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Nordic Growth Entrepreneurship Review - preliminary findings
 

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    Nordic Growth Entrepreneurship Review - preliminary findings Nordic Growth Entrepreneurship Review - preliminary findings Presentation Transcript

    • The Nordic GrowthEntrepreneurship Review Preliminary Findings!Glenda Napier, Chief Advisor, RegX and SDU 1
    • Content• Findings• Challenges• Recommendations• Country Findings (panel)• Background & Methodology (handout) Please note: Figures and graphs presented in the Seminar (slides 4-54) are preliminary – the final figures will be available and updated by 30 September 2012 2
    • NGER Findings 2012:Growth Entrepreneruship Performance • High levels of Nordic start-up activity • High levels of gazelles • Nordic gazelles are mainly in services • But not enough up-scaling activities • Not many gazelles that grow really big in the Nordic region 3
    • High level of Nordic start-up activity - Employer enterprise birth rates, 2009 16 14 12 10 8 6 4 2 0 Norway Denmark OECD Iceland Sweden USA Canada Finland average Source: NGER based on National Statistics offices in Nordic countries and OECD 4
    • High Nordic levels of gazelles- firms with average 20% annual growth in employment over a 3-year-period and younger than 2 years old at the beginning of the growth period, 2009 1,0 0,9 0,87 0,8 0,70 0,7Shaer of gazelles 0,60 0,6 0,57 0,56 0,5 0,43 0,4 0,33 0,3 0,2 0,11 0,1 0,0 Norway Sweden OECD average Canada Finland Denmark Iceland USA 5 Source: NGER based on National Statistics offices in Nordic countries and OECD
    • Nordic gazelles are small in numbers, so even more important that they become successful growth firms! Norway Sweden Finland Denmark Iceland 214 206 92 84 6Source: NGER based on National Statistics offices in Nordic countries 6
    • Nordic gazelles are mainly in service industries100 %90 %80 %70 %60 %50 %40 %30 %20 %10 % 0% Denmark Sweden Norway Finland Iceland Services, more knowledge-intensive Services, less knowledge-intensive Manufacturing, higher technology Manufacturing, lower technology Other 7 Source: NGER based on National Statistics offices in Nordic countries
    • Nordic gazelles are small in size Share of gazelles that reach more than 50 employees 60 50 47,83 40 38,32 Pct. of gazelles 30 24,76 20,24 20 16,67 10 0 Finland Norway Sweden Denmark Iceland 8 Source: NGER based on National Statistics offices in Nordic countries
    • Even less ever reach 100 employees.. Share of gazelles that reach more than 100 employees 30 25 23,91 20 17,29Pct. of gazelles 15 14,29 12,14 10 5 0,00 0 Finland Norway Denmark Sweden Iceland Source: NGER based on National Statistics offices in Nordic countries 9
    • Weak Nordic ability to upscale firms compared to USA Share of firms with 500-999 employees and younger than 10 years-old 25 20% 20 15 10 5 2,2% 1,5% 0 USA Finland Denmark Source: Nordic Entrepreneurship Monitor, 2010. 10
    • Summary I• Nordic gazelles are few in numbers• Even fewer that ever reach more than 50 employees• Only in Finland approx. 50% of gazelles reach more than 50 employees• A challenge to create more firms that become big players in the Nordic countries 11
    • NGER Findings 2012:Framework Conditions for Entrepreneurship 12
    • Nordic region catching up• Nordic framework conditions for entrepreneurship are catching up with the best performing countries: USA, UK and Canada• Nordic region are much ahead of both central Europe (Austria, Belgium, Germany and Netherlands) and South Europe (Greece, Italy and Spain) in terms of framework conditions for entrepreneurship. 13
    • Framework conditions in Nordic region second to USA, UK and Canada, 2012USA, UK, Canada Nordic region Central Europe South Europe 0 10 20 30 40 50 60 70 Source: NGER. 14
