OECD Studies on SMES and Entrepreneurship SMES, Entrepreneurship and Innovation Welcome to the entrepreneurial economy:
small fi rms are playing an ever-increasing role in innovation, driven by changes in technologies and markets.
Whilst some spin-offs and high growth fi rms are having remarkable success, however, the broad bulk of small fi rms are not capitalising on
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 embedding fi rms in knowledge fl ows;
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
S M E s, E ntrep reneurship and Inno vatio n 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
and Entrepreneurship SMES ENTREPRENEURSHIP AND INNOVATION O E C D S tu d ies o
N s M E s an d E ntrep ren eu rsh ip OECD Studies on SMES and Entrepreneurship
SMES, Entrepreneurship and Innovation ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand
concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy
OECD Studies on SMES and Entrepreneurship ISSN 2078-0982 (print ISSN 2078-0990 (PDF Photo credits:
-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 Martinez-Fernandez and Jonathan Potter (Chapter 4), and Antonella Noya (Chapter 5 Further written inputs were provided by Stefano Menghinello, National Statistical Institute
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 3 FOREWORD Foreword The combined forces of globalisation, technological progress and growing market demand have
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
â€oegazelles†of the enterprise ecoystem. Governments are seeking ways to help them emerge and carry
economic growth and adaptation, it is vital to have incremental innovation from the broader bulk of
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
as a means of generating innovation in new enterprises and SMES. Much can be learned from taking
the small and medium-sized enterprise sector accounts for 99%of firms in the OECD area,
enterprises, including the â€oegazelles†(new firms with rapid growth. And there are, of course, barriers to innovation in SMES.
entrepreneurs with skills for successfully setting up ventures is only now becoming clear In addition to presenting the data,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 5 knowledge flows: embedding new and small firms in streams of knowledge that will enable them to
small firms do not innovate by themselves but in collaboration with suppliers, customers competitors, universities, research organisations and others.
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
A second course of policy action is to develop skills and capabilities for entrepreneurship and
Universities are increasingly providing entrepreneurship training, and this book establishes core principles in this area. The efforts of vocational training institutions and
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.
social entrepreneurship and social innovation. These fit well with the broader notion of innovation that governments are now
entrepreneurs and enterprises is to provide innovative solutions to unsolved social problems; an example is the Health and Social Care Cooperative in Korea.
enabling environment more favourable †are identified In highlighting the importance of SMES and entrepreneurship to innovation in the 21st century
and the role of policy in responding to the challenges they face, this book functions as an important
efforts must be the promotion of innovation in SMES and of innovative new entrepreneurship, and
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,
and analysis of the OECD€ s Working Party on SMES and Entrepreneurship and the Directing
Pier Carlo Padoan, Deputy Secretary-general and Chief Economist, OECD SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 20106
ACKNOWLEDGEMENTS Acknowledgements The following experts comprised the Scientific Advisory Group that helped guide preparation of this publication
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
Kristoffer Astrup, Danish Enterprise and Construction Authority, Denmark Paul Atkinson, INSEAD, France Claudine Bichera de Oliveira, The Information Society Institute, Brazil
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 7 Aruna Deo, University of Western Sydney, Australia
Michael Eilan, Israel Business Information Services Consulting, Israel Sirin Elci, Technopolis, Turkey Ilario Favaretto, University of Urbino, Italy
Yacov Fisher, Israel Business Information Services Consulting, Israel Claudia Gonzalez Brambila, Mexican Autonomous Institute of technology, Mexico
ria Szukics, Ministry for National Development and the Economy, Hungary Lena Tsipouri, University of Athens, Greece
Charles Wessner, National Academy of Science, Technology, Entrepreneurship and Innovation, USA David Wolfe, University of Toronto, Canada
the international conference on â€oesmes, Entrepreneurship and Innovation†held in Udine on 22-23 october 2009, organised by the OECD Centre for Entrepreneurship, SMES and
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 20108 ACKNOWLEDGEMENTS 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 9 This book has Statlinks2 A service that delivers Excelâ files
What is the role of SMES and entrepreneurship in innovation?..32 Policy implications...38 Plan of the book...
Chapter 2. SMES, Entrepreneurship and Innovation: An Overview by Country...45 Introduction...46 Australia...48
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 11 Poland...90 Portugal...92 Slovak Republic...94
How knowledge affects entrepreneurship...132 The systemic approach to innovation...134 The geographical clustering of knowledge-intensive activities...
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201012
TABLE OF CONTENTS 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...
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
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 13 SMES, Entrepreneurship and Innovation  OECD 2010
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 The innovation process, however, requires significant and appropriate public policy support to secure the social benefits it can deliver.
current environment and based on sound analysis, that propose how governments and their partners can support innovation in new and more effective ways.
increasing the contribution of new entrepreneurial ventures and small and medium-sized enterprises (SMES) to innovation
The double focus on SMES 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. Innovation is not just science and technology; it is also the
creation of a multitude of new products and services in all sectors of the economy, new
entrepreneurship (which typically generates new SME entities but occasionally also â€oeborn large†firms) and innovations in existing SMES play an important role
innovation by improving environments for enterprise creation and innovation in small and medium-sized firms and strengthening the capabilities of entrepreneurs and SMES.
â Sets out the role of SMES and entrepreneurship in innovation and the drivers of and
â 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
innovative entrepreneurship â The participation of new and small firms within global and local knowledge flows, and
growth of entrepreneurial human capital â 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 â€oeniched†market demand and
economy, more open and distributed innovation, globalisation, a shift to non-technological innovation, the emergence of the â€oesilicon Valley Business Model†and a new imperative for
social innovation and social entrepreneurship have given all rise to a new â€oeentrepreneurial economyâ€, as opposed to the â€oemanaged economy†of the past
New business ventures and SMES have a number of critical roles to play in supporting
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201016 EXECUTIVE SUMMARY shares of total activity accounted for by each of the sub-categories of micro, small-and
Many new policies have been pursued to foster the creation of new innovative enterprises and encourage SME innovation in the countries reviewed.
â€oepackage†of policy instruments (seed capital, patenting support, credit guarantees coaching of entrepreneurs, angel investment) promoting more and better technology
-based start-ups (â€oetechnostartersâ€) in and around universities. These programmes can provide inspiration for policy development in other countries
with their suppliers and customers, and with universities and research organisations Collaboration is an important element in the strategies of innovative SMES to overcome
However, globalisation has created also new opportunities for domestic knowledge to be exploited overseas and for tapping into knowledge generated abroad, raising a new
direct investment ventures; and to attract highly-skilled labour from abroad SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 17
EXECUTIVE SUMMARY The second thematic chapter examines the issue of skills. 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 also increasingly provided 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. There is also a systematic access gap younger, better-educated workers in highly-skilled occupations such as managers
professionals and technicians have greater access to training opportunities than less educated â€oeroutine†(i e. involved in routine tasks) and older workers.
that externally-provided entrepreneurship training approaches for managers and workers are geared not sufficiently to the â€oehow to†nature of competences that firms require
provide a significant boost to the entrepreneurship skills of SME employees. This involves SMES bringing in outside firms and consultants to help them implement change, for example in
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201018
EXECUTIVE SUMMARY 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
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.
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
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
Furthermore, governments should target SMES and entrepreneurship as a major potential source of new jobs in the recovery from recession.
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
â Foster positive attitudes in society to business start up and growth, including through education and the media
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 19 EXECUTIVE SUMMARY â Ensure that the specific needs
and conditions of entrepreneurship and SME activity are taken into account in framework conditions and regulations affecting business
intellectual capital protection, sources of finance, competitive markets, human capital and so on, entrepreneurs and small firms need access to knowledge to innovate.
global and local levels involving interactions among customers, suppliers, competitors and market and technology collaborators.
â Strengthen knowledge-based entrepreneurship by providing advice and training to start-up entrepreneurs who have strong technological knowledge
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 â Stimulate local knowledge flows in the following ways:
alliances, securing better local embedding of foreign direct investment ventures, and attracting highly-skilled labour from abroad
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201020 EXECUTIVE SUMMARY their efforts to upgrade their R&d,
â Embedding of foreign direct investment ventures should be promoted through integration of inward investment policies and cluster policies;
promotion of corporate spin-offs from foreign direct investors; and joint technology development and training initiatives involving foreign affiliates and local SMES
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.
â 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
â Embed teaching of an entrepreneurship mindset in school curricula and accompany this with relevant teacher training and teaching materials designed for entrepreneurship
â Reinforce training in SMES by launching in-company projects and increasing SME apprenticeships and developing the training function of small business support
Encouraging social entrepreneurship and social innovation will help in this respect. The key recommendations are to
â 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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 21
EXECUTIVE SUMMARY 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 â 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 â Evaluate the impacts of social entrepreneurship and social innovation, using appropriate methods such as Social Return on Investment measures and balanced scorecards
â Provide training opportunities to social entrepreneurs and include social entrepreneurship in school and university curricula
â Introduce social clauses in public procurement procedures to encourage involvement of social enterprises in provision of social goods and services
â Establish social innovation funds, dedicated to specific fields where social innovation is needed (eldercare and climate change)
or to supporting promising experiments and models â 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 Â OECD 201022
SMES, Entrepreneurship and Innovation  OECD 2010 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 â€oemanaged†to the â€oeentrepreneurial†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 â€oesilicon 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 23 1. INTRODUCTION 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 â€oehigh-growth enterprises†account for between only 2 and 8 per cent of all enterprises with 10 or more
employees, while â€oegazelles†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 â€oehigh
-expectation entrepreneursâ€, 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
entrepreneurship and SME activity and economic growth and job creation. These growth and job creation effects happen through innovation,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201024 with more rapid economic growth (Audretsch and Thurik, 2001;
Audretsch and Keilbach 2005; Acs et al. 2005; Erken et al. 2008). ) There is also an important link between new and
downsizing elsewhere in the economy and increase national and local competitiveness Neumark et al. 2008; Haltiwanger, 1999;
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. What is still lacking,
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
than in the past on entrepreneurship and SMES, but institutions and policies have yet to fully adapt to this new reality.
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
entrepreneurship is one of the foundations of innovation SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 25
1. INTRODUCTION 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
services is bringing with it new types of non-technological innovation that render economies of scale in R&d far less significant
importance of SMES and entrepreneurship in each 1. The Schumpeter Mark I regime. Schumpeter†s initial view was developed in the first decades
exploiting high price elasticities of demand Schumpeter, 1942. Innovation from the 1940s to the 1970s fits this model:
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
of advanced economies have again been changing. Now, the importance of economies of scale has reduced and the role of new and small firms in innovation and economic
development has grown again The key to understanding the renewed role of SMES and entrepreneurship in today†s
economy is reduced the importance of economies of scale and scope in production management, finance and R&d. This has occurred for a number of reasons.
As incomes have risen, consumers have developed an increasing taste for variety. This is associated with the emergence of multiple market niches,
Changing markets, increased competition and new technologies have reduced product life times, demanding more rapid creation of products and their more rapid destruction.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201026 1. INTRODUCTION reducing the transaction costs associated with managing different parts of the production
i e. the capacity of firms and economies to specialise, able to produce output for niche
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, with significant implications for the importance of new and small
the knowledge economy; open innovation; global connections; non-technological innovation; the â€oesilicon Valley Business Modelâ€, 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-labour
-cost 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
However, the knowledge economy is not just an advanced world phenomenon Emerging economies as well are engaging more with science and technology and ideas
-based 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:
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. It is therefore critical for policy to stimulate knowledge creation and exploitation in firms
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.
Others may be small ideas, but they still require entrepreneurs and SME workforces that are able to generate
and exploit them by applying creativity and problem-solving approaches. 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 this is more likely to be found in new and small operations than in the systematic research
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 27 1. INTRODUCTION Open and distributed innovation Innovation today involves going beyond exclusive reliance on internal ideas from
laboratories 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
technologies) from abroad and in exploiting its outputs (products and services, patents licenses, etc. in foreign markets.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201028 1. INTRODUCTION make a major difference, such as changes in product design or packaging, product
news and information services or the introduction of total quality management techniques on the work floor.
with manufacturing, 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 and from 63%to 77%of United states value added
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. One of the keys to releasing its
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 29 1. INTRODUCTION Many non-technological innovations are small, â€oeeveryday†innovations.
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 and grow them to scale. In the
logistics, product service and ancillary corporate services Cohen (2010) calls this the â€oesilicon Valley business modelâ€, for where it first developed
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.
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. In this way a more symbiotic relationship
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201030 1. INTRODUCTION 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
Social entrepreneurship is defined by its paramount logic of providing entrepreneurial business solutions to social challenges.
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,
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.
mobile capital, resulted in a pulling back of the welfare state at the same time as greater turbulence and labour market flexibility increased the strain upon it
Social entrepreneurs and social enterprises such as nonprofit organisations have stepped into this breach (OECD, 2003;
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
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,
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, since they are driven often by people with different motivations and capacities
entrepreneurial economy, the growth of the knowledge economy, open innovation increased global connections, non-technological innovation, the Silicon valley business
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 31
1. INTRODUCTION 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.
number of seminal authors have seen the connection between entrepreneurship and innovation (see also Ahmad and Seymour, 2008, p. 7
It is entrepreneurs who bring about change in an economy by providing â€oenew combinationsâ€: new or improved goods, methods of production
in the economy â 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
â The entrepreneur as a risk taker. Knight (1921) focused on a related aspect of the role of
entrepreneurs in innovation. Entrepreneurs take risks by offering new solutions in the market in the face of uncertainty about
profit opportunities will open up and providing products, processes and business models to fit †at the risk of failure.
The entrepreneur innovates by experimenting â The entrepreneur as a resource shifter. Drucker†s (1985) interest was in how entrepreneurial
is more on firm strategy and competitiveness than aggregate economic growth â The entrepreneur as a breakthrough innovator.
dynamic framework examining the relationship between entrepreneurship, innovation and economic growth. However, unlike Schumpeter (1934), who took the entrepreneur
rather than the large firm to be the central actor in innovation, Baumol considers that
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201032 1. INTRODUCTION ties to existing technologies. Large firms are seen to undertake more incremental
All of these authors identify essential roles for entrepreneurship in innovation: in both static and dynamic frameworks;
†combining in new ways, discovering opportunities, taking risks, shifting resources and creating breakthrough innovations â€
But in which settings is entrepreneurship to be found? There are many competing views and some degree of confusion in this area.
the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets
value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets
â 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
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:
knowledge spillovers and entrepreneurship; large and small firm roles in breakthrough and incremental innovation; distributed and open innovation;
Venture creation and SME growth renew economies by forcing the contraction, exit or upgrading of incumbent competitors.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 33 1. INTRODUCTION SMES that grow clearly have some productivity advantage that enables them to compete
thus increasing the average productivity of the economy and driving economic growth. There is also an indirect impact,
since the mere competitive threat of new and small firms, or contestability of their markets, may force incumbents to upgrade
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 otherwise remain un-commercialised in large corporations, universities and research
endogenous growth theory, the lens through 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 â€oespin-off†companies,
but also as external entrepreneurs commercialise ideas from these sources. Both public policy makers and firms and research organisations themselves
In Canada, 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
entrepreneurship resource centres and entrepreneurship courses for researchers have been introduced (Mcnaughton, 2008 It should nonetheless be recognised that spin-off numbers are not high and represent
only a small proportion of new enterprise starts. Callan (2001) reports that academic spin -offs accounted for no more than 2%of new firm creation across eight OECD countries, and that
-SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201034 1. INTRODUCTION offs high-growth firms on average, while they also tend to grow slowly (Lindholm-Dahlstrand
key drivers of entrepreneurship in their areas through spin-offs (84 spin-offs in Madison 64 spin-offs and 50 â€oefounder affiliates†in Oxfordshire;
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.
