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Entrepreneurship Data, Research and Policy - The Danish Case

Entrepreneurship Data, Research and Policy - The Danish Case. Anders Hoffmann, Ph.D. Creative Director, FORA – Centre for Economic and Business Research. Data, Reseach and policy.

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Entrepreneurship Data, Research and Policy - The Danish Case

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  1. Entrepreneurship Data, Research and Policy- The Danish Case Anders Hoffmann, Ph.D. Creative Director, FORA – Centre for Economic and Business Research

  2. Data, Reseach and policy • “Es ist nicht genug zu wissen, man muss es auch anwenden; es ist nicht genug zu wollen, man muss es auch tun.” Johann Wolfgang von Goethe, 1749-1832 (Knowing is not enough, one should also use it; Wanting is not enough, one should also do it)

  3. Data, Reseach and policy • Without data you are just another guy with an opinion ICE, 2004

  4. Our political motivation • The Danish Government Platform, 2005 • “The Government will, therefore, draw up an ambitious, holistic and multi-year strategy to make Denmark a leading growth, knowledge and entrepreneurial society”. • “Our goal is for Denmark, by 2015, to be one of the societies in the world where most growth enterprises are launched”.

  5. Our analytical objective • The objective is to provide policy makers with an overview of which policy areas that should be an essential part of a country’s overall strategy to promoting entrepreneurship. • The analysis is based on a cross-country comparison of indicators measuring both performance and the underlying business environment for entrepreneurship.

  6. The Danish Approach Data Research Policy

  7. Exit 25% General population Want-to-be 30% Entry 1% Survival 70% Growth 5% What is Entrepreneurship? • No single definition exists of entrepreneurship simply because entrepreneurship cannot be seen as a single event. Eurostat GEM

  8. Research • Entrepreneurship is defined as • entry and exit of firms and • creation of high growth firms, …as analyses link these two stages in the entrepreneurship process directly to productivity growth (Audretsch and Thurik, 2000; Scarpetta et. al. 2002, OECD 2003, Brandt, 2004).

  9. Research • The number of new firms and new high-growth firms created each year depends on a myriad of underlying factors coupled with the personal attributes of entrepreneurs • Hoffmann (2007) summarizes these in: • skills • opportunities • capital • incentives • motivation

  10. DataOur Quality Manual • The objective is to collect and evaluate all avaliable indicators of entrepreneurship • Quality is defined as “fitness for use” in terms of user needs (Relevance, accuracy and availability). • Four main categories: • Performance indicators • Business environment indicators • Attribute indicators • Context indicators

  11. Quality manual – an exampleAssessment of Accuracy (1 dimension) • Very good: the indicator originates from national statistical offices or international government institutions; or the indicator stems from a fact-based survey. • Good: the indicator comes from an action-based survey. • Acceptable: the indicator comes from an opinion-based survey.

  12. Quality manual – an example Overall Evaluation • Good (A): at least 5 As and no Cs • Acceptable (B): at least 3 As and no Cs • Questionable (C): less than 3 As or one or more Cs.

  13. DataWhat’s Missing? – a prioritised list • Performance indicators are missing for both start-up rates and growth rates! • Abilities are badly measured (both education and advice services) • Capital markets (business angles, exit possibilities, loans)

  14. DataICE • Our consortium was founded in 2004 • 8 countries are full members • We have a yearly budget of €240.000 • Vision: A critical demander of data and analyses

  15. Policy The Danish Entrepreneurship Index

  16. Main findings • Entrepreneurship activity • A high level of start ups in Denmark • Limited share of Danish companies experience high growth rates • Framework conditions • Compared to the top-3 countries, DK: does well on administrative burdens, wealth and bequest tax, and public guidance • Four areas in particular need of improvement: entrepreneurship education, access to professional counselling, bankruptcy legislation and taxes.

