OECD SME and entrepreneurship outlook 2019.

396 Pages·2019·7.663 MB·English

OECD
SME and Entrepreneurship
Outlook 2019
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OECD SME
and Entrepreneurship
Outlook
2019
This document, as well as any data and any map included herein, are without prejudice
to the status of or sovereignty over any territory, to the delimitation of international
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Please cite this publication as:
OECD (2019), OECD SME and Entrepreneurship Outlook 2019, OECD Publishing, Paris,
https://doi.org/10.1787/34907e9c-en.
ISBN 978-92-64-37480-5 (print)
ISBN 978-92-64-35882-9 (pdf)
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FOREWORD │ 3

Foreword
Small and medium-sized enterprises (SMEs) and entrepreneurship are essential drivers of
economic and social well-being. Representing 99% of all businesses, generating about
60% of employment and totalling between 50% and 60% of value added in the OECD
area, SMEs are key for delivering sustainable and inclusive economic growth. They are
instrumental to ensure that our economies and societies adapt to major transformations,
such as digitalisation, globalisation, ageing and environmental pressures.
In this context, it is more critical than ever to have a better understanding of the
conditions that enable countries, regions and cities to capitalise on their many small
businesses. However, while SMEs and entrepreneurship are high on the policy agenda in
many countries, the lack of robust and comparable evidence has often limited a more
effective policy design and implementation.
Bringing together unique evidence, this first edition of the OECD SME and
Entrepreneurship Outlook offers policymakers new benchmarking tools and insights on
good policy practices to help frame national SME and entrepreneurship policies.
Complementing the statistical publication OECD Entrepreneurship at a Glance and
building on the 2017 report Small, Medium, and Strong, this new flagship publication
presents recent and emerging trends in entrepreneurship and SME performance and
provides a comprehensive overview of business conditions and policies that impact SMEs
and entrepreneurs.
The Outlook reveals that the SME engine has begun to pick up again, with firm creation –
an important driver of productivity growth and innovation – back to pre-crisis levels in
many countries. SMEs have also been important drivers of creation during the last
decade. However, there are also signs that the journey ahead may not be an easy one:
significant productivity and wage gaps with larger firms persist, weighing on
inclusiveness. Even in relatively large SMEs, wage levels are typically around 20% lower
than in large firms, reflecting lower productivity levels. And while there has been
significant job growth, most has been in activities with relatively low productivity and
wage levels. Between 2010 and 2016, for example, close to 90% of the net new jobs in
France, 75% in the United States, and 66% in Germany and the United Kingdom, were in
low-wage sectors, which contributed to the observed stagnation in average wages and to
widening inequalities.
Not all SMEs are the same, however, and this Outlook provides new insights on the
heterogeneity of SME performance. Among the millions of SMEs around the world, there
are many major innovation and productivity champions, especially in specialised services
such as professional, scientific and technical activities, where size does not play such a
key role. Indeed, SMEs, including micro-firms, can be as productive as, or even more
than, large firms in these areas. For instance, between 2010 and 2016, SMEs operating in
the information and communication technologies (ICT) sector increased their shares of
employment and value added across nearly all OECD economies, despite concerns about
market concentration and winner take-most dynamics.
Digital technologies are opening up new opportunities for young firms and SMEs to
innovate and grow, including through digital business platforms, big data and Fintech.
OECD SME AND ENTREPRENEURSHIP OUTLOOK 2019 © OECD 2019
4 │ FOREWORD