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
entrepreneurship acting to convert knowledge into growth by exploiting spillover originating in a country†s R&d stock (Acs et al.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 35 1. INTRODUCTION There is certainly evidence that small firms
and new ventures are active in breakthrough innovation in sectors such as biotechnology and information and
communication technologies. Baumol himself provides a convincing account of the small -firm origins of many breakthrough innovations.
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201036 1. INTRODUCTION between what is known as the knowledge exploration subsystem, in which universities
A key distinction needs to be made between the role of SMES and entrepreneurship in the Science, Technology and Innovation (STI) mode of innovation and the Doing,
with users of products and services outside the organisation. The result is innovation with localised usability in addressing problems faced by the firm.
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
Whereas typical problems for STI-based innovation are under-investment in scientific research, lack of connections between science and industry and poor access
and human capital to absorb knowledge SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 37 1. INTRODUCTION
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.
managed to the entrepreneurial economy and the lag involved in adapting policies to the new needs.
large firms, innovation policy in the entrepreneurial economy must expand to include new types of actions for entrepreneurship and SMES.
This book seeks to correct the policy lens The root of the predicament is that while government policy agendas around the
being about investment in science and R&d policies, leaving aside the crucial issues of diffusion and exploitation of research
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
innovation in an environment where knowledge flows globally, where collaborations networks and absorption capabilities are required
â 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.
â 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 â 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 most pronounced in periods of economic crisis and recovery,
as the global economy is SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201038 1. INTRODUCTION 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 â Access to finance. Research clearly identifies a finance gap in many locations for new and
such as grants, loans, loan guarantees, mezzanine finance, seed capital, venture capital business angel finance and investor readiness programmes need to be explored (OECD
economy is breakthrough innovation. It involves a small minority of firms that are highly innovative, often exploiting new science developed in universities and research
which could contribute more to the economy if they begin to innovate incrementally and strengthen their non-technological innovation.
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.
entrepreneurship is knowledge exchange between and among explorers and exploiters particularly for the exploitation of new, science-based knowledge.
science parks and business incubators, encouraging mobility of staff between universities and industry, and facilitating knowledge exploitation through licenses
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 39 1. INTRODUCTION organisational methods and marketing approaches.
â Entrepreneurship skills. Another often overlooked factor affecting the propensity for successful business start-up is the degree to
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, structures and strategies in
â Social entrepreneurship and social innovation. Entrepreneurship is not only about profit -making. 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
entrepreneurship and innovation, but rather a form of â€oepriority 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.
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
suppliers, 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. But it is also important to connect local innovation clusters to global knowledge pipelines, for
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201040 1. INTRODUCTION example through embedding of foreign direct investment, attraction of highly-skilled
labour from overseas and building cross-national SME alliances Chapter 4 examines the skills issue.
while entrepreneurship skills are needed to start successful firms, they are understood not well or supported.
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,
gives some telling examples of social entrepreneurship and social innovation that offer inspiration for wider adoption.
are enterprises with average annualised growth in employees greater than 20%a year over a three year period and with ten or more
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
3. The OECD/Eurostat Entrepreneurship Indicator Programme is developing internationally -comparable indicators of entrepreneurship based on this definition
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SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 201044 SMES, Entrepreneurship and Innovation  OECD 2010 Chapter 2
SMES, Entrepreneurship and Innovation: An Overview by Country This chapter presents information on policy initiatives to promote the creation of
innovative firms and encourage innovative activities in SMES in OECD members and accession and enlargement countries.
or to a major policy in the field of entrepreneurship, SMES and innovation. Examples are given of recent policy innovations that are of interest
2. SMES, ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY Introduction The following chapter presents key figures on the SME sector and the innovation
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 Box 2. 1. Basic methodological references Data presented in the chapter come from three main sources
Structural indicators of the enterprise population Data are drawn from the OECD dataset Business Statistics by Size Class,
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201046 2. SMES, ENTREPRENEURSHIP AND INNOVATION:
AN OVERVIEW BY COUNTRY tly nal ect ns od in ess ns ses or ms
ive has on to of re ific nd on†in /1 /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 significan
developed by the enterprise itself or by the group to which the enterprise belongs. A group consists of two
more legally defined enterprises under common ownership. Also, innovation surveys typically cover fir 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.
Qualitat information on country laws and regulations, collected through a questionnaire in 1998,2003 and 2008
state control, barriers to entrepreneurship, and barriers to trade and investment. The indicator â€oebarriers entrepreneurship†measures different regulations in the domain of entrepreneurship and is composed
three sub-indicators: â€oeadministrative burdens to the creation of new firms†(low-level indicators a administrative burdens for corporations, administrative burdens for sole proprietor firms, sector-spec
administrative burdens; â€oeregulatory and administrative opacity†(low-level indicators are: licenses a permits system, communication and simplification of rules and procedures;
and â€oebarriers to competiti low-level indicators are: legal barriers, antitrust exemptions, barriers in network sectors and barriers
services). ) More information about the OECD PMR Indicators is available at: www. oecd. org/document
+SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 47 2. AUSTRALIA Australia Ausindustry Ausindustry is the Australian government†s principal business programme delivery division in its
business development, industry support and venture capital †worth AUD 2 billion to more than 12 000 businesses and about 85 000 individuals every year
products, processes and services by early-growth-stage companies, spin-offs and individual entrepreneurs. These grants can be between AUD 5 000
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,
information and referral that assist with services that include but are limited not to finance and cash-flow
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.
Centres may also help organise placement of university researchers within SMES under the â€oeresearchers in Business†initiative.
Enterprise Connect also runs both the Workshops, Industry Intelligence and Networking programme, to help SMES network within their sector;
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201048 2. AUSTRALIA Australia Notes: 1. As%of all firms within size class. 2. As%of innovating firms. 3. Index scale of 0-6 from least to most restrictive
Uncertain demand for new goods or services Marketing innovation Organisational innovation Micro 0 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 Micro 529 216 95.8 1 249 603 96.4 96.2 683 000 34.6 1 576 000 35.6 35.3 23.0 37.1 31.1
Small 19 298 3. 5 39 216 3. 0 3. 2 382 000 19.4 757 000 17.1 17.8 15.8 17.0 16.5
Medium 2 920 0. 5 5 633 0. 4 0. 5 257 000 13.0 497 000 11.2 11.8 12.3 12.2 12.3
SMES 551 434 99.8 1 294 452 99.9 99.9 1 322 000 67.0 2 830 000 63.9 64.9 51.1 66.4 59.9
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 49 2. AUSTRIA Austria In Austria, a number of linked policies work in unison to foster entrepreneurship and SME innovation
Among these are schemes to encourage high-tech research in small firms, technology transfer, co -operative research and innovation, patenting, and first time innovation
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.
maximum of 50%of annual profit. In case of bankruptcy, the loan may be lost altogether. The time frame
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.
venture capital funds feature a similar failure rate. Given the earlier stage of the firms financed by the
traditional bank financing and even access to private venture capital funds. Participation in the programme acts as a signal to private investors, â€oecrowding†them â€oein†rather than â€oeoutâ€.
academic research and business and to enhance the potential for start-ups by anchoring entrepreneurship as an interesting academic exit option.
venture capital funds can be co-owners. In biyearly meetings of the centres, knowledge and best practice
confirm good performance, even in international comparisons with university incubators. The programme is administered by the agency FFG (Austrian Research Promotion Agency
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201050 2. AUSTRIA 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 76.8 207 111 90.2 87.5 131 948 14.2 490 288 31.6 25.1 9. 6 26.8 18.8
Small 10 675 18.5 19 579 8. 5 10.5 212 438 22.8 363 303 23.4 23.2 16.0 23.0 19.8
Medium 2 170 3. 8 2 520 1. 1 1. 6 224 725 24.2 243 243 663 15.7 18.9 22.4 21.0 21.6
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 51 2. BELGIUM Belgium Belgian policy to promote innovative entrepreneurship
or innovation activities is designed largely and delivered at the regional level, aside from elements captured in the national Lisbon Reform Programme
Federal responsibility in these matters is restricted to fiscal incentives 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
production of prototypes or the acquisition of necessary research equipment. In addition, SMES can make use
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. The programme is a comprehensive scheme consisting of eight threads. IWT the Flemish Institute for the Promotion of Innovation, implements the following types of measures in the
a new firm based on an original and realistic idea in almost any sector of the economy.
%SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201052 2. BELGIUM 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
Small 9 643 9. 1 17 876 5. 6 6. 5 197 388 21.7 344 387 21.1 21.3 15.7 23.0 19.9
Medium 1 911 1. 8 2 056 0. 6 0. 9 196 161 21.6 196 070 12.0 15.5 20.8 17.2 18.8
or customers Competitors Firms within the group Government or public research institutes Consultants commercial labs
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 53
2. CANADA Canada National Research Council of Canada Industrial Research Assistance program The main national policy in Canada that addresses the innovation activities of SMES is the National
Research Council of Canada Industrial Research Assistance program (NRC-IRAP. Described as the government of Canada†s premier innovation and technology assistance programme, NRC-IRAP provides support to SMES
for the development of new technologies and their successful commercialisation in a global context. The
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
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 economy in Southern Ontario. NRC-IRAP is committed to using all of this funding to improve the long
CAN 1. 88 investment from the client and other sources at the initial stages of a project
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201054 2. CANADA 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 72.1 387 046 73.4 73.1 199 285 7. 1 298 391 6. 6 6. 8
Canada, Survey on Financing of Small and Medium Enterprises, 2007. Chart D: OECD, Product Market Regulation Database
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 55 2. CZECH REPUBLIC 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 innovation -based 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. There are seven priority threads to the programme, six of which focus on different areas of public intervention in the enterprise sector with the overall aim of improving the competitiveness of
Czech firms. The total financial allocation for this programme is over EUR 3. 5 billion,
22.4%),environment for business and innovations (35.4%)and business development services (6. 9%).Measures for these priorities include start-up support,
innovation systems, strategic services and R&d function development support, support to projects improving energy efficiency, support to the establishment of training centres, marketing efforts, property development
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 OPEI was approved in December 2007, and during 2008 and 2009 over 8 000 project applications were
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 and shift the basis of global competitive advantage from low-cost manufacturing to higher value
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. In particular, technology centres developing new technologies and high-tech products have been established and business support
services have been targeted at export-oriented companies through subsidies for operation costs and training and retraining schemes
This programme supported 183 projects from 2002 to 2009 and is estimated to have created over 28 430 jobs in the business service sector,
which collectively represent investments of EUR 817.6 million State aid in the form of a business activity subsidy reached EUR 191.9 million,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201056 2. CZECH REPUBLIC 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 96.2 95.2 367 788 19.5 675 890 39.0 29.2 10.4 29.8 19.1
Small 15 523 5. 1 18 455 3. 2 3. 9 321 125 17.1 348 474 20.1 18.7 12.9 20.5 16.3
Medium 4 392 1. 4 2 709 0. 5 0. 8 464 140 24.7 261 631 15.1 20.2 21.3 18.2 19.9
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises Large SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 57 2. DENMARK Denmark With the Danish Globalisation Strategy, the Danish government has created a comprehensive
framework that sets out to strengthen Danish competitiveness. The Strategy, which became operative in 2006, contains 350 specific initiatives that introduce reforms in key areas such as education and training
innovation, research and entrepreneurship. For 2010 the funds allocated to initiatives in the Strategy exceeds DKK 8. 5 billion.
Among other things, the Strategy aims at making substantial improvements in the framework conditions for growth and innovation in new and existing enterprises.
The Regional Centres of Growth and Programme for User-driven Innovation are two of the Strategy†s initiatives
Regional Centres of Growth (Vaeksthuse The Regional Centres of Growth are the result of local government reform in 2007
the new framework of business services. Their role is to support the creation and expansion of high
-growth start-ups by providing free and impartial assistance, referring enterprises to private advisors and relevant government agencies and organisations.
advisory services The centres, which have a generalist profile, cooperate with the Trade Council to promote
based on the performance of their customers. In addition, DKK 42 million in 2007 and DKK 60 million in
services, the latter part is devoted to the development of new products and services Programme for user-driven innovation
development of new products, services and concepts, as well as in an increase of the qualifications of the
Enterprise and Construction Authority, which is part of the Ministry for Economic and Business Affairs SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201058
2. DENMARK 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 87.0 103 805 16.1 254 254 212 21.7 19.7 14.5 27.6 22.7
Small 7 808 13.5 15 015 9. 7 10.8 156 419 24.3 293 755 25.0 24.8 19.8 23.0 21.8
Medium 1 581 2. 7 2 446 1. 6 1. 9 153 330 23.8 232 142 19.8 21.2 22.7 18.4 20.0
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Uncertain demand for innovative
goods or services Denmark SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 59 2. FINLAND Finland
In Finland, support for innovative entrepreneurship and the innovation activities of SMES is based on a systemic policy approach.
The Finnish Funding Agency for Technology and Innovation (Tekes) provides well-established programmes aimed to encourage SME participation in cooperative research
development and innovation projects. The funding is concentrated heavily on R&d in small businesses and covers more than one-third of R&d in businesses with less than 50 employees,
but less than 3%of R&d in businesses with more than 500 employees. 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.
An additional EUR 10-15 million was directed towards SMES through projects in large businesses which increases the SMES€ share by 5-8
%The Ministry of Employment and the Economy (TEM) is building a modern growth entrepreneurship policy that seeks to create first-rate conditions for Finnish growth ventures.
To that end, two initiatives were launched recently: 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
and accept new owners and investors R&d expenses need to represent at least 15%of its total operating expenses over the past three years
business plan preparation (1-6 months/up to EUR 50 000), early growth (6-24 months/up to EUR 250 000) and rapid growth (1-3 years/EUR 750 000.
funding is EUR 1 million per enterprise and it may take the form of a grant, loan, or risk capital.
materials and equipment, external services. At each stage, the funding decision involves external panel evaluation, and only 10-20 businesses per year are expected to reach the third phase of financing
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
flexible early-stage funding. The scheme is managed by TEM and coordinated by Tekes. The public sector
new ventures. Such experts are positioned well to offer high-quality advice and contacts for start-ups to
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201060
2. FINLAND 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 64.5 53.5
Large 298 0. 4 311 0. 2 0. 3 246 991 42.9 279 732 38.2 40.3 56.2 35.5 46.5
Notes: 1. As%of all firms within size class. 2. As%of total turnover. 3. As%of innovating firms. 4. Index scale of 0-6 from least to most
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
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 70 80 90
%SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 61 2. FRANCE France During the 1980s the Agence Nationale de Valorisation de la Recherche, ANVAR, created in 1974 to promote
the exploitation of public research results, was reoriented progressively to the mission of supporting SMES by means of tools such as loans for innovative projects, contacts with research societies, recruitment of
researchers and Phd students and counselling in intellectual property. In the nineties ANVAR opened regional delegations,
which started to play a central role in the state/region multilevel governance of innovation policy
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.
The objective of the poles is thus to encourage co-operation and collaboration among key local development
stakeholders around related industries in a specific geographical area. This makes them a form of â€oeinstitutionalised clustersâ€
investments with other local partners SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201062 2. FRANCE 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 15.1 26.4 22.0
Small 59 603 8. 5 92 223 4. 9 5. 9 1 220 992 22.0 1 853 526 19.4 20.4
18.1 19.3 18.8 Medium 9 573 1. 4 13 540 0. 7 0. 9 996 611 18.0 1 392 798 14.6 15.8 16.6
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
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 activitiesâ Process innovationâ Product innovationâ Non-technological innovation Firms with new to
-market product innovations Share of turnover due to new to-market product innovationsâ SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 63
2. GERMANY Germany With the so-called High-tech Strategy for Germany, from August 2006 onwards the German
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
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
stimulating the early-stage venture capital market Exist EXIST is a support programme of the Federal Ministry of Economy and Technology.