  17. Basic idea – a 7 steps approach • Define good performance and select performance indicators (3 indicators) • Identify top-performing countries (check robustness) • Define relevant policy areas and select indicators (58 indicators - check robustness) • Test for correlation between performance and policies

  18. Basic idea – a 7 steps approach • The critical areas of the framework conditions are identified • Weak points in national framework conditions are identified • Improve weak points by using peer review to learn from policies in best performers

  19. Distance between Denmark and the top-performing countries

  20. An overviewComparing the Business environment 0 100 DK 2005 - 06 Top4 2005 - 06 Denmark is catching-up

  21. - 80 - 70 - 60 - 50 - 40 - 30 - 20 - 10 0 10 20 30 Incitamenter Indkomstskat Selskabsskat Konkurslovgivning Administrative byrder - opstart * Administrative byrder - drift Arbejdsmarkedsregulering UdbudafKompetencer (Ikke opdateret) Iværksætteruddannelse * Genstartsmuligheder (Ikke opdateret) Traditionelle merkantile uddannelser Iværksætterinfrastruktur (Ikke opdateret) Udbud af kapital Kapitalskat (Ikke opdateret) Aktiemarkeder Lånekapital Venturekapital Formue og arveskat Iværksætterkultur Motivation for iværksætteri (Ikke opdateret) Efterspørgselsmuligheder * Adgang til udenlandske markeder (Ikke opdateret) * Adgangsbarrierer (Ikke opdateret) Overførsel af ny viden Gennemsnitlig afstand irammevilkår Danmark bagud Danmark foran

  22. Difference between Denmark and top-4 -80 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 Incentives Income taxes Business taxes Bankruptcy Administrative burdens start-up Administrative burdens - operation Labour market regulation

  23. Udvikling DK Udvikling T4 Udvikling DK – T4 - 20 - 10 0 10 20 - 20 - 10 0 10 20 - 20 - 10 0 10 20 Incitamenter Indkomstskat Selskabsskat Konkurslovgivning Administrative byrder - opstart Administrative byrder - drift * Arbejdsmarkedsregulering Udbudafkompetencer (Ikke opdateret) (Ikke opdateret) Iværksætteruddannelse Genstartsmuligheder (Ikke opdateret) (Ikke opdateret) * Traditionelle merkantile uddannelser Iværksætterinfrastruktur (Ikke opdateret) (Ikke opdateret) Udbudafkapital Kapitalskat (Ikke opdateret) (Ikke opdateret) Aktiemarkeder Lånekapital Venturekapital Formue og arveskat Iværksætterkultur Motivation for iværksætteri (Ikke opdateret) (Ikke opdateret) Efterspørgselsmuligheder Adgang til udenlandske markeder (Ikke opdateret) (Ikke opdateret) * Adgangsbarrierer (Ikke opdateret) (Ikke opdateret) * Videnoverførsel Rammevilkår i alt DK forværrer DK forbedrer T4 forværrer T4 forbedrer DK mister DK vinder rammevilkår rammevilkår rammevilkår rammevilkår terræn terræn

  24. Change T4 Change DK–T4 Change DK - 10 0 10 - 10 0 10 - 10 0 10 Incentives Income taxes Business taxes Bankruptcy Administrative burdens start-up Administrative burdens - operation Labour market regulation

  25. Critical Policy Areas

  26. 4 KOR 3 USA 2,5 2 Performance GBR CAN ESP FIN NOR SUI NED DK 1 ITA 0 SWE GER FRA DK 0 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0 1 2 Framework Conditions 9 8 7 6 5 4 3 2 1 0 Bankruptcy Index DK Top 3 DK

  27. However, we still lack internationally comparable data

  28. 3 types of indicators • Indicators based on register data equal or close to the policy instrument in question. Time to close a business

  29. 3 types of indicators • Indicators based on “hard”, which provide an indirect measure of the policy area in question. Barriers to competition

  30. 3 types of indicators • Indicators based on survey data that describes the quality of the policy area. Entrepreneurship education

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