Description
Skills Development For Smes And Entrepreneurship
OECD-DBA INTERNATIONAL WORKSHOP
“SKILLS DEVELOPMENT FOR SMEs AND ENTREPRENEURSHIP”
Summary Report
1
Background information
The OECD Local Economic and Employment Development (LEED) Programme and the Danish
Business Authority (DBA) organised a workshop on “Skills Development for SMEs and
Entrepreneurship” on 28 November 2012. The workshop intended to support future policy
development by DBA in the domain of human capital development in new and small existing
businesses, as well as to strengthen the knowledge of OECD/LEED on an area where parallel work is
ongoing (local reviews, surveys, etc.). The workshop was organised around three main sessions,
which also provide the structure of this summary report: i) workforce skills development in SMEs; ii)
skills for growth-oriented entrepreneurship; iii) skills for socially inclusive self-employment.
Session I: Workforce skills development in SMEs
It is well-known by policy makers that small enterprises invest less than large companies in training
their workforces. Workforce training is up to three times more expensive for SMEs than for large
companies, mainly as a result of lack of economies of scale, higher opportunity costs and higher costs
for administrative compliance. Small companies tend to have fewer employees attend formal (internal
or external) courses; meet greater production constraints due to lack of appropriate staff; and spend
more time in understanding which training is relevant to them and how to benefit from it. However,
cost is not the only issue. Small businesses find it difficult to receive customised training, largely as a
result of lack of economies of scale. And they are less likely to perceive the value of training for
upgrading their production processes. The whole of these factors poses a challenge to the training of
workers in small enterprises and, in the long-term, saps the productivity and competitiveness of SMEs
in an increasingly knowledge-based economy.
Given this background, Prof. Ian Stone (Durham University) gave the keynote speech of the
workshop based on an international review of policies and programmes in upgrading workforce skills
in small businesses. After identifying the main barriers to training in SMEs – which included some of
the market failures introduced above – the author presented a rich overview of programmes that can
be summarised in the table below according to which area of action they address.
1
This summary report has been prepared by Marco Marchese from the secretariat of the OECD LEED
Programme.
2
Table 1: Training policy measures by areas for action
POLICY
MEASURES
AREAS FOR ACTION
Awareness-raising
among SMES
about role of
training
Sectoral/local
outreach
mechanisms
Flexible provision
of training
Integration of
formal training
with informal
learning
Trainer and
facilitator
networks
Financial
incentives for
training demand
Collaboration
between SMEs by
pooling resources
for training
Training
partnerships
between large and
small enterprises
Changing
employer outlook
Information and
guidance
Forms of training
provision
Tax incentives for
training
Training subsidies
Training levies
Rights to training
leave
Job-rotation
schemes
Employer
networks
Accounting
standards
Pay-back
contracts
Occupational
licensing
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Table 1 gives a snapshot of which policy measures are more likely to tackle multiple areas for action.
Employer networks and training levies come at the top. In the first case, the pooling of resources by
small employers offers a number of advantages related to economies of scale, specialist training
expertise and reduced transaction costs in handling administration. Networks can also be vertical,
linking buyers and suppliers. In this case, it is generally buyers? demands that drive training supply
and production upgrading in smaller suppliers. Levy systems, which are based on
voluntary/mandatory contributions by employers to a common training fund, have also the merit of
addressing different policy needs at the same time. They also reduce the externality of “worker
poaching” (i.e. worker moving to another enterprise after having received training) by requiring all
firms to contribute to training expenditures. Not all levy systems are the same, and there is evidence in
the literature that levy systems based on employers? contributions to a common fund from which
training costs are met (e.g. Denmark, the Netherlands, Spain, Italy, Belgium, Australia) are more
effective and efficient than systems hinged on the “train-or-pay” principle (France and Quebec,
Canada), where employers are requested to commit to a minimum training budget or pay a tax on the
outstanding shortfall.
The table also emphasises that tax breaks and subsidies are important but not sufficient to tackle the
different forms of disadvantage experienced by SMEs in the provision of training, which also involve
employers? perception about the function of training in the production process, the assessment of
business training needs, the match of these needs with the available supply of training, etc. Financial
incentives, therefore, have to be combined with or embedded in other forms of support (e.g.
information and guidance, employer networks, etc.).
Within the domain of financial incentives, training subsidies should be preferred to general tax breaks
if SMEs are the target of the policy. General tax incentives are likely to be captured by large firms
more familiar with the tax system, which raises deadweight costs. As well, subsidies need to be
substantial to entice small firms into the provision of training and need to be combined with other
measures to help small employers cope with the multiple barriers they face in the provision of training.
The keynote presentation by Ian Stone was followed by a presentation by Mr. Marco Marchese of
the OECD LEED secretariat on a project recently completed by OECD/LEED on “Leveraging
training and skills development in SMEs”. The presentation stressed the importance of informal
learning at the workplace for small enterprises considering their low level of investment in formal
training. Based on a survey of SMEs in 7 regions, the project found that informal learning through
daily activities (e.g. interactions with co-workers or consultants, internal work projects, etc.),
generally called “knowledge intensive service activities” (KISA), are perceived by small employers as
a better source of skills upgrading than formal training courses. The divide in outcomes from training
between high- and low-skilled employees is also narrower in KISA than in formal training, and
innovative SMEs are twice more likely to engage in KISA than the average firm. The main policy
implication, therefore, regards the development of a public policy framework for the recognition of
informal skills development activities. This is all the more important because the OECD report also
warns that the main motivation for training provision in SMEs lies in a demand from clients/buyers,
rather than the existence of any policy regulation or incentive.
The third presentation in the session was by Prof. Sergio Destefanis (University of Salerno, Italy),
who introduced the findings of two OECD/LEED projects on “Skills for Competitiveness” and “Local
Job Creation” in the context of Italy. The human capital endowment of Italy is lower than that of most
other important European countries. This is not so much because of schooling (primary and secondary
education) or university (tertiary education), which have levels similar to other main EU economies,
but because of extremely low adult education and on-the-job learning. This is partly related to
structural conditions of the Italian economy, such as the disproportionate shares of self-employment
in the business population and of temporary contracts in the workforce, both of which discourage the
investment of SMEs in formal training.
The presentation also describes Italy?s policy approach to skills upgrading as too supply-driven and
sapped by the lack of effective selection criteria and burdensome regulations. Nonetheless, good
4
policy practices are available especially at local level. For example, the employment agencies of
Veneto and Trento, two neighbouring regions, have set up a matchmaking tool (i.e. Borsino delle
Professioni) where local employers can post their job announcements and workers can upload their
CVs. The tool also offers monthly information on local labour market trends detailed by occupational
profile. A second good-practice concerns the footwear industrial district of Brenta, where firms from
two different provinces of Italy (Venice and Padua) have been able to co-organise a series of skills
development activities in spite of dealing with two different local councils. The key policy message
from this presentation, therefore, concerns: i) the role of employer networks in SME training; ii) the
importance of looking at training policy from a threefold perspective: demand, supply and the match
of the two sides; iii) the usefulness of a decentralised approach in order to tailor policies to SMEs,
though controlling for possible rent-seeking behaviours at local level.