    • Nordic strongholds is regulation and market access• Nordic region has particular strong framework conditions in the policy areas related to the Regulatory Framework and Market Conditions – on par with the best countries. • Easy and cheap to start a new firm • Bankruptcy has limited financial risk • Labor market regulations fine (despite marked differences across Nordic countries) 15
    • Regional comparison of the six policy areas The Nordic Region Continental Europe USA, UK, Canada Regulatory Framework 100 80 60 Entrepreneurial Market Conditions culture 40 20 0 Entrepreneurial Access to financing Capabilities Creation and Source: NGER. 16 Diffusion of
    • Access to finance and entrepreneurial capabilities are challenging areas• Access to Finance – particularly access to venture capital at expansion stage and stock markets are challenged in the Nordic region. These element are critical for growth-firms• Nordic region ranks low on Entrepreneurial Capabilities – business education, perceived entrepreneurial capabilities, and how much Nordic countries allow inflows of foreign talent• These elements are critical for the formation and strengthening of strong management teams in the young growth firms 17
    • Summary II• Nordic region scores low on Access to Finance/expansion capital – although critical for growth firms!• Entrepreneurial Capabilities and the ability to run successful firms is a challenge in the Nordic region• A need to improve access to finance and capabilities in the Nordic region. 18
    • Thematic discussion 19
    • Is it one or two challenge(s)? 20
    • Some reflections regarding finance and capabilities• Of all US venture-backed public companies in 1990- 2005, 25% of them were immigrant-founded.• Study conducted by NVCA!• Much lower rate of return in Northern Europe vs. USA (Figure) Figure: IRR Pooled Average, 2011 1,00 0,50 0,00 -0,50 -1,00 -1,50 -2,00 Source: AmericanMade study, National Venture Capital -2,50 Association(NVCA) -3,00 -3,50 21 Northern Europe Western Europe North America
    • What do firms need to succeed and grow? Venture Service capital providers Strong ecosystem Knowledge Established institutions firms 22
    • Zooming in on the Ecosystems..Copenhagen Stockholm London Silicon Valley 23
    • Benchmarking Ecosystems (only with some Nordic capitals) BIOTEK & MEDICO ICT & TELE COMMUNICATION Ecosystem Index value Ecosystem Index value 1. Silicon Valley 100 1. Silicon Valley 100 2. Boston 75 2. Boulder 43 3. San Diego 61 3. Austin 35 4. Boston 31 4. Boulder 53 5. Cambridge 53 5. Seattle 25 6. København 44 6. Stockholm 24 7. RTP 43 7. San Diego 23 8. Denver/Boulder 21 8. Minneapolis 33 9. RTP 21 9. Stockholm 31 10. København 19 10. Seattle 29 11. Denver/Boulder 27 11. Cambridge 15 12. Austin 27 12. Chicago 15 13. Chicago 24 Composite 13. London 13 14. London 24 Index based on : 14. Phoenix 13 15. Phoenix 15 15. Minneapolis 13 • Patents 16. Montreal 6 16. Montreal 3 • LQ 17. Toronto 4 17. Toronto 2 • Venture capital • Dealmakers Source: NGER based on Hansen and Lempel 2012 (to be published).
    • Startup-America Partnership todevelop stronger ecosystemsAmerica’s Top Entrepreneurs and Business Leaders Form NewAllianceLaunched at the White House in January 2011, the Startup AmericaPartnership is an independent alliance of top entrepreneurs,investors, corporations, universities, foundations, and otherleaders, joining together to grow the entrepreneurial ecosystems thatsupport innovative, high-growth U.S. startups.The Startup America Partnership has already mobilized morethan $1 billion in private-sector commitments to provideproducts, services, mentorship and funding to scale and grow100,000 U.S. startups over the next three years.