It is specifically designed 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 and is financed co by the European
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
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201064 2. GERMANY 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 6. 0
24.8 16.1 Small 91 875 21.4 163 896 11.8 14.1 1 740 469 19.1 3 060 121 23.4 21.6 13.4 21.2 17.6
Medium 20 632 4. 8 23 095 1. 7 2. 4 2 122 243 23.3 2 232 646 17.1 19.6
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 65
2. GREECE Greece The National Strategic Reference Framework 2007-2013, co-funded by the European Regional
Development Fund, is geared towards transforming Greece into a highly competitive and open economy The Operational Programme â€oecompetitiveness 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: Creation and development of innovation supported by research and
technological development, and Priority 3: Improvement of the entrepreneurial environment) as well as to threads of the five regional operational programmes related to entrepreneurship and digital convergence
The OPCE provides for a good number of measures, 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 co
-operative research), PRAXE (research spin-offs) and the Zone of Innovation framework programme. As a whole, these programmes have provided incentives to both university and the private sector to work
together, whilst cushioning the financial risk for people willing to invest in technology-based start-ups
The Creation †Support to New Innovative Enterprises programme for 2007-13 builds on this past
experience and expands to assist small young technology-based companies (no more than six years of age
manufacturing sector and software industry, in buying innovative consulting services and know-how from so-called â€oeinnovation agentsâ€,
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201066 2. GREECE 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 96.4 6 049 12 96.8 96.8 189 207 44.0 1 137 990 60.3 57.2 27.3 38.2 35.1
Small 2 475 2. 6 17 905 2. 9 2. 8 55 695 12.9 332 472 17.6 16.7 9. 6
24.7 20.4 Medium 798 0. 8 1 758 0. 3 0. 4 81 294 18.9 165 547 8. 8 10.6 18.2 14.3 15.4
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
because no demand for innovations Lack of qualified personnel Lack of information on technology Lack
enterprises Uncertain demand for innovative goods or services SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 67
2. HUNGARY Hungary In Hungary, the total expenditure on research and development was HUF 245.7 billion in 2007;
this exceeded the previous year†s figure by 3. 3%at current prices. The main sources of aid provided by national
sources are the Hungarian Scientific research Fund Programmes (OTKA) and the Research and Technology Innovation Fund (KTIA.
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
innovation 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.
this programme, SMES receive information and orientation services on industrial property protection and HPO has been able to bolster its existing regional partner network,
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201068 2. HUNGARY 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 18.9 19.3 11.7 17.6 14.0
Medium 2 312 1. 8 2 076 0. 5 0. 8 236 676 22.2 194 569 12.8 16.7 19.1 16.5 18.1
SMES 130 180 99.6 417 178 99.9 99.8 676 998 63.5 1 161 270 76.5 71.2 38.1 61.9 47.2
or customers Competitors Firms within the group Small Medium Large Medium Large Small Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises Uncertain demand for innovative goods or services SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 69
2. ICELAND Iceland Icetec †Icelandic Technological Institute The Icelandic Technological Institute (Icetec), operating under the Ministries of Industry and Commerce
is charged with the role of transferring technologies and expertise to business and industry. Icetec possesses a budget of ISK 242 million (USD 2. 6 million),
of which the majority comes from the government via institutional and competitive funding channels. Icetec has a role in assisting companies in innovation
productivity and R&d as well as providing information and advice to entrepreneurs and 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. Begun in 2002, IMRPA acts as an intermediary between individuals, companies and
knowledge on how to make business plans and foster business knowledge within rural communities Another, similar project that seeks to bring together individuals and companies, though not directly
New Business Venture Fund The government launched a programme in 1998 entitled the New Business Venture Fund,
which became an important source of funding for SMES. This Fund, which is owned by the government and operates
-ups. The official purpose of the Fund is to strengthen Iceland†s economy and increase internationalisation
In pursuit of this goal, the Fund participates in innovation-oriented investment projects and assists SMES
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201070 2. ICELAND 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 8. 4 824 8. 1 8. 2 Medium 108 1. 7 120 1. 2 1. 4
SMES 6 253 99.7 10 170 99.7 99.7 Large 19 0. 3 29 0. 3 0. 3
or customers Competitors Firms within the group Small Medium Large Small Consultants commercial labs or private institutes
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises Uncertain demand for innovative goods or services SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 71
2. IRELAND Ireland Creating a leading innovative economy has been identified as a key priority of The irish government
EUR 8. 2 billion has been allocated in the National Development Plan to the Strategy for Science, Technology
and Innovation (SSTI) 2006-2013. SSTI interlinks all policy areas for supporting and sustaining innovation
The strategy takes a holistic approach and combines education in science and engineering; social and
economic development; 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,
in order to develop a world-class research and development capacity in Ireland With regard to SMES, the focus is on transforming the quality
and quantities of research undertaken by enterprises †both directly and in co-operation with third-level institutions.
World Class Research STI has an allocation of EUR 3. 46 billion. The second biggest allocation is to Enterprise STI, EUR 1. 29 billion
between 2006 and 2013. The aim is to grow R&d business expenditure from EUR 1 billion in 2003 to
in Ireland a global leader) 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
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
most of the projects focus on software engineering, services and food iv) Innovation Vouchers †The voucher initiative offers businesses with limited experience of R&d the chance
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.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201072 2. IRELAND 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 21.4 12.8
Small 2 071 37.9 12 036 13.5 14.9 446 24 19.4 224 228 26.7 25.1 6. 9 27.3 18.2
Medium 657 12.0 1 965 2. 2 2. 8 68 605 29.8 178 875 21.3 23.1 21.7 20.1 20.8
1. Data only reflect enterprises with 3 or more persons engaged. 2. As%of all firms within size class
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises Uncertain demand for innovative goods or services SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 73
2. ITALY Italy Promoting the design of large innovative industrial projects is one of the most important recent
changes in Italian industrial and innovation policies. This new approach has two main thrusts: general
support for all firms in the form of automatic incentives (a tax credit), and the Industria 2015 project
designed in 2006-08 Industria 2015 Industria 2015 aims to change the entire business support system, particularly with regard to SMES, by
forging a stronger link between industrial and innovation policies. Three main strategic areas are identified within Industria 2015:
companies, private investment equity, and local governments. The projects intend to improve the competitiveness of Italian industry over the medium 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
tender fund R&d projects that seek to develop prototypes in one of the thematic areas specified by each
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
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201074 2. ITALY 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 Total Micro 1 009 128 89.1 2 679 560 96.6 94.4 2 428 034 36.1 4 840 805 54.6 46.6 21.3
41.5 31.5 Small 110 689 9. 8 83 348 3. 0 5. 0 2 000 860 29.8 1 441 427 16.3 22.1
27.9 20.0 23.9 Medium 11 814 1. 0 8 192 0. 3 0. 5 1 128 553 16.8 802 470 9. 1 12.4
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
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 to -market product innovations SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 75
2. JAPAN Japan Small Business Innovation Research The Small Business Innovation Research (SBIR) programme was introduced first in 1999 and is
implemented by seven government ministries, with the budget set annually by the Cabinet. Budget allocations awarded under the programme have increased gradually from JPY 26.1 billion in 2003 to
JPY 37.1 billion in 2007 There are 17 programmes through which Small Business Innovation Research is implemented
provided by research funders such as the Japan Science and Technology Agency (JST), and New Energy and
Industrial Technology Development Organisation (NEDO), among others. Two types of support are offered i) research and development support through subsidies or contract grants;
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.
entrepreneurship and innovation in SMES. A programme unique to Japan is the Support for Development of
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
Through co-ordinators, communication and interaction is facilitated via targeted forums, seminars and matching events, enabling companies to
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201076 2. JAPAN 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. 0 Small 110 023 42.6 2 287 938 26.5 17.3
1. For manufacturing, data only reflect enterprises with 4 or more persons engaged. 2. As%of SMES with new product sales
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 77 2. KOREA Korea Small and Medium Business Administration (SMBA
that are targeted all at assisting SMES in the areas of entrepreneurship, human resources, financing marketing and innovation
aims through the provision of services such as a technology guarantee scheme, technology appraisal technologically innovative business certification, and business support
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201078 2. KOREA 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 49.4 377 100 12.9 5. 4 Small 51 674 43.1 1 020 169 34.9 19.9
Medium 7 621 6. 4 6 800 83 23.2 20.2 SMES 118 518 98.9 2 077 352 71.0 45.5
1. For manufacturing, data only reflect enterprises with 5 or more persons engaged. 2. As%of all firms within size class
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 79 2. LUXEMBOURG Luxembourg National Credit and Investment Society
The National Credit and Investment Society (SNCI) is owned a state bank that specialises in financing
medium-and long-term projects undertaken by Luxembourg-based companies. With resources standing at EUR 580 million in 2005, the Society provides financing through equipment loans, medium-and long
-term loans, innovation loans, financing of foreign investments, equity loans and participating interests in small companies.
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
EUR 2. 5 million in paid-in capital, 50%contributed by the SNCI, with five commercial Luxembourg-based
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; and the Business Angels network Another programme undertaken by Luxinnovation is the ECOSTART enterprise and innovation centre
This centre is located in Foetz and is aimed at providing entrepreneurs with support at the idea and start
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201080
2. LUXEMBOURG 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
Micro 699 66.8 18 326 90.0 88.9 1 859 5. 0 24 812 24.7 19.4 2. 8 44.1 31.6
Small 226 21.6 1 667 8. 2 8. 8 4524 12.1 23 621 23.6 20.5 6. 4 23.4 18.2
Medium 91 8. 7 299 1. 5 1. 8 8 527 22.9 21 118 21.1 21.6 17.9 17.1 17.4
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Uncertain demand for innovative goods or services Markets dominated by established
enterprises SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 81 2. MEXICO Mexico AVANCE In 2003 Mexico started operating AVANCE,
a programme aimed at identifying and exploiting business opportunities based on scientific and/or technological developments.
This initiative supports the stages of the innovation process of firms and assists in the commercialisation of innovations, mainly from SMES
The programme has three main delivery modes: the Nuevos Negocios (previously known as Ultima milla, or
Last Mile), which provides resources to support the late stages of the innovation process; the Entrepreneurs
Fund, which is managed in conjunction with NAFIN (Mexico†s state development bank), and offers complementary resources in the form of risk capital;
Third, it has promoted the creation of business angel and venture capital funds, which had been virtually absent in the country.
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201082 2. MEXICO 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 96.1 827 308 16.7 4 590 833 56.3 41.3
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 83 2. THE NETHERLANDS The netherlands Innovation Voucher A major programme considered very successful in The netherlands is the so-called Innovation Voucher
procedure, SMES (in the manufacturing and services sectors) can apply for a voucher at the Innovation
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
universities, incubators, innovation intermediaries, banks, companies and other actors The Technopartner programme includes several action lines:
aims to promote and mobilise the Dutch venture capital market to the benefit of high-tech starters
institutional pillar focused on improving the environment in which starters operate, particularly in the universities
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201084 2. THE NETHERLANDS 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 85.6 367 860 90.4 89.2 308 026 23.9 1 233 220 31.2 29.4 13.4 24.1 20.6
Small 15 385 11.5 32 915 8. 1 8. 9 327 063 25.4 814 006 20.6 21.8 21.3 22.4 22.0
Medium 3 195 2. 4 5 210 1. 3 1. 6 299 585 23.2 601 275 15.2 17.2 24.3 20.3 21.6
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Markets dominated by established enterprises Lack of finance from sources
outside enterprise SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 85 2. NEW ZEALAND 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 and targeted grant schemes:
the Targeted Research and development Funding Grant and the Capability Funding Grant The Targeted Research and development Funding Grant provides annual funding support of
NZD 40 million for research-intensive firms with high growth potential. Funding is targeted at projects that
significantly increase a firm†s technological expertise. The level of a project†s technical stretch is judged
on-demand basis and funding is provided typically on a matched basis, i e. 50%of eligible project costs
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 whether Better by
and develop a plan outlining new strategies, opportunities and potential projects; it then assists with implementation.
and communication strategies. Design Integration Funding is available to client companies that have completed the Design 360 assessment and planning process.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201086 2. NEW ZEALAND 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 21.8 21.1
Small 5 635 7. 6 12 429 5. 1 5. 7 108 610 26.7 229 440 27.6 27.3
Medium 585 0. 8 1 053 0. 4 0. 5 39 940 9. 8 73 040 8. 8 9. 1
%SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 87 2. NORWAY Norway Commercialisation of R&d The Commercialisation of R&d (FORNY) programme has been developed by the Research Council of
In the case of industrial R&d contracts, the programme stimulates co-operation between a demand
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201088 2. NORWAY 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 53 852 88.5 172 554 92.6 91.6 92 572 19.8 259 157 30.1 26.5 27.0 33.5 29.8
Small 5 757 9. 5 11 990 6. 4 7. 2 115 377 24.6 216 507 25.2 25.0 11.7 20.9 15.7
Medium 1 055 1. 7 1 421 0. 8 1. 0 102 828 21.9 140 230 16.3 18.3 21.4 15.6 18.9
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 89 2. POLAND 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, some 95%of which is earmarked for
Lisbon objectives. The programme is managed by the Ministry for Regional Development; co-financing from the Polish government brings the total to EUR 9. 71 billion,
amounting to nearly 0. 5%of GDP per annum. It is hoped that another EUR 2. 42 billion will be raised from other sources
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 to create a better interface between the science 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.
part of the Innovative Economy Operational Programme are expected to be subject to formal evaluation Strengthening the Protection of Intellectual and Industrial Property rights Programme
the main services charged with enforcing IPR, and to increase international co-operation in such
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201090 2. POLAND 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 96.0 905 309 23.3 2 220 284 50.9 37.9 10.7 32.8 21.3
Small 19 604 4. 8 22 298 2. 1 2. 8 461 343 11.9 479 401 11.0 11.4 8. 9
14.4 11.5 Medium 9 049 2. 2 5 726 0. 5 1. 0 978 275 25.2 573 800 13.2 18.8 23.2 19.0 21.2
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Uncertain demand for innovative
goods or services Markets dominated by established enterprises SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 91
2. PORTUGAL Portugal INOFIN Improved access to financing for entrepreneurs and SMES is implemented a priority through the
INOFIN programme, which in turn incorporates three programmes. FINICIA, launched in the second half of 2006, 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, aims at raising the competitiveness of Portuguese SMES by encouraging business resizing and transfer,
thereby allowing Portuguese SMES to attain the right size to compete globally 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, and coordinating financial instruments COMPETE The National Strategic Reference Framework (NSRF) 2007-2013, co-financed by EU Structural Funds
includes a National Programme on Competitiveness Factors (COMPETE), which is the key operational programme dealing with innovation policy.