The last presentation in session I was by Ms. Mirkke Turunen (Finland?s Ministry of Economy and
Employment), who presented the activities of the Finnish government Centre for Economic
Development, Transport and the Environment (ELY) on training for business owners and employees
in SMEs. The Finnish government is moving from a relatively rigid approach based on 11 different
specialist product services to one that focuses on five different areas of training (management, finance,
sales and marketing, internationalisation, growth). The goal is to better meet the actual needs of
customer firms through a collective method in which training needs are jointly assessed by the firm
together with the ELY local branches and local training institutions. This new approach, which is
defined as Joint Purchase Training, is suitable for networks of employers who come together to cope
with economies of scale and, compared to the previous model, aim to reach to a larger number of
firms through a lower number of training and consulting hours. This Finnish reform, therefore,
confirms the emphasis on inter-firm cooperation to strengthen training provision in small businesses.
Key messages of Session I
? SMEs are faced with multiple barriers in providing their workforce with training opportunities. A
policy that puts emphasis only on one dimension, including financial incentives, is therefore
unlikely to achieve the hoped-for results.
? Horizontal and vertical networks between firms hold the potential to strengthen the internal
demand for training, often more than public incentives, and should accordingly be supported. This
holds true for buyer-supplier linkages as well as for horizontal initiatives where SMEs jointly
purchase training services.
? In the domain of fiscal measures, training levies are common and primarily based on a sector
approach. They have the merit of reducing policy deadweight costs by obliging all companies in a
local industry to take part in a common training fund so that training costs are mutualised. On the
other hand, if subsidies or tax breaks are offered it should be recognised that SMEs can have
difficulties accessing tax breaks, whereas subsidies may have greater market distortion effects.
? Governments often focus on demand-side and supply-side policies, but there is scope for public
intervention also in facilitating the match between the two. The experience of Italy and its Borsino
delle Occupazioni offers a case in point in this respect.
? There is also increasing emphasis on informal sources of learning within SMEs, as co-worker
collaboration, co-operation with suppliers and client firms and in-work projects may all be
sources of skills upgrading as much as formal training. This poses a challenge to policy makers
with respect to whether and how to recognise the role of these knowledge intensive service
activities (KISAs).
? The decentralised implementation of training policies should enable better policy tailoring to local
business needs. Nonetheless, this should not happen at the expense of a common system of
5
nationwide qualifications and should cope with possible rent-seeking behaviours at local level by
exerting some degree of national control on training activities.
Session II: Skills for growth-oriented entrepreneurship
The second session of the workshop dealt with skills for growth-oriented entrepreneurship,
scrutinising the skills set needed for the entrepreneurs who have the ambition to grow. The
underlying assumption of this session was therefore that there are skills that can be cultivated in
people and help them to become more entrepreneurial, either in running their business or in whatever
other position they will occupy in life.
The first keynote presentation in this session was by Prof. Thomas Cooney (Dublin Institute of
Technology), who gave an extensive overview of the literature on barriers to growth, what
differentiates fast-growers from average enterprises, what entrepreneurship skills include, and how
current entrepreneurship skills programmes work. An interesting snapshot of the main factors
affecting growth is provided in the figure below, which distinguishes between entrepreneur-level,
firm-level and strategy-level factors. Average enterprises may have some appropriate characteristics
in the entrepreneur, firm or strategy areas, but it is only when all the three combine that high-growth
firms arise. Each component provides a distinctive contribution: the entrepreneur factors are those that
can be identified prior to the start up, the firm factors reflect decisions made on start-ups, while
strategy factors determine the rate of growth of the business.
Figure 1: Factors influencing growth in small firms
ENTREPRENEUR FIRM STRATEGY
Motivation Age Workforce Training
Unemployment Sector Management Training
Education Legal form External equity
Management experience Location Technology
Number of founders Size Market positioning
Prior self-employment Ownership Market adjustments
Family history Planning
Social marginality New products
Functional skills Management recruitment
Training State support
Age Customer concentration
Prior business failure Competition
Prior sector experience Information and advice
Prior firm size experience Exporting
Gender
In a similar vein, entrepreneurship skills can also be divided in three areas: entrepreneurship skills;
technical skills; and management skills. It can equally be presumed that technical skills are key to
running any type of business, whether or not the business has the ambition to grow, while
management skills and entrepreneurship skills are more instrumental to successful high-growth
ventures.
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Figure 2: Entrepreneurship skills-sets.
But can entrepreneurship skills be taught? While some voices are critical on this matter and highlight
that there is ambiguity in the evidence relating management training to small firm performance, there
is a plethora of initiatives that try to promote these skills, both at the university level and through
public programmes such as accelerators. Where there is more consensus, on the other hand, is that
entrepreneurship training needs to be innovative in methods, favouring experiential (e.g. action-
oriented, mentoring and group-work) and hands-on (case studies, games, projects, simulations, etc.)
methodologies over traditional classroom lectures.
The author concludes that the main skills that growth-oriented entrepreneurs should have, are: i)
customer orientation (i.e. entrepreneurs must be committed to creating customer value through the
provision of innovative products or services); ii) strategic development (i.e. entrepreneurs should
learn how to select from a number of market strategies that can influence their chances of success); iii)
financial management (i.e. entrepreneurs must learn the skills required to access additional venture
capital), iv) human resource management (i.e. entrepreneurs need to understand and appreciate the
need to enhance the HR practices of the firm and to offer financial incentives to employees so as to
share the rewards). Skills development opportunities should also preferably be provided in
combination with access to networks, finance, international markets, peer-to-peer learning and
mentoring opportunities.
