Entrepreneurship review of Denmark [electronic resource]

2008·4.3 MB·English

by  Organisation for Economic Co-operation and Development. Directorate for Science, Technology, and Industry

OECDDirectoratefor
Science,TechnologyandIndustry(STI)
Entrepreneurship Review of
Denmark
oS
ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT 2008
ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT
sociaTlhaendOEenCvDiroinsmaenutnailqucehaflolreunmgewshoefregltohbealgiosavteironn.meTnhtesoOfE3C0Ddeismoaclrsaocaitesthewofrokreftroognetthoefretfofoardtdsretossunthdeeresctoannodmiacn,d
tohelpgovernmentsrespondtonewdevelopmentsandconcerns,suchascorporategovernance,theinformation
economyandthechallengesofanageingpopulation.TheOrganisationprovidesasettingwheregovernmentscan
comparepolicyexperiences,seekanswerstocommonproblems,identifygoodpracticeandworktoco-ordinate
domesticandinternationalpolicies.
TheOECDmembercountriesare:Australia,Austria,Belgium,Canada,theCzechRepublic,Denmark,Finland,
FNreawnceZ,eaGlearnmd,anNyo,rwGareye,ceP,olHaunndg,arPyor,tuIgcaell,andth,eIrSelloavnad,kIRteaplyu,blJiacp,anS,paKionr,eaS,weLduexne,mbSowuirtgze,rlMaenxdi,coT,urtkheey,NetthheerUlnaintdes,d
KingdomandtheUnitedStates.TheCommissionoftheEuropeanCommunitiestakespartintheworkoftheOECD.
OECDPublishingdisseminateswidelytheresultsoftheOrganisation’sstatisticsgatheringandresearchon
economic,socialandenvironmentalissues,aswellastheconventions,guidelinesandstandardsagreedbyitsmembers.
Acknowledgements
ThisreportwaspreparedunderthesupervisionofMarcosBonturi.KoendeBackerwastheprojectmanager.The
authorswereKoenDeBackerandFabienneCerri,PaulAtkinson(externalconsultant),KristofferAstrup(Danish
MinistryofEconomicsandBusiness,temporarilysecondedtoOECD)andOlafMerk.Itbenefitedfromcommentsby
MariarosaLunatiandJensLundsgaard.StatisticalsupportwasprovidedbyIsabelleDesnoyersandLaurentMoussiegt.
©OECD2008
Notranslationofthisdocumentma[e-mail].
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EXECUTIVESUMMARY
e1n.terprisesT.heStDaratn-iusphreatceosnionmDyeinsmsamralkl,haovpeeninacnrdeadsyendasmtiecadiwliythinarleacregnetnyuemarbseranodfsamrealhliaghndinmeidntieurmn-astiiozneadl
comparison.Theoverallimportanceofhighgrowthfirmsisincreasingbutremainsbelowthelevelof
someothercountries.ThishasstimulatedtheDanishgovernmenttoputforwardambitiousobjectivesfor
entrepreneurshipingeneralandhighgrowthstart-upsspecificallyintheGlobalisationStrategyin2006.
Accordinglythefundsandinfrastructureavailableforthesupportofyoungenterpriseswithhighgrowth
potentialhasincreasedsubstantially.
2. Inthepast,entrepreneurshippolicyinDenmarkhasaimedatcreatingfavourableframework
conditionsforentrepreneurshipforallfirms.Sinceearly2000,Denmarkhasadoptedawiderangeof
programmespromotingentrepreneurship,easingaccesstofinance,providingentrepreneurshipeducation,
improvingaccesstocounselling,technologytransferandinternationalisation.Entrepreneurshippolicy
psehrofwosrmaancleargaendcodmeptreerhmeinnsainvtesneisnsteranantdioniasllyr.eguAlarlcyontmionnuiotuosredassbeyssmbeenntchomfarkthiengenetnrterperperneenuerusrhiialp
performanceofDenmarkhasbeenverybeneficialas(policy)entrepreneurshiptrendsinothercountries
couldbemonitoredandexistingDanishentrepreneurshippoliciescouldbeadaptedtothechanging
characteroftheglobaleconomy.
