty, in creating and
/or distributing social value; 4) is/are willing to accept an above-average degree of risk in creating
and disseminating social value; and 5) is/are unusually resourceful in being undaunted relatively by scarce assets in pursuing their social venture.
p. 64) Perrini 2006 Entailing innovation designed to explicitly improve societal wellbeing, housed within entrepreneurial organisations that initiate this level of change in society.
p. 247) Weerawardena and Mort 2006 Social entrepreneurship strives to achieve social value creation and this requires the display of innovativeness, proactiveness and risk management behaviour.
They continuously interact with a turbulent and dynamic environment that forces them to pursue sustainability, often within the context of the relative resource poverty of the organisation.
p. 32) Zhara, Gedajlovic, Neubaum and Shulman 2006 Social entrepreneurship concerns the processes related to the discovery of opportunities to create social wealth
p. 12) Cochran 2007 Social entrepreneurship is the process of applying the principles of business and entrepreneurship to social problems.
p. 451) Haugh 2007 Social entrepreneurship, the simultaneous pursuit of economic, social, and environmental goals by enterprising ventures Social entrepreneurship is first and foremost a practical response to unmet individual and societal needs.
p. 743) Martin and Osberg 2007 We define social entrepreneurship as having the following three components:
1) identifying a stable but inherently unjust equilibrium that causes the exclusion, marginalisation, or suffering of a segment of humanity that lacks the financial means or political clout to achieve any transformative benefit on its own;
2) identifying an opportunity in this unjust equilibrium, developing a social value proposition, and bringing to bear inspiration, creativity, direct action, courage,
p. 35) Wei-Skillern, et al. 2007 We define social entrepreneurship as an innovative, social value creating activity that can occur within or across the nonprofit, business, or government sector.
p. 4) Brock and Ashoka's Global Academy for Social Entrepreneurship 2008 Innovative approaches to social change or using business concepts
p. 1) Zhara, Gedajlovic, Neubaum, Shulman 2008 Social entrepreneurship encompasses the activities and processes undertaken to discover,
define and exploit opportunities in order to enhance social wealth by creating new ventures or managing existing organisations in an innovative manner.
p. 118) 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 214 NTREPRENEURSHIP AND INNOVATION OECD 2010 Table 5a. 2. Definitions of social innovation
Source Year Definition OECD/LEED Forum on Social Innovations 2000 The OECD working definition of social innovation implies conceptual, process or product change,
and can deal with new relationships with stakeholders and territories.‘‘Social innovation'seeks new answers to social problems by:
identifying and delivering new services that improve the quality of life of individuals and communities; identifying and implementing new labour market integration processes, new competencies, new jobs,
to benefit from an opportunity to modify social relationships, to transform established patterns of behaviour,
Skoll World Forum on Social Entrepreneurship and Social Innovation 2007 Social innovation can simply be understood as‘new ideas that work which address social or environmental needs'.
or changing organisational structures to grasp new opportunities to add social value. New programmes, models,
Skoll, in Westall, 2007) EMES 2007 According to the EMES, social innovation can be seen As arising from a new kind of entrepreneurship focused on social goals, new products or new qualities of products,
and from new lifestyles to new products and services. We have suggested also a somewhat narrower definition:
Innovative activities and services that are motivated by the goal of meeting a social need and that are developed predominantly
which are motivated generally by profit maximisation and diffused through organisations that are motivated primarily by profit maximisation.
There are of course many borderline cases, for example models of distance learning that were pioneered in social organisations but then adopted by businesses,
or for-profit businesses innovating new approaches to helping disabled people into work. But these definitions provide a reasonable starting point
services and models) developed to fulfil unmet social needs; many of those supported by the public sector, others by community groups and voluntary organisations;
or a new approach to the organisation and delivery of services; social innovation can either spread throughout a profession or sector like education or healthcare or geographically from one place to another. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 215 Table
5a. 2. Definitions of social innovation (cont.)Source Year Definition Stanford Social Innovation Review 2008 A novel solution to a social problem that is more effective, efficient, sustainable,
Phills, Deiglmeier and Miller, 2008) EMES 2007 According to the EMES, social innovation can be seen as arising from a new kind of entrepreneurship focused on social goals, new products of new qualities of products,
or unresolved by services organised by the state. Social innovation can take place inside or outside of public services and can be developed by the public, private or third sector, users and communities;
because they do not directly address major social challenges. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, E 216 NTREPRENEURSHIP AND INNOVATION OECD 2010 ANNEX A Policy Recommendations:
Strengthening Innovation through SMES and Entrepreneurship A summary of the policy recommendations of the report is presented in the Box below.