COMPETE includes the Incentive schemes (IS) to support company investments that lead to innovation in technological and non-technological areas:
IS Innovation IS R&td and IS Qualification and Internationalisation of SMES. The latter two gave rise to two new initiatives
the R&td and Innovation Vouchers, launched in May 2008. These initiatives aim at supporting companies
production of new products and services and at the organisational, strategic or market innovation level
provide technical or technological services can receive financing of up to EUR 25 000 (nonrefundable incentive
networking among enterprises (including SMES) and between enterprises and relevant support institutions (namely R&td, higher education and vocational training institutions) who are involved in the
Collective Efficiency Strategies†formal recognition allows the submission of investment projects and respective action programmes, thereby facilitating access to instruments available within the National
technology poles and 8 clusters) foresee an eligible investment of around EUR 2 000 million, of which
The Small and Medium-sized Enterprises and Innovation Support Institute also plays a major role as funding agency
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201092 2. PORTUGAL 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 22.8 23.8
Medium 3 453 1. 6 2 335 0. 4 0. 7 321 859 24.1 223 298 11.2 16.4 28.7 17.5 22.0
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of information on markets Markets dominated by established enterprises
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 93 2. SLOVAK REPUBLIC Slovak Republic National Agency for Development of SMES (NADSME
A joint initiative of the European union and the government of the Slovak Republic, the National
Agency for Development of SMES was founded in 1993 to improve the competitiveness of Slovak SMES in the
Ministry of Economy of the Slovak Republic, the Slovak Association of Entrepreneurs and the Slovak
increase the amount of venture capital investment for SMES in the Slovak economy. The company looks for
The services provided by the Seed Capital Company include the provision of share capital, follow-up financing, guaranteed and non-guaranteed
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201094 2. SLOVAK REPUBLIC 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 14.6 4. 4 27.0 14.2
Small 4 643 33.4 8 318 18.9 22.4 82 726 15.2 115 193 25.3 19.8 10.5 26.3 17.4
Medium 13 10 9. 4 734 1. 7 3. 5 139 979 25.7 75 079 16.5 21.5 18.2 15.8 17.2
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 95
2. SPAIN 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. Inno-Empresa is budgeted with EUR 75 million per year; the main sources of financing are the Spanish Ministry of Industry, Tourism and Trade (EUR 500 million), the Autonomous
Communities (EUR 125 million) and the European Regional Development Fund (EUR 110 million The specific objective of the programme is to back innovative and growth-oriented small businesses
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 and the venture capital market by facilitating loans to risk-capital societies interested in sharing the
In this case, 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201096 2. SPAIN 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 1 795 950 32.4 1 699 824 19.5 24.5 25.8
20.3 22.7 Medium 11 662 1. 7 10 346 0. 5 0. 8 1 108 508 20.0 1 007 237 11.5 14.8
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises Uncertain demand for innovative goods or services SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 97
2. SWEDEN Sweden National policy addressing innovative entrepreneurship and/or innovation activities of SMES is based
on mix of direct support programmes, run by different governmental agencies. The three most important agencies are:
Tillvã¤xtverket, which includes ALMI †Sweden†s SME and Entrepreneurship Agency VINNOVA (Swedish Governmental Agency for Innovation Systems;
and Innovationsbron Innovationbridge The newly established Swedish Agency for Economic and Regional Growth †Tillvã¤xtverket †supports
entrepreneurship and SMES. Part of this support is furnished by ALMI, which provides information and financing (with a budget of approximately SEK 150 million,
of which SEK 40 million is earmarked for innovative SMES VINNOVA€ s responsibility covers innovations linked to research and development.
Its tasks are to fund the needs-driven research required by a competitive business and industrial sector and a thriving economy
and to strengthen the networks that are necessary for this work. VINNOVA has a total budget of almost
SEK 2 000 million, out of which approximately 10%is for programmes addressing SMES 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
Sweden has a long history of large (private) R&d investments and successful innovations, while the
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201098 2. SWEDEN 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 123 984 90.8 403 634 95.1 94.1 202 034 17.6 500 492 29.0 24.4 10.9 27.9 20.3
Small 9 924 7. 3 17 416 4. 1 4. 9 222 595 19.4 381 035 22.0 21.0 14.7 21.0 18.2
Medium 2 145 1. 6 2 716 0. 6 0. 9 233 511 20.4 291 240 16.9 18.3 18.8 17.4 18.1
or customers Competitors Firms within the group Large Medium Small Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of finance from sources outside enterprise Markets dominated by established
enterprises SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 99 2. SWITZERLAND 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 Start-up The goal of the CTI Start-up measure is to increase the number of start-ups significantly, particularly
in high-tech industries. Furthermore, the measure intends to help entrepreneurs manage the early stage of firm development successfully.
Concrete measures include the provision of coaches that teach entrepreneurs essential skills such as drawing up a business plan, granting access to networking events
and certification of promising start-ups with the CTI Start-up label. By 2008,194 firms received the label
169 â€oelabel firms†are still active. Label firms created around 2 800 jobs and could generate risk capital of
selected firm variables (profit, turnover, employment growth, third-party funding and profit turnover ratio), labelled firms are performing better than non-labelled firms.
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.
It is organised at a regional level. During the past five years more than 10 200 students and start-up firms attended Venturelab courses (2 600 in 2008.
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. Venturelab organised 237 courses (modules) and 1 390 workshops between 2004 and 2008
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010100 2. SWITZERLAND 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 29.4
Small n. a n. a. 262 811 25.3 315 385 20.9 22.7 Medium 2 496 4. 1 1 984 1. 2 2. 0 283 559 27.3 213 938 14.2 19.5
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 101 2. TURKEY Turkey Young Entrepreneur Development Programme
entrepreneurship, stimulate start-up of new technology-based firms among university students and graduates, and create new jobs.
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
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
promotes the creation of technology-based companies in KOSGEB incubators (called Technology Development Centres †TEKMERS †and Virtual Technology Incubators †DTIS.
Initiated in 1991, the programme provides a mixture of grants and a soft loan to entrepreneurs/SMES having new technological ideas and
innovations, 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010102 2. TURKEY 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 98.1 1 113 081 32.5 3 512 942 75.9 57.4 12.2 44.4 28.2
Small 16 149 3. 9 12 190 0. 6 1. 2 521 934 15.2 314 797 6. 8 10.4 11.1
11.5 11.3 Medium 7 795 1. 9 4 362 0. 2 0. 5 799 763 23.3 286 359 6. 2 13.5 21.7
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
enterprises Uncertain demand for innovative goods or services Firms with new to -market product innovations Lack of funds within
enterprise or enterprise group Lack of finance from sources outside enterprise SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 103
2. UNITED KINGDOM United kingdom The United kingdom is the only country that has documented, twice, the scale of public funding for
SMES. The first, in 2002, showed that, including the provision of tax relief, total public funding was
approximately GBP 8 billion. Of this, GBP 2. 3 million was the result of small firms paying the lower 20%rate
of corporation tax. A later estimate by the National Audit Office provided a lower figure by excluding the
taxation component, but found that all expenditure on training had been omitted from the initial estimate Recent years have seen significant shifts in both the orientation and organisation of SME and
At a more operational level both enterprise and innovation policy are now increasingly being regionalised, with the Regional Development Agencies in England and agencies
Venture capital programmes has addressed the problem of lack of risk capital, particularly in more peripheral areas. These programmes have yet to be evaluated rigorously
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010104 2. UNITED KINGDOM 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 87.9 884 252 18.8 3 014 077 22.5 21.5 13.1 21.3 18.4
Small 45 889 11.7 122 555 9. 6 10.1 934 303 19.8 2 218 333 16.5 17.4 14.8 16.2 15.7
Medium 10 428 2. 7 17 005 1. 3 1. 6 1 058 301 22.4 1 698 133 12.7 15.2
or customers Competitors Small Medium Large SME Large Consultants commercial labs or private institutes Government
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 105 2. UNITED STATES United states Small Business Innovation Research (SBIR
providing competition-based awards to small private sector companies of about USD 100 000+for proof of
principle, and later awards of about USD 750 000 to develop prototypes. Created in 1982 through the Small
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
up with at least one small or medium-sized for-profit company, or may participate as a member within a
successful prototypes funded by the SBIR programme. Both programmes are highly competitive, making awards to only about 15-20%of all applicants;
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010106 2. UNITED STATES 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 20.6 1 137 356 7. 1 11.1
Small 247 273 21.7 596 613 18.8 19.5 2 724 431 40.4 4 760 930 29.6 32.8
1. Average level of financial investment by that source; includes all start-up firms. 2. Expressed as a proportion of the total start
%SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 107 2. BRAZIL Brazil Brazilian innovation policy is based on two pillars, namely the Industrial, Technological and External
managerial support to innovative enterprises. They focus on different lines of action, including: 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 high -priority 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,
MSMES (micro small and medium sized enterprises) trying to implement any managerial, commercial or technical innovation in their products, services or processes.
It consists of offering loans, ranging from BRL 100 000 to BRL 900 000, to be reimbursed without any interest in 100 instalments.
technical innovation and to new investments stated in the business plan of the enterprise is eligible to be
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010108 2. BRAZIL Brazil Notes 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey
A. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 109 2. CHILE Chile As a part of the government strategy to promote economic growth, a National Innovation for
Competitiveness Council (CNIC) was established in 2005. This was strengthened further in 2006, when a new pro-innovation law was passed,
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. It contains 21 specific measures, which are divided into five areas
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
This assists existing enterprises in their effort to develop innovative projects through individual entrepreneurial innovation, technological consortia, business platforms and innovation management.
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.
Chile Emprende is targeted to existing micro and small enterprises in order to promote public-private partnership, entrepreneurial association and improvement of managerial practices.
economic dynamics in the context of territorial identities, 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,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010110 2. CHILE Chile Notes 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey
A. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 111 2. CHINA China The Torch Programme The Torch Programme was established in 1988 by the Chinese central government
enterprises†own capital accounted for the majority of project funding, i e. 74.5 %The programme†s other main activities are to coordinate
high-technology development zones, 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
In 2005,41 990 enterprises operated in the 53 development zones, employing over 5. 2 million
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, while the graduated tenants soared from 190 in 1994 to 6 927 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010112 2. CHINA China Notes 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey
B. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 113 2. ESTONIA Estonia It is only since 2004,
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
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 â€oeyear 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. The programme was launched in 2008 and has a budget of EUR 37 million over
Financing of the competence centres by Enterprise Estonia was not as stable as expected during the first years of the programme.
additional funds were made available by Enterprise Estonia to invest in eight competence centres (the five
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010114 2. ESTONIA 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
Small 2 820 22.3 3 403 9. 6 12.9 57 506 28.9 64 160 26.8 27.8 24.5 28.3 26.6
Medium 696 5. 5 527 1. 5 2. 5 66 100 33.2 49 771 20.8 26.4 38.9 24.2 30 30.8
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 115 2. INDIA
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 technology development. Instead, a bolder approach to international co-operation to meet national developmental imperatives has emerged as the norm for
-quality technology environment reflects the strength of the role of government and rule of law in India†s
innovation and entrepreneurship Information technology (IT The development of the IT industry in India is lauded greatly by decision makers and researchers alike
and support innovation and entrepreneurship in this sector In 1998 the Indian Parliament passed legislation by way of an Electronic commerce Act,
saw passage of the Environment Protection Act, which was supplanted by the Manufacture, Use, Import Export, and Storage of Hazardous Microorganisms,
Biotechnology put together ethical policies on the human genome, genetic research, and services overseeing basic research activities,
genetically modified products and services Technopreneur Promotion Programme Another major public policy initiative for funding innovation is the Technopreneur Promotion Programme
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010116 2. INDIA India Notes 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey
A. Barriers to entrepreneurship, India 2007 and OECD 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 117 2. INDONESIA Indonesia Access to financing is faced a problem by entrepreneurs of micro, small, and medium-sized
enterprises (MSMES) in Indonesia. The national policy to address this problem is to provide direct financial
programme, up to a maximum 60%of the total cost of the investment; ii) the provision of grants to assist
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 The Iptekda programme, launched in 1998, was aimed initially at mitigating the impact of monetary
From 1998 to 2006, LIPI (Indonesian Institute of Sciences) has launched 389 projects with a total investment
or expected returns on investment) and those that cannot yet meet bank requirements. Secondly, Iptekda has assisted successfully non-bankable SMES in financing and
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. It acts as an institutional hub in synergising policies and programmes, and
provide integrated services in the areas of technology, human resource capacity building, business network development,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010118 2. INDONESIA Indonesia Notes 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey
A. Barriers to entrepreneurship, Indonesia 2007 and OECD 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 119 2. ISRAEL Israel Incubator programme The main Israeli programme promoting innovative entrepreneurship is the Incubator
programme, set up in 1991. 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 and 40%are active to this day.
Since the programme started, 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 whether the proposed project is innovative in global markets;
whether it shows sound commercial potential; and whether the entrepreneurs have needed the skills to develop the
The OCS Incubators Committee awards grants of up to USD 500 000 over two years, or up
funding, 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
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. Yozma was privatised in 1997 Yozma is a case in point of a bold policy implemented to overcome a market failure.
which allowed the fledgling Israeli venture capitalists to make companies public at a size that would be impossible today
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010120 2. ISRAEL Israel Notes: For technical reasons, these figures use Israel†s official statistics,
A. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 121 2. RUSSIAN FEDERATION Russian Federation Since mid-1990s the Russian government has taken initiatives to stimulate innovative activities of
SMES and innovative entrepreneurship. Presently, 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.
Annually, 1. 5%of federal budget funds provided for public research are allocated to this Foundation.
support of the commercialisation process through direct financing to small innovative enterprises. Part of this financial support is given to small firms to help develop a product,
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,
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010122 2. RUSSIAN FEDERATION A corrigendum has been issued for this page.
See: http://www. oecd. org/dataoecd/59/53/46211243. pdf Russian Federation A. Definition of SMES
Department of state Regulation in the Economy of the Russian Federation. Charts B and C: Ministry of Economic
D. Barriers to entrepreneurship, 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 123 2. SLOVENIA Slovenia The Ministry of Higher education, 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 in international research
networks, and innovation vouchers. In 2009, the measure to co-finance R&d projects was redesigned in
Its goal is to stimulate the investment of micro and small enterprises in R&d, new technologies, products and processes.
The wider aim is to increase the technological level, value added and competitiveness of SMES.
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. ME and MHEST are thus strongly focusing on supporting international industrial co-operation.
products, processes and services. In the context of international co-operation incentives ME measures aim
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, strengthening the national innovation
Economy and Ministry of Defence are participating by contributing through their own resources. Several of
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
Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments (PAEFI) has two main
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010124 2. SLOVENIA 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
Small 2 714 7. 7 3 097 4. 8 5. 8 54 629 17.0 57 332 19.9 18.4 16.2 24.1 20.1
Medium 756 2. 2 464 0. 7 1. 2 81 029 25.3 44 052 15.3 20.6 24.5 17.7 21.1
or customers Competitors Firms within the group Small Medium Large Small Medium Large Consultants commercial labs
within enterprise or enterprise group Lack of qualified personnel Lack of finance from sources outside
enterprise Markets dominated by established enterprises SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 125 statlink 2 http://dx. doi. org/10.1787/813553877374
2. SOUTH AFRICA South africa The promotion and support of micro, small and medium enterprises (MSMES) is an important policy
issue in South africa. The Department of Trade and Industry (DTI) has various strategies and programmes
aimed at MSME growth and development, as well as R&d and innovation. The OECD Review of Innovation
Policy in South africa (2007) has identified, however a gap in the current innovation policy in terms of comprehensive and operational support to MSMES
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
programme in the South african context, one that addresses an essential demand in industry, initially it
all participating firms) 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010126 2. SOUTH AFRICA South africa Notes 1. Czech republic, Hungary, Korea, Mexico, Poland, Slovak Republic, Turkey
A. Barriers to entrepreneurship, South africa 2007 and OECD 2008 Index scale of 0-6 from least to most restrictive
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 127 2. SMES, ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY
ANNEX 2. A1 Notes on the Country Data The structural data on businesses presented in the chapter follow the International
I. Transport, storage and communications J. Financial intermediation K. Real estate, renting and business activities L. Public administration and defence;
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010128 Sections G h i and K). Totals refer to Industry and Services,
although it is not always possible to obtain totals. The following text gives details on the completeness of the data
for each country Australia: 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 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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 129
2. SMES, ENTREPRENEURSHIP AND INNOVATION: AN OVERVIEW BY COUNTRY 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 Â OECD 2010130 SMES, Entrepreneurship and Innovation
 OECD 2010 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 131 3. KNOWLEDGE FLOWS 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
â€oeinnovation 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
How knowledge affects entrepreneurship Studies investigating the determinants of the entrepreneurial process have traditionally focused on either personal traits or external constraints.
the entrepreneurship literature, however, looks at the role of knowledge in facilitating business entry and performance.
gender and age as the key determinants of entrepreneurship; whereas Lazear (2005) finds that a variegated educational and occupational background increases the likelihood of
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010132
The thread between the two strands of personal profiles and external constraints is the implicit assumption of a condition of market equilibrium, in which â€oeentrepreneurial
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
But for entrepreneurship to happen the values that 3. KNOWLEDGE FLOWS 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. Post
customers or suppliers to enter downstream or upstream industries (Hippel, 1988 In a nutshell, business formation occurs
when new opportunities caused by inefficiencies or the emergence of new technologies matches the prior knowledge of
frequency of the multi-venture process, i e. the creation of more than one firm by the same
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 133 3. KNOWLEDGE FLOWS overshadows pre-entry market knowledge in determining the ability of a firm to be
Knowledge is crucial for entrepreneurship and triggers the business innovation process. SMES though, tend not to innovate alone but rather in collaboration with other
organisations, including enterprises (e g. suppliers and customers), universities, research organisations, etc. They may also need to interact
innovation is affected not only by relationships with the external environment (firms suppliers, research institutes, etc. but also by the norms, routines, rules and laws that
innovation is that the entrepreneurship and innovation performance of a locality, region or country will not only depend on the endogenous capacities of the firms but also on their
linkages and innovation through internal investments in R&d The innovation system approach significantly departs from an approach merely based
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010134 3. KNOWLEDGE FLOWS capacity to codify and implement new knowledge into their business operations.