    • What to do in the Nordic region? 26
    • Nordic Policy Recommendations (2010)• Sharpening the Nordic Entrepreneurship policy debate and facilitate policy learning and exchange of best/worse practices across the Nordic countries• Strengthening the Nordic entrepreneurship infrastructure in order to address the Nordic growth challenge• Fill the Nordic knowledge gap on entrepreneurship and enhance Nordic entrepreneurship analysis and data• RECOMMENDATIONS HAVE BEEN FOLLOWED BY THE NORDIC COUNCIL OF MINISTERS AND NORDIC INNOVATION!! 27
    • Knowledge-oriented Policy Recommendations • Create better data and indicators for scaling of young firms, both for the Nordic countries and benchmark countries – more analysis and even suggest new indicators in OECD. • Conduct a benchmark study of Nordic and other universities’ entrepreneurship and outreach activities • Make a comparison of selected Nordic entrepreneurship ecosystems with some of the worlds best entrepreneurship ecosystems. • Improve the understanding of which policy areas lead more or less to growth-entrepreneurship, possible include new areas such as ecosystem indicators in the model • Develop a composite indicator for tax and free welfare services and enhance our understanding of the topic 28
    • Action-oriented Policy Recommendations • Established a Nordic Startup Partnership with participation of Nordic flagship companies, high-level government representatives, universities, investors and Nordic foundations/funds. • Create an Entrepreneurship Ecosystem Forum with private and public operators to enhance discussion on how to strengthen the Nordic ecosystem(s). • Initiate a Nordic discussion regarding public enterprises and institutions role in the entrepreneurship ecosystem. • Encourage and create strong entrepreneurship ‘outreach’ centers at universities across the Nordic countries with the objective to have them become much stronger partners in the ecosystem 29
    • Thank you!Please see hand-outs for more detailedinformation and/or await the NGERpublication this Fall. 30
    • Country FindingsGlenda Napier, RegX &SDUPetri Rouvinen, ETLAThorvald Finnbjornsson, RANNISEspen Solberg, NIFUDan Johansson, HUI Research 31
    • Framework conditions across the Nordic countries• Finland scores highest on the overall framework condition values and Norway scores lowest.• Finland has the strongest framework conditions among the Nordic countries, followed by Iceland, Denmark, Sweden and Norway (ranked in this order). Please note: figures and graphs presented in the Seminar (slides 4-54) are preliminary - the final figures will be available and updated by 30 September 2012 32
    • Finland has the best framework conditions of the Nordic countries, 2012 USA Finland IcelandDenmark Sweden Norway 50 52 54 56 58 60 62 64 33 Source: NGER.
    • Framework conditions across Nordic countries, 2012 Regulatory framework 100 Entrepreneurship Culture 80 Market Conditions 60 40 20 0 Access to Finance Entrepreneurial Capabilities Creation and Diffusion of Knowledge Denmark Finland Iceland Norway Sweden Source: NGER. 34
    • Denmark
    • Denmark strengths vs TOP3 OECD) Market ConditionsCreation and Diffusion of Knowledge Regulatory Framework Access to financing Entrepreneurial culture Entrepreneurial Capabilities -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 Denmark strengths vs Nordic countriesCreation and Diffusion of Knowledge Market Conditions Access to financing Regulatory Framework Entrepreneurial Capabilities Entrepreneurial culture -15 -10 -5 0 5 36 10
    • Denmark strengths vs TOP3 OECD Product and Labour regulations Degree of Public Involvement Access to debt financing Foreign Markets Administrative burdens Bankruptcy legislation Technology availablity and take-up R&D Activity Patent System - Standards Social and Health Security Transfer of non-commercial knowledge Bequest and Wealth Taxes Competition legislation Venture capital Attitude to entrepreneurship Court and Legal framework Stock markets Business and Capital Taxes Public Procurement Immigration Entrepreneurial mindsetBusiness and Entrepreneurship education (skills) Income Taxes -80 -75 -70 -65 -60 -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 53710 15
    • Denmark strengths vs Nordics countries Product and Labour regulations Access to debt financing Technology availablity and take-up Transfer of non-commercial knowledge Degree of Public Involvement Foreign Markets Patent System - Standards Bankruptcy legislation R&D Activity Social and Health Security Administrative burdens Business and Capital Taxes Bequest and Wealth Taxes Immigration Stock markets Competition legislationBusiness and Entrepreneurship education (skills) Venture capital Attitude to entrepreneurship Public Procurement Entrepreneurial mindset Court and Legal framework Income Taxes -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55
    • Finland
    • Finland strengths vs TOP3 OECDCreation and Diffusion of Knowledge Access to financing Regulatory Framework Market Conditions Entrepreneurial culture Entrepreneurial Capabilities -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 Finland strengths vs Nordic countriesCreation and Diffusion of Knowledge Access to financing Entrepreneurial culture Regulatory Framework Market Conditions Entrepreneurial Capabilities -10 -5 0 5 10 40 15
