OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
This "ActionPlan" builds on recommendations given in the draft summary report on the districts Mittweida (Saxony) und Altenburger Land (Thuringia), March 2006, presented at a regional workshop on 20 March 2006 in Leipzig, Germany
ENTREPRENEURSHIP ATTITUDES AND SKILLS
What How Who*
Increase institutional Stronger collaboration between Chambers of Commerce and Trade, Chambers of Commerce and collaboration Chambers of Crafts and the Public Employment Service would help increase Trade, Chambers of Crafts, the level of support from mere appraisal of a business idea, which is a pre- Crafts Association, and the requisite for starting a business with the financial support of the Public Public Employment Service Employment Service, to jointly organised orientation and coaching activities for new self-employed and entrepreneurs. Because of its strong orientation to the general population, the local Public Employment Service is a good starting place to identify potential entrepreneurs from all segments of society and direct them to appropriate advice and coaching.
Improve the image of the Changing the entrepreneurial culture means changing the image of the All relevant stakeholders Districts Districts with both internal and external populations. If people do not believe that a place is attractive to live in, and that it allows the development of innovative and growing activities, then they will not set up businesses, or will set up or operate their businesses in more attractive places. Campaigns should therefore be created to generate trust in the endogenous strengths and future of the Districts. In strengthening their entrepreneurial image Mittweida and Altenburger Land should promote key specific strengths or 'magnets of attraction'. The Technology Centre and University of Applied Sciences, Mittweida, and the Altenburger Land-Nobitz airport are excellent examples of 'magnets of attraction'.
Role models Successful local entrepreneurs should be profiled and publicised much more District administrations, other key than is currently the case. They should be described as 'profiles of success'. stakeholders Approaches include 'SME of the Year' awards in various categories (regional awards, sectoral awards, awards for biggest SME job creator, best exporter, etc.), regular newspaper reports, press releases when particular progress has been made and interviews on TV/radio. It is useful to emphasise the contribution made by these entrepreneurs to local development (e.g. jobs, exports, local services purchased/supported).
1 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
Increase awareness of Special promotions, where not already conducted, and promotional material District administrations, other key entrepreneurial opportunities aiming at increasing publicity and awareness of the opportunities for new stakeholders business start-ups amongst all segments of the population should be developed. While there are already some initiatives on these lines, the experience of other regions shows that this needs to be intensive and continuous. Further, Mittweida and Altenburger Land should be innovative and initiate their own local promotion that establishes their own identity and is directed at their own local populations.
Establish mentor and patron The availability of a panel of retired business people to counsel new and District administrations, panels expanding companies has been an important feature of working with, and Chambers of Commerce and supporting SMEs, in other OECD countries. Both Mittweida and Altenburger Trade, Chambers of Crafts, Land should look at mentoring and patron type programmes and seek to have Crafts Association, Venture dedicated panels of people that can contribute to the strategic development of Capital schemes, Business local companies. This should be seen as counselling and not consultancy Angels, public and private banks where the consultant would operate on commercial terms (e.g. assist in preparing financial accounts). Given the high level of business plans that are deemed inadequate by banks the introduction of mentors at the early discussion stage of start-up proposals may assist in addressing this issue. This type of mentoring service is relevant to both micro and larger SMEs, and at start-up and later stages of development in the life cycles of companies.
* This is not an exhaustive list of stakeholders and actors. It needs to be adapted to and completed for the local context.
ENTREPRENEURSHIP FINANCING
What How Who*
Instigate discussion on the role Local agencies should instigate discussion with regional and local District administrations, of banks for local management of all banks and financial institutions on how these bodies can Chambers of Commerce and entrepreneurship development play a stronger and more active role in promoting and providing funding to Trade, Chambers of Crafts, start-ups and existing SMEs. This discussion is not about persuading the Crafts Association, Venture banks to adopt a less commercial approach but about seeking more Capital schemes, Business engagement from them in the new enterprise strategy of the region. It should Angels, public and private banks also address the scope of local management in banks to deal effectively with local enterprise.
2 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
Address weaknesses in As a contribution to resolving the problem, the banks might consider Chambers of Commerce and business plan preparation and producing a guide to business applicants or undertaking some work on Trade, Chambers of Crafts, business development establishing 'mentor' panels and 'patron' panels that will guide entrepreneurs Crafts Association, Venture before they make any formal application to banks. The work of banks here Capital schemes, Business might be done in conjunction with existing schemes of advice to Angels, public and private banks, entrepreneurs. If such work has already been done, then the question of its InnoRegio initiatives effectiveness needs to be examined by the banks.
Enhance value added in A persistent theme from feedback in both Altenburger Land and Mittweida Chambers of Commerce and enterprises was the low equity levels in many companies and the need for existing SMEs Trade, Chambers of Crafts, to strengthen their balance sheets and profit levels. This will require strategic Crafts Association, Venture changes such as changes of products or enhanced value added in products Capital schemes, Business and services. For high tech companies, where sometimes the level of Angels, InnoRegio initiatives investment needed is significant as companies grow through development stages, the issue is more pronounced.