3. Articulation of demand-driven quality requirements 4. Creation and change of organisations needed for the development of new fields of
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
9. Provision of technology-oriented consultancy services (e g. technology transfer university-based technology centres assessing commercialisation opportunities, etc
Source: Based on Edquist, 2005 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 135 3. KNOWLEDGE FLOWS
2007b) shows, for instance, that ten leading regions in Europe account for more than one -third of all patents and that the level of patenting is correlated strongly with GDP per
The success of these clusters in entrepreneurship and innovation has in large part stemmed from strong local knowledge generation, diffusion and absorption capacities
indicators of their entrepreneurship vitality. However, they remain preliminary and exploratory and caution is advised in their interpretation given possible location, structural
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010136 3. KNOWLEDGE FLOWS European union The first two maps show the agglomeration of HTM
in a particular locality as compared to a reference economy (EU27 in this case. The territorial level of analysis is OECD Territorial Level 3 or Eurostat NUTS Level III, i e. micro
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 137 3. KNOWLEDGE FLOWS science parks. Baden-WÃ rttemberg (e g.
local presence of green-field (newly established) foreign direct investment. Examples include Mazowieckie and Wielkopolskie in Poland;
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.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010138 3. KNOWLEDGE FLOWS cluster around large metropolitan areas,
economic activity. The first type illustrates the basic characteristics of firm spatial distribution based on quantiles; the second type is built from a statistical algorithm for
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 139 3. KNOWLEDGE FLOWS Consolidated clusters of high-tech manufacturing firms can be detected in a vast
empirical evidence on the uneven distribution of US firms in knowledge-intensive services KISA firms tend to concentrate in a limited number of US States,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010140 3. KNOWLEDGE FLOWS Figure 3. 6, based on the same methodology adopted for Figure 3. 4, highlights the
-intensive services firms (dark grey areas) are found in a large area of California including San francisco, Los angeles and San diego,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 141 Mamy Crayon 3. KNOWLEDGE FLOWS Cluster rankings:
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
) 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010142 3. KNOWLEDGE FLOWS Table 3. 2. Ranking of HTM clusters based on the composite indicator
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 143 3. KNOWLEDGE FLOWS The role of local knowledge flows for spatial agglomerations and local
Tacit knowledge is created not just a priori through investments in education and training or the attraction and retention of qualified labour,
interaction process between customers and suppliers or between users and producers which explains why proximity is so important for knowledge spillovers to happen
In a study on the US economy, Jaffe et al. 1993) find that patents are more likely to cite
of the impact of R&d investment on patent production provides similar results (Bottazzi and Peri, 2003;
and radio and TV communications are all highly concentrated in the three states of Massachusetts, California and New york (Audretsch and
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010144 3. KNOWLEDGE FLOWS place between sectors that share competences, rather than within one specific sector.
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
Similarly, Fritsch and Slavtchev (2007) find an inverse U-shaped relationship between industrial diversity and regional economic performance,
analysis of high-tech enterprises, show for instance that innovation networks positively affect both product and process innovation and that the positive relationship between firm
which makes entrepreneurship a process that strongly hinges on knowledge spillovers (Acs et al. 2006 A form of knowledge flows:
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 145 3. KNOWLEDGE FLOWS In Europe the most reliable survey is carried out by Proton, the European knowledge
perceive a concrete licensing opportunity. However, value of licensing revenues associated with KTOS in the United states is markedly higher than in Europe.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010146 3. KNOWLEDGE FLOWS the United kingdom or Denmark, where there is a more consolidated licensing tradition
Local knowledge flows are crucial to entrepreneurship and SMES in an innovation system as they strengthen the knowledge base and the absorptive capacity of local firms
and local competitiveness by creating new opportunities for knowledge generated abroad to be exploited locally and for knowledge produced locally to be harnessed overseas.
have equity investments in new firms and commercialise R&d results. The establishment of KTOS has also been encouraged
which start-up opportunities are diminished accordingly (Kneller, 2007. Currently collaborative research is predominant and the role of KTOS is still marginal (there are 35 of
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 147 3. KNOWLEDGE FLOWS 4 about patent grants and patent applications at the US Patent and Trademark Office
services jointly developed with PRO; employment of high-skilled workforce; co-funding of research activities Government Express strategic research
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
creation of new opportunities for PROS; fostered R&d culture among firms Figure 3. 7. Figure 3. 8
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010148 3. KNOWLEDGE FLOWS The reference is the priority date,
b) small economies (Australia, in our case) are more likely to engage in international collaborations
direct investment (FDI; and iii) attraction of skilled labour. All three can contribute to the
development and entrepreneurship in terms of potentially exploitable new products services and organisational methods Cross-border alliances
The importance of local networking is recognised well within innovation systems and clusters, but networks also need to be open to global sources of knowledge and markets
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 149 3. KNOWLEDGE FLOWS agreements for product or process development.
Small firms may not be aware of overseas opportunities or may be too inward-looking to look for knowledge sources abroad.
delivery of effective support instruments as a recent OECD review of entrepreneurship and SME support systems in various OECD regions shows (Potter, Marchese and Hofer
Knowledge transfers from foreign direct investment Another important source of global knowledge is inward foreign direct investment
FDI). ) Foreign multinationals can stimulate local development through firm-specific advantages, including efficient and advanced operational practices and technologies
which can spin off into the host economy to drive productivity improvements and innovations in local firms and organisations.
multinationals are plugged into the local economy through effective linkages with local firms and research organisations Knowledge transfers from FDI can take place either passively or actively.
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
the economy. Supplier development programmes have had, for instance, a prominent role in counteracting the â€oebranch plant†nature of traditional FDI in which foreign affiliates
foreign investors up with local enterprises and technology/research institutes. The encouragement of corporate spin outs from FDI is another option, especially considering
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010150 3. KNOWLEDGE FLOWS that foreign multinationals are often less reluctant to allow spin-offs than normally
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 high
-skilled 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, levels of R&d, enrolments in graduate programmes and the potential creation of growth-oriented businesses by immigrants.
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
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.
innovative entrepreneurship and SME innovation by improving the flow of knowledge SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 151
3. KNOWLEDGE FLOWS among agents involved in different activities. The concept recognises that the knowledge
and knowledge exploitation (large and small enterprises) parts of an innovation system There are two main action areas for policy.
strengthen SME and entrepreneurship performance and help open new growth trajectories and fend off lock ins and other systemic failures
Similarly, investment readiness SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010152 3. KNOWLEDGE FLOWS 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 â€oeentrepreneurship skills†that move away from traditional business management
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
embed multinationals in the local economy by encouraging managers or skilled workers of the foreign affiliate to set out their own business.
importance of agglomeration economies and of helping firms to link up with each other and with research organisations at the local level.
zones, 62 university science parks, about 200 business incubators and 35 software parks (see China†s Country Note.
associations can include customers, suppliers and technology institutions â Universities need to be involved actively in the innovation system
flows and so be given the opportunity to unfold their â€oethird mission†to contribute to the development of their region (OECD, 2007c;
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 153 3. KNOWLEDGE FLOWS other research institutes can foster entrepreneurship by generating and diffusing
innovations and supplying highly skilled and entrepreneurial workforces to industry Indeed, the centrality of this role increases with the growing importance of knowledge
-based activities in the globalised economy. In this new setting, success in meeting economic and social challenges will depend on the ability of firms to generate and
exploit new products and services, and higher education institutions can play an important supporting function through the transfer of knowledge.
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
experience, although marked inter-firm labour mobility can deter private investments in training, especially in SMES.
opportunities, often in more than one industry, policies should target broader technologies with potential multiple industrial applications rather than more
-SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010154 3. KNOWLEDGE FLOWS fertilising technologies, through a comprehensive approach in which two key
successful prototypes funded by SBIR, so the two programmes are complementary (see the United states Country Note
international networking by setting up legal services or guarantee schemes, or by organising study visits and business forums for local entrepreneurs.
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.
A third way of triggering global knowledge connections is to promote the attraction and exchange
high-tech manufacturing and knowledge-intensive services introduced in the section on the spatial concentration of innovative industries
electronics-communications (32 scientific instruments (33. KISA comprises: post and telecommunications (64; computer and related activities (72;
Economics and Statistics, Vol. 76, No. 2, pp. 336-340 Adragna, S. and A. Lusardi (2008), â€oeexplaining International Differences in Entrepreneurship:
The Role of Individual Characteristics and Regulatory Constraintsâ€, National Bureau of Economic Research NBER), Working Paper No. 14012
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 155 3. KNOWLEDGE FLOWS Asheim, B. and M. Gertler (2005), â€oethe Geography of Innovation:
Auerswald, P. 2007), â€oethe Simple Economics of Technology Entrepreneurship: Market Failure Reconsideredâ€, in D. Audretsch,
Handbook of Research on Entrepreneurship Policy, Edward Elgar, Cheltenham, UK Bottazzi, L. and G. Peri (2003), â€oeinnovation and Spillovers in Regions:
Drucker, P. 1985), Innovation and Entrepreneurship, Harper collins, New york Duranton, G. and D. Puga (2005), â€oefrom Sectoral to Functional Urban Specialisationâ€, Journal of Urban
Economics, Vol. 57, pp. 343-370 Edquist, C. 2005), â€oesystems of Innovation: Perspectives and Challenges†in J. Fagerberg, D. Mowery and
Evans D. and B. Jovanovic (1989), â€oean Estimated Model of Entrepreneurial Choice under Liquidity Constraintsâ€, Journal of Political economy, Vol. 97, No. 4, pp. 808-827
Evidenced by Patent Citationsâ€, The Quarterly Journal of Economics, Vol. 108, No. 3, pp. 577-598
Lazear, E. 2005), â€oeentrepreneurshipâ€, Journal of Labor Economics, Vol. 23, No. 4, pp. 649-680
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010156 3. KNOWLEDGE FLOWS Malerba, F. 2002), â€oesectoral Systems of Innovation and Productionâ€, Research Policy, Vol. 31, pp. 247-264
Environment and Planning †A, Vol. 37, pp. 1793-1812 Nelson, R. 1993), National Systems of Innovation:
OECD (2005), SME and Entrepreneurship Outlook, OECD, Paris OECD (2007a), Competitive Regional Clusters: National Policy Approaches, OECD, Paris
OECD (2007b), Globalisation and Regional Economies: Can OECD Regions Compete in Global Industries? OECD Paris
OECD (2008c), Entrepreneurship and Local Innovation Systems: The Case of Cantabria, OECD, Paris OECD (2009a), Innovation in Firms:
OECD (2009b), Entrepreneurship and the Innovative System of the Agder Region, Norway, OECD, Paris OECD (2009c), â€oeuniversities, Entrepreneurship and Innovationâ€, internal working document, Centre for
Entrepreneurship, SMES and Local Development, OECD, Paris OECD (forthcoming 2010a), High-Growth Enterprises: What Governments Can Do to Make a Difference
OECD, Paris Potter, J. ed.)(2008), Entrepreneurship and Higher education, OECD, Paris Potter, 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 â€oesmes, Entrepreneurship and Innovationâ€, Udine, Italy 22-23 october 2009, OECD LEED Programme, Paris
Pilat, D.,K. De Backer, E. Basri, S. Box and M. Cervantes (2009), â€oethe Development of Global Innovation
Networks and the Transfer of Knowledgeâ€, in V. Chandra, D. Erã cal, P. C. Padoan and C a. Primo
Culture and Competition in Silicon valley and Route 128, Harvard University Press, Boston Shane, S. and S. Venkataraman (2000), â€oethe Promise of Entrepreneurship as a Field of Researchâ€
Academy of Management Review, Vol. 25, No. 1, pp. 217-226 Winters, R. and E. Stam (2007), â€oeinnovation Networks Of high-Tech SMES:
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 157 3. KNOWLEDGE FLOWS ANNEX 3. A1 The â€oeorbis†Database
There are no exclusion thresholds in terms of enterprise size, unless national limitations reduce the coverage of administrative data sources.
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010158 death rates. Moreover, ORBIS naturally tends to overestimate real entry rates compared to
concentrates its economic activity. For a number of reasons, including geographical proximity to financial and administrative institutions, the place where the company sets
its core economic activities Besides location bias, other characteristics of commercial databases can indirectly alter the consistency of territorial data calculated from this sort of source
conventionally assumed to include all active enterprises resident in a given country Under-coverage is induced generally by threshold effects in which firms under a certain
by classification variables (economic activity, firm size and location. Such a deviation potentially generates biased economic indicators.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 159 3. KNOWLEDGE FLOWS The extent to which statistical biases affect indicators
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010160 3. KNOWLEDGE FLOWS ANNEX 3. A2 The LISA Methodology
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 161 The LISA cluster maps developed for the USA provide a graphic representation of
rather than â€oelearning†agglomeration economies. Further analysis is needed to investigate these effects SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010162
SMES, Entrepreneurship and Innovation  OECD 2010 Chapter 4 Entrepreneurship Skills This chapter describes the role of entrepreneurship skills in driving successful new
venture creation and putting innovative initiatives into action in SMES. Also discussed are the roles of tertiary and school education, vocational training and the
use of knowledge-intensive service activities and small business support in the provision of entrepreneurship skills.
Policy recommendations are provided 163 4. ENTREPRENEURSHIP SKILLS 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. Recent studies strongly underline this connection and signal as one of the qualities of successful entrepreneurs an exceptional capacity to learn and acquire
knowledge from everywhere and everything that comes their way (Smilor, 1997; Minniti and Byrgave, 2001.
Successful entrepreneurs are, and this also applies to small business owners and SME managers, â€oejacks-of-all-trades†(Lazear, 2004:
The OECD defines entrepreneurship as human action in pursuit of the generation of value by identifying and exploiting new products, processes
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. It is built on cumulative learning and preparedness (Gibb Dyer, 1993;
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 self -taught.
entrepreneurship by a lack of appropriate skills and behaviours. The evidence suggests that new entrepreneurs often face problems,
industry is transformed into a low-carbon economy. â€oegreen and silver jobs†are expected to grow and there will be a marked shift towards business services jobs in advanced
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010164 economies (CEDEFOP, 2008a. The level of skills is expected also to increase.