    • Finland strengths vs TOP3 OECD Patent System - Standards R&D Activity Technology availablity and take-up Bankruptcy legislation Administrative burdens Venture capital Degree of Public Involvement Attitude to entrepreneurship Access to debt financing Stock markets Foreign Markets Court and Legal framework Competition legislation Social and Health Security Bequest and Wealth Taxes Transfer of non-commercial knowledge Business and Capital Taxes Entrepreneurial mindset Public Procurement Immigration Product and Labour regulationsBusiness and Entrepreneurship education (skills) Income Taxes -65 -60 -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 415 10
    • Finland strengths vs Nordics countries Stock markets Patent System - Standards Technology availablity and take-up Venture capital R&D Activity Attitude to entrepreneurship Competition legislation Entrepreneurial mindset Access to debt financing Court and Legal framework Bankruptcy legislation Business and Capital Taxes Income Taxes Administrative burdens Degree of Public Involvement Foreign Markets Transfer of non-commercial knowledge Immigration Product and Labour regulations Bequest and Wealth Taxes Social and Health SecurityBusiness and Entrepreneurship education (skills) Public Procurement -20 -15 -10 -5 0 5 10 15 20
    • Iceland
    • Iceland strengths vs TOP3 OECD Regulatory Framework Market Conditions Entrepreneurial Capabilities Entrepreneurial cultureCreation and Diffusion of Knowledge Access to financing -40 -35 -30 -25 -20 -15 -10 -5 0 5 Iceland strengths vs Nordic countries Entrepreneurial Capabilities Entrepreneurial culture Regulatory Framework Market ConditionsCreation and Diffusion of Knowledge Access to financing -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 44 35
    • Iceland strengths vs TOP3 OECD Immigration NOT AVAILABLE Social and Health Security Court and Legal framework Degree of Public Involvement Administrative burdens Public Procurement Bankruptcy legislation Business and Capital Taxes R&D Activity Attitude to entrepreneurship Bequest and Wealth Taxes Product and Labour regulations Transfer of non-commercial knowledge Entrepreneurial mindset Foreign Markets Technology availablity and take-upBusiness and Entrepreneurship education (skills) Stock markets Patent System - Standards Competition legislation Income Taxes Access to debt financing Venture capital -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15
    • Iceland strengths vs Nordics countries Immigration NOT AVAILABLE Product and Labour regulations Social and Health Security Business and Capital Taxes Court and Legal framework Public Procurement Income Taxes Entrepreneurial mindsetBusiness and Entrepreneurship education (skills) Attitude to entrepreneurship Transfer of non-commercial knowledge Bequest and Wealth Taxes Degree of Public Involvement Administrative burdens R&D Activity Bankruptcy legislation Stock markets Technology availablity and take-up Foreign Markets Competition legislation Patent System - Standards Venture capital Access to debt financing -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35
    • Norway
    • Norway strengths vs TOP3 OECD Market Conditions Access to financing Regulatory Framework Entrepreneurial cultureCreation and Diffusion of Knowledge Entrepreneurial Capabilities -45 -40 -35 -30 -25 -20 -15 -10 -5 0 Norway strengths vs Nordic countries Access to financing Market Conditions Regulatory Framework Entrepreneurial culture Entrepreneurial CapabilitiesCreation and Diffusion of Knowledge -20 -15 -10 -5 0 5 48 10
    • Norway strengths vs TOP3 OECD Bankruptcy legislation Access to debt financing Administrative burdens Court and Legal framework Foreign Markets Public Procurement Venture capital Degree of Public Involvement Patent System - Standards Social and Health Security Attitude to entrepreneurship Competition legislation R&D Activity Stock markets Bequest and Wealth Taxes Immigration Transfer of non-commercial knowledge Entrepreneurial mindset Technology availablity and take-upBusiness and Entrepreneurship education (skills) Business and Capital Taxes Income Taxes Product and Labour regulations -85 -80 -75 -70 -65 -60 -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 10
    • Norway strengths vs Nordics countries Public Procurement Access to debt financing Court and Legal framework Bankruptcy legislation Venture capital Immigration Foreign Markets Income TaxesBusiness and Entrepreneurship education (skills) Administrative burdens Attitude to entrepreneurship Stock markets Competition legislation Social and Health Security Patent System - Standards Degree of Public Involvement Entrepreneurial mindset R&D Activity Transfer of non-commercial knowledge Bequest and Wealth Taxes Business and Capital Taxes Technology availablity and take-up Product and Labour regulations -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20
    • Sweden
    • Sweden strengths vs TOP3 OECD Access to financing Market Conditions Regulatory FrameworkCreation and Diffusion of Knowledge Entrepreneurial culture Entrepreneurial Capabilities -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 Sweden strengths vs Nordic countries Access to financingCreation and Diffusion of Knowledge Market Conditions Regulatory Framework Entrepreneurial culture Entrepreneurial Capabilities -15 -10 -5 0 5 52 10
