AN INTERNATIONAL BENCHMARKING ANALYSIS …

1 AN INTERNATIONAL BENCHMARKING ANALYSIS OF public PROGRAMMES FOR HIGH-GROWTH FIRMSP repared by the OECD Local Economic and Employment Development programme in collaboration with the Danish Business AuthorityMarch 2013 This work is published on the responsibility of the Secre tary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. This document and any map included herein are without pr ejudice to the status of or sovereignty over any territory, to the delimitation of INTERNATIONAL fr ontiers and boundaries and to the name of any territory , city or area.

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3 All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at or the Centre fran ais d'exploitation du droit de copie (CFC) at AN INTERNATIONAL BENCHMARKING ANALYSIS OF public PROGRAMMES FOR HIGH-GROWTH FIRMS FINAL REPORT Prepared by the OECD Local Economic and Employment Development programme in collaboration with the Danish Business Authority March 2013 3 TABLE OF CONTENTS EXECUTIVE SUMMARY.

4 4 INTRODUCTION .. 7 PART I BENCHMARKING ANALYSIS .. 9 CHAPTER 1. DESIGNING POLICY FOR HIGH-GROWTH SMES .. 10 CHAPTER 2. THE HIGH-GROWTH programme ASSESSMENT FRAMEWORK .. 18 CHAPTER 3. THE BENCHMARKING RESULTS .. 28 CHAPTER 4. KEY MESSAGES FOR DENMARK .. 39 PART II THE BENCHMARKED PROGRAMMES .. 43 CHAPTER 5. DENMARK'S GROWTH HOUSES .. 44 CHAPTER 6. SCOTLAND S COMPANIES OF SCALE programme .. 64 CHAPTER 7. THE NETHERLANDS GROWTH ACCELERATOR .. 85 CHAPTER 8. FLANDERS GAZELLE JUMP .. 106 CHAPTER 9.

5 GERMANY'S HIGH-TECH GRUNDERFONDS .. 131 CHAPTER 10. COMMERCIALISATION AUSTRALIA .. 153 PART III OTHER LEARNING MODELS .. 183 CHAPTER 11. ENGLAND'S GROWTH ACCELERATOR .. 184 CHAPTER 12. IRELAND'S MANAGEMENT FOR GROWTH programme .. 189 CHAPTER 13. SWEDEN S NATIONAL INCUBATOR PROGRAM .. 195 CHAPTER 14. THE JOBS AND INNOVATION ACCELERATOR CHALLENGE .. 202 CHAPTER 15. ONTARIO'S MEDICAL AND RELATED SCIENCE DISCOVERY DISTRICT .. 207 CHAPTER 16. CHILE'S SEED CAPITAL programme .. 214 CHAPTER 17. BRAZIL S INOVAR VENTURE CAPITAL programme .

6 219 ANNEX A. ASSESSMENT FRAMEWORK FOR HIGH-GROWTH PROGRAMMES .. 222 4 EXECUTIVE SUMMARY Applied economic research shows that net job creation comes from a small batch of successful fast-growing firms, rather than from a large majority of averagely performing SMEs. The evidence for different countries suggests that around 4-6 percent of high-growth firms produce half to three/quarters of all new jobs. Two common features to high-growth firms are that they are prevalently young and small, with age being a stronger determinant of rapid growth than size.

7 However, they are not disproportionally present in any specific sector, including technology-based ones, and their incidence is in fact stronger in services than in manufacturing. By definition, rapid business growth is not a steady phenomenon and high-growth firms do not remain as such for a long time. Periods of high-growth are episodic rather than persistent and multiple instances are rare. Evidence from the UK shows, for example, that firms that achieved mean sales growth of 36 percent per year over the period 1992-1996, only grew by 8 percent over the following 1996-2001 period.

8 Repeated periods of rapid growth only affected one/third of UK high-growth firms. The contribution to net job creation by a few rapidly growing firms provides one of the rationales for policy intervention. High-growth firms generate positive externalities ( increased employment and consumer demand) that benefit the whole of the economy beyond the private returns available to the entrepreneur, which makes them worth of policy support. But there are other market failures that affect high-growth firms and that policies seek to address.

9 Business expansion require external finance, often of equity nature, which is hardly available in the markets, especially to enterprises that are too young or too small and have not yet achieved the stage of development likely to attract Venture Capital. Business growth also calls for improved management skills. Fast business development is a disruptive process that alters the organizational dynamics and management practices of an enterprise, from production to logistics, from marketing to staff management.

10 New leadership and management skills are often needed to cope with this process. The programmes analysed and benchmarked in this report fall under the two categories of management skills and finance, although not always is the distinction neat. Programmes that have a focus on finance also tend to offer management support, while the opposite is generally not true for schemes with a management focus. Programmes have been analysed through an assessment framework consisting of 35 indicators garnered by 7 categories: context of the programme ( objectives, governance, and geographical scope); staff profile ( academic and professional background); client firms ( selection process, prevailing sectors, market orientation, and follow-up); type of business diagnosis ( business concept, business organisation, customer relations, and operations).