3. OverallentrepreneurshippolicyinDenmarkcanbeevaluatedaspositive,havingresultedina
healthybusinessenvironmentandveryconducivetoentrepreneurialactivity.Administrativeburdensfor
entrepreneurshipinDenmarkareverylowasDenmarkhasbeenmoresuccessfulthanmanycountriesin
keepingregulatoryandadministrativerequirementstoareasonableminimum.Andthesupplytofinancial
resourcesforentrepreneurialfirmsisoverallfavourableinDenmark.TheDanishventurecapitalmarket
hasgrownsteadilyinrecentyearsandtheconcentrationandprofessionalizationofactivitiesinthe
Vaekstfondenhasresultedinalargertransparencyforcompanies.
4. Thisdoesnotmeanthatthereisnoroomforimprovementineffectiveentrepreneurshippolicies
inDenmark,especiallyinthelightoftheambitiousobjectivessetoutbytheGlobalisationStrategy.The
focusonhighgrowthentrepreneurshipmightcallfornew/adaptedpoliciesandinstruments.Itisclearthat
thesuccessofthismorefocusedapproachinentrepreneurshippolicywilldirectlydependonthegood
identificationofgrowthentrepreneurs.Itshouldbetakenintoaccounthoweverthatadefinitionbasedon
firmagemayrisktargetingtoosmallagroupofhigh-potentialentrepreneurialfirms.
5. ThemajorareawheretheframeworkconditionsinDenmarkworkagainstentrepreneurial
activityistheimpactofhighandprogressivetaxationonrisk/rewardtrade-offsthatinfluenceincentives.
Highmarginaltaxratesaffectbothsuccessfulentrepreneursandtheskilledpeoplewhomakecrucial
contributionsinsupporting,andoftensalaried,positions.Thereareprobablylimitstowhatcanbedone
giventheratherstrongpublicsupportbutmeasurestomitigatethedisincentivesgeneratedbyhightaxation
wouldbehelpful.
6. Theissueoftaxationisalsoparticularlyimportantgivenitsinfluenceontheinternational
mobilityoftalentedandhighlyskilledpeoplewhooftenhaveoptionsreadilyavailableelsewhere.
Denmarkisasmallpartofanopenandincreasinglyintegratedinternationaleconomy,sosuchpeopleare
likelytoincludebothDanishcitizensandpeoplewhomustbeattractedfromothercountries.Thiscategory
ofhumancapitalisespeciallyimportantindevelopedcountrieslikeDenmarkasthegrowthpotentialof
firmsisdirectlyrelatedtotheinnovativenessandinternationalisationoftheiractivities.Theabilityto
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attractandretainskilledhumanresourcesisanimportantelementofmakingDenmarkamore
entrepreneur-friendlybaseofoperations.
7. AsecondpriorityareaforentrepreneurshippolicyinDenmarkisentrepreneurshipeducationon
thedifferentlevelsoftheeducationsystem.Denmarkperformscomparativelylesswellinthesupplyof
entrepreneurialskillsandcapabilities,entrepreneurshipreceivinglessattentionintheDanisheducation
systemrelativetothetopperformingcountries.Thismeansthatthereisstillscopetoimprovethetraining
ofpotentialentrepreneursandtheculturalattitudetowardsentrepreneurship.Differentinitiativeshavebeen
launchedinrecntyears;somefirstindicationsofincreasedattentiontoentrepreneurshipineducation
alreadybecomeapparent.Itseemsthatthereisaneedforcontinuationofprogramsinthisdomain;a
thoroughevaluationiswarrantedontheinducedeffectsofpolicyprogramsinthefuture.
8. Inaddition,someconditionsforentrepreneurshipcouldbefurtherimproved:theventurecapital
marketsremainsrelativelysmallandisheavilydependentongovernmentfundsespeciallyinpre-seedand
seedinvestments,thetransferoftechnologybetweentheresearchandthebusinesssectorisrelatively
limitedandsomeadministrativerequirementsmayundergofurtherpolicyevaluation.