    • Sweden strengths vs TOP3 OECD Bequest and Wealth Taxes Competition legislation Foreign Markets Access to debt financing Patent System - Standards Venture capital Technology availablity and take-up Administrative burdens Degree of Public Involvement R&D Activity Transfer of non-commercial knowledge Bankruptcy legislation Attitude to entrepreneurship Business and Capital Taxes Social and Health Security Entrepreneurial mindset Stock markets Public Procurement Court and Legal framework ImmigrationBusiness and Entrepreneurship education (skills) Income Taxes Product and Labour regulations -90 -85 -80 -75 -70 -65 -60 -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0
    • Sweden strengths vs Nordics countries Bequest and Wealth Taxes Competition legislation Venture capital Technology availablity and take-up Access to debt financing Patent System - Standards Foreign Markets Entrepreneurial mindset Business and Capital TaxesBusiness and Entrepreneurship education (skills) Immigration Transfer of non-commercial knowledge Administrative burdens R&D Activity Degree of Public Involvement Income Taxes Stock markets Public Procurement Attitude to entrepreneurship Social and Health Security Bankruptcy legislation Court and Legal framework Product and Labour regulations -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20
    • Background and Methodology (handouts)
    • Background 56
    • Nordic Entrepreneurship Monitor 2010- many new firms in the Nordic regions, but the new firmsdo not turn into equally high levels of growth firms. Firm entry Firm growth 0 10 20 30 40 50 60 70 The Nordic region USA 57
    • How does NGER differ from the Nationalgrowth-entreprenership reviews? • Iceland, Norway and Sweden do not conduct annual/biannual entrepreneurship reviews • Denmark does conduct an annual national entrepreneurship index for Denmark (since 2004/2005). • Finland has for 2 years conducted a national entrepreneurship review. However, it does not apply much international comparable data like OECD definitions. • Generally the indexes provide little/none international benchmark of entrepreneurship performance and framework conditions putting all the Nordic countries in an international context • In national reviews there are no Nordic policy recommendations, if policy recommendations at all. • National reviews do not contribute to the development of new indicators • !!!! NGER includes UPDATED data for ALL Nordic countries !!!! 58
    • Methodology 59
    • Methodology Entrepreneurship Entrepreneurship Wealth Framework Performance Creation The Nordic Growth Entrepreneurship Review is based on an international entrepreneurship framework condition model, which rates the entrepreneurial capacity of OECD countries relative to each other. According to this model, entrepreneurship is viewed as a driver of wealth creation, and working strategically with targets for entrepreneurship enables governments to meet a number of macroeconomic targets. The framework identifies three separate, but inter-connected flows – all of which are important for policy measures. Thus, entrepreneurship framework conditions reflect the key areas affecting entrepreneurship performance, which again has an impact on the economy. 60
    • Methodology The core purpose of the entrepreneurship model is to identify the policy-affected areas in the framework conditions that will help improve entrepreneurship performance. In addition to this, the model has the strength of being based on a broad understanding of entrepreneurship – and therefore includes a wide variety of external factors that influence entrepreneurship performance. The external factors that influence entrepreneurship performance can be strengthened or weakened through public policymaking, and governments can work strategically with entrepreneurship through six policy areas (see also below). The model first occur in 2004 and has been developed over the years based on the main theoretical foundations at that time as well as work taking place in international working groups such as the OECD. As opposed to other approaches, this model discusses framework conditions for entrepreneurship as opposed to specific policies. In other words, sound entrepreneurship performance is a result of a mix of different policies (framework conditions) as opposed to one single policy (Hoffmann and Gabr, 2006). 61
    • Composite index values for entrepreneurshipframework conditionsThe Nordic Growth Entrepreneurship Review builds on composite index analysis. Composite Indexanalysis provides a useful tool for policy analysis, i.e. how to optimise a set of framework conditionsfor growth entrepreneurship. Contrary to analysis focusing on a common trend in many differentindicators, the advantage of composite indices is that they combine separate indicators into anoverall picture thereby providing an easy tool for interpretation. Composite indices are made up ofdifferent indicators which measure different aspects of a certain area.Throughout the publication, a four-step method is used including the following four steps.1. Ranking and Regional AnalysesBased on the selected indicators, a complete ranking of countries is carried out in terms of bothperformance and framework conditions.2. Best PracticeThe best-performing countries are identified for each of the 6 overall policy areas and the 20 sub-policy areas describing entrepreneurship framework conditions. Best practice is drawn from eachpolicy area by comparing the top-performing countries to other countries. 62
