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Report presented by the Entrepreneurship Team, led by Alison Partridge with Eddy Adams and Sally Kneeshaw
This report draws upon a comparative analysis of promising approaches and good practices from eight of INTERREG IVC’s projects exchanging good practices in entrepreneurship. The aim is to distil the results into key messages and recommendations that can assist policymakers and practitioners across Europe.
INTERREG IVC Capitalisation on Entrepreneurship: Why entrepreneurship matters in European regions
The Europe 2020 strategy acknowledges the importance of entrepreneurship and self-employment in achieving smart, sustainable and inclusive growth. For more than a decade, the European Commission has actively promoted entrepreneurship in response to the fact that fewer Europeans start or grow businesses than their main global competitors.
Efforts in this area have included supporting business start-ups amongst unemployed people and disadvantaged groups as well as promoting social entrepreneurship. They have also sought to improve business innovation, growth and sustainability rates.
The importance of entrepreneurship is reflected in the Commission’s proposals for the 2014-2020 Cohesion Policy, where it is considered in at least half of the thematic objectives. Alongside this, the Commission’s Entrepreneurship Action Plan reinforces the need for improvement in key areas including entrepreneurship education, access to finance and reduced regulation.
Improving rates of entrepreneurship – in both the commercial and social spheres – are considered vital for Europe’s economic recovery. Regions have a key role to play in creating ecosystems that promote and support enterprising attitudes and activities.
Entrepreneurship challenges at regional level
Despite many interventions, entrepreneurship levels in Europe remain stubbornly low. Addressing this will require tackling the barriers which remain in place, and which entrepreneurs and their supporters have identified within this report. Although we see some regional variations, this report highlights common challenges facing entrepreneurs and public support for them across Europe. Principal amongst these are:
Fragmentation and short-termism
In many regions, publicly funded support services aimed at entrepreneurs are insufficiently joined-up. Too often, these services are provided in a reactive and ad hoc way. Service duplication is not unusual, clients struggle to understand the support offer and, overall, there is a lack of integration. Linked to this is a prevalent culture of short-termism, often linked to political cycles, which leads to structures being routinely reorganised causing further disruption.
Diversity of the target group
For publicly funded agencies seeking to support entrepreneurs, the diversity of the client group can present challenges. Although there are common support needs, certain priority groups face distinct barriers – for example some young people, migrants and women. There are also particular support needs for social entrepreneurs, all of which raises important questions relating to resource allocation, service design and delivery.
INTERREG IVC supports regions to improve performance through mutual learning and exchange of experience. In relation to entrepreneurship, one of the main challenges is the lack of a ‘one size fits all’ solution and the limited degree to which approaches can be taken off the shelf and applied between regions. Regional entrepreneurship support structures reflect the complex, and often fragmented, environments – legal, regulatory, cultural etc. – in which they operate.
Weaknesses in impact measurement
Measuring the impact of public sector support for entrepreneurship is not easy. Evaluation processes often adopt relatively short time frames and tend to focus on the indicators that are easiest to measure – such as the number of new businesses, turnover levels and jobs created. It is more difficult to measure attitudinal impact – a critical factor according to the INTERREG IVC projects – whilst assessing the impact of social entrepreneurship requires quite distinct indicators.
Low awareness levels of support mechanisms
In addition to the confusion amongst entrepreneurs caused by the lack of integrated support systems, this report has identified a particular challenge relating to poor visibility and accessibility of some support mechanisms. An important example is the low awareness and take up of social clauses and related mechanisms designed to support access to public procurement processes.
Access to finance
During a period of intense austerity, it was not surprising to hear that access to finance remains a barrier for entrepreneurs. However, this is not insurmountable when the business idea is good.
Lack of an entrepreneurial culture
Attitudinal barriers were consistently identified as being central to shifting entrepreneurial performance. Fear of failure is a Europe-wide cultural barrier which requires intervention with the young – through the education system – as well as with seasoned entrepreneurs whose initial enterprises have failed.
