OECD Recommendation on SME and Entrepreneurship Policy

Join the UN MSME launch event of the recommendation on 27 June 2022

Background

The Recommendation on SME and Entrepreneurship policy was adopted by the OECD Council at Ministerial level on 10 June 2022 on the proposal of the Committee on SMEs and Entrepreneurship (CSMEE).

As part of a broader OECD SME and Entrepreneurship Strategy, the Recommendation aims to provide an evidence-based and holistic framework to support Adherents in developing coherent, effective and efficient SME and entrepreneurship policies, to foster their contribution to inclusive and sustainable growth and for the benefit of all.

The Recommendation responds to long-standing demand by countries for frameworks and tools to improve the effectiveness of SME and entrepreneurship policies, ensuring coherence and synergy across varied policy areas and actors and accounting for the diversity of the SME and entrepreneurship population. This has taken a new urgency in the aftermath of the COVID-19 crisis and acceleration of mega trends, as governments strive to support SMEs and entrepreneurs in the recovery and to adapt to the digital and green transitions.

Scope

The Recommendation offers a coherent and strategic approach to SME and entrepreneurship policies, encompassing a mix of targeted and horizontal policy dimensions and placing emphasis on effective governance mechanisms.

While aiming to be widely applicable, it recognises the different circumstances, institutional contexts and stages of development across jurisdictions, and that countries use a variety of policy frameworks to support their SMEs and entrepreneurs.

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The Recommendation is structured around three inter-related pillars:

Policy coordination and governance

Put in place cross-cutting and coherent approaches to SME and entrepreneurship policy design and implementation by:

Co-ordinating and aligning SME and entrepreneurship policy across government entities and levels through effective governance mechanisms and place based-approaches, in line with each country’s institutional setting, circumstances and needs.
Ensuring that implications for SMEs and entrepreneurs are considered across the diverse policy areas that influence their prospects and outcomes in order to enhance policy synergies, address potential trade-offs and reduce administrative burdens, including through increased attention to their specificities and circumstances in policy and regulatory design, SME tests and evaluations, consultation mechanisms, streamlined processes and user-centric approaches in implementation.
Taking account of the diversity of SMEs and entrepreneurs throughout policy making, by assessing implications for different types of SMEs, entrepreneurs and self-employed, adopting policy relevant typologies and collecting granular data on SME and entrepreneur key features, performance and behaviour.
Setting up robust monitoring and evaluation mechanisms that systematically assess policies for their SME and entrepreneurship impacts, using relevant data and methodologies and feeding results in new policy initiatives.

Transitions and resilience

Facilitate the transition and resilience of SMEs and entrepreneurs by:

Supporting the adoption of digital technologies, services and data by all SMEs and entrepreneurs in line with their needs, digital maturity and aspirations by enhancing access to digital infrastructure; strengthening digital skills, data literacy and management of digital security risk; and ensuring open and well-functioning markets for digital goods and services.
Encouraging and enabling SMEs and entrepreneurs to transition to sustainable business models, practices and technologies, and to drive green innovations, taking into account their specificities and needs in environmental policies; fostering their access to resources, including sustainable finance; and supporting their adoption of circular economy strategies.
Enhancing SMEs and entrepreneurs participation in international trade and global value chains through open markets; conducive regulatory frameworks; trade facilitation and trade finance; and by strengthening their access to services and networks, including with foreign partners and multinationals.
Enabling entrepreneurship by reducing barriers to entry, exit, business transfer and business succession, and by easing possibilities to re-start for entrepreneurs who fail; and ensuring that policies and the regulatory environment support competition and provide incentives and support for innovative entrepreneurs to scale up.
Encouraging and supporting under-represented or disadvantaged groups to participate in entrepreneurship, by taking into account structural barriers and specific challenges and needs through appropriate targeted measures, where necessary, and through equal access to wider entrepreneurship support programmes.
Facilitating the transition from informal to formal entrepreneurship, easing access to resources where needed; and ensuring a level playing field and enabling conditions for productive employment and decent work for the self-employed and for all kinds of entrepreneurship, including in the platform economy.
Promoting responsible business conduct and the engagement of SMEs and entrepreneurs in avoiding and addressing adverse environmental and social impacts and improving social outcomes associated with their activities and business relations along value chains and within their local communities.

Accessing resources

Enhance SMEs and entrepreneurs’ access to resources by:

Providing adequate incentives for SMEs and entrepreneurs to innovate and fostering their capacity to benefit from innovation diffusion, through conducive market conditions; robust and inclusive innovation ecosystems, local networks and infrastructure; and appropriate targeted measures, where necessary.
Enhancing SMEs and entrepreneurs’ access to a diverse range of financing instruments, sources and channels that are adapted to their needs in terms of development, growth and sustainability, by implementing evidence-based policies and regulatory approaches conducive to transparent and resilient SME finance markets; leveraging the role of new technologies; encouraging timely payments; and strengthening SME financial skills and vision.
Encouraging the development of an entrepreneurial mindset throughout society, and creating adequate incentives for SMEs and entrepreneurs to invest in skills; in particular promote the development of and access to skills that are transversal across jobs and contexts, such as management, problem-solving and digital skills.
Strengthening entrepreneurial ecosystems at national and local level, including by developing networks and linkages along supply chains, between SMEs and with large firms, within and across sectors; and by enhancing SME access to and participation in public procurement.