9. AnimportantchallengeforDenmarkisthecoordinationandintegrationofdifferentpolicies
affectingentrepreneurship. Just like inothercountries, thewide rangeofprograms impacting
entrepreneurship in Denmark illustrates the shared responsibilities of different ministries on
entrepreneurship.TheGlobalisationStrategyhasputforwardobjectivesindifferentpolicydomains
acknowledgingthemutualinterdependenceofpolicysub-domainslikeeducation,entrepreneurshipand
innovation.Inacontextoflowunemployment,thefocusonhighgrowthstart-upswhicharemore
productiveandinnovativecallsforaclearcoherenceespeciallybetweeninnovationandentrepreneurship
policies.Thereforeitisbothpositiveandnoteworthythatstrongeffortshavebeenundertakenfromthe
relevantministriestoensureco-ordinationandacleardivisionoflabour.
10. Denmarkmayfacepotentialbottleneckslinkedtothemulti-levelgovernancedimensionof
entrepreneurshippolicies.The2007localgovernmentreformhasallowedtheDanishgovernmenttore-
thinktheDanishbusinesssupportinfrastructure.Asregardstheprovisionofbusinessservices,thereform
hasresultedinmoredifferentiatedadvice,withbasicbusinessservicesbeingprovidedbymunicipalities,
whilethenewlycreatedregionalCentresofGrowthservicegrowth-orientedbusinesses.Thereisariskthat
therecentlyde-concentratedstructures(RegionalCentresofGrowth)mayterritoriallyoverlapwiththerole
playedbysub-nationalgovernments.
11. Thecasestudyonthemulti-levelgovernmentcoordinationinmetropolitanCopenhagenshows
thattheobjectivesoftheBusinessLinkGreaterCopenhagenAreaandtheBusinessCentreatthe
municipallevel(CityofCopenhagen)arepotentiallyconflicting.Whilethenewbusinessservicestructure
istoorecenttoevaluate,thecasestudyonCopenhagenshowsthatadditionalactionsmighthavetobe
takeninordertorealisetheeffectivecoordinationbetweenthedifferentlevelsofgovernment.Thiscalls
forincreasedcoordinationbetweenthedifferentlevelsofgovernmentintheimplementationof
entrepreneurshippolicies andprograms. Co-ordinationisalsoneededbetweenthemunicipalities
deliveringbasicservicestoenterprisesandtheCentresofGrowthtooptimisetask-sharingbetweenthese
twolevelsofdelivery.
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TABLEOFCONTENTS
EXECUTIVESUMMARY 3
INTRODUCTION 7
11..21..MStariunctiunrdeuosftrtyhesefcitromrspopulation. L. 190
1.3.Internationalorientationandopenness 13
2.EntrepreneurshipinDenmark 19
2.1.Definingandmeasuringentrepreneurship 19
2.2Businessstart-ups 20
2.3.Theneedforhigh-growthenterprises 22
2.4.RecentevolutionofgrowthtrajectoriesinDenmark 25
3.Concludingremarks 27
BTBLTOCtRAPHY 28
CHAPTER2.FRAMEWORKCONDITIONSFORENTREPRENEURSHIPINDENMARK 29
21..TAhferoavmeerawlolrbkufsoirneasnsaleynsviinrgoennmternetpriennDeuernsmhaiprk 2392
3.Entrepreneurialcapabilitiesandhumanresources 33
Formaleducation 35
Continuingadulteducationandtraining 36
Immigration 37
4.Accesstofinance 40
5.Research,developmentandtechnology 43
7(S..RPergoudluacttomrayrfkreatmceownodrikt:iosnoscialsecurityandtaxsystems 4572
Socialsecuritybenefits 53
Impactoftaxationandsocialchargesonincentives 54
Theinternationaldimension 57
Wealthtaxesandestates 57
8.Regulatoryframework:otherissues 58