Some good practices and solutions from INTERREG IVC
This report has identified a wide range of good practices and solutions emerging from the eight entrepreneurship projects under review. These are presented here under five interlinked themes.
Entrepreneurial education and culture
Several INTERREG IVC projects contain good practices designed to strengthen Europe’s entrepreneurial culture. A number of these focus on stimulating enterprising behaviour amongst the young. From the YES project is the Swedish ‘Environment Rally’ which has school students tackling local companies’ environmental challenges. Two projects, the Danish Innocamp (ENSPIRE EU project) and the Estonian ‘Hour Innovation Camp’ (YES) immerse young people in an enterprise-focused experience which takes them out of their comfort zones. All of these build links between schools and local businesses, as well as equipping young people with enterprising attitudes such as team working, creative problem-solving and planning.
Brokerage work linking schools and enterprise also supports teachers, who have a key role in shaping youth attitudes. In Gothenburg (Sweden) (IMAGEEN), the Entrepreneurship Teacher Training Initiative equips teachers and careers advisers with the competencies to encourage enterprising behaviours amongst students. As a direct result of this INTERREG IVC project, the Lubeskie region in Poland is now introducing teacher training for entrepreneurship. In Finland, YES centres are facilitating links between business and education through the organisation of highly successful speed networking events.
Efforts to affect culture change also take place with adults. The Paris Chamber of Commerce and Industry (ENSPIRE EU) offers the Groupement de Créateurs the possibility to build awareness amongst unqualified and disadvantaged people. Effective support extends beyond the traditional commercial sector to encompass the social economy. The Hampshire School of Social Entrepreneurs (ENSPIRE EU) and the Foundation of the Social Economy School in Spain (PASE) provide effective support for social entrepreneurs, showing that there are legitimate alternatives to established business models.
A clear message from projects working in this area is that shifting culture takes time, and success requires consistent and long-term commitment.
The long-established Munich Business Plan (IMAGEEN) is an effective access-to-finance model. Organised as a competition, prizes are financial input as part of an integrated support package. Since 1997, over €300 million in seed capital has been invested, creating 808 businesses and 5199 jobs. Birmingham is adopting a version of this Munich model.
As part of the Young SMEs project, the INCYDE Foundation looks beyond start-ups, and provides financial support to existing businesses. This approach involves an innovative road show model, where support agencies spend several days in one town at a time.
Social entrepreneurs face particular issues in relation to finance and the Regional Council Provence-Alpes-Côte d’Azur (France) (PASE) helps them access banks and other sources of financial support. The Malaposka region (Poland), which has an effective programme to support social entrepreneurs using ESF, is looking to adopt the French approach.
These projects indicate the importance of providing financial support as part of an integrated package. They also suggest that alternative and innovative ways to raise finance are growing in popularity. The new Cohesion Programme also looks set to boost microfinance support schemes.
Regulatory environment and procurement
Businesses routinely complain about too much red tape, and one project partner observed that “If government can’t help. They should stay away.”
Both the PASE and MESSE projects explored regulatory models which support social enterprise. Two Italian examples were of particular interest. Marche region (a partner in both projects) has a co-programming model which brings public sector and social entrepreneurs to develop and fund social services. Nationally, there are reserved tenders for social enterprises, and in the Marche region, 5% of public spending goes on enterprises focused on integration. The Italian and Spanish support structures for cooperatives were also of interest to other project partners.
In France, procurement clauses designed to favour social enterprises also received much attention. Yet, although these exist at the national scale, implementation barriers remain at the regional level.
Each Member State has its own regulatory model. This can mean that some good practices – such as the Basingstoke 3en Venture Capital Fund (ENTREDI) are hard to transfer. It also means that new businesses must be aware of the context in which they operate. Another ENTREDI project, KOMPASS (Frankfurt), offers a universal support package to entrepreneurs, covering regulations including tax, company reporting and health and safety rules.
The importance of integrated regional infrastructure models is clear from this report. This includes physical spaces and virtual support. The former includes the Gothenburg Brewhouse (IMAGEEN), a city centre space supporting creative industries. Another sector-focused project is the Cleantech Campus (PROSPECTS) in Houthallen-Helchteren (Belgium). Situated in a former mining area, this supports businesses involved in clean mobility, renewable energy and clean production processes.