The second presentation in this session was by Dr. Anders Hoffman (Danish Business Authority)
and Prof. David Storey (Sussex University), who analysed the existing Danish programme Growth
Houses from the perspective of a principle-agent dilemma between the Danish Business Authority
(DBA) which sets the operating rules and the managers of the five regional Growth Houses who
deliver the programme at local level. The programme gives entrepreneurs business advice and
signposting to private business development services available in the market. The principal-agent
problem implies that DBA?s national managers (i.e. the principal) and the Growth Houses? regional
managers (i.e. the agent) have conflicting interests and that the contract setting out the rules of
operation can help address this conflict by influencing the behaviour of the agent. However, because
in a principal-agent situation the agent continuously adapts itself to the new rules set by the principal,
these rules need to evolve over time to reflect past learning and changed external conditions. Annual
Entrepreneurship Skills
• Inner discipline
• Risk-seeking
• Innovation
• Change-orientation
• Persistency
• Visionary
Management Skills
• Planning
• Formulating goals
• Decision-making
• Motivating
• Marketing
• Accounting
• Negotiation
Technical Skills
• Specific Operation Technology
• Communication
• Interpersonal relations
• Organizational ability
• Coordinating team members
• Environmental observation
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minor adjustments in the rules of the contract are, therefore, needed so that major radical changes do
not happen later. The presentation also discussed the impact of the programme on participant firms
compared to a control group gathering similar firms by age, size and industry. Whilst the global
economic crisis has had an impact on all enterprises, firms which have used the services of the
Growth House have weathered the crisis better, for example losing fewer jobs during the peak of the
crisis and generating more jobs once the crisis had produced its worst effects in 2010.
The intervention by Dr. Magnus Henrekson (Sweden?s Research Institute of Industrial Economics),
the third in session II, reminded the audience that while skills are important, it will be difficult to
promote high-growth entrepreneurship without the right set of institutions in place. The institutional
framework determines the incentives for the actors in the entrepreneurial ecosystem to acquire and
utilise knowledge, which provides the basis for the development of high-growth entrepreneurship.
Particularly relevant among all institutions is the tax code, which can shift the incentives towards
entrepreneurship or wage employment in multiple ways including through different rules in labour
taxation (e.g. level and degree of progressivity, social security contributions, etc.), taxation of current
capital income, taxation of capital gains, taxation on asset holdings (e.g. wealth tax, property tax, etc.),
etc.
Prof. Markku Virtanen (Aalto University School of Business) discussed what the basic skills are for
entrepreneurs. In his view, they relate to the ability of the entrepreneur and his/her team to identify
and develop a business opportunity. Opportunity identification requires listening to customers to
understand and solve their needs. Opportunity development calls for a more precise definition of the
business concept and of the business model, where the former consists in the definition of market
needs from the viewpoint of benefits and resources while the latter corresponds to an advanced
version of the former in which information of competitors, pricing and profit-generation model is
included. An implication of this view is that policy makers should not neglect the issue of
“opportunity development” through, for example, the facilitation of knowledge platforms where
entrepreneurs and customers can exchange information.
The final presentation in Session II was by Prof. Leona Achtenhagen (Jonkoping International
Business School), who introduced the POMI competence model to explain the key skills for business
internationalisation (Table 2).
Table 2: The POMI model of internationalisation competences
Personal international
attitude/experience
Organisational
competences and
resources
Market competence Institutional
competence
P O M I
International experience
Cultural understanding
Language skills
International innovativeness
Internationalisation
competence
International marketing
competence
International marketing
International business skills
? Customers
? Markets
? Competition
Experience and knowledge
on:
? Relevant actors
? Institutional structures
? Rules, norms, values of
international markets
Contribute to reducing the
fear of internationalisation
Challenge to make
knowledge work in practice
Helps view environmental
risks as less dramatic
Institutional competence
needs are company-specific
Research by the author suggests that the prevailing internationalisation competence needs vary
depending on the type of enterprise and its intention and business potential to internationalise. In
particular, companies which have high business potential and high internationalisation intention (e.g.
high-tech SMEs) will need both market competences and institutional competences; companies that
have high potential but low intention (e.g. traditional manufacturing SMEs) will need to work on the
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sphere of personal attitudes; while companies that have high intention but low potential for
internationalisation (e.g. imitative e-commerce companies) will have to focus on organisational
competences and resources. The speaker, therefore, concluded by putting an emphasis on the role of
skills development for business internationalisation and by warning policy makers about the different
internationalisation competence needs by target enterprise.
Key messages of Session I I
? There is not a universal consensus on whether entrepreneurship skills can be taught and can affect
the likelihood of success by an entrepreneur. Nonetheless, entrepreneurship skills such as
innovativeness, planning and risk-taking are typically appreciated in all work environments and
will help people in any type of career they will undertake, whether or not this involves a business
start-up.
? There are some skills that are more important than others for successful high-growth
entrepreneurship, namely proper entrepreneurship skills (inner discipline, risk-seeking, innovation,
change-orientation, persistency, etc.) and management skills (planning, goals formulation,
decision-making, motivating, marketing, etc.).
? While there is not an agreement among academics on the impact of entrepreneurship training on
successful entrepreneurship, there is a general consensus that teaching methods cannot be the
traditional ones and should rather involve experiential and hands-on methodologies.
? There appear to be also specific competences required for a business to successfully go
international. They encompass organisational resources, market knowledge, but also the
entrepreneur?s personal attitude towards internationalisation (e.g. foreign markets, foreign
cultures, foreign languages, etc.)
? In the delivery of skills through soft forms of support such as mentoring and coaching, policy
makers should not neglect basic economic principles such as the principal-agent problem that
underlies the relationship between the policy-manager and the policy-deliverer and which have
the potential to undermine the effectiveness of the policy itself.
Session III: Skills for socially inclusive self-employment
The third and last session of the workshop presented the case of a type of entrepreneurship that does
not receive the same attention as innovative entrepreneurship among either academics or policy-
makers. Nonetheless, especially in a time of recession and sluggish recovery like the one experienced
by many OECD countries since 2008, self-employment provides an alternative to wage employment
for people to integrate the labour market and escape unemployment. It is, therefore, an important tool
of social inclusion.
The first presentation in this third session was by Dr. Jonathan Potter (OECD/LEED), who
introduced a collaborative project between the OECD and the European Commission (EC) on
“Entrepreneurship and Social Inclusion in Europe”, which includes a series of OECD/EC Policy
Briefs on youth entrepreneurship, senior entrepreneurship, social entrepreneurship, evaluating
inclusive entrepreneurship programmes etc, and a forthcoming OECD publication on „The Missing
Entrepreneurs?. The speaker focused on extant OECD research findings on youth entrepreneurship
and women entrepreneurship. There exist barriers to business start-up that are specific to either young
people or women. Youth endure lack of savings and difficulty in accessing external finance (e.g. due
to lack of collaterals); education and training models that do not promote entrepreneurship as a
valuable career option; lack of prior work and entrepreneurship experience; and lack of business
networks. Barriers to women?s entrepreneurship are different to some extent and comprise gender
norms discouraging entrepreneurship; tax, family and social policies that implicitly favour traditional
roles; limited, compared to men, managerial and self-employment experience; and lower likelihood to
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have developed professional networks. Considerations for effective policy responses to these barriers
include: i) providing support both before and after the start-up phase, as well as during start-up; ii)
providing youth with entrepreneurship experience to compensate for lack of labour market experience;
iii) using mentors and role models from the same social communities as the target population; iv)
reaching out to hard-to-reach groups through community organisations, although linkages with
mainstream business support need to be maintained; v) adapting training to the specific
entrepreneurship barriers that youth and women are faced with.