Between 2016 and 2017, for example, online alternative financing saw double and triple
digit growth in many countries, marking a turning point in the diversification of SME
financing sources and instruments.
Yet, as the Outlook illustrates, to contribute to growth and job creation, and capitalise on
the digital transition, SMEs are much more dependent on the business ecosystem and the
policy environment than large companies. Many SMEs continue to face size-related
barriers in accessing strategic resources, such as skills, finance and knowledge. In 2017, a
quarter of SMEs in the EU reported a lack of skilled staff or experienced managers as
their most important problem. The proportion of small firms providing ICT training to
employees has not increased substantially in recent years, and remains low across OECD
countries, ranging from 49% in New Zealand to 7% in Latvia in 2018. While there are
clear benefits for SMEs in protecting data and mitigating cybersecurity threats, the
associated costs are relatively higher for smaller enterprises.
These barriers are a symptom of imperfections in product, credit and labour markets.
They also reflect the disproportionate impacts of regulatory complexities, administrative
burdens and policy inefficiencies on small firms. Smart regulation, reforms in taxation
and the strengthening of e-government functions have contributed to reduce the burden
on SMEs and level the playing field. However, the pace of structural reforms has slowed
in recent years, and progress is uneven in areas that are essential for business dynamism
and a thriving SME population, such as insolvency regimes, enforcement of competition
laws and civil justice systems.
In addition to a lower adoption of new technologies, SMEs are typically less engaged in
internationalisation compared to large firms. This channel for productivity enhancement
remains a challenge for small firms, notably in the context of recent trade tensions, which
are likely to further hamper their opportunities to engage in trade networks and Global
Value Chains.
The scale of these challenges calls for innovative and multi-level policy solutions. The
2018 OECD Declaration on Strengthening SMEs and Entrepreneurship for Productivity
and Inclusive Growth recognised the importance of getting SME policies right, for the
benefits of globalisation, open markets and technological progress to be enhanced and
shared more broadly across our economies and societies.
As this report shows, governments have been proactive in their efforts to level the playing
field for SMEs and capitalise on emerging opportunities, making them a major target of
public policy attention and support. The 36 country profiles of the OECD SME and
Entrepreneurship Outlook, which complement the analysis of SME trends and business
environment conditions, show that while governments often have common overarching
strategies to accelerate SME development and innovation, a large variety of policy
approaches is being implemented.
It is our hope that, by bringing together and comparing national experiences and
outcomes, this publication will provide an instrument that can help governments identify
policy levers to unleash the potential of SMEs and entrepreneurs and to build more
resilient, sustainable and inclusive societies.

Angel Gurría
OECD Secretary-General
OECD SME AND ENTREPRENEURSHIP OUTLOOK 2019 © OECD 2019
ACKNOWLEDGEMENTS │ 5

Acknowledgements
The SME and Entrepreneurship Outlook is a joint report produced by the OECD Centre
for Entrepreneurship, SMEs, Regions and Cities (CFE) led by Lamia Kamal-Chaoui and
the OECD Statistics and Data Directorate (SDD) led by Martine Durand. The report was
prepared under the aegis of the OECD Working Party on SMEs and Entrepreneurship
(WPSMEE). Useful comments and guidance were also provided by delegates to the
OECD Committee on Industry, Innovation and Entrepreneurship (CIIE). The report was
approved and declassified by the WPSMEE and the CIIE.
Sandrine Kergroach (CFE) and Mariarosa Lunati (SDD) coordinated the production of
the first 2019 edition of this report. Lucia Cusmano and Miriam Koreen (CFE) and
Nadim Ahmad (SDD) supervised the project. Special thanks go to Joaquim Oliveira
Martins (CFE) for his suggestions on the report.
Chapter 1, “Trends in SME sector and performance”, was prepared by Nadim Ahmad and
Mariarosa Lunati from SDD, with input and statistical assistance from Gueram Sargsyan,
Liliana Suchodolska and Belen Zinni.
Part I on “SME business conditions and access to strategic resources”, and the
conceptual framework, was designed and produced by Sandrine Kergroach from CFE.
Lead authors also include Lucia Cusmano, Kris Boschmans and David Halabisky, with
contributions from Giulia Ajmone Marsan, Dorothee Allain-Dupre, Sara Ballero, Marco
Bianchini, Isabelle Chatry, Andrea Hofer, Alexander Lembcke, Marco Marchese, Hubert
Massoni, Lora Pissareva, Jonathan Potter, Stephan Raes, Oriana Romano, Raffaele
Trapasso and Lenka Wildnerova.
Part II which provides detailed country profiles was jointly designed and produced by
Sandrine Kergroach from CFE and Mariarosa Lunati from SDD. It benefited from
contributions from Giulia Ajmone-Marsan, Sara Ballero, Marco Bianchini, Kris
Boschmans, Pierre Coster, Eric Gonnard, David Halabisky, Sandra Hannig, Cynthia
Lavison, Marco Marchese, Hubert Massoni, Lora Pissareva, Pierre Popineau, Jonathan
Potter, Stephan Raes, Laetitia Reille, Mikko-Waltteri Sihvola and Raffaele Trapasso
(from CFE) and Samuel Pinto-Ribeiro, Gueram Sargsyan, Liliana Suchodolska and
Waleed Adebayo-Renaud (from SDD).
Colleagues from other OECD Directorates provided valuable input and feedback. Thanks
go to Silvia Appelt, Michela Bello, Frédéric Bourassa, Hélène Dernis, Guillaume Kpodar,
Pierre Montagnier and Fabien Verger from the OECD Directorate for Science,
Technology and Innovation (STI); Cristiana Vitale from the OECD Economics
Department (ECO); and Frederic Gonzales from the OECD Trade and Agriculture
Directorate (TAD).
The publication process was managed by CFE. François Iglesias designed the cover and,
together with Pilar Philip, served as coordinator. Heather Mortimer-Charoy provided
project and secretariat assistance.

