Entrepreneurship is a key driver of job creation, economic growth and social cohesion. However, appropriate policy interventions are required to exploit its potential; both to create the right framework conditions for new firm development and to offer direct support to help entrepreneurs and start-ups overcome specific barriers, for example in areas such as finance, innovation and skills.
The contribution of entrepreneurship to job creation and productivity growth is well documented. Entries of new firms boost job opportunities and through a process of creative destruction raise aggregate productivity. Entrepreneurship plays an important role in the development and diffusion of innovation, although innovative start-ups represent a small subset of new start-ups. New firms contribute to market dynamism, improving the breadth of choices available to consumers, and increase competition, incentivising existing businesses to improve and driving inefficient firms out.
Entrepreneurship also has the potential to create wider social benefits. One of the benefits is to offer an alternative pathway to employment to people who are disadvantaged in the labour market, who may be able to create successful businesses. Entrepreneurship can also cater to people who prefer more flexibility and autonomy in their work or to stress social objectives. Entrepreneurship can contribute to support the transition of regions in economic decline, including in the context of major firm restructuring. Entrepreneurs can also contribute to introducing innovative solutions to economic and social challenges to the market, in areas such as driving the green transition and creating services for ageing populations.
However, realising the benefits requires policy interventions that address the market, behavioural and institutional failures that hold entrepreneurship back. Entrepreneurship policy is a relatively recent but important policy area for government economy, industry and business development ministries and for small and medium-sized enterprises (SME) agencies, development banks and economic development agencies at national, regional and local levels. The policy focus on entrepreneurship has been emerging since the 1990s, following from an earlier policy focus on small business policies and evolving over the past three decades through broad support to start-ups, including start-up subsidies, to a recent leading-edge focus on holistic packages for start-ups with growth potential. Governments are paying increasing attention to entrepreneurship policies that support people to start and scale up ventures with a degree of innovation at the same time as pursuing parallel support for equal opportunities in entrepreneurship across all population groups and types of geographical area.
This report offers policy makers a brief overview of the main types of entrepreneurship policy approaches being pursued internationally and their main features and success factors. It focusses on policies and programmes that promote and support the creation of businesses which have job creation and innovation potential, yet are not likely to reach the growth levels of gazelles or unicorns. These policies span areas as varied as access to risk capital, targeted consultancy for entrepreneurs, easing regulatory barriers and developing supportive entrepreneurial ecosystems. The report also gives policy makers opportunities to draw inspiration from a small set of international policies and programmes with demonstrated results or promising prospects, and learn from their experiences, considering how other countries have addressed entrepreneurship policy challenges. The report presents key features of each case and highlights the success factors and challenges faced.
By providing a structured typology of intervention and identifying key programme characteristics and best practices, this report offers policy makers actionable tools to navigate the complex policy area of entrepreneurship support. It is hoped that the information will prove useful to policy makers when considering their choices on the mix of entrepreneurship policy measures to offer, on the design and implementation measures that they need to take into account and on the types of key performance indicators that they can track in policy monitoring and evaluation.