The second intervention in Session III was by Mr. Nardo de Vries (Panteia/EIM), who presented his
paper on “Explaining Entrepreneurial Performance of Solo Self-employed from a Motivational
Perspective”. His work investigates whether start-up motivations influence the entrepreneurial
performance of self-employed people while controlling for other determinants of performance. The
classic distinction between opportunity-driven vs. necessity-driven entrepreneur is applied to the
concept of self-employment. The results reveal that necessity-driven self-employed have a lower
probability to generate a high annual turnover. This is especially true if necessity self-employment is
established by a previous condition of unemployment, as compared to “self-proclaimed necessity” and
“author-classified necessity”. The results of the analysis also suggest that formal education level and
firm tenure only to a limited extent mediate the effect of start-up motivation (opportunity versus
necessity) on the performance of self-employed people. The main policy implication the author
derives from his research is that self-employment schemes could become more effective by targeting
participants with the right motivation to succeed.
Prof. Friederike Welter (Jonkoping International Business School) followed, analysing the case of
business crises and whether management skills development can help overcome them. The
presentation firstly highlights that management mistakes are the main reason for business crisis
among German SMEs, far more important than lack of financing or economic/industry downturns.
Business crises are difficult to manage because they involve a score of risk factors such as uncertainty,
high information needs, novelty elements, need for action, etc. They usually start as a “strategic crisis”
in which success factors are threatened (e.g. top employees leave and market shares decrease), to
move then to a “success crisis” in which the enterprise fails to achieve the return-on-investment goals
(e.g. sales and turnover decrease and returns diminish), to become then a “liquidity crisis” leading to
indebtedness (e.g. cash-flow decreases and debt/ratio increases) and to turn finally into open
“insolvency”. These steps are often aggravated by the fact that crises are a latent process which often
entrepreneurs recognise only late on and whose outcome is difficult to forecast and manage. However,
the final outcome of a business crisis is influenced by the skills and knowledge of the management,
which is why entrepreneurship skills development should encompass the topic of crisis management.
Germany, for example, has adopted a twofold approach to help entrepreneurs cope with periods of
crisis. Firstly, it provides entrepreneurs going through a crisis with soft forms of support aimed at
facilitating a turnaround. In this frame, the government has also facilitated partnerships between the
German development bank KfW and the chambers of commerce. Secondly, a reform of bankruptcy
has been introduced with the aim to reduce the social stigma of insolvency and facilitate enterprise
restructuring.
The fourth intervention in the session was by Prof. Jan Rath (University of Amsterdam), who
presented the case of migrant self-employment. The self-employment of immigrants is important for
several reasons. By starting their own business, ethnic entrepreneurs create their own jobs. This
enables them to circumvent some of the barriers they may encounter in the labour market, including
unrecognised educational qualifications, limited social networks or open racial discrimination. If they
are successful, ethnic entrepreneurs can create jobs for others as well. Ethnic entrepreneurs can also
contribute different forms of social capital to immigrant ethnic communities. Because of their links to
suppliers and customers, ethnic entrepreneurs can be useful in constructing bridges to other networks
outside the inner circle, thus improving chances of upward mobility. Finally, ethnic entrepreneurs
show that immigrants from less-developed countries are not necessarily restricted to filling vacancies
in the job market. Despite this potential, specific programmes promoting ethnic entrepreneurship in
the EU are thin on the ground and mainly limited to training and coaching, provision of business
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premises or subsidised loans. These measures are often ad-hoc and rarely integrated into a wider
economic agenda. Moreover, ethnic entrepreneurs are often unaware of existing public support
schemes while public agencies find it difficult to reach this target group, which makes the delivery of
ethnic entrepreneurship schemes particularly complicated.
The fifth and last presentation in session III was by Ms. Paula Fitzsimons (Fitzsimons Consulting),
who discussed the case of senior entrepreneurship. Senior entrepreneurship takes on increasing
importance in the EU context because of the ageing of the population, which comes along with a
growing number of senior people with skills, financial resources and available time to invest.
Nonetheless, senior entrepreneurship and its promotion have so far been mainly focused on the option
of micro-enterprises with limited growth prospects. Senior entrepreneurship policies should instead
include traditional measures such as access to finance and training, but also more innovative
alternatives such as the promotion of business acquisition as a route into entrepreneurship and of
business angels and mentors for younger entrepreneurs. An example of a programme going in this
direction is Ireland?s “Senior Enterprise” in which older people engage with enterprises through
starting and partnering; investing and acquiring; and advising and supporting innovation in new and
existing businesses. So far, of those who have received some form of senior support, over 900 had set
up new businesses in 2011.
Key messages
? Entrepreneurship policy covers not only innovative entrepreneurship but also self-employment
and business creation by socially-disadvantaged groups, which plays an important economic and
social role especially in a time of recession and slow growth like the one many OECD economies
experience since 2008.
? Groups such as youth and women are faced with specific challenges that require tailored actions
involving both pre- and post- start-up phases. The involvement of community organisations is
advisable as long as it does not result in the marginalisation of target groups from mainstream
forms of support.
? Migrants are often found in self-employment because of the legal, social and education barriers
they face in entering the labour market of the host country. They often represent, therefore, an
important share of the self-employment population. Nonetheless, there are relatively few policy
measures that aim at this target group, partly because government agencies find it difficult to
reach migrant communities and partly because migrants are often unaware and sometimes even
sceptical of existing public support.
? Senior people have also attracted the attention of entrepreneurship policy makers due to the
ageing of population in many OECD economies. Thus far, the focus has been on forms of low
value-added self-employment, but in fact older people often have skills, financial resources and
time that could be invested in more lucrative ventures. As a result, senior entrepreneurship
programmes should promote the role of senior people not only as frontline entrepreneurs, but also
as partners, mentors and business angels of younger partners.
? Interestingly, not all self-employment should be deemed necessity-driven. There are self-
employed people who are more ambitious than others and who show more chances to succeed. It
could, therefore, be argued that self-employment programmes should focus on those who have the
ambition and the motivation to grow, including by hiring other people.
