Design a local development strategy.
In close co-operation with relevant institutions at city/local and state level a local strategy to boost small business activity should be drafted with strong local participation. Other stakeholders should be recruited as partners in the delivery of the strategy. Further discussion is needed on whether the strategy should focus on the administrative jurisdiction or a wider economic region. It might be also relevant to include the area’s role in some wider region with a certain economic relevance (e.g. the Berlin Brandenburg capital region). Translated into an action plan clear priorities and roles for partners, timescales and resources can be defined.
Establish a vision and strategy for entrepreneurship policy.
A clear and mutually agreed strategy for entrepreneurship aims to formalise the aspirations and co-operation of key partners locally. A strategy such as, for instance, ‘Entrepreneurship and SME Development Strategy 2006-2010’, should be the product of public debate, deliberation and consensus building amongst relevant local institutions, as well as consultation amongst relevant communities, and seek to develop a comprehensive and integrated approach. Once established, the strategy can be translated into an action plan with clear priorities and roles for partners, timescales and resources.
Establish clear priorities.
An entrepreneurship strategy, local institutional framework and systematic approach to locally-oriented policy provide a means for identifying key priorities. A clear focus can help local institutions to be more discerning about the quality of entrepreneurship, potentially seeking to encourage and support those entrepreneurs and businesses with growth and sustainability potential. Priority policy areas can also be targeted at key needs and/or bottlenecks locally, for example developing micro-finance instruments together with local financial institutions to address the weak capital base of local SMEs, and extending current knowledge transfer activities to encourage innovation in SMEs.
Adopt and further expand the application of the policy cycle methodology.
Policy and programme development at all governance levels should be thought of as involving four linked stages – problem definition, design, delivery and evaluation. These stages underpin a potentially stronger and more systematic approach to entrepreneurship policy. The policy cycle also includes a more forward looking policy development approach. This may begin to foster a more proactive approach locally that may be more future-oriented rather than reactive in its responses to local economic change and Land level initiatives. The introduction and further expansion of systematic evaluation efforts of programmes and initiatives is a valuable source of information that helps to integrate lessons learned and findings about framework conditions for delivery success in new programme and initiative development. Linking target and objective setting in different programmes and initiatives is further a key ingredient of building sound local development strategies.
A participatory evaluation of previous and on-going programmes and projects, involving major local and regional stakeholders, can help to create an inventory of experience made and helps to align different strategies and action plans.
Adopt a more strategic approach in project selection and information dissemination.
Priority setting in innovation infrastructure must be future oriented. The support services need a stronger reference to, partially already introduced, criteria like technological level, coherence with strategic core competences of the region, potential for value added, export orientation and, most importantly, global market potential. The impact of business creation and development activities on the local economy in a place and its surrounding region could be used for promotional campaigns.
Foster institutional innovation.
Institutional arrangements characterised by high levels of integration, co-operation and transparent co-ordination are likely to positively influence entrepreneurial development and firm growth. With regard to rural development, the establishment of formalised inter-ministerial working groups at Land level, including the Ministry of Agriculture and other line ministries for entrepreneurship issues can contribute to further flag entrepreneurship development as priority and foster integration and co-operation. This process would also contribute to the identification of hindering framework conditions for entrepreneurship development that need to be addressed and to how procedures related to entrepreneurship development could be streamlined. At local level key local partners may benefit from more formalised joint working, for example using partnership and network models.
The lessons gained from “Inno Regio” initiatives, which are not strictly bound to administrative borders, should be fed into a wider process of innovating institutional co-operation. It is recommended that such a process is initiated for all existing “Inno Regio” projects. This would enable an exchange of information on the lessons of different regional etworking experiences in East Germany as an input into further innovation in institutional partnerships. A closer co-operation at Land level would further enhance collaboration and joining efforts at local level, especially in border areas.
Enhance policy co-ordination.
A broader entrepreneurship strategy may necessitate further co-operation and co-ordination in functional policy areas between local institutions at the District level. Key local partners may benefit from more formalised joint working, for example using partnership models. While offering a degree of flexibility and built upon well established local contacts, the relatively informal, issue-based and ad hoc current system raises questions about how institutional relations and contacts renew themselves over time and maintain their problem solving capacity. If the District level is too small, then ways need to be developed better to co-ordinate and integrate policy horizontally between Districts and vertically with the Land. Looking beyond the District boundary may provide a stimulus to collaboration, innovation and joint working.
Keep existing networks open for new members.
The actual engagement of local stakeholders in network initiatives can be used as a good and effective start, however further involvement of other actors like the Chamber of Crafts, the Local Association of Crafts and Farmer Associations should be sought in order to address new issues such as provision of apprenticeship places, business succession and rural tourism development. Existing local initiatives should also seek a stronger involvement of local governments and their agencies. It would help to further streamline procedures related to business registration and administrative matters depending from local authorities.
Increase integration and co-ordination in programme design.
Innovation, technology transfer and spin-offs benefits from increased networking between institutes of higher education, private sector actors and public business support institutions. In order for public policy to be supportive in this process strong integration and co-ordination of related policies and programmes at federal and Land level is needed to avoid regulation overlap and conflicting eligibility criteria.
Tailor policies to the local and regional contexts.
Building a more systematic approach to policy development amongst local institutions provides an opportunity better to shape policy more effectively to address particular local and regional conditions rather than relying upon generic, ‘off-the-shelf’ instruments. For local institutions, this may involve seeking to establish local policy-making discretion within their competence in the Land context or using existing policies in different ways. Given the potential this creates for policy divergence and diversity, efforts will be required to maintain co-ordination and integration between different institutions working at different geographical levels.
