findings from a survey of hgies in eight countries and policy implications mutual learning seminar...
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Findings from a survey of HGIEs in eight countriesand policy implications
Mutual Learning SeminarSession II: Policies to supporthigh-growth innovative enterprises
Brussels, 20 March 2014
A study on behalf of the European Commission
Stefan Lilischkisempirica Communication and Technology Research, Bonn
Study background
Mutual Learning Seminar ▪ Brussels, 20/3/2014 2Presentation Stefan Lilischkis
Evidence that HGIEs contribute decisively to job
creation
However: lack of knowledge about HGIE
characteristics and appropriate policies
=> HGIE study 1/2013 – 9/2013
Partners
Mutual Learning Seminar ▪ Brussels, 20/3/2014 3Presentation Stefan Lilischkis
Methods: CATI survey
Mutual Learning Seminar ▪ Brussels, 20/3/2014 4Presentation Stefan Lilischkis
Survey in 36 innovative industries in eight countries: DE, FR, UK, PL, CH, US, JP, KR
Sample: 580 HGIEs
“High growth”: Companies’ number of employees grew at least one third over three years in past five years (PL: 22% in two years)
Only internal growth, no mergers and acquisitions
Size threshold: ten employees at beginning
Data base for sampling included 4% HGIEs
Further methods
Mutual Learning Seminar ▪ Brussels, 20/3/2014 5Presentation Stefan Lilischkis
Interviews with experts– Three interviews per country
(one academic, one governmental, one business)
Literature research
Mutual Learning Seminar ▪ Brussels, 20/3/2014 6Presentation Stefan Lilischkis
HGIE characteristics
Industries in data universe
Mutual Learning Seminar ▪ Brussels, 20/3/2014 7Presentation Stefan Lilischkis
620 Computer programming, consultancy and related activities
23%
711 Architectural and engineering activities and related technical
consultancy20%
702 Management consultancy activities
13%
701 Activities of head offices6%
641 Monetary intermediation5%
265 Manufacture of instruments and appliances for measuring, testing and
navigation; watches and clocks4%
465 Wholesale of information and communication equipment
4%
721 R&D on natural sciences and engineering
4%
582 Software publishing4%
Other industries17%
Size
Mutual Learning Seminar ▪ Brussels, 20/3/2014 8Presentation Stefan Lilischkis
Majority of HGIEs small (10-49 employees)
Considerable share medium-sized; below 10% large
Share of medium-sized HGIEs larger than share of all medium-sized enterprises; for small enterprises it is the other way round
=> for many enterprises medium size may be required to take off for high growth (economies of scale and scope)
Age
Mutual Learning Seminar ▪ Brussels, 20/3/2014 9Presentation Stefan Lilischkis
Majority of HGIEs in sample older than 10 years
Applies to all countries and sectors
=> High growth not a start-up phenomenon but takes place after initial struggle of establishing firm in the market
Year when fast growth started
Mutual Learning Seminar ▪ Brussels, 20/3/2014 10Presentation Stefan Lilischkis
Vast majority: high growth started in past 10 years
45% of HGIEs: 2009-2012
further 45%: 2004-2008
Small share of HGIEs (10%) performs continuous high growth (> 10 years). Characteristics:
Largest share among medium-sized enterprises
Share considerably larger in services (12%) than in
manufacturing (5%)
Spin-offs
Mutual Learning Seminar ▪ Brussels, 20/3/2014 11Presentation Stefan Lilischkis
13% of HGIEs in sample are spin-offs
Origin:
– Most spin-offs (68%) from other companies
– 24% from universities
– 18% from other public research organisations
Other characteristics
Mutual Learning Seminar ▪ Brussels, 20/3/2014 12Presentation Stefan Lilischkis
25% have private equity, 12% VC
=> Very likely more than in other companies
Main customer group: other companies
=> So don‘t mind invisibility
Main market: national (56%)
=> Potential to grow internationally
Reasons for growth in HGIEs
Mutual Learning Seminar ▪ Brussels, 20/3/2014 13Presentation Stefan Lilischkis
35
42
50
75
77
21
55
41
26
28
25
43
36
34
19
22
28
31
39
42
44
25
18
21
16
5
1
46
14
18
31
26
50
0 10 20 30 40 50 60 70 80 90 100
Development of the business cycle has been favourable for our company
Our company sells to a growing market
Our company has been facing strong competition
Our company’s directors actively target growth