? Small enterprises are especially exposed to periods of crisis, which tend to follow a common four-
step pattern: strategic crisis, success crisis, liquidity crisis, insolvency. Crisis management skills
can help mitigate the effects of a period of slowdown on a business activity, and some
governments are active on this front (e.g. Germany).
doc_489846500.pdf
Skills Development For Smes And Entrepreneurship
OECD-DBA INTERNATIONAL WORKSHOP
“SKILLS DEVELOPMENT FOR SMEs AND ENTREPRENEURSHIP”
Summary Report
1
Background information
The OECD Local Economic and Employment Development (LEED) Programme and the Danish
Business Authority (DBA) organised a workshop on “Skills Development for SMEs and
Entrepreneurship” on 28 November 2012. The workshop intended to support future policy
development by DBA in the domain of human capital development in new and small existing
businesses, as well as to strengthen the knowledge of OECD/LEED on an area where parallel work is
ongoing (local reviews, surveys, etc.). The workshop was organised around three main sessions,
which also provide the structure of this summary report: i) workforce skills development in SMEs; ii)
skills for growth-oriented entrepreneurship; iii) skills for socially inclusive self-employment.
Session I: Workforce skills development in SMEs
It is well-known by policy makers that small enterprises invest less than large companies in training
their workforces. Workforce training is up to three times more expensive for SMEs than for large
companies, mainly as a result of lack of economies of scale, higher opportunity costs and higher costs
for administrative compliance. Small companies tend to have fewer employees attend formal (internal
or external) courses; meet greater production constraints due to lack of appropriate staff; and spend
more time in understanding which training is relevant to them and how to benefit from it. However,
cost is not the only issue. Small businesses find it difficult to receive customised training, largely as a
result of lack of economies of scale. And they are less likely to perceive the value of training for
upgrading their production processes. The whole of these factors poses a challenge to the training of
workers in small enterprises and, in the long-term, saps the productivity and competitiveness of SMEs
in an increasingly knowledge-based economy.
Given this background, Prof. Ian Stone (Durham University) gave the keynote speech of the
workshop based on an international review of policies and programmes in upgrading workforce skills
in small businesses. After identifying the main barriers to training in SMEs – which included some of
the market failures introduced above – the author presented a rich overview of programmes that can
be summarised in the table below according to which area of action they address.
1
This summary report has been prepared by Marco Marchese from the secretariat of the OECD LEED
Programme.
2
Table 1: Training policy measures by areas for action
POLICY
MEASURES
AREAS FOR ACTION
Awareness-raising
among SMES
about role of
training
Sectoral/local
outreach
mechanisms
Flexible provision
of training
Integration of
formal training
with informal
learning
Trainer and
facilitator
networks
Financial
incentives for
training demand
Collaboration
between SMEs by
pooling resources
for training
Training
partnerships
between large and
small enterprises
Changing
employer outlook
Information and
guidance
Forms of training
provision
Tax incentives for
training
Training subsidies
Training levies
Rights to training
leave
Job-rotation
schemes
Employer
networks
Accounting
standards
Pay-back
contracts
Occupational
licensing
3
Table 1 gives a snapshot of which policy measures are more likely to tackle multiple areas for action.
Employer networks and training levies come at the top. In the first case, the pooling of resources by
small employers offers a number of advantages related to economies of scale, specialist training
expertise and reduced transaction costs in handling administration. Networks can also be vertical,
linking buyers and suppliers. In this case, it is generally buyers? demands that drive training supply
and production upgrading in smaller suppliers. Levy systems, which are based on
voluntary/mandatory contributions by employers to a common training fund, have also the merit of
addressing different policy needs at the same time. They also reduce the externality of “worker
poaching” (i.e. worker moving to another enterprise after having received training) by requiring all
firms to contribute to training expenditures. Not all levy systems are the same, and there is evidence in
the literature that levy systems based on employers? contributions to a common fund from which
training costs are met (e.g. Denmark, the Netherlands, Spain, Italy, Belgium, Australia) are more
effective and efficient than systems hinged on the “train-or-pay” principle (France and Quebec,
Canada), where employers are requested to commit to a minimum training budget or pay a tax on the
outstanding shortfall.
The table also emphasises that tax breaks and subsidies are important but not sufficient to tackle the
different forms of disadvantage experienced by SMEs in the provision of training, which also involve
employers? perception about the function of training in the production process, the assessment of
business training needs, the match of these needs with the available supply of training, etc. Financial
incentives, therefore, have to be combined with or embedded in other forms of support (e.g.
information and guidance, employer networks, etc.).
Within the domain of financial incentives, training subsidies should be preferred to general tax breaks
if SMEs are the target of the policy. General tax incentives are likely to be captured by large firms
more familiar with the tax system, which raises deadweight costs. As well, subsidies need to be
substantial to entice small firms into the provision of training and need to be combined with other
measures to help small employers cope with the multiple barriers they face in the provision of training.
The keynote presentation by Ian Stone was followed by a presentation by Mr. Marco Marchese of
the OECD LEED secretariat on a project recently completed by OECD/LEED on “Leveraging
training and skills development in SMEs”. The presentation stressed the importance of informal
learning at the workplace for small enterprises considering their low level of investment in formal
training. Based on a survey of SMEs in 7 regions, the project found that informal learning through
daily activities (e.g. interactions with co-workers or consultants, internal work projects, etc.),
generally called “knowledge intensive service activities” (KISA), are perceived by small employers as
a better source of skills upgrading than formal training courses. The divide in outcomes from training
between high- and low-skilled employees is also narrower in KISA than in formal training, and
innovative SMEs are twice more likely to engage in KISA than the average firm. The main policy
implication, therefore, regards the development of a public policy framework for the recognition of
informal skills development activities. This is all the more important because the OECD report also
warns that the main motivation for training provision in SMEs lies in a demand from clients/buyers,
rather than the existence of any policy regulation or incentive.
The third presentation in the session was by Prof. Sergio Destefanis (University of Salerno, Italy),
who introduced the findings of two OECD/LEED projects on “Skills for Competitiveness” and “Local
Job Creation” in the context of Italy. The human capital endowment of Italy is lower than that of most
other important European countries. This is not so much because of schooling (primary and secondary
education) or university (tertiary education), which have levels similar to other main EU economies,
but because of extremely low adult education and on-the-job learning. This is partly related to
structural conditions of the Italian economy, such as the disproportionate shares of self-employment
in the business population and of temporary contracts in the workforce, both of which discourage the
investment of SMEs in formal training.
The presentation also describes Italy?s policy approach to skills upgrading as too supply-driven and
sapped by the lack of effective selection criteria and burdensome regulations. Nonetheless, good
4
policy practices are available especially at local level. For example, the employment agencies of
Veneto and Trento, two neighbouring regions, have set up a matchmaking tool (i.e. Borsino delle
Professioni) where local employers can post their job announcements and workers can upload their
CVs. The tool also offers monthly information on local labour market trends detailed by occupational
profile. A second good-practice concerns the footwear industrial district of Brenta, where firms from
two different provinces of Italy (Venice and Padua) have been able to co-organise a series of skills
development activities in spite of dealing with two different local councils. The key policy message
from this presentation, therefore, concerns: i) the role of employer networks in SME training; ii) the
importance of looking at training policy from a threefold perspective: demand, supply and the match
of the two sides; iii) the usefulness of a decentralised approach in order to tailor policies to SMEs,
though controlling for possible rent-seeking behaviours at local level.