The Jönköpping Science Park (ENTREDI) provides a nodal support model showing how entrepreneurs can be supported beyond urban areas, with a particular focus on family-run businesses. The Lyon Ville de l’Entrepreneuriat (IMAGEEN) offers another networked model, ensuring that entrepreneurs are never more than 15 minutes from a support point. This has contributed to Lyon’s business start-up rate exceeding the national average by 18.2%.
In East and Southern Europe entrepreneurship is being promoted as a response to the crisis. The Entrepreneurship Foundation in Zary (Poland) (ENSPIRE EU) offers a coordinated support package to students and also to young unemployed people. In Spain, the Murcia Regional Entrepreneurship Plan (YES) provides an excellent example of an integrated support model aimed at young people. In nearby Granada, the web portal for entrepreneurs (IMAGEEN) provides a 24/7 support service through a service that has allowed municipalities to collaborate.
This capitalisation exercise confirms that entrepreneurship is ‘a people thing’ not ‘a buildings thing’. Infrastructure must be reliable, high quality, easy to reach and serviced by good professionals.
Support and technical assistance
Entrepreneurs stress the importance of an integrated support model. The ENTREDI network offered a good example through the KOMPASS profiling tool (Frankfurt, Germany) which allows advisers to test an entrepreneurs’ business readiness. From the same project, the I-Planner, from the Tartu Science Park (Estonia), is a web-based business planning tool. Both of these examples support entrepreneurs as well as help public services to assess risk and make informed support and investment decisions.
From the IMAGEEN project, two Swedish cases provide examples of how services can be flexibly delivered to meet entrepreneurs’ busy lifestyles. ‘Mind Your Own Business’ is a tailored support service provided at all hours to suit the client. ‘Expedition Forward’ offers customised support to business leaders, with high rates of satisfaction.
Trust emerges as an important factor in effective support projects. This is evident in the ‘Ethnic Coach for Ethnic Entrepreneurs’ project from Denmark (ENSPIRE EU) which operates within the Muslim community. In the UK, the Prince’s Trust Enterprise Programme (ENSPIRE EU) also uses the trusted coach as an effective support tool for fledgling businesses.
This report suggests that, although the public sector has a key support role, it should not always take an active lead within an integrated service model. Business-focused organisation – such as Chambers of Commerce – can be more credible at the front.
Some of the recommendations emerging from this work are:
Recommendations for regional strategies
- Long-term vision and commitment are required, with a willingness to invest
- Consistent multi-party commitment is needed at high levels
- Patience is required, as results may take time
Recommendations for entrepreneurship strategies
- More coherence is needed across departments and levels of government
- Evidence based / informed decisions are required to make best use of limited resources
- Metrics should include better analysis of survival and growth rates and consider qualitative benefits
Recommendations for entrepreneurship education
- Entrepreneurship should be an integral part of education
- It is important to work with teachers and support them to work with business
- The fact that entrepreneurship creates a better workforce needs to be promoted
Recommendations for entrepreneurship ecosystems
- Coherence between legal frameworks, infrastructure and human capital is vital
- Transparent services with user friendly pathways and progression routes are important
- Support mechanisms and services need to be credible with business and the finance community
Recommendations for communications on entrepreneurship
- Effective communication strategies are key to inspiring culture change
- Cities and regions must find ways to articulate the benefits and impact of entrepreneurship
- Success stories, competitions, awards and ambassadors all form part of effective communication strategies
Finally, some key points for INTERREG IVC
INTERREG IVC’s role in supporting entrepreneurship is important because:
- Involving politicians in interregional exchange activity has a proven positive effect on the success for transferring policies – increasing levels of political commitment
- Interregional exchange helps regions to evaluate and benchmark their own entrepreneurship assets and assess the potential for improvement
- Emerging tools can help administrations in the design of the new Structural Fund programmes and improve regional entrepreneurship policy