Processforensuringhighqualityregulation 58
Startingupanewbusiness 59
Bankruptcyarrangements 60
Health,safety,environmentalandproductregulation 61
Labourmarketregulation 61
9.Culturalattitudestowardsentrepreneurship 61
10.Concludingremarks 64
BTRT.innRAPHV fifi
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CHAPTER3.ENTREPRENEURSHIPPOLICIESINDF.NMARK 68
21..TGohveeDrannainscheGilnotbhaeliasraetaioonfSetnrtarteepgryeneurship:thenationalandsub-nationallevels 6780
22..21..TThheenraetgiioonnaalllaenvdellocallevel 770
3.Policiesandprogrammesinsupportofentrepreneurship 74
3.1.Facilitatingaccesstofinance 74
3.2.Improvingentrepreneurialeducationandculture 77
3.3.Businessservicesfacilitatingfirmcreation,growthandinternationalisation 80
3.4.Boostingbusinessdevelopment 85
3.5.Supportingtechnologytransferfromtheuniversities 87
4.Concludingremarks 88
BIBLIOGRAPHY 89
CHAPTER4.GOVERNANCEOFF.NTRF.PRF.NF.IJRSHTPACROSSGOVERNMENTLF.VF.T.S 90
1.Multi-levelframeworkforeffectivegovernanceofentrepreneurship 90
2.Regionalandlocalgovernanceofentrepreneurship:thecaseofmetropolitanCopenhagen 92
2.1DefiningCopenhagen 92
2.2.EntrepreneurshipinCopenhagen 92
2.3Responsibilitiesofmainactors 94
2.4Visionsandpoliciesofmainmulti-levelgovernanceactors 95
2.5Evaluationofsub-nationalpolicies 97
2.6Criticalissuesinregionalgovernanceofentrepreneurship 98
3.Concludingremarks 102
BIBLIOGRAPHY 104
CHAPTER5.ENTREPRENEURSHIPPOLICYTNDENMARK:ANASSESSMENT 105
21..LOvaerrgaellangdooridsifnrgaimmepwoorrtkanccoendoiftieonntsrefporreenneturresphriepnpeoulrischyip 110058
3.Entrepreneurialcapabilitiesandhumancapital:strengtheningentrepreneurshipeducation 112
456...AABuccsccieenssessssttoosFRuip&npaoDnrctea:nsedfruvtrietcchehesrn:oploropogftyiem:sisisiniotnneagnlstiihsfeiynipgnugtbhlteihceveeknnnttoruewrpelrecedangpeieutratlsrhamniasprfieknreftbraesttwreuectnurreesearchandbusiness111211269
7.Concludingremarks 124
BTBLTOGRAPHY 126
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INTRODUCTION
12. Thereisagrowingrecognitionthatentrepreneurshipisanimportantdriverofeconomicgrowth,
pgarzoedlulcetsi)viatryeacnrudcieamlpfloorytmheenti.nduTshtreiaelntdryynaamnidcsexoitfcoofunctormipeasniaensd,retghieongsr,owatshneofweixninsotviantgivceomfpiarnmsiersep(lea.cge.
olderfirmsandresultinacreativedestructionprocessoftheeconomy.Accordinglypolicymakershave
takennumerousmeasurestotestthepotentialofentrepreneurshippolicyoninnovationandproductivity
growth.
13. Theeconomiccontextinwhichentrepreneurshipispromotedishoweveressential,sincefirm
creationandexpansionoperatesinbothanationalandaninternationalbusinesscontext.Forasmallopen
economylikeDenmarkinparticular,entrepreneurshipandinnovationhavetobeanalysedfroman
international/globalperspective,giventheincreasingimportanceofglobalvaluechainsandglobal
innovationnetworks.ThisreviewofentrepreneurshipbenchmarksDenmarkinternationally,presentingthe
differentdeterminantsandassessingtheeffectivenessandgovernanceofentrepreneurshippolicies.It
analyseshowcurrententrepreneurshippoliciescontributetoenhancedinnovationinthecontextofthe
GlobalisationStrategysetoutrecentlybytheDanishgovernment.