The last presentation in session I was by Ms. Mirkke Turunen (Finland?s Ministry of Economy and
Employment), who presented the activities of the Finnish government Centre for Economic
Development, Transport and the Environment (ELY) on training for business owners and employees
in SMEs. The Finnish government is moving from a relatively rigid approach based on 11 different
specialist product services to one that focuses on five different areas of training (management, finance,
sales and marketing, internationalisation, growth). The goal is to better meet the actual needs of
customer firms through a collective method in which training needs are jointly assessed by the firm
together with the ELY local branches and local training institutions. This new approach, which is
defined as Joint Purchase Training, is suitable for networks of employers who come together to cope
with economies of scale and, compared to the previous model, aim to reach to a larger number of
firms through a lower number of training and consulting hours. This Finnish reform, therefore,
confirms the emphasis on inter-firm cooperation to strengthen training provision in small businesses.
Key messages of Session I
? SMEs are faced with multiple barriers in providing their workforce with training opportunities. A
policy that puts emphasis only on one dimension, including financial incentives, is therefore
unlikely to achieve the hoped-for results.
? Horizontal and vertical networks between firms hold the potential to strengthen the internal
demand for training, often more than public incentives, and should accordingly be supported. This
holds true for buyer-supplier linkages as well as for horizontal initiatives where SMEs jointly
purchase training services.
? In the domain of fiscal measures, training levies are common and primarily based on a sector
approach. They have the merit of reducing policy deadweight costs by obliging all companies in a
local industry to take part in a common training fund so that training costs are mutualised. On the
other hand, if subsidies or tax breaks are offered it should be recognised that SMEs can have
difficulties accessing tax breaks, whereas subsidies may have greater market distortion effects.
? Governments often focus on demand-side and supply-side policies, but there is scope for public
intervention also in facilitating the match between the two. The experience of Italy and its Borsino
delle Occupazioni offers a case in point in this respect.
? There is also increasing emphasis on informal sources of learning within SMEs, as co-worker
collaboration, co-operation with suppliers and client firms and in-work projects may all be
sources of skills upgrading as much as formal training. This poses a challenge to policy makers
with respect to whether and how to recognise the role of these knowledge intensive service
activities (KISAs).
? The decentralised implementation of training policies should enable better policy tailoring to local
business needs. Nonetheless, this should not happen at the expense of a common system of
5
nationwide qualifications and should cope with possible rent-seeking behaviours at local level by
exerting some degree of national control on training activities.
Session II: Skills for growth-oriented entrepreneurship
The second session of the workshop dealt with skills for growth-oriented entrepreneurship,
scrutinising the skills set needed for the entrepreneurs who have the ambition to grow. The
underlying assumption of this session was therefore that there are skills that can be cultivated in
people and help them to become more entrepreneurial, either in running their business or in whatever
other position they will occupy in life.
The first keynote presentation in this session was by Prof. Thomas Cooney (Dublin Institute of
Technology), who gave an extensive overview of the literature on barriers to growth, what
differentiates fast-growers from average enterprises, what entrepreneurship skills include, and how
current entrepreneurship skills programmes work. An interesting snapshot of the main factors
affecting growth is provided in the figure below, which distinguishes between entrepreneur-level,
firm-level and strategy-level factors. Average enterprises may have some appropriate characteristics
in the entrepreneur, firm or strategy areas, but it is only when all the three combine that high-growth
firms arise. Each component provides a distinctive contribution: the entrepreneur factors are those that
can be identified prior to the start up, the firm factors reflect decisions made on start-ups, while
strategy factors determine the rate of growth of the business.
Figure 1: Factors influencing growth in small firms
ENTREPRENEUR FIRM STRATEGY
Motivation Age Workforce Training
Unemployment Sector Management Training
Education Legal form External equity
Management experience Location Technology
Number of founders Size Market positioning
Prior self-employment Ownership Market adjustments
Family history Planning
Social marginality New products
Functional skills Management recruitment
Training State support
Age Customer concentration
Prior business failure Competition
Prior sector experience Information and advice
Prior firm size experience Exporting
Gender
In a similar vein, entrepreneurship skills can also be divided in three areas: entrepreneurship skills;
technical skills; and management skills. It can equally be presumed that technical skills are key to
running any type of business, whether or not the business has the ambition to grow, while
management skills and entrepreneurship skills are more instrumental to successful high-growth
ventures.
6
Figure 2: Entrepreneurship skills-sets.
But can entrepreneurship skills be taught? While some voices are critical on this matter and highlight
that there is ambiguity in the evidence relating management training to small firm performance, there
is a plethora of initiatives that try to promote these skills, both at the university level and through
public programmes such as accelerators. Where there is more consensus, on the other hand, is that
entrepreneurship training needs to be innovative in methods, favouring experiential (e.g. action-
oriented, mentoring and group-work) and hands-on (case studies, games, projects, simulations, etc.)
methodologies over traditional classroom lectures.
The author concludes that the main skills that growth-oriented entrepreneurs should have, are: i)
customer orientation (i.e. entrepreneurs must be committed to creating customer value through the
provision of innovative products or services); ii) strategic development (i.e. entrepreneurs should
learn how to select from a number of market strategies that can influence their chances of success); iii)
financial management (i.e. entrepreneurs must learn the skills required to access additional venture
capital), iv) human resource management (i.e. entrepreneurs need to understand and appreciate the
need to enhance the HR practices of the firm and to offer financial incentives to employees so as to
share the rewards). Skills development opportunities should also preferably be provided in
combination with access to networks, finance, international markets, peer-to-peer learning and
mentoring opportunities.