Even in the most negative scenario, more than 80%of jobs by 2020 are expected to require medium and
high levels of skills while low-skills jobs will continue to decline (CEDEFOP, 2008a Entrepreneurship skills will also be at a premium.
These are not â€oebasic†skills; they are more sophisticated, 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.
4. ENTREPRENEURSHIP SKILLS system. Therefore, looking towards the skills scenario of 2020, it is time to give
entrepreneurship skills greater attention Skills for entrepreneurship1 â€oeskills†refers to the abilities and capacities of people who perform tasks demanded of
environments and society develop, this classification will need to be adjusted. For example â€oegreen skills†is a recent addition,
Converging skills require several of the other skills plus skills specific to entrepreneurship, or for
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 and warranting, strategic thinking, self-confidence, the ability to make the best of personal networks,
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
) 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:
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 165 4. ENTREPRENEURSHIP SKILLS in ess ce ter
ced to ge t Table 4. 1. Classification of skills at work Source: OECD, 2010b, forthcoming
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,
different ethnic groups (e g. communications by a customer representative selling products/services in different countries, capacity to incorporate cultural differences in negotiations
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, motivating others to achieve a common goal, co-operation for success
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
to recognise available opportunities that can be significant for their personal, professional and/or busin
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010166 4. ENTREPRENEURSHIP SKILLS Entrepreneurship skills are considered here as converging,
because they require the integration of several other skills, with both a horizontal understanding of business
development and a vertical specialisation in one or more fields related to core competitive advantage. One of the definitional difficulties is that these skills are relevant not just to
workforce in entrepreneurship skills. For example, a recent survey of SMES in New zealand shows that entrepreneurship activities in the firm are the activities most linked with firmsâ€
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, making the decision to start 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
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 very rarely provided. 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 â€oeentrepreneurshipâ€, â€oesmall business managementâ€
and â€oenew venture creationâ€. 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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 167
4. ENTREPRENEURSHIP SKILLS 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. Teachers are pressed hard to deliver on their core programmes †the
basis for recruitment 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 best learned rather than be tethered to traditional classroom forms.
Many interactive reality-based and experiential approaches have been developed, 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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010168
4. ENTREPRENEURSHIP SKILLS 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 (lã¤nder) 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 a combination of both to sustain and expand this aspect of their â€oethird missionâ€
Half of them have 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.
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
â Strategy: There is clear role for public policy in â€oeopening up†universities towards their â€oethird missionâ€,
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
of entrepreneurship chairs and incubation facilities which proves to be successful â 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
â Entrepreneurship education: The exchange of good practice in creative teaching methods allows for improvement and innovation.
development and the integration of entrepreneurship courses, such as creativity classes â Start-up support: 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 â€oeover protectionâ€, early exposure to market conditions is advisable
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 169 4. ENTREPRENEURSHIP SKILLS â Evaluation: Public policy organisations and universities will need to work â€oehand in handâ€
in developing a monitoring and evaluation system which demonstrates the socio -economic 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 faculty -internal 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010170 4. ENTREPRENEURSHIP SKILLS 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,
2002 the demand for apprenticeship positions has exceeded constantly their supply, both in eastern and western Germany (Zwick, 2007.
Box 4. 2. Entrepreneurship support in universities: Criteria for good practice cont 4. The suite of courses has differentiated a offer that covers the pre-start-up phase, the start
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, and maintains close relationships with firms and alumni Evaluation 1. Regular stocktaking and performance checking of entrepreneurship activities is
undertaken 2. Evaluation of entrepreneurship activities is formalised and includes immediate (post -course), mid-term (graduation),
and long-term (alumni and post-start-up) monitoring of the impact SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 171
4. ENTREPRENEURSHIP SKILLS the â€oeaustralian Apprenticeshipsâ€, bring together the traditional apprenticeship and the traineeship systems. This initiative has been especially successful,
escalating from about 120 000 apprentices in 1995 to over 400 000 by 2003. The numbers in Australian
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, since the latter can often afford to run
However, improving entrepreneurship skills in SMES through vocational education and training is challenging due to obstacles to SMES in
participation from micro and small enterprises and from unskilled, semiskilled and older employees. Training packages and apprenticeship schemes have been very successful in
challenge of providing more relevant entrepreneurship teaching in vocational education therefore requires changes in programmes and pedagogy to focus on teaching the â€oehow toâ€
The business plan should not be as central to the teaching process as is usually the case, rather
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
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010172 4. ENTREPRENEURSHIP SKILLS 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. Currently workforce development measures are not flexible enough to be fully taken up by SMES.
An evaluation conducted by Brummelkamp et al. 2005) made a number of recommendations policy measures should target both workers and enterprises,
not providing financial incentives alone but also allowing freedom of choice and market transparency administrative burdens should be limited;
entrepreneurship and creativity in an SME. Owner-managers do not see themselves as having time to participate in long academic styled programmes
The need for people to have new skills for entrepreneurship is accompanied by a need for shifts in school curriculums and this is occurring slowly in many countries, encouraged
entrepreneurship. It is also based on the view that students who receive entrepreneurship education as part of their schooling show improved school attendance and educational
attainment, have increased problem-solving and decision-making abilities, improved interpersonal relationships, teamwork, money management and public speaking skills, are
for opportunities to make things happen, to have the self-confidence to achieve their goals and to use their talents to build a better society economically and socially (Cooney, 2009
â Introduce entrepreneurship as a key competence in school curricula â Ensure that the importance of entrepreneurship is reflected in teacher training
â 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 173 4. ENTREPRENEURSHIP SKILLS 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 â€oefrom Higher education Institutes to Entrepreneurâ€.
The Ministry of Education also appointed an Entrepreneurship Steering Group to ensure that the agreed programme of action was properly
implemented. 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
foster a culture for entrepreneurship. Scotland has launched also an entrepreneurship education called â€oedetermined to Succeed†(Box 4. 3
Box 4. 3. Scotland†s â€oedetermined to Succeed†entrepreneurship education strategy Scotland†s â€oedetermined 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 â€oewhat success will look likeâ€
which highlights how the programme will be measured. Obviously, the more important indicators cannot be measured in the early
and all have staff with responsibility for delivering enterprise in education. An annual reporting process ensures examples of good practice can be
communications strategies which keep parents informed of how they can support their child†s learning
â can use experiences in enterprise to reflect on other learning and make connections â are self-motivating
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010174 4. ENTREPRENEURSHIP SKILLS Box 4. 3. Scotland†s â€oedetermined to Succeedâ€
entrepreneurship education strategy (cont â can generate and act upon original ideas â understand transitions throughout life and the importance of making connections
between past, present and future experiences 2) Confident individuals â have a â€oecan doâ€, â€oebe all you can be†attitude
enterprise â understand the roles, rights and responsibilities of individuals as employees, managers employers, entrepreneurs, investors, customers and global citizens
â are willing to take responsibility for and accept the consequences of their own actions â understand the positive and negative contributions of technology and business to
economies 4) Effective contributors â 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 â have knowledge and understanding of wealth creation and wealth distribution both
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
how it wants to achieve its goals, what stakeholders needs to be involved, and what regular measurement systems need to be embedded into
Further details of the Scottish strategy on entrepreneurship education can be found at www. ltscotland. org. uk/enterpriseineducation/index. asp
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 175 4. ENTREPRENEURSHIP SKILLS 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. It found that in several countries (including Spain Finland, 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 well
established 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. Examples are regular programmes to train new employees or potential team
leaders and project management and foreign language language training (Markowitsch and Hefler, 2007. However, encouraging SMES to train remains a key policy challenge
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. This remains true in countries reputed for their high levels of training culture such as Denmark, the
training opportunities than less-educated older workers and workers involved in routine tasks (OECD, 2003; 2008a
of activities, investment in the training itself, and the adverse effects on management of workloads.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010176 4. ENTREPRENEURSHIP SKILLS 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
technologies, rapidly changing operational environments and evolving business concepts (OECD, 2006, p. 47. This results in â€oeco-production of knowledge†by the
different workers involved, constituting a critical nexus of today†s networking economy Alternatively, internal projects can be undertaken,
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.
here refers to learning that occurs in an organised and structured environment (e g. in an
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 177 4. ENTREPRENEURSHIP SKILLS KISAS are embedded in many occupational profiles
and tasks performed at work, not only high-knowledge intensive tasks but also more routine, low-knowledge tasks
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. Innovative firms are moving towards recognising the important contribution that routine workers can make
of knowledge production is high †are an example of the sophisticated entrepreneurship skills that can be learned at work
the context of the new green growth economy and in occupations that depart from previous rigid conceptions of job profiles (Miles et al.
SMES acquire knowledge and new entrepreneurship skills through formal (contractual and informal (networking) activities, where professionals interact with their embedded
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,
which enable SMES to purchase outside KISAS on a consultancy basis in support of an innovation
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 interface, new service development tailored training in innovation management or innovation/technology audits.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010178 4. ENTREPRENEURSHIP SKILLS Small business support There is a number of small-business-specific support programmes aimed at developing
entrepreneurship skills in SMES (although as yet there are no specific programmes supporting KISAS. In particular, the kinds of training offered by local chambers of commerce
and business associations, and the investment activity of local governments in private sector development, for instance through smart infrastructure such as HEI networked business
incubators, can make a difference in training take-up rates Business succession Business succession, that is, the transfer of businesses from retiring owners to new
owners, is an interesting field for policy that can combine elements of business start-up support with upgrading of an existing firm.
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
provided for owners and managers of independent enterprises with 250 employees or fewer, and at least partly funded by the organisation†(OECD, 2002, p. 6
Evaluations of these measures indicate that networking opportunities, combined with dedicated one-to-one attention and a â€oehands-on†approach are elements of successful
sharing of experiences that provide an opportunity to achieve business insights by learning from others in similar positions;
managers to think about processes, business models or solutions to specific problems. This type of training is common in SMES
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 179 4. ENTREPRENEURSHIP SKILLS to participate in these activities on an informal basis and through interactions with
companies and organisations in their network. As such these activities, even if critical for the entrepreneurship and innovation process of the firm
and to upgrade professionals†skills, do not carry standard qualifications and cannot be labelled as standard training (Martinez
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.
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
such was the case with the COMET programme in Australia (see Chapter 2, p. 48
and on the way the services are offered (Hall and Lansbury, 2006 The concept of skill ecosystems directs attention to the interdependency of multiple
entrepreneurship skill formation policy also demands an appreciation of workforce development as an alternative to traditional approaches centred on the provision of
more fully in entrepreneurship training activities has received little attention in policy design. Although training can in principle be provided by experts from other countries or
regions, it tends to be seen as a local resource by both enterprises and employees. This, and
economies, suggests that a local policy orientation might be useful in promoting greater entrepreneurship training cultures in SMES
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010180 4. ENTREPRENEURSHIP SKILLS An example of an organisation providing entrepreneurship training in a local skills
ecosystem is provided in Box 4. 4 below Policy recommendations â Build up entrepreneurship education in universities and higher education institutions
â 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 â Encourage growth-oriented entrepreneurship. Shift emphasis from business manage
-ment 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 â 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, including several world-class SME clusters.
services Formaper activities are aimed at providing technical assistance to private and public sector development through active involvement in international co-operation projects
Typical assignments include delivering tailored training and support services for the following fields of expertise
â Development of SMES, especially in their start-up phase, and entrepreneurship development †training programmes for owners, managers and consultants in business
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 181 4. ENTREPRENEURSHIP SKILLS placements and consulting projects.
Develop case studies tailored to the environment that students will face â 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, using them as mentors and so on.
-institution mobility of entrepreneurship teachers â Strengthen VET programmes for business founders, SME managers and SME workforces
both workers and enterprises; limit administrative burdens; increase transparency and clarity of objectives and information to employers and employees;
â Embed an entrepreneurship mindset through the school education system â Develop the training function of small business support programmes including
â Include entrepreneurship activities in school curricula; develop interactive materials and activities and involve entrepreneurs and businesses;
and support to teachers involved in entrepreneurship activities â Reinforce training in SMES â Use these and other approaches to support the integration of new employees and the
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;
SMES since they are ideal for entrepreneurship skills development â Increase the use of informal learning sources
entrepreneurship skills acquisition of SME workforces. Consider the use of Innovation Vouchers for this purpose
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010182 4. ENTREPRENEURSHIP SKILLS â Create integrated training strategies combining training located in higher education
vocational education and training, knowledge-intensive activities performed by the firm and SME support programmes Note
Cooney, T. 2009), â€oewhat Entrepreneurship Skills are Important to Innovation in SMES and How Should
Entrepreneurship and Innovation, Udine, Italy, 22-23 october 2009, OECD LEED Programme, Paris Dawe, S. and N. Nguyen (2007), Education and Training that Meets the Needs of Small Business:
European commission (2006), Management Capacity Building, Enterprise and Industry Directorate -General, Brussels European commission (2007), â€oeassessment of Compliance with the Entrepreneurship Education
Objective in the Context of the 2006 Spring Council Conclusionsâ€, Directorate General for Enterprise and Industry, Brussels
Gibb, A. 2002), â€oein Pursuit of a New †Enterprise†and †Entrepreneurship†Paradigm for Learning
Gibb, A. 2009), â€oethe Small Business and Entrepreneurship Challenge to Vocational education Revolution or Evolution? â€, 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), â€oetowards a Theory of Entrepreneurial Careersâ€, Entrepreneurship Theory and Practice, Vol. 19, No. 2, pp. 7-21
Innovation, EC DG Enterprise and Industry, Brussels Hall, D. and R. D. Lansbury (2006), â€oeskills 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), â€oebenchmarking Entrepreneurship Education
across US, Canadian and Danish Universitiesâ€, in J. Potter (ed.),Entrepreneurship and Higher Education, OECD, Paris, Ch. 6, pp. 139-164
Itkonen, K. 2009), â€oedeveloping Entrepreneurship in Small Enterprises †The Succession Process Supported by Apprenticeship Training as a Context for Learning†in M.-L. Stenstrã m and P. Tynjã¤lã
¤eds.),), Towards Integration of Work and Learning: Strategies for Connectivity and Transformation, Springer United kingdom, pp. 153-170
2007), Enterprise Training in Europe †Comparative Studies on Cultures Markets and Public Support Initiatives, LIT-Verlag, Vienna
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 183 4. ENTREPRENEURSHIP SKILLS Martinez-Fernandez, C. 2005), Knowledge Intensive Service Activities (KISA) in Innovation of Mining
Technology Services in Australia, University of Western Sydney, Sydney Martinez-Fernandez, C. and L. Martinez-Solano,(eds.