14. Asecondobjectiveofthereviewistoanalysethegovernanceaspectofentrepreneurshippolicies
inDenmark.Followingthelocalgovernmentreform,responsibilitiesforentrepreneurshippolicieshave
beenrestructuredinDenmark,particularlyintheprovisionofbusinessservice.Thereviewshedslighton
thedivisionoflaborbetweendifferentministriesandagenciesaswellasacrossthedifferentlevelsof
government;itidentifies(potential)problemsanddoesrecommendationsforabetterfunctioning.
15. Entrepreneurshipisinterpretedverybroadlyinthisreport,coveringallentrepreneurialactivities
inthepursuitofthegenerationofvaluethroughthecreationorexpansionofeconomicactivity,by
identifiyingandexploitingnewproducts,processesormarket(OECD-EurostatEntrepreneurship
IenndtirceaptroerneuPrrsohgirpa;m)d.ataThceomreepforrtomhaaslatrrigeedditvoerpsrietsyenotfseomupricreisca(linecvliuddeinncgeOoEnCDtheanmdulDtainfiascehtesdourncaetsu)reanodf
arethereforenotalwayscompletelycomparable.
l1e6v.el.ItdiCshcaupstseerst1hpersetsreuncttsureanltcrheaprraecnteeruirssthiicpsaonfdthteheDaDnainsihshecbousnionmeyssinsttreurctmusreofatinatenrantaitoinoanlalaonrdiernetgaitoinoanl,
specialisationandinnovation.EntrepreneurshipinDenmarkisbenchmarkedwithothercountriesandthe
needforhighgrowthfirmsisraised.
17. Chapter2discussestheframeworkconditionsforentrepreneurshipinDenmarkbasedona
cenotnrceepprteunaelurifarlamecawpoarbiklitoifes,theacdceetsesrmitnoantRs&aDndacnodndittieocnhsnolfoogry,enttrheeprerneeguurlsahtiopr.yAcecnevsisrontomenfitnanacned,
entrepreneurialcultureareassessed.
18. Chapter3describesthemainpolicyinitiativesintheareaofentrepreneurshipwithafocusonthe
linksbetweenentrepreneurship,innovationandglobalisation.Thechapteralsopresentsthedifferentactors
involvedintheimplementationofpoliciesandprograms.
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19. Chapter4focusesspecificallyonthedivisionoflaborofentrepreneurshippoliciesacrossthe
national,regionalandlocallevels.Thereviewassessestheeffectivenessofthecurrentorganisationof
entrepreneurshippoliciesinDenmark,discussingtheopportunities,problemsandchallengeslinkedtoa
multi-levelgovernancesystem.
20. Chapter5assessesentrepreneurshipinDenmarkbasedonthefindingsofthefourfirstchapters,
pavingthewayforpolicyrecommendationsonhowtofosterentrepreneurshipfurther.Advantagesand
disadvantagesofcurrententrepreneurshippoliciesandtheirimplementationacrossdifferentlevelsare
identifiedinordertooptimisethecontributionofentrepreneurshiptogoalsDenmarksetitselfinthe
GlobalisationStrategy.
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CHAPTER1:ENTREPRENEURSHIPINDENMARK
ThischapterdiscussestheimportanceandtheroleofentrepreneurshipintheDanisheconomy.Inafirst
stagethestructureoftheDanishfirmpopulationandthemainindustrysectorsaredescribed,inrelationto
theirinternationalopennessandinnovationcapacitysincethestructuralcharacteristicsdirectlydetermine
theroomforentrepreneurship.Atasecondstage,entrepreneurshipitselfisdiscussedinmoredetailby
analysingstart-upandgrowthtrajectoriesinthelightoftheobjectivessetbytheDanishgovernmentinthe
domainofentrepreneurship.