The second presentation in this session was by Dr. Anders Hoffman (Danish Business Authority)
and Prof. David Storey (Sussex University), who analysed the existing Danish programme Growth
Houses from the perspective of a principle-agent dilemma between the Danish Business Authority
(DBA) which sets the operating rules and the managers of the five regional Growth Houses who
deliver the programme at local level. The programme gives entrepreneurs business advice and
signposting to private business development services available in the market. The principal-agent
problem implies that DBA?s national managers (i.e. the principal) and the Growth Houses? regional
managers (i.e. the agent) have conflicting interests and that the contract setting out the rules of
operation can help address this conflict by influencing the behaviour of the agent. However, because
in a principal-agent situation the agent continuously adapts itself to the new rules set by the principal,
these rules need to evolve over time to reflect past learning and changed external conditions. Annual
Entrepreneurship Skills
• Inner discipline
• Risk-seeking
• Innovation
• Change-orientation
• Persistency
• Visionary
Management Skills
• Planning
• Formulating goals
• Decision-making
• Motivating
• Marketing
• Accounting
• Negotiation
Technical Skills
• Specific Operation Technology
• Communication
• Interpersonal relations
• Organizational ability
• Coordinating team members
• Environmental observation
7
minor adjustments in the rules of the contract are, therefore, needed so that major radical changes do
not happen later. The presentation also discussed the impact of the programme on participant firms
compared to a control group gathering similar firms by age, size and industry. Whilst the global
economic crisis has had an impact on all enterprises, firms which have used the services of the
Growth House have weathered the crisis better, for example losing fewer jobs during the peak of the
crisis and generating more jobs once the crisis had produced its worst effects in 2010.
The intervention by Dr. Magnus Henrekson (Sweden?s Research Institute of Industrial Economics),
the third in session II, reminded the audience that while skills are important, it will be difficult to
promote high-growth entrepreneurship without the right set of institutions in place. The institutional
framework determines the incentives for the actors in the entrepreneurial ecosystem to acquire and
utilise knowledge, which provides the basis for the development of high-growth entrepreneurship.
Particularly relevant among all institutions is the tax code, which can shift the incentives towards
entrepreneurship or wage employment in multiple ways including through different rules in labour
taxation (e.g. level and degree of progressivity, social security contributions, etc.), taxation of current
capital income, taxation of capital gains, taxation on asset holdings (e.g. wealth tax, property tax, etc.),
etc.
Prof. Markku Virtanen (Aalto University School of Business) discussed what the basic skills are for
entrepreneurs. In his view, they relate to the ability of the entrepreneur and his/her team to identify
and develop a business opportunity. Opportunity identification requires listening to customers to
understand and solve their needs. Opportunity development calls for a more precise definition of the
business concept and of the business model, where the former consists in the definition of market
needs from the viewpoint of benefits and resources while the latter corresponds to an advanced
version of the former in which information of competitors, pricing and profit-generation model is
included. An implication of this view is that policy makers should not neglect the issue of
“opportunity development” through, for example, the facilitation of knowledge platforms where
entrepreneurs and customers can exchange information.
The final presentation in Session II was by Prof. Leona Achtenhagen (Jonkoping International
Business School), who introduced the POMI competence model to explain the key skills for business
internationalisation (Table 2).
Table 2: The POMI model of internationalisation competences
Personal international
attitude/experience
Organisational
competences and
resources
Market competence Institutional
competence
P O M I
International experience
Cultural understanding
Language skills
International innovativeness
Internationalisation
competence
International marketing
competence
International marketing
International business skills
? Customers
? Markets
? Competition
Experience and knowledge
on:
? Relevant actors
? Institutional structures
? Rules, norms, values of
international markets
Contribute to reducing the
fear of internationalisation
Challenge to make
knowledge work in practice
Helps view environmental
risks as less dramatic
Institutional competence
needs are company-specific
Research by the author suggests that the prevailing internationalisation competence needs vary
depending on the type of enterprise and its intention and business potential to internationalise. In
particular, companies which have high business potential and high internationalisation intention (e.g.
high-tech SMEs) will need both market competences and institutional competences; companies that
have high potential but low intention (e.g. traditional manufacturing SMEs) will need to work on the
8
sphere of personal attitudes; while companies that have high intention but low potential for
internationalisation (e.g. imitative e-commerce companies) will have to focus on organisational
competences and resources. The speaker, therefore, concluded by putting an emphasis on the role of
skills development for business internationalisation and by warning policy makers about the different
internationalisation competence needs by target enterprise.
Key messages of Session I I
? There is not a universal consensus on whether entrepreneurship skills can be taught and can affect
the likelihood of success by an entrepreneur. Nonetheless, entrepreneurship skills such as
innovativeness, planning and risk-taking are typically appreciated in all work environments and
will help people in any type of career they will undertake, whether or not this involves a business
start-up.
? There are some skills that are more important than others for successful high-growth
entrepreneurship, namely proper entrepreneurship skills (inner discipline, risk-seeking, innovation,
change-orientation, persistency, etc.) and management skills (planning, goals formulation,
decision-making, motivating, marketing, etc.).
? While there is not an agreement among academics on the impact of entrepreneurship training on
successful entrepreneurship, there is a general consensus that teaching methods cannot be the
traditional ones and should rather involve experiential and hands-on methodologies.
? There appear to be also specific competences required for a business to successfully go
international. They encompass organisational resources, market knowledge, but also the
entrepreneur?s personal attitude towards internationalisation (e.g. foreign markets, foreign
cultures, foreign languages, etc.)
? In the delivery of skills through soft forms of support such as mentoring and coaching, policy
makers should not neglect basic economic principles such as the principal-agent problem that
underlies the relationship between the policy-manager and the policy-deliverer and which have
the potential to undermine the effectiveness of the policy itself.
Session III: Skills for socially inclusive self-employment
The third and last session of the workshop presented the case of a type of entrepreneurship that does
not receive the same attention as innovative entrepreneurship among either academics or policy-
makers. Nonetheless, especially in a time of recession and sluggish recovery like the one experienced
by many OECD countries since 2008, self-employment provides an alternative to wage employment
for people to integrate the labour market and escape unemployment. It is, therefore, an important tool
of social inclusion.
The first presentation in this third session was by Dr. Jonathan Potter (OECD/LEED), who
introduced a collaborative project between the OECD and the European Commission (EC) on
“Entrepreneurship and Social Inclusion in Europe”, which includes a series of OECD/EC Policy
Briefs on youth entrepreneurship, senior entrepreneurship, social entrepreneurship, evaluating
inclusive entrepreneurship programmes etc, and a forthcoming OECD publication on „The Missing
Entrepreneurs?. The speaker focused on extant OECD research findings on youth entrepreneurship
and women entrepreneurship. There exist barriers to business start-up that are specific to either young
people or women. Youth endure lack of savings and difficulty in accessing external finance (e.g. due
to lack of collaterals); education and training models that do not promote entrepreneurship as a
valuable career option; lack of prior work and entrepreneurship experience; and lack of business
networks. Barriers to women?s entrepreneurship are different to some extent and comprise gender
norms discouraging entrepreneurship; tax, family and social policies that implicitly favour traditional
roles; limited, compared to men, managerial and self-employment experience; and lower likelihood to
9
have developed professional networks. Considerations for effective policy responses to these barriers
include: i) providing support both before and after the start-up phase, as well as during start-up; ii)
providing youth with entrepreneurship experience to compensate for lack of labour market experience;
iii) using mentors and role models from the same social communities as the target population; iv)
reaching out to hard-to-reach groups through community organisations, although linkages with
mainstream business support need to be maintained; v) adapting training to the specific
entrepreneurship barriers that youth and women are faced with.