Our company has particularly highly skilled employees
Our company has had easy access to external financing
Our company successfully introduced new products or services to market
Our company successfully introduced new internal business processes
Our company successfully introduced new marketing methods
Our company successfully introduced new forms of organising business
Our company successfully entered into new international markets
Applies fully Applies partly Does not apply
Perceived main barriers to growth
Mutual Learning Seminar ▪ Brussels, 20/3/2014 14Presentation Stefan Lilischkis
Bureaucratic/regulatory/political barriers
19%
Difficult access to finance
18%
Finding skilled employees /
employees not sufficiently skilled
9%Strong competition /
cost pressure7%
Unfavourable business cycle
6%
Lack of support from state5%
High or complicated taxation
5%
Difficult customers4%
High labour costs3%
Other24%
Breakdown by country
Mutual Learning Seminar ▪ Brussels, 20/3/2014 15Presentation Stefan Lilischkis
Similarities across countries:– Hardly any particularly high share of HGIEs per industry
– Majority of HGIEs small
– Vast majority older than 10 years
– Most important reasons for growth: “our company’s directors actively target growth” and “our company has particularly highly skilled employees”
– Other companies are main customers
– National sales market most important
Differences in countries’ shares of HGIEs from certain industries, reflecting national specificities
Breakdown by industry
Mutual Learning Seminar ▪ Brussels, 20/3/2014 16Presentation Stefan Lilischkis
In data universe: shares of HGIEs per industry do not differ much (not >7%)
Growth in manufacturing and services partly driven by different factors:
– highly skilled employees more important in services
– entering new international markets more important for manufacturers
Beside “directors targeting growth” and “skilled employees”, each industry has own profile of growth factors
Mutual Learning Seminar ▪ Brussels, 20/3/2014 17Presentation Stefan Lilischkis
HGIE policies
Assessment of framework conditions
Mutual Learning Seminar ▪ Brussels, 20/3/2014 18Presentation Stefan Lilischkis
5
4
3
2
3
1
11
15
10
14
14
14
7
34
51
38
41
53
52
53
33
18
30
29
9
15
7
13
5
14
9
4
3
3
3
0 10 20 30 40 50 60 70 80 90 100
regulations about starting, running or expanding a company
company taxation
labour market regulation
regulations for access to private capital
product market regulations
bankruptcy regulation
higher education system
very supportive rather supportive neutral rather harmful very harmful
Perceived need for governmental policy
Mutual Learning Seminar ▪ Brussels, 20/3/2014 19Presentation Stefan Lilischkis
27
19
15
34
15
35
27
15
39
32
32
31
32
29
30
33
29
33
37
42
42
30
47
32
37
50
27
0 10 20 30 40 50 60 70 80 90 100
accessing international markets
accessing debt finance
accessing equity finance
intellectual property protection
standardisation of product characteristics
research and development within your …
joint R&D with university or other PRO
development of regional business clusters
enhancing skills of companies’ employees
strong need some need no need
Use of state support measures
Mutual Learning Seminar ▪ Brussels, 20/3/2014 20Presentation Stefan Lilischkis
Regional
investment support
programme24%
National investment
support programme
37%
European investment
support programmes
8%
Labour administration
financial support (wage subsidies)
9%
Employee training courses
5%
Tax relief schemes5%
Other12%
HGIEs welcome any type of support that improves the balance sheet
Conclusions for policies
Mutual Learning Seminar ▪ Brussels, 20/3/2014 21Presentation Stefan Lilischkis
Consider HGIE characteristics– older age, spin-off origin, national and sectoral specificities
Target key barriers for growth– especially regulations for starting/growing a company, access to
finance, lack of skilled employees
Improve framework conditions– in particular company taxation and labour law
Foster key growth factors – e.g. ability/readiness to target growth and internationalisation
Evaluate policies– Little scientific evidence about effectiveness and efficiency of
specific HGIE support measures
Mutual Learning Seminar ▪ Brussels, 20/3/2014 22Presentation Stefan Lilischkis
http://www.hgie-policies.eu