2006), â€oeknowledge Intensive Service Activities KISA) in Software Innovationâ€, International Journal of Services Technology and Management, IJSTM
Special Issue, Vol. 7, No. 2, pp. 109-173 Martinez-Fernandez C.,M. Receretnam and S. Sharpe (2007), Manufacturing Innovation in the New Urban
Economy: Responses to Globalisation, University of Western Sydney and Liverpool City council, UWS Sydney Martinez-Fernandez, C. and S. Sharpe (2007), Ways to Grow in South West Sydney, University of Western
Service Economy †Scenarios and Implications for Skills and Knowledge, ETEPS AISBL, Brussels Minniti, M. and W. Byrgave (2001), â€oea Dynamic Model of Entrepreneurial Learningâ€, Entrepreneurship
Theory and Practice, Vol. 25, No. 3, pp. 5-16 Muller, E. and A. Zenker (2001), â€oebusiness Services as Actors of Knowledge Transformation:
The Role of KIBS in Regional and National Innovation Systemsâ€, Research Policy, Vol. 30, pp. 1501-1516
OECD (2005), SME and Entrepreneurship Outlook, OECD, Paris OECD (2006), The Role of Knowledge Intensive Activities (KISA) in Innovation, OECD, Paris
Potter, J. ed.)(2008), Entrepreneurship and Higher education, OECD, Paris Smilor, R. 1997), â€oeentrepreneurship: Reflections on a Subversive Activityâ€, Journal of Business Venturing
How Does Successful Innovation Impact on the Demand for Skills and How Do Skills Drive
Zwick, T. 2007), â€oeapprenticeship Training in Germany †Investment or Productivity Driven? †Discussion Paper No. 07-023, Centre for European Economic Research, Germany
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010184 SMES, Entrepreneurship and Innovation  OECD 2010 Chapter 5
Social Entrepreneurship and Social Innovation The chapter outlines social entrepreneurship and social innovation before going on
to provide concrete examples. While it may be argued that these fields require better exploration and articulation, that does not mean that their role should be
underestimated. They have already proved to be effective tools to meet social challenges and needs and contribute to sustainable development.
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Introduction Social entrepreneurship and social innovation have garnered, in the past decade
particular attention from policy makers, academics, practitioners, and the general public Both are important tools to tackle social challenges
If economic globalisation offers opportunities to improve living conditions, it also implies substantial and continuous restructuring
economic crisis †and a renewed or new approach, not only to the new social challenges but
Competition keeps increasing and as a consequence, all territories have to engage more strongly in innovation, both
and in entrepreneurship, both â€oecommercial†(for-profit businesses pursuing as a primary objective economic value and its appropriation) and social (primarily
aiming at addressing and satisfying unmet social needs, and therefore creating social value 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
and social development so that once the economy has recovered the benefits can be widely diffused 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,
entrepreneurship tends to overlap with terms such as social economy, third sector, nonprofit SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010186
sector, social enterprise and social entrepreneur, some of which are also ill-defined and overlapping (see the Glossary at the end of the book.
Moreover, definitions are context -sensitive, in the sense that the geographical and cultural contexts matter.
entrepreneurship and social enterprise do not have the same meaning in the United states as in Europe for example, 1 and this difference also complicates things.
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION There is, therefore, a need for greater conceptual clarity to be developed around these
This chapter examines social entrepreneurship and social innovation and explores their meaning, as well as considering concrete examples of both.
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 non
-profit 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 â€oesocial 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
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
organisations was introduced in 1999, the number of social entrepreneurship entities developed from 1 176 in 1999 to 30 000 in 2008,
USD 110 097 billion according to OECD STAT) to the economy in 2005, which represents 1. 5%of Japan†s GDP
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,
15 000 social enterprises employing 350 000 employees, serving 5 million users and with an economic turnover of EUR 10 billion
as social enterprises (36 in October 2007; 19 in December 2007; 30 in April 2008;
the Research Institute of Social Enterprise Moving to the social economy, a recent report by CIRIEC (2007) clearly shows its diversity
in European countries. Part of the study is devoted to the presentation 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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 187
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Social entrepreneurship The concept of social entrepreneurship is defined still poorly and its boundaries to
other fields of study remain fuzzy. While to some this may appear to be a problem, it
could also be seen as a unique opportunity for researchers from different fields and disciplines, such as entrepreneurship, sociology and organisational theory, to
challenge and rethink central concepts and assumptions (Mair and Marti, 2006, p. 36 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 entrepreneurs link themselves to a wide spectrum of organisations that have an entrepreneurial approach and
whose overall primary mission is to tackle social problems. Social entrepreneurship is, therefore, about solving social problems rather
than exploiting market opportunities. Social currency is the motivation of social entrepreneurs who â€oe†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. â€oethe 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, equivalent to about 6%of the working population of the EU These aggregates underline the fact that this is a reality
actually exceed for-profit wages in many of the fields where both sectors operate; Despite
In effect, the Global 300 is the 10th largest economy in the world (ICA, Annual Report, 2006
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010188 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION to pursue opportunities to catalyze social change†(Mair and Ganly, 2010.
Social entrepreneurs are in pursuit of â€oesustainable 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 Whether it is better to concentrate on setting the boundaries 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,
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
entrepreneurship have not yet been explored adequately (see for e g. Austin et al. 2006 Mair and Marti, 2006;
on what defines social entrepreneurship or a social entrepreneur may not be important†arguing that what really matters is understanding the landscape of the sector
entrepreneurship could become very inclusive and, as a result, represent an immense tent into which all kinds of socially beneficial activities fit (Martin and Osberg, 2007.
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 â€oe†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 and practices from the field and to exclude others has been reached.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 189 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION entrepreneurship:
social value, social mission, social wealth, social change, social impact social innovation, sustainability, creativity and a business approach
The content and approaches of definitions vary; they tend to include multiple dimensions; and they present a number of conflicting â€oetensions†within the notion itself
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
social enterprises, which are owned often collectively and managed in the form of a co -operative, and initiatives realised by communities that can be seen as collective
2. is shaped social entrepreneurship by social value rather than economic value? The answer would be that,
social mission of social entrepreneurship initiatives, the creation of social value is the essential feature of the initiatives, for the social entrepreneur†s principal aim is to produce social
the novelty represented by social enterprises and social entrepreneurship is that the economic value serves social objectives.
In this sense, social entrepreneurship creates â€oeblended 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 â€oeattitudes†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,
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
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010190 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION
The distinction between a commercial entrepreneur †who, in creating jobs and in providing goods and services,
obviously also has a social impact †and a social entrepreneur is that social entrepreneurs create their business in order to produce a
social impact (or to address a neglected positive externality. Solving social challenges is articulated their goal
opportunity to increase personal wealth, is the explicit goal of social entrepreneurs and their business mission
â€oewhat distinguishes social entrepreneurship from commercial entrepreneurship is the predominant focus on value creation rather than on
value appropriation. †Although individuals may have multiple goals, organizations need clarity of purpose in order to engage with their environment in coherent ways.
They need to choose either value creation or value appropriation as their dominant focus†Santos, 2009, p. 13
Box 5. 2. Social entrepreneurship â€oeattitudes†in the for-profit sector Corporate social responsibility (CSR) is a concept distinct from that of social
entrepreneurship; the two ideas do not overlap. Still, some commercial business can have significant CSR initiatives in the social entrepreneurship field, most especially if they
support the development of this sector. One good example is Banca Prossima in Italy, created by Intesa Sanpaolo, a large Italian banking group, in November 2007.
shareholder funds of about EUR 120 million one of the largest capitalisations in its field;
nonprofits that won a regional auction for provision of healthcare services to old and disadvantaged people;
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 191 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Social entrepreneurship practices
Having considered the theoretical approach to social entrepreneurship, some examples of it are presented now; these show the variety of its expressions.
Individual social entrepreneurs are featured (Institute For one World Health, inspired by a powerful leader), together with collective organisations (cooperatives like the Health and Social
Care Cooperative in Wonju, Korea), registered charities (such as Silai for Skills) and associations (like SIEL BLU.
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 â€oeattitudes†in the for-profit sector (cont â A project for setting up residences to host mentally disabled people who have outlived their
focuses not only on providing healthcare services, but also on addressing wider health issues, such as poor housing and diet.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010192 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Health-related problems are at the core of the initiative of pharmaceutical scientist
Victoria G. Hale, founder of the Institute For one World Health (Box 5. 4). There the concern is to
is the capacity-building opportunities offered to healthcare workers and scientists, with a possible further impact on economic development
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
One World Health also creates interesting opportunities for industry, government and academia, and developing world partners.
industry by offering dual market opportunities through its role as global development partner and by taking responsibility for markets in developing countries.
/SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 193 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION 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,
as well as the prevention and limitation of dependency is the focus of the association†s activity.
Given the challenges represented by an ageing population, this mission is an important one. Its expansion from the initial start in a few
retirement homes through to home care for the elderly and disabled, 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. Focusing on preventative health has the result of reducing public spending on
This innovative social enterprise (a registered charity) has as its main objective to help build women†s skills,
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
have access to the services regardless of their financial situation A new development for Silai for Skills is an â€oeenterprise unit†in which current and past
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010194 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION 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
â€oethe 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. ††Josã Manuel Barroso, President of the European union, 20 january 2009
What is social innovation? The OECD definition In 2000, the Local Economic and Employment Development Committee (LEED) of the
This multi-stakeholder Forum was created in April 2000 with the main Box 5. 6. SIEL Bleu (France
There is also GPS Santã, a commercial venture created to help companies prevent accidents and muscular-skeletal disorders among its
annual budget by selling its services to institutional care providers; and develop a well -trained staff.
insurance companies that help to pay for SIEL Bleu†s services. Moreover, SIEL Bleu makes sure to keep its costs low
is need in of its services but is unable to pay for them, the association works with the
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 195 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION objective of facilitating international dissemination
and transferring best policies and practices in social innovation. Some eleven organisations from six countries signed the
stakeholders and territories â€oesocial 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
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 †sociã tã coopã rative d†intã rã t collectif, cooperative of collective interest †and The british
account, 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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010196 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Many of the elements presented in the OECD definition have been taken into account
by other definitions at a later stage Theories of social innovation The notion of social innovation has not yet been explored totally.
Like social entrepreneurship, social innovation has blurred boundaries. Nevertheless, the term has been used widely to refer to
entrepreneurship, a balance between inclusive and exclusive definitions has to be found Social innovation is needed
further ideas and innovations (like the move to a low-carbon economy or the creation of a
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 social innovation is critical to this process (NESTA, 2008a.
and innovation in the nonprofit sector or for profit private sector that improves public services or provides new ones.
sector (voluntary and community groups and social enterprises) may be spun â€-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
of ICT by social enterprises and by civil society is strengthening the links between technological innovation and social innovation,
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 197 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION sectors have adopted since the idea of social innovation,
and this has resulted obviously in its wider application and new impetus and energy. Still, the nonprofit sector plays an
social issues. 11 At the same time the nonprofit/social economy sector is increasingly adopting an entrepreneurial approach to further pursue its social objectives
acknowledgment of a need or demand within society, and then the effective supply, which comes first from innovative ideas and secondly from the transformation of these ideas into
actors to support social enterprise development, and is a social innovation worth underlining SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010198
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION 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
it is the result of the joint efforts of multiple stakeholders Box 5. 7. Individual Development Accounts (IDAS
Washington-based, private organisation, the Corporation for Enterprise Development CFED), started a trend in 1997.
housing-related programmes and services promoting home ownership, educating renters and landlords, improving existing housing stock,
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 199 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION a
ing nd of ity ion ial eby the the to ers of age lso ose
significant local difficulties, including a lack of basic services such as water, electricity, transport a health services, the Association of Residents of Conjunto Palmeiras proposed a community bank as way
helping themselves Palmas Bank has three main characteristics: management responsibilities are borne by the commun there is an integrated system of local development that promotes credit, production, commercialisat
community, e g. commerce, industry and services, to exchange currency each time it is necessary 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 produc and consumers), incentive tools for local consumption (credit card and social currency) and new ways
community benefits of consuming local goods and services, and the wider benefits of the solidar
economy; to help build a network of local producers and traders; and to promote the development of lo
ria (National Secretariat of Solidarity Economy) and the Banco popular do Brasil was sign The agreement allowed not only Bank Palmas
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010200 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Bank Palmas represents a powerful example of a social innovation driven by the
community as a methodology for the sustainable eradication of poverty in disadvantaged neighbourhoods. Community banks represent a hybrid economy †locally connected but
market driven †which helps to promote the attractiveness of an area and the proper
networks of social economy organisations; spread throughout Brazil and also Venezuela 3 600 banks have been created following the example of Bank Palmas) and soon to
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
investment Box 5. 9. Equisol (France The Regional Council of Ile-de-france launched on 21 september 2009 Equisol (a
which is an investment fund specifically targeting social enterprises. It aims to fund hundreds of projects â€oewith a social and/or
environmental objective†during its 15-year lifetime. With a budget of EUR 1. 75 million
this fund will enable capital to be provided to social enterprises during their creation, operation and development phases
The region has a 49%share of the fund, and has sought out other partners (including
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. Designed to complement the overall financing offer already present in Ile-de-france,
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 funding available ranges from EUR 10 000 to 100 000 and can
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 201
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION 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
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 deep
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, such as
investment into addressing the causes of deep-rooted social problems and create a new way of
-responsible companies and engaged individuals in a unique environment of shared interests. It supplies the tools necessary to support online campaigning,
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
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010202 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Box 5. 11. ammado:
A global platform harnessing social media for social goods (cont â nonprofits to promote their cause (s)
developing economies but also to organisations in developed countries: take for example the Italian Red cross. At the time of the massive earthquake that rocked the region of
/SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 203 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION The discussion now turns to the increased interest in social innovation among some
OECD member countries and the ad hoc structures and special measures created as a result These are important in moving social innovation towards the mainstream of public policies
-profits, social entrepreneurs, corporations and foundations †as partners in solving social challenges. Located within the Domestic Policy Council, it will seek to:
asked Congress to allocate USD 50 million in seed capital for the Social Innovation Fund, to
and then provide the capital needed to replicate their success in communities around the country that are facing similar challenges.
education, healthcare and economic opportunity. It will partner with foundations philanthropists and corporations that commit matching resources, funding and technical
services through social innovation. The work of The Lab is divided into three distinct parts Challenge Lab looks at the contribution innovation can make to services, with an initial
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010204 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION focus on ageing, health and climate change;
Methods Lab examines how public service innovation can be fostered; and Learning Lab seeks to disseminate what works and what
does not work (www. nesta. org. uk Social innovation and entrepreneurship are considered also critical factors for economic
development in Portugal, a view reflected in the recently approved Portuguese Government Programme. They are addressed mainly by two programmes:
Support Social Economy Development (PADES), which includes support for social innovation and the INOV-Social programme,
economy institutions France launched in December 2009 a â€oelarge 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 and it is hoped that this could leverage from the private markets a further EUR 25 billion.
Loan facility will create a fund of EUR 100 million to support social entrepreneurship and
Social entrepreneurship and social innovation aim to meet unsatisfied social needs and to respond to social challenges.
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 innovation is also about social change and refers
Social entrepreneurship â Build enabling environments and implement supporting policies â Specific enabling environments (legal, fiscal, regulatory) might be needed for social
entrepreneurs, according to the form that their initiatives take. 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
â Provide sustainable finance â A social capital marketplace should be fostered. Policy measures should include
offering fiscal incentives to attract investors; offering multiple forms of credit enhancement; and, spearheading and monitoring innovative institutional
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 205 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION funding is critical in the early phases of a project as it covers the costs linked to a start
-up and also the costs of capital investments. This could be provided through small loans or grants
â Support further research â 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 â Provide training opportunities to social entrepreneurs
and include social entrepreneurship in school and university curricula â 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 â Support market development for social enterprise and provide training for public officials and
social enterprises to deal with public tenders â 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 â Evaluate the impact of social entrepreneurship in selected areas
â This will require the identification of quantitative and qualitative measurement tools including the social return on investment measures and the balanced scorecard
Social innovation â Support further research â 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
â Create incubators for social innovations and foster the emergence of intermediaries who can connect social demand with the supply of social innovations
â 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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010206 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION
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. The absence of intermediaries in the social field is a key
reason why too few innovations succeed. For intermediaries to be effective, they must be embedded across sectors †the state, the private sector and the social economy
/nonprofit sector â Evaluate the impact of social innovation in selected areas â This will require work on accountability,
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, and identifies ways in which Europeans and Americans can learn from each other.