    • 3. Peer ReviewAnalyses are carried out for each of the Nordic countries – Denmark, Finland, Iceland,Norway and Sweden. Individual country’s framework conditions and performance arecompared to each of the other Nordic countries and the top-performing country.Developments are analysed over time. The results are qualified and elaborated upon bypolicy experts. The analysis also covers individual country analyses in terms of thecoverage and quality of policies supporting entrepreneurship efforts.4. Policy RecommendationsThe framework conditions and performance is evaluated and analysed, providing a solidground for policy recommendations. The recommendations for the Nordic region arepresented in the Nordic Growth Entrepreneurship Review. 63
    • Data sources and coverageTo measure and compare performance in growth-entrepreneurship and framework conditions84 internationally comparable indicators for entrepreneurship framework condition are used.Various sources are used for these indicators such as WEF, OECD, GEM etc and someindicators are survey-based (see below). .Fact-based surveys relate to easy quantifiable aspects, in which different people would give thesame response to a question. The OECD Regulatory Database is an example of this typebecause respondents are asked about whether or not a country has a given regulation.Action-based surveys concern issues where respondents are asked if they have performed agiven action within a given time period or not. The European Community Innovation Survey isan example of this type of survey. In this survey, firms are asked whether they have introducednew or technologically improved products or processes on the market during the last year.Opinion-based surveys deal with questions asking for a subjective evaluation of a given aspectof the economy. The World Economic Forum’s Executive Survey is an example of this type ofsurvey. It asks executives about their opinion of the functioning and the quality of variousaspects of the economy. 64
    • Framework and performance Framework conditions Entrepreneurship Performance 6 overall policy areas Employment based entry rates 25 sub-policy areas Gazelles 84 international comparable indicators for framework conditions Sources: OECD, Eurostat, World Bank, GEM etc.The policy areas cover a wide variety of external factors since they include a combination of theentrepreneurs’ opportunities, competencies and available resources. The framework conditionsare essential in order to improve entrepreneurship performance. In the following, entrepreneurshipperformance and framework conditions are explained in more detail. 65
    • 6 Policy areas1. Regulatory framework refers to the policy areas which governments can influence directly through regulation. Public regulations such as administrative procedures, bankruptcy and labour market regulation have an effect on entrepreneurship performance. For instance, a strict labour market regulation might hamper the flexibility of hiring and firing employees and thus also firm growth. Moreover, the costs and days it takes to start a business are important issues that have direct influence on the ability and flexibility of starting a business. Finally, the tax structure influences the attractiveness of starting and growing a business, thereby also constituting an important area of regulatory frameworks.2. Market conditions have an impact on the entrepreneur’s possibility for starting a new business. For instance, access to foreign markets determines the general market access for new firms. Market conditions are an important underlying requirement for effective business growth and firm entry. Firms depend to some extent on their national market; a well-organized national market is a good starting point for business growth. Globalization has opened up for increased international opportunities for entrepreneurs, making import and export burdens a very important aspect of market conditions.3. Access to finance has an impact on the resources available to entrepreneurs. This area is an important precondition for entrepreneurial activity, and is vital for both firm entry and firm growth. Without finance and venture capital, newly-established firms and entrepreneurs would be restricted in their efforts toward higher growth. Different ways of financing are important for different stages in firm development. For instance, firm entry relies on venture capital, both in the early stage and in the expansion stage. Firm growth relies on access to loans and a well-functioning stock market. 66