Organise support services for entrepreneurs into effective systems for providing resources such as technical assistance and training, access to capital, land and buildings, and regulatory guidance.
The aim has to be to bring in ways that increase efficiency and reduce transaction costs while maintaining or improving quality outreach to dispersed rural entrepreneurs. There is no shortage of agencies and institutions at the local, district, and state levels that can contribute in different ways to promoting and supporting entrepreneurship. There is evidence of strong linkages between government departments and chambers, and also bottom-up collaborations facilitated by the Leader Plus programs. These relationships and networks will be critical in ensuring that integrated and comprehensive support is available for those entrepreneurs with the motivation to create jobs and wealth in rural communities. Particular attention will have to be paid to regulatory frameworks and the time it takes to obtain regulatory approvals.
Discuss the establishment of an Enterprise Agency.
The creation of an organisation dedicated to fostering and assisting enterprise in the form of small, early stage and start-up businesses has proved to be successful elsewhere. The local authorities of involved districts or municipalities/communes, could take the leadership/initiating role in discussing and establishing such an enterprise agency. Experienced local judgement is needed in the decision whether to form an agency around an existing organisation rather than starting something new. A discussion about the future role of “Regionalmanagements” should be included. It would be important to avoid domination of the local authority either in policy terms or in its staffing and financing as this would undermine the commitment of others. The typical enterprise agency model would be an organisation governed by a public/private partnership fit for purpose and reflecting the requirements of the locality. Stakeholders may donate benefits in kind such as accommodation and office support services as well as secondments of staff for periods of time. Such secondments might be seen as training placements by banks, for example. The combination of permanent staff and secondees, running business support programmes for third parties ensures that enterprise agencies often operate like small businesses themselves. The work and survival of the agency would have to be seen to depend on everyone involved in the venture. It therefore helps if the agency is constitutionally and financially independent with its own governance arrangements.
Ensure the active support of local and regional stakeholders.
A successful agency would require the active support of local and regional stakeholders such as the Chambers, the larger private and public sector employers, including the hospital, and financial institutions whose services are key to small business development. Assembling such stakeholder support is likely to be a difficult task without a previous record of co-operative working. Therefore strong leadership from the local authority, with both a political and practical dimension, would be so important.
Simplify the interface with SMEs.
Local Economic Development Offices should also play a stronger pro-active role in working with SMEs. This entails understanding the strategic issues faced by such companies in achieving growth and maintaining close and regular contact with them. The co-ordination of support services to such companies and simplification of procedures – in cooperation with all regional partners: technology and R&D centres, universities, training bodies, banks, venture capital groups, etc. – should be a priority task. The clarity, transparency and communication of business support services for local entrepreneurs and businesses may be improved by the establishment of a single institutional identity or brand and gateway, for example using the ‘One Stop Shop’ model to provide a single and widely communicated information point for services. A free public access website may further underpin this model, for example drawing.
Make the existence of a “Small Business Charter” widely known among the local business community.
To achieve most effect, the existence of the “Small Business Charter” needs to be made widely known. There may be involvement of representative business organisations in drawing up the terms of the Charter and reviewing its effectiveness periodically. Including a reference to the existence such a Charter in international marketing efforts might increase the attractiveness as business location.
Identify and segment categories of enterprises.
Identifying and segmenting categories of enterprises that have the features of growth will be crucial to tackling the challenge of company scale, lack of capital and low exports in the SME sector. Growth companies can emerge from all sectors, for example, from manufacturing automotive components, from traditional manufacturing in the clothing, textile, construction products and food sectors, from the tourism sector, and from the service and new technology sectors. While retaining a sectoral strategy and focus, it may be useful to look horizontally across sectors and to tailor programmes of advice, support and funding more to the growth needs and growth prospects of different segments of companies. This process is not about picking winners, which state bodies or indeed banks and other bodies cannot do with any degree of certainty of eventual success. However, it is about recognising new business plans and company features that can form the foundation for business expansion and lead to growth, and then identifying and segmenting the companies that display such features. It is crucial that transparent categorisation procedures and objective and clear criteria be used in any such approach.
Look for and prioritise innovative companies and growth enterprises.
SME support should focus support in a more concentrated way, across all sectors, on those companies that have the best prospects for future growth. Greater resource needs to be applied to identifying start-up companies that are innovative and have the potential to grow. There needs to be greater emphasis on scanning and pro-active identification of growth companies. This will require a dedicated resource and a wider, more holistic interpretation of innovation, which encompasses product, process and marketing.Other SME company segments should continue to have support relevant to their needs and stage of development, for example, website information, selected business development advice, information on quality standards and training..
Increase international networking efforts.
Active involvement in international networks would help to contribute to the internationalisation of the local economy. It is important to expose leading university managers and policy makers to colleagues working in other jurisdictions and to establish working networks with the people involved. This could be tackled through active involvement in international networks of economic development practitioners such as the European Association of Development Agencies (EURADA), which is currently planning to launch a European network of universities and regions, the International Economic Development Council (IEDC) in the US, the European Business Angels Network, and the National Business Incubation Association as well as the activities of the OECD LEED Programme.
Discuss the introduction of co-ordination and co-operation mechanisms to bundle local development efforts of existing networks.
Participation in policy and programme design could be increased by bringing together different networks. The establishment of a sounding board with the participation of entrepreneurs and the public sector have proved to be a useful instrument to receive feedback on effectiveness and impact of entrepreneurship policies and measures. Further, effective co-ordination mechanisms and the existence of social capital can be market as a strong local development asset.
International Learning Models
Basque, Spain: Building on strategy in consolidating an entrepreneurial society