The broader definition of social enterprises in the United states (â€oe†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 with
social and commercial aims, located in the third sector, 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 Defourny and Nyssens (2008, p. 203) explain that the notions of social entrepreneurs, social
entrepreneurship and social enterprise were used in an interchangeable way until recently and that â€oesocial entrepreneurship was seen as the process through which social entrepreneurs created
social enterprisesâ€. More recently though, the notions have been differentiated: â€oesocial entrepreneurs†in the United states are individuals launching activities dedicated to a social mission, while in
the social enterprises themselves, which are usually of a collective nature, rather than on the
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 â€oethird sectorâ€. 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
â€oenon-profit organisations more oriented towards the market and developing †earned income strategies†as a response to decreasing public subsidies and to the limits of private grants from
foundations†(p. 204 2. Santos (2009) argues that if there are perceived positive externalities, government will act to
Here social entrepreneurship gives its full contribution. An example of this is the Unis-Citã initiative in France:
this social enterprise was created to offer young people opportunities for civic service in order not only to increase their skills
3. In 2006 Light identified four components of social entrepreneurship: entrepreneurs †the people who pursue change;
opportunities †for disrupting the equilibrium; and organisations †which seek to bring about change (Light, 2008, p. 17.
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 207 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION existing literature at that time,
which had led him to a very inclusive definition of social entrepreneurship. Thus he suggested that it is â€oean effort by an individual, group, network
organisation or alliance of organisations that seeks sustainable, large scale change through pattern-breaking ideas in what governments, nonprofits and business do to address significant
in a more exclusive (that is narrow) definition of social entrepreneurship based on the idea that â€oethere are special sets of attitudes,
3) opportunities for grand changes come in waves; 4) socially entrepreneurial organisations are built to make changes
2009) focus on the landscape of social entrepreneurship rather than on defining it. In order to do so,
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. â€oeregardless 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.
social entrepreneurship as follows: â€oesocial 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
7. Somehow the ideal type of social enterprise 8. The specific objectives of the Forum on Social Innovations are:
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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SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 211 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION ANNEX 5. A1
Definitions Table 5a. 1. Definitions of social entrepreneurship Author (s) Year Definition Fowler 2000 â€oesocial entrepreneurship is the creation of viable (socioeconomic structures, relations, institutions
organisations and practices that yield and sustain social benefits. †(p. 649 CCSE 2001 â€oedefines †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, and the benefits that accrue to
approaches in the not-for-profit sector in order to increase organisational effectiveness and foster long-term sustainabilityâ€.
Economy 2002 â€oesocial entrepreneurship is not about starting a business or becoming more commercial. It is about
finding new and better ways to create social value. †(p. 326 Hibbert, Hogg and Quinn 2002 â€oesocial 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 â€oesocial entrepreneurship is the art of simultaneously pursuing both a financial and a social return on
investment (the †double bottom lineâ€. †(p. 1 Thompson 2002 â€oealthough 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 â€oesocial 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 lineâ€. †(p. 69 Mair and Noboa 2003 â€oese 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 â€oesocial 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 â€oesocial entrepreneurship, the entrepreneurship leading to the establishment of new social enterprise and the continued innovation in existing ones. †(p. 76
â€oeconceptualises 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 â€oethe innovative use of resources to explore
and exploit opportunities that meet a social need in a sustainable manner. †(p. 3
SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010212 Haugh 2005 â€oesocial entrepreneurship is the process of creating social enterprise. †(p. 3
Roberts and Woods 2005 â€oesocial 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 â€oesocial 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. â€
pp. 243-244 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Table 5a. 1. Definitions of social entrepreneurship (cont
Source: Brouard and Larivet, 2009 Author (s) Year Definition GEM 2006 â€oesocial 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 â€oeone 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 â€
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 â€oefirst, 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 â€oeinnovative 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 â€oesocial 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
†envisionâ€; 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
relatively undaunted by scarce assets in pursuing their social venture. †(p. 64 Perrini 2006 â€oeentailing innovation designed to explicitly improve societal wellbeing,
Weerawardena and Mort 2006 â€oesocial entrepreneurship strives to achieve social value creation and this requires the display
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
2006 â€oesocial entrepreneurship concerns the processes related to the discovery of opportunities to create social wealth and the organisational processes developed
Cochran 2007 â€oesocial entrepreneurship is the process of applying the principles of business and entrepreneurship
Haugh 2007 â€oesocial 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 â€oewe 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
2) identifying an opportunity in this unjust equilibrium, developing a social value proposition, and bringing to bear inspiration, creativity, direct action, courage, and fortitude, thereby
2007 â€oewe define social entrepreneurship as an innovative, social value creating activity that can occur
Entrepreneurship 2008 â€oeinnovative approaches to social change†or â€oeusing business concepts and tools to solve social
2008 â€oesocial 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 SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 213
5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Table 5a. 2. Definitions of social innovation Source Year Definition
OECD/LEED Forum on Social Innovations 2000 â€oethe 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
â identifying and delivering new services that improve the quality of life of individuals and communities â identifying and implementing new labour market integration processes, new competencies, new
for a need, to benefit from an opportunity to modify social relationships, to transform established
Social Entrepreneurship and Social Innovation 2007 Social innovation â€oecan simply be understood as †new ideas that work which address social or environmental
or changing organisational structures to grasp new opportunities to add social value. New programmes, models,
EMES 2007 According to the EMES, social innovation can be seen â€oeas arising from a new kind of entrepreneurship
and from new lifestyles to new products and services. We have also suggested a somewhat narrower definition
Innovative activities and services that are motivated by the goal of meeting a social need and that
motivated 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 (and overly precise definitions tend to limit understanding rather than helping it) †(Mulgan et al.
â â€oenew ideas (products, services and models) developed to fulfil unmet social needs â many of those supported by the public sector, others by community groups and voluntary
and delivery of services â social innovation can either spread throughout a profession or sector †like education or healthcare
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010214 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION Table 5a. 2. Definitions of social innovation (cont
Source Year Definition Stanford Social Innovation Review 2008 â€oea novel solution to a social problem that is more effective, efficient, sustainable,
entrepreneurship focused on social goals, new products of new qualities of products, new methods of organisation and/or production (often involving different partners and resources), new production
served or unresolved by services organised by the state. Social innovation can take place inside or
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 215 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION ne
ies the unt th ew urs ffs all rch cal ing of ANNEX A Policy Recommendations:
through SMES and Entrepreneurship A summary of the policy recommendations of the report is presented in the Box below
Policies to strengthen entrepreneurship and increase the innovation capabilities of SMES should be o of the main planks of government innovation strategies.
1. Promote conducive entrepreneurship cultures and framework conditions â Foster positive attitudes in society to business start up and growth including through education and
and conditions of entrepreneurship and SME activity are taken into acco in framework conditions and regulations affecting business
â Strengthen knowledge-based entrepreneurship by providing advice and training to start-up entreprene with strong technological knowledge and developing programmes for corporate and university spin-o
programmes, services for knowledge transfer and joint technology foresight activities and responses â Stimulate local knowledge flows by involving SMES in interactive learning networks,
entrepreneurship engagement aspects of university â€oethird missionsâ€, developing technology bridg institutions, strengthening the innovation absorption capacity of SMES
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010216 labour into and out of new and small firms
services and technologies with growth potential 5. SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATION ing ges ng
-ip der ME nd the of nd on nts for gh cal her eir blic
between SMES and foreign direct investment ventures and attracting highly-skilled labour from abroad 3. Strengthen entrepreneurial human capital
â Build up entrepreneurship education in universities and higher education institutions by smartly scali up, shifting the teaching emphasis from business management to growth-oriented entrepreneursh
introducing interactive teaching methods that incorporate practical experience and linking into wi networks including alumni networks and external economic development organisations
relevant teacher training and teaching materials designed for entrepreneurship â Reinforce training in SMES by launching in-company projects, increasing SME apprenticeships a
providing knowledge-intensive services activities, such as through innovation voucher programmes SMES â Strengthen the contribution of local skills ecosystems to entrepreneurship and SME development throu
greater engagement of employers, unions and individuals involved in new and small firms with lo
4. Improve the environment for social entrepreneurship and social innovation â Build financial, fiscal, legal and regulatory environments that enable social enterprises to meet th
economic and social goals, including facilitation of a social investment marketplace, introduction of pu procurement measures that include socioenvironmental criteria and experimentation with innovat
institutional arrangements between civil society, governments, financial institutions and social enterpr ventures â Undertake research into social entrepreneurship and social innovation and their main components
order to create clear definitions and understandings of how to develop them â Evaluate the impacts of social entrepreneurship and social innovation policies and programmes us
appropriate methods such as Social Return on Investment measures and balanced scorecards â Provide training opportunities to social entrepreneurs
and include social entrepreneurship in school a university curricula â Introduce social clauses in public procurement procedures to encourage involvement of social enterpri
in provision of social goods and services â Establish social innovation funds in specific fields where social innovation is needed or to supp
promising experiments and models â Create incubators for social enterprises and social innovation intermediaries to bring together the sk
and expertise necessary to help sustain and develop social projects, provide a space to experime
support learning across a community of innovators and establish clear pathways for scaling up the m
promising models SMES, ENTREPRENEURSHIP AND INNOVATION  OECD 2010 217 SMES, Entrepreneurship and Innovation  OECD 2010
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 and avoiding technology lock ins in innovation systems
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
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 and exploiting new products, processes of markets. It may occur through new business creation or within SMES, large firms and the public and non
-profit sectors 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 and development while reducing pollution and greenhouse gas emissions, minimising waste and inefficient use of natural resources, maintaining
environmental impacts from economic growth, and greening of consumption and production patterns, while reducing poverty and improving health and job prospects.
growth means making investment in the environment a new source of economic growth Green jobs Jobs 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.
-communications, and scientific instruments Incremental innovation An improvement on existing products or processes that is achieved through internal
maximise profits on existing products and services Innovation system The actors, institutions and relationships which interact in the production, diffusion
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010220 GLOSSARY national, regional or local dimension. They include firms, universities, finance suppliers
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
when firms collaborate with each other or when they do so with external bodies (e g. research organisations and technology institutions
development, legal services, computing and information technology and marketing. The engagement of SMES with providers of KISAS supports their learning and innovation
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 221 GLOSSARY relationships outside of the firm including licensing, spin-offs and informal research and
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
Small and medium-sized enterprises (SMES Non-subsidiary, independent firms which employ less than a given number of
Social economy The ensemble of entities that explicitly have both an economic and a social mission
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 SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010222
GLOSSARY 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, each of which
contributes to improving the position of individuals in the workforce Spin-off A new firm that is created by a former employee of a company (i e. corporate spin-off
or by researchers, teachers or students of a university (i e. university spin-off. Corporate spin-offs are established often to outsource stages of production previously carried out in
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010 223 GLOSSARY Third sector Often used as a synonym for the nonprofit sector,
shareholders Vocational education and Training (VET Formal education and training programmes that have a task orientation rather than
SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 2010224 OECD PUBLISHING, 2, rue Andrã-Pascal, 75775 PARIS CEDEX 16
OECD Studies on SMES and Entrepreneurship SMES, Entrepreneurship and Innovation Welcome to the entrepreneurial economy:
small fi rms are playing an ever-increasing role in innovation, driven by changes in technologies and markets.
Whilst some spin-offs and high growth fi rms are having remarkable success, however, the broad bulk of small fi rms are not capitalising on
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 embedding fi rms in knowledge fl ows;
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
S M E s, E ntrep reneurship and Inno vatio n 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
and Entrepreneurship SMES ENTREPRENEURSHIP AND INNOVATION O E C D S tu d ies o
N s M E s an d E ntrep ren eu rsh ip Foreword Acknowledgements Table of contents
The knowledge economy Open and distributed innovation Global connections Non-technological innovation The â€oesilicon Valley Business Modelâ€
Social entrepreneurship and social innovation What is the role of SMES and entrepreneurship in innovation
Creative destruction Knowledge spillovers Breakthrough and incremental innovation Interactive learning Modes of innovation Policy implications
SMES, Entrepreneurship and Innovation: An Overview by Country Introduction Box 2. 1. Basic methodological references
Enterprise Connect Austria Seedfinancing Aplusb Belgium Flemish Cooperative Innovation Networks (VIS Walloon Pre-activity Grant
Technology centres and centres of strategic business support services Denmark Regional Centres of Growth (Vaeksthuse
Funding for Young Innovative Enterprises and Start-up Accelerator France PÃ'les de compã titivitã Germany
Creation †Support to New Innovative Enterprises Hungary Iceland Icetec †Icelandic Technological Institute New Business Venture Fund
Ireland Italy Industria 2015 Japan Small Business Innovation Research Support for Development of Networks between Upstream and Downstream Companies
National Credit and Investment Society Luxinnovation Mexico AVANCE The netherlands Innovation Voucher Technopartner Programme New zealand Technz
Technology Investment India Information technology (IT Biotechnology Technopreneur Promotion Programme Indonesia Innovation Centre for Micro, Small and Medium Enterprises
Israel Incubator programme Yozma programme Russian Federation Foundation for the Assistance of Small Innovation Enterprises
RUSNANO Venture Funds Slovenia South africa Support Programme for Industrial Innovation Technology and Human resources for Industry Programme
Notes on the Country Data Chapter 3. Knowledge Flows Introduction How knowledge affects entrepreneurship The systemic approach to innovation
Box 3. 1. Main activities in an innovation system The geographical clustering of knowledge-intensive activities
European union Figure 3. 1. Distribution of HTM firms in the European union (Quantiles based on LQS Figure 3. 2. Distribution of KISA firms in the European union (Quantiles based on LQS
Knowledge transfers from foreign direct investment The attraction of foreign skilled workers Conclusions and policy recommendations
Entrepreneurship Skills The importance of entrepreneurship skills for SMES and start-ups Skills for entrepreneurship Table 4. 1. Classification of skills at work
Relationship between skills and innovation Box 4. 1. Core characteristics of entrepreneurs How are acquired entrepreneurship skills
Universities and higher education institutions Box 4. 2. Entrepreneurship support in universities: Criteria for good practice Vocational education and training
Schools Box 4. 3. Scotland†s â€oedetermined to Succeed†entrepreneurship education strategy Training in SMES
KISAS and learning at work Small business support Local skills ecosystems Box 4. 4. Formaper Policy recommendations
Note Bibliography Chapter 5. Social Entrepreneurship and Social Innovation Introduction Box 5. 1. The growth of social entrepreneurship
Social entrepreneurship What is social entrepreneurship The challenge of defining social entrepreneurship Social entrepreneurship theories
Box 5. 2. Social entrepreneurship â€oeattitudes†in the for-profit sector Social entrepreneurship practices Box 5. 3. Health and Social Care Cooperative (Wonju, Korea
Box 5. 4. Institute for Oneworld Health (United states Box 5. 5. Silai for Skills (England
Box 5. 6. SIEL Bleu (France Social innovation What is social innovation? The OECD definition
Theories of social innovation Social innovation in practice Box 5. 7. Individual Development Accounts (IDAS Box 5. 8. Bank Palmas (Brazil
Box 5. 9. Equisol (France Box 5. 10. Social Impact Bonds (United kingdom Box 5. 11. ammado:
A global platform harnessing social media for social goods Preliminary recommendations Social entrepreneurship Social innovation Notes
Bibliography Annex 5. A1. Definitions Table 5a. 1. Definitions of social entrepreneurship Table 5a. 2. Definitions of social innovation
Annex A. Policy Recommendations: Strengthening Innovation through SMES and Entrepreneurship Box A1. Summary of Policy Recommendations
Glossary
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