Summary of Policy Recommendations Policies to strengthen entrepreneurship and increase the innovation capabilities of SMES should be one of the main planks of government innovation strategies.
1. Promote conducive entrepreneurship cultures and framework conditions Foster positive attitudes in society to business start up
and conditions of entrepreneurship and SME activity are taken into account in framework conditions and regulations affecting business.
and SMES in knowledge flows Strengthen knowledge-based entrepreneurship by providing advice and training to start-up entrepreneurs with strong technological knowledge and developing programmes for corporate and university spin-offs, including proof-of-concept,
including provision of infrastructure for collaboration such as science parks, collaborative research programmes, services for knowledge transfer and joint technology foresight activities and responses.
promoting the local entrepreneurship engagement aspects of university third missions, developing technology bridging institutions, strengthening the innovation absorption capacity of SMES
and knowledge bases in order to facilitate the emergence of new cross-sectoral combinations of products, services and technologies with growth potential. 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION SMES, ENTREPRENEURSHIP AND INNOVATION OECD
and foreign direct investment ventures and attracting highly-skilled labour from abroad. 3. Strengthen entrepreneurial human capital Build up entrepreneurship education in universities
and higher education institutions by smartly scalingup, shifting the teaching emphasis from business management to growth-oriented entrepreneurship,
and introduction of relevant teacher training and teaching materials designed for entrepreneurship. Reinforce training in SMES by launching in-company projects, increasing SME apprenticeships and developing the training function of small business support programmes,
and consultants providing knowledge-intensive services activities, such as through innovation voucher programmes for SMES. Strengthen the contribution of local skills ecosystems to entrepreneurship and SME development through greater engagement of employers,
unions and individuals involved in new and small firms with local training programmes and development of integrated training strategies combining training in higher education,
vocational education and training and formal and informal training. 4. Improve the environment for social entrepreneurship and social innovation Build financial, fiscal,
legal and regulatory environments that enable social enterprises to meet their economic and social goals,
including facilitation of a social investment marketplace, introduction of public procurement measures that include socioenvironmental criteria and experimentation with innovative institutional arrangements between civil society,
governments, financial institutions and social enterprise ventures. Undertake research into social entrepreneurship and social innovation and their main components in order to create clear definitions
and understandings of how to develop them. Evaluate the impacts of social entrepreneurship and social innovation policies and programmes using appropriate methods such as Social Return on Investment measures and balanced scorecards.
Provide training opportunities to social entrepreneurs and include social entrepreneurship in school and university curricula.
Introduce social clauses in public procurement procedures to encourage involvement of social enterprises in provision of social goods and services.
Establish social innovation funds in specific fields where social innovation is needed or to support promising experiments and models.
Create incubators for social enterprises and social innovation intermediaries to bring together the skills and expertise necessary to help sustain
and develop social projects, provide a space to experiment, support learning across a community of innovators
and establish clear pathways for scaling up the most promising models. SMES, Entrepreneurship and Innovation OECD 2010 219 Glossary Absorptive capacity The knowledge base that small firms need to interact with
and learn from universities, research organisations and technologically-advanced companies. This is key to receiving external knowledge
For example, entrepreneurship skills combine generic skills related to communication, numeracy and general IT use, some advanced skills on business management and human resources and some specific skills related to risk assessment and warranting,
GLOSSARY SMES, E 220 NTREPRENEURSHIP AND INNOVATION OECD 2010 Entrepreneurship The phenomenon associated with entrepreneurial activity,
namely enterprising human action in pursuit of the generation of value through the creation or expansion of economic activity by identifying
Entrepreneurship skills The skills that an entrepreneur needs to start and operate successfully a new firm.
They include small business management skills (such as business planning and accounting), strategic skills (such as decision-making and opportunity recognition) and entrepreneurial traits (such as leadership and creativity.