The second intervention in Session III was by Mr. Nardo de Vries (Panteia/EIM), who presented his
paper on “Explaining Entrepreneurial Performance of Solo Self-employed from a Motivational
Perspective”. His work investigates whether start-up motivations influence the entrepreneurial
performance of self-employed people while controlling for other determinants of performance. The
classic distinction between opportunity-driven vs. necessity-driven entrepreneur is applied to the
concept of self-employment. The results reveal that necessity-driven self-employed have a lower
probability to generate a high annual turnover. This is especially true if necessity self-employment is
established by a previous condition of unemployment, as compared to “self-proclaimed necessity” and
“author-classified necessity”. The results of the analysis also suggest that formal education level and
firm tenure only to a limited extent mediate the effect of start-up motivation (opportunity versus
necessity) on the performance of self-employed people. The main policy implication the author
derives from his research is that self-employment schemes could become more effective by targeting
participants with the right motivation to succeed.
Prof. Friederike Welter (Jonkoping International Business School) followed, analysing the case of
business crises and whether management skills development can help overcome them. The
presentation firstly highlights that management mistakes are the main reason for business crisis
among German SMEs, far more important than lack of financing or economic/industry downturns.
Business crises are difficult to manage because they involve a score of risk factors such as uncertainty,
high information needs, novelty elements, need for action, etc. They usually start as a “strategic crisis”
in which success factors are threatened (e.g. top employees leave and market shares decrease), to
move then to a “success crisis” in which the enterprise fails to achieve the return-on-investment goals
(e.g. sales and turnover decrease and returns diminish), to become then a “liquidity crisis” leading to
indebtedness (e.g. cash-flow decreases and debt/ratio increases) and to turn finally into open
“insolvency”. These steps are often aggravated by the fact that crises are a latent process which often
entrepreneurs recognise only late on and whose outcome is difficult to forecast and manage. However,
the final outcome of a business crisis is influenced by the skills and knowledge of the management,
which is why entrepreneurship skills development should encompass the topic of crisis management.
Germany, for example, has adopted a twofold approach to help entrepreneurs cope with periods of
crisis. Firstly, it provides entrepreneurs going through a crisis with soft forms of support aimed at
facilitating a turnaround. In this frame, the government has also facilitated partnerships between the
German development bank KfW and the chambers of commerce. Secondly, a reform of bankruptcy
has been introduced with the aim to reduce the social stigma of insolvency and facilitate enterprise
restructuring.
The fourth intervention in the session was by Prof. Jan Rath (University of Amsterdam), who
presented the case of migrant self-employment. The self-employment of immigrants is important for
several reasons. By starting their own business, ethnic entrepreneurs create their own jobs. This
enables them to circumvent some of the barriers they may encounter in the labour market, including
unrecognised educational qualifications, limited social networks or open racial discrimination. If they
are successful, ethnic entrepreneurs can create jobs for others as well. Ethnic entrepreneurs can also
contribute different forms of social capital to immigrant ethnic communities. Because of their links to
suppliers and customers, ethnic entrepreneurs can be useful in constructing bridges to other networks
outside the inner circle, thus improving chances of upward mobility. Finally, ethnic entrepreneurs
show that immigrants from less-developed countries are not necessarily restricted to filling vacancies
in the job market. Despite this potential, specific programmes promoting ethnic entrepreneurship in
the EU are thin on the ground and mainly limited to training and coaching, provision of business
10
premises or subsidised loans. These measures are often ad-hoc and rarely integrated into a wider
economic agenda. Moreover, ethnic entrepreneurs are often unaware of existing public support
schemes while public agencies find it difficult to reach this target group, which makes the delivery of
ethnic entrepreneurship schemes particularly complicated.
The fifth and last presentation in session III was by Ms. Paula Fitzsimons (Fitzsimons Consulting),
who discussed the case of senior entrepreneurship. Senior entrepreneurship takes on increasing
importance in the EU context because of the ageing of the population, which comes along with a
growing number of senior people with skills, financial resources and available time to invest.
Nonetheless, senior entrepreneurship and its promotion have so far been mainly focused on the option
of micro-enterprises with limited growth prospects. Senior entrepreneurship policies should instead
include traditional measures such as access to finance and training, but also more innovative
alternatives such as the promotion of business acquisition as a route into entrepreneurship and of
business angels and mentors for younger entrepreneurs. An example of a programme going in this
direction is Ireland?s “Senior Enterprise” in which older people engage with enterprises through
starting and partnering; investing and acquiring; and advising and supporting innovation in new and
existing businesses. So far, of those who have received some form of senior support, over 900 had set
up new businesses in 2011.
Key messages
? Entrepreneurship policy covers not only innovative entrepreneurship but also self-employment
and business creation by socially-disadvantaged groups, which plays an important economic and
social role especially in a time of recession and slow growth like the one many OECD economies
experience since 2008.
? Groups such as youth and women are faced with specific challenges that require tailored actions
involving both pre- and post- start-up phases. The involvement of community organisations is
advisable as long as it does not result in the marginalisation of target groups from mainstream
forms of support.
? Migrants are often found in self-employment because of the legal, social and education barriers
they face in entering the labour market of the host country. They often represent, therefore, an
important share of the self-employment population. Nonetheless, there are relatively few policy
measures that aim at this target group, partly because government agencies find it difficult to
reach migrant communities and partly because migrants are often unaware and sometimes even
sceptical of existing public support.
? Senior people have also attracted the attention of entrepreneurship policy makers due to the
ageing of population in many OECD economies. Thus far, the focus has been on forms of low
value-added self-employment, but in fact older people often have skills, financial resources and
time that could be invested in more lucrative ventures. As a result, senior entrepreneurship
programmes should promote the role of senior people not only as frontline entrepreneurs, but also
as partners, mentors and business angels of younger partners.
? Interestingly, not all self-employment should be deemed necessity-driven. There are self-
employed people who are more ambitious than others and who show more chances to succeed. It
could, therefore, be argued that self-employment programmes should focus on those who have the
ambition and the motivation to grow, including by hiring other people.
? Small enterprises are especially exposed to periods of crisis, which tend to follow a common four-
step pattern: strategic crisis, success crisis, liquidity crisis, insolvency. Crisis management skills
can help mitigate the effects of a period of slowdown on a business activity, and some
governments are active on this front (e.g. Germany).
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