OECD SME AND ENTREPRENEURSHIP OUTLOOK 2019 © OECD 2019
6 │ TABLE OF CONTENTS

Table of contents
Foreword ................................................................................................................................................ 3
Acknowledgements ................................................................................................................................ 5
Editorial ................................................................................................................................................ 17
Reader’s guide ..................................................................................................................................... 19
Background ........................................................................................................................................ 19
Contents and structure ....................................................................................................................... 20
Sources and resources ........................................................................................................................ 23
Acronyms and abbreviations .............................................................................................................. 25
Acronyms ........................................................................................................................................... 25
Abbreviations ..................................................................................................................................... 27
Executive Summary ............................................................................................................................ 29
Enterprise creations have picked up, especially in services, but newly created jobs are
concentrated in low-productive and low-wage sectors ...................................................................... 29
Innovation is key to boost productivity, and digitalisation offers SMEs new opportunities to take
part in the next production revolution ................................................................................................ 30
Digitalisation can also help SMEs integrate global markets and global value chains (GVCs) ......... 30
SME market conditions have improved overall, but there are risks on the horizon .......................... 30
SMEs must be better prepared for the digital transition .................................................................... 31
Government approaches to SME&E policy are increasingly varied ................................................. 31
Digitalisation is also a game changer for high quality public services to SMEs. .............................. 32
These developments call for innovative policy action and a whole-of-government approach .......... 32
Chapter 1. SME structure and business dynamism: Trends and performance in productivity
and wages ............................................................................................................................................. 33
Introduction ........................................................................................................................................ 35
The structure of the SME population ................................................................................................. 36
Business dynamics and SMEs ........................................................................................................... 42
SMEs and productivity ...................................................................................................................... 46
SME participation in global markets ................................................................................................. 57
Conclusions and looking ahead ......................................................................................................... 69
Notes .................................................................................................................................................. 71
Data sources ....................................................................................................................................... 72
References .......................................................................................................................................... 72
Annex 1.A. Developing new data ...................................................................................................... 74
Annex 1.B. Sectoral specialisation .................................................................................................... 76
Annex 1.C. Enterprise creation rates ................................................................................................. 79
Annex 1.D. Labour productivity of SMEs by sector ......................................................................... 85
OECD SME AND ENTREPRENEURSHIP OUTLOOK 2019 © OECD 2019
TABLE OF CONTENTS │ 7