    • 4. Creation and diffusion of knowledge is related to the ability of diffusing new knowledge created through research and development activities, as well as the availability of new technology on the market. R&D and entrepreneurship often go hand in hand, and R&D is an important factor when discussing entrepreneurial activity. Funding of R&D activity is essential in order to attain additional market share and grow business opportunities, thereby enabling firm growth. Patenting might be a tool to minimize knowledge diffusion; nonetheless, it is a central indicator on the level of R&D activity. In addition to this, the education system is a contributing factor to transfer of non- commercial knowledge, especially when it comes to collaboration between industry and universities.5. Entrepreneurial capabilities refer to the entrepreneur’s capability to create value through new innovative products. One of the main factors for creating entrepreneurial capabilities is high-quality business schools and universities, and their emphasis on education in entrepreneurship. Immigration and inflow of foreign labor is also an important source of start-up and growth of companies in many countries; in particular, immigrants with a high education are valuable and important in creating companies with high-growth potential. Entrepreneurship capabilities can also be strengthened through appropriate access to business services and entrepreneurship infrastructure. However, international comparison in this area is not yet possible.6. Entrepreneurial culture refers to how society and individuals understand entrepreneurship, as well as the possibility for individuals to start their own firms. The culture of entrepreneurship is very different in the individual countries; often this culture goes back many years and is not easily changed. Indicators such as “Image of entrepreneurship” and “Desirability of becoming self- employed” are related to the culture of entrepreneurship and the desirability of starting a new business. The willingness to take risks is also a very important factor in the cultural understanding of entrepreneurship, since risk tolerance is often correlated with the image of entrepreneurs. Still, it should be noted, a strong business culture is not enough to ensure entrepreneurship performance, since this willingness to start new businesses does not guarantee that these businesses will generate high growth. 67
    • Framework condition modelRegulatory Market Access to Creation and Entrepreneurial EntrepreneurshipFramework Conditions Finance Diffusion of capabilities culture KnowledgeAdministrative burdens Foreign Markets Access to Debt R&D Activity Business and Entrepreneurial attitude Financing Entrepreneurship in Society Education (skills)Bankrupt legislation Degree of Public Access to Venture Transfer of Non- Immigration Entrepreneurial Involvement capital commercial Knowledge education (mindset)Product and labor Public Procurement Stock markets Co-operation Amonglegislation FirmsCourt and legal Private Demand Technology Availabilityframework and Take-upCompetition legislationSocial and healthsecurityIncome taxesBequest & WealthTaxesBusiness and CapitalTaxesPatent System:Standards 68
    • 90 Latvia 80 70Framework conditions (normalised value 0-100) R² = 0,0033 60 50 Lithuania France 40 30 New Zealand Sweden 20 Norway Finland Spain Czech Republic Hungary Denmark Canada Slovenia Estonia USA Netherlandfs Portugal Luxembourg 10 Italy 0 0,00 10,00 20,00 30,00 40,00 50,00 60,00 70,00 Growth (normalised value 0-100) 69
    • Nordic region scores lowest on taxes • A part of regulatory framework is taxes, an area that the Nordic region ranks lowest • What would be the best incentives for growth entrepreneurs – low taxes or access to free hospital, schools, universities, services etc.? • Some measures for social and health security are already included in the NGER index and outweighs the low tax score • Maybe a more developed combined composite indicator measuring tax vs. free welfare services 70
    • Some national highlights• Nordic countries have high overall score for regulatory framework and market conditions – with Denmark in lead due to labor market regulations.• Sweden ranks lowest on labor regulation• Iceland has been hit tremendously by the financial crises and access to finance has been drained.• Finland and Iceland score high on their entrepreneurship culture• Norway is particualry challenged in the area of creation and diffusion of knowledge, partly due to high GDP (R&D indicators are % of GDP), but also rank low an areas such as enterprise-university collaborations 71
    • Some recent initiatives abroad 72
    • Startup-America Partnership todevelop stronger ecosystemsAmerica’s Top Entrepreneurs and Business Leaders Form New AllianceLaunched at the White House in January 2011, the Startup America Partnership is an independentalliance of top entrepreneurs, investors, corporations, universities, foundations, and otherleaders, joining together to grow the entrepreneurial ecosystems that support innovative, high-growth U.S. startups.The Startup America Partnership has already mobilized more than $1 billion in private-sector commitments to provide products, services, mentorship and funding to scale andgrow 100,000 U.S. startups over the next three years.
    • Startup Britain PartnershipStartUp Britain is a national campaign by entrepreneurs for entrepreneurs, harnessing the expertiseand passion of Britain’s leading businesspeople to celebrate, inspire and accelerate enterprise in theUK.The campaign was founded by eight entrepreneurs and launched on 28th March 2011 by the PrimeMinister, with the full support of the Chancellor and HM Government, although it is completely fundedby our private-sector sponsors such as AXA, Dell, Intel, Intuit, Magento Go and PayPal. 74
    • Final NGER publication will be finished in Fall 2012.For further information, please contact Glenda Napier: glenda@regx.dk 75