1.MainfeaturesofthebusinesssectorinDenmark
1.1.Structureofthefirmpopulation
s1i.z1edcomTphaeniDesa.nisIhnetchoenommanyuifsacatusrmialnlgaannddopseernviecceosnosemcytorwsi,thsamallalrgeennteurmpbreisresof(swmiatlhllaensdsmtehdainum5-0
efmepwleorymeiecsr)oafcicromusn(tbeedtfwoeren971%-9oefmptlhoeyteoetsal):nuthmebseerreopfrfeisremnsteidn82700%5of(Ffiigrumrsei1n).maDneunfmaactrukrisnegemasndtosehravviecesa
inDenmark,asagainstover90%forsomeoftheNordiccountries(92%forFinlandand94%forSweden).
Inaddition,Denmarkhasarelativelyhighershareofmedium-sizedenterprises(50-249employees).
Figure1.Numberofcompaniesinbtyhfeirmmansuifzeac2t0u0ri5ngindustryandinmarketservices1,
1-9 10-19 20-49050-2490250+
1.1-E9x;cl1u0-d1i9n;g2fi0n-a9n9c;ia1l0i0n-t4e9r9m;ed5i0a0t+i.on(ISIC65-67)andCommunity,socialandpersonalservices(ISIC75-99).FortheUnitedStates:
Source:StructuralandDemographicBusinessStatistics(SDBS),OECD2008
1.2 Asregardsemployment,smallenterprises(lessthan50employees)representedabout42%of
totalemploymentinmanufacturingandservices.Denmarkpositionsitselfinthemiddleofthegroupof
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OECDcountries.InotherEuropeancountrieslikeforexampleItaly,SpainorPortugal,smallenterprises
ro1te.hp3erresheanntde,dsomvaelrl6en0t%eroprfitsoetsalreepmrpelsoenytmeednatl(oFwiegrurseha2r).eIonfFtihneleamndp,loGyemremnatny(boertwteheenUn3i7t%edanKdin3g9d%)o.monthe
Reflectingtheirrelativelargernumber,medium-sizedenterprisesabsorbamoreimportantshare
ofthetotalemploymentinDenmark(21%)incomparisontoothercountriessuchasFinland(18%),
Germany(19%),Sweden(18%)andtheUnitedKingdom(15%).Largeenterprisesontheotherhand
representcomparativelyalowershare:37%inDenmarkasagainst44%inFinland,42%inGermanyand
47%intheUnitedKingdom(Figure2).SinceDenmarkhasahigherproportionoflargecompanies(more
than500employees)comparedtootherNordiccountries,suchasFinlandorNorway,thismeansthaton
averagethelargeDanishcompanieshaveconsiderablyfeweremployees.
Figure2.Employment1(numberengagebdy)fiirnmthseizmea2n0u0fa5cturingindustryandinmarketservices2,
1-9 10-19 20-49 50-249D250+
21..NExucmlbuedirngoffpinearnscoianlsienntgeramgeeddiation(ISIC65-67)andCommunity,socialandpersonalservices(ISIC75-99).
Source:StructuralandDemographicBusinessStatistics(SDBS)OECD2008
1.2.Mainindustrysectors
1.4 LikeinotherEuropeancountries,theservicessectorisdominantintheDanisheconomy
representing73%ofthetotalvalueaddedin2005.WhileservicesinEuroperepresentedabout71%ofthe
totalvalueadded,thissectorismoreprominentintheUnitedStatesrepresenting77%ofindustryvalue
addedand81%ofthetotalemployment(76%inDenmark)(Table1).
1.5 ThemanufacturingsectorinDenmarkhaslessweightthaninEuropeanandNordiccountries,
representing13%ofindustryvalueaddedinDenmark,asagainst18%intheEuropeanUnionand17%in
theNordiccountries.Inthisrespect,DenmarkismoresimilartotheUnitedStateswheretheweightofthe
manufacturingsectorissimilar.
1.6 ResourceendowmentinrawmaterialfromtheNorthSeahasincitedDenmarktodevelop
methodstoextractoilandgas.Rawmaterialhasincreaseditsshareinindustryvalueaddedasa
10