Part I. Business conditions for SMEs and entrepreneurship and policy responses ...................... 91
Chapter 2. Institutional and regulatory framework ........................................................................ 93
Why is it important ............................................................................................................................ 94
Regulation, institutions and recent trends .......................................................................................... 96
Recent policy developments ............................................................................................................ 104
References ........................................................................................................................................ 110
Chapter 3. Market conditions .......................................................................................................... 113
Why is it important? ........................................................................................................................ 114
Global and domestic market conditions: Recent trends ................................................................... 119
Market conditions for SMEs and entrepreneurship: recent national policy trends .......................... 129
Notes ................................................................................................................................................ 139
References ........................................................................................................................................ 140
Annex 3.A. Market conditions, efficient firm size and market structure ......................................... 147
Notes ................................................................................................................................................ 150
Annex 3.B. SME scale-up dynamics ............................................................................................... 151
Chapter 4. Infrastructure ................................................................................................................. 153
Why is it important? ........................................................................................................................ 155
Infrastructure capacity and performance: Recent trends .................................................................. 159
Notes ................................................................................................................................................ 173
References ........................................................................................................................................ 174
Annex 4.A. Fixed and mobile broadband: Substitution and complementarity ................................ 178
Chapter 5. Access to finance ............................................................................................................. 181
Why is it important? ........................................................................................................................ 182
The funding mix for SMEs: recent and emerging trends ................................................................. 183
Main policy approaches and recent policy developments ............................................................... 192
Notes ................................................................................................................................................ 195
References ........................................................................................................................................ 195
Chapter 6. Access to skills................................................................................................................. 199
Why is it important? ........................................................................................................................ 200
Skills, labour markets and emerging trends ..................................................................................... 202
Main policy approaches and recent policy developments ............................................................... 210
Notes ................................................................................................................................................ 215
References ........................................................................................................................................ 215
Chapter 7. Access to innovation assets ............................................................................................ 219
Whys is it important? ....................................................................................................................... 221
Innovation and knowledge diffusion in SMEs: Recent trends ......................................................... 224
Main policy approaches and recent national policy development ................................................... 234
Notes ................................................................................................................................................ 242
References ........................................................................................................................................ 243
Web references (accessed 29 July 2018) ......................................................................................... 247
Annex 7.A. The diffusion of digital technology packages............................................................... 251
Part II. Country Profiles ................................................................................................................... 253
Chapter 8. Methodology of the country profiles ............................................................................. 255
OECD SME AND ENTREPRENEURSHIP OUTLOOK 2019 © OECD 2019
8 │ TABLE OF CONTENTS

Purpose and structure ....................................................................................................................... 256
SME structure and business dynamics ............................................................................................. 257
Benchmarking SME business conditions: general approach and methodology .............................. 258
SME access to strategic resources ................................................................................................... 259
SME business environment.............................................................................................................. 261
Caveats and caution in interpretation ............................................................................................... 263
Annex 8.A. Data sources and definitions ......................................................................................... 264
Annex 8.B. Policy sources and general references .......................................................................... 274
Chapter 9. Australia .......................................................................................................................... 275
SME business conditions and access to strategic resources ............................................................ 276
References ........................................................................................................................................ 277
Chapter 10. Austria ........................................................................................................................... 278
SME business conditions and access to strategic resources ............................................................ 279
References ........................................................................................................................................ 280
Chapter 11. Belgium .......................................................................................................................... 281
SME business conditions and access to strategic resources ............................................................ 282
Chapter 12. Canada .......................................................................................................................... 284
SME business conditions and access to strategic resources ............................................................ 285
References ........................................................................................................................................ 286
Chapter 13. Chile ............................................................................................................................... 287
SME business conditions and access to strategic resources ............................................................ 288
References ........................................................................................................................................ 289
Chapter 14. Czech Republic ............................................................................................................. 291
SME business conditions and access to strategic resources ............................................................ 292
References ........................................................................................................................................ 293
Chapter 15. Denmark ........................................................................................................................ 294
SME business conditions and access to strategic resources ............................................................ 295
References ........................................................................................................................................ 296
Chapter 16. Estonia ........................................................................................................................... 297
SME business conditions and access to strategic resources ............................................................ 298
References ........................................................................................................................................ 299
Chapter 17. Finland .......................................................................................................................... 300
SME business conditions and access to strategic resources ............................................................ 301
References ........................................................................................................................................ 302
Chapter 18. France ............................................................................................................................ 303
SME business conditions and access to strategic resources ............................................................ 304
References ........................................................................................................................................ 305
Chapter 19. Germany ........................................................................................................................ 306
SME business conditions and access to strategic resources ............................................................ 307
References ........................................................................................................................................ 308
OECD SME AND ENTREPRENEURSHIP OUTLOOK 2019 © OECD 2019