Green growth Means by which the economy can make the transition to environmental sustainability. It involves promoting growth
It requires further decoupling of environmental impacts from economic growth, and greening of consumption and production patterns,
Green growth means making investment in the environment a new source of economic growth. Green jobsjobs that contribute to protecting the environment
and reducing the harmful effects human activity has on it (mitigation), or to helping to better cope with current climate change conditions (adaptation.
This is sometimes considered to be the realm of large firms that are constrained by the need to maximise profits on existing products and services.
Innovation systems can take a GLOSSARY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 221 national, regional or local dimension.
Knowledge economy An economic paradigm in which knowledge is regarded widely as the most important factor of production and driver of growth.
Investment in knowledge creation, diffusion and exploitation are critical in this environment. Knowledge flows The flows of knowledge occurring
Knowledge-intensive service activities (KISA) These are sources and carriers of knowledge in sectors such as research and development, legal services, computing and information technology and marketing.
People climate Societal factors other than mere economic opportunities able to influence the decision of skilled workers about where to live and work.
The concept is used to explore how economies can grow by moving from mature existing specialisations into growing activities by combining knowledge in new ways.
Small and medium-sized enterprises (SMES) Non-subsidiary, independent firms which employ less than a given number of employees.
Social economy The ensemble of entities that explicitly have both an economic and a social mission.
These can include associations, cooperatives, mutual organisations, foundations and more recently social enterprises. This type of economy is regulated essentially by the stakeholder principle,
which stands in stark contrast to the notion of shareholder capitalism. Social enterprise Any private activity conducted in the public interest that is organised with an entrepreneurial strategy and
whose main purpose is not the maximisation of profits, but the attainment of certain economic and social goals.
For example a social enterprise can GLOSSARY SMES, ENTREPRENEURSHIP AND INNOVATION OECD 2010 223 bring innovative solutions to problems such as social exclusion and unemployment through the production of goods and services.
They come in a variety of legal forms. They often provide personal and welfare services and training and integration into employment of persons excluded from the labour market.
Social entrepreneur A person who recognises a social problem and uses entrepreneurial principles to organise,
create and manage a venture to make social changes. Social entrepreneurs are change-makers and move ideas.
Social entrepreneurship A type of entrepreneurship that aims to provide innovative solutions to unsolved social problems and challenges.
It often goes hand-in-hand with social innovation processes. Social entrepreneurs organise themselves across a wide spectrum of organisations
which have an entrepreneurial approach and whose primary mission is to tackle social problems and generate radical or more limited social changes.
Social entrepreneurship is therefore about solving social problems rather than exploiting market opportunities in order to maximise profits.
Social innovation A type of innovation that answers to social problems by identifying and delivering new services that improve the quality of life and welfare of individuals and communities, both as consumers and producers.
Social innovations can, for instance, concern new competencies, jobs and forms of participation in the labour market,
and more recently also for the social economy, particularly in European literature. The term reflects the idea that the sector sits between the public and private sectors.
which firms create their profit margins and value for shareholders. Vocational education and Training (VET) Formal education and training programmes that have a task orientation rather than an academic nature
-64-08031-7 No. 57299 2010 www. oecd. org/publishing OECD Studies on SMES and Entrepreneurship SMES, Entrepreneurship and Innovation Welcome to the entrepreneurial economy:
This book explores how government policy can boost innovation by improving the environment for entrepreneurship and small fi rm development,
and increasing the innovative capacities of enterprises. Policy fi ndings and recommendations are presented in three key areas:
developing entrepreneurship skills; and social entrepreneurship. In addition, country notes present statistics and policy data on SMES, entrepreneurship and innovation for 40 economies, including OECD countries, Brazil, China, Estonia, Indonesia, Israel, the Russian Federation
, Slovenia and South africa. SMES, Entrepreneurship and Innovation is part of the OECD Innovation Strategy, a comprehensive policy strategy to harness innovation for stronger and more sustainable growth and development,
and to address the key global challenges of the 21st century. For more information about the OECD Innovation Strategy, see www. oecd. org/innovation/strategy.
Related reading SMES and Entrepreneurship in Poland (2010) Clusters Innovation and Entrepreneurship (2009) OECD Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes (2007) ISBN 978
-92-64-08031-7 85 2010 02 1 P: -HSTCQE=U UXV: The full text of this book is available on line via these links:
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