Simplify and streamline Regulations and conditions for existing and new enterprise support Land governments, public banks, regulations and procedures in programmes need to be more transparent and procedures simplified. private banks, district existing support programmes Bureaucracy should be reduced, decision making accelerated and information administration, other institutions made more accessible with respect to enterprise access to funding. An involved in delivering public evaluation of the impact of regulations and procedures should be conducted support programmes for on an annual basis based on feedback from client companies. The public entrepreneurship development, banks ("Aufbaubanken" of Saxony and Thuringia and other relevant like InnoRegio initiatives, authorities should examine how existing administrative procedures in regard Regional Management to investment allowances, which might be simplified and streamlined.
Increase the availability of A need for increased availability of microcredit schemes is an issue Land governments, public banks, microcredit highlighted in both regions as key to start-ups. This should be the subject of private banks special discussion with all banks and financial institutions.
Review existing venture capital The existing schemes of venture capital provision should be reviewed in more Venture Capital schemes, Land schemes detail as to their relevance and effectiveness in generating and supporting governments, public banks, new companies and growing SMEs. It appears that much of the venture private banks, Chambers of capital, insofar as it has happened, is less effective than in other locations Commerce and Trade, worldwide. Local agencies should examine, in co-operation with financial Chambers of Crafts, Crafts institutions, how joint funding initiatives might enable more local venture Association, Business Angels capital to be introduced.
3 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
Seek the involvement and A developed venture capital system needs individual investors as well as Chambers of Commerce and advice of business angels venture capital funds. 'Angels', that is people who are prepared to invest in Trade, Chambers of Crafts, individual companies and frequently bring knowledge of the sector or other Crafts Association, Venture strategic advice to companies, are common in most OECD countries. They Capital schemes, Business may be people who successfully started a company in the past and may have Angels, InnoRegio initiatives a series of companies in which they have invested. Often this type of investment is accompanied by mentoring where the individual investor or another nominated person acts as a counsellor to the entrepreneur and business. This is particularly important to business that are seeking to tackle international markets or where they have ambitious growth plans and could benefit from business advice and networking to other potential financiers, market contacts or expert advisors.
* This is not an exhaustive list of stakeholders and actors. It needs to be adapted to and completed for the local context.
SME INNOVATION AND EXPORTING
What How Who*
Expand technology institutions Given cost structures, SMEs in OECD countries increasingly need to compete InnoRegio initiatives, Chambers and activities on technology or other added value features that give them competitive edge of Commerce and Trade, on international markets. The establishment and further development of Chambers of Crafts, Crafts external R&D services could help local SMEs to innovate. The work of the Association, Business Technology Centre and Laser Institute in Mittweida and the InnoRegio Incubators, HEI activities are examples of key regional institutions that foster knowledge transfer to SMEs and should be actively supported and encouraged to expand their scope of work. It might be that the Districts perceive themselves as too small to create by themselves the innovation support infrastructures necessary for SMEs. In this case, collaboration with neighbouring Districts or thematically related higher education institutions should be sought.
Encourage university-industry Increased enterprise by the academic sector, and stronger links between InnoRegio initiatives, Chambers linkages regionally and locally present higher education institutions and the local SME of Commerce and Trade, sector, should continue to be encouraged and promoted. This should also Chambers of Crafts, Crafts refer to commercialisation of academic research, technology and innovations. Association, Business Incubators, HEI
4 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
Identify and segment Identifying and segmenting categories of enterprises that have the features of Land governments, public banks, categories of enterprises growth will be crucial to tackling the challenge of company scale, lack of private banks, Chambers of capital and low exports in the SME sector. Growth companies can emerge Commerce and Trade, from all sectors, for example, from manufacturing automotive components, Chambers of Crafts, Crafts from traditional manufacturing in the clothing, textile, construction products Association, InnoRegio initiatives and food sectors, from the tourism sector, and from the service and new technology sectors. At present the focus in Mittweida and Altenburger Land is largely sectorally based (automotive and technology where the regions have traditional strengths) and concentrated on the manufacturing sector. While retaining a sectoral strategy and focus, it may be useful to look horizontally across sectors and to tailor programmes of advice, support and funding more to the growth needs and growth prospects of different segments of companies. This process is not about picking winners, which state bodies or indeed banks and other bodies cannot do with any degree of certainty of eventual success. However, it is about recognising new business plans and company features that can form the foundation for business expansion and lead to growth, and then identifying and segmenting the companies that display such features. It is crucial that transparent categorisation procedures and objective and clear criteria be used in any such approach.
Promote business-to-business Larger companies can play an important role in encouraging SME innovation Land governments, public banks, mentoring and exporting by making available expert managers to SMEs for short private banks, Chambers of advisory sessions. This can be very effective and valuable to many Commerce and Trade, companies at the early stages of their development. Chambers of Crafts, Crafts Association, InnoRegio initiatives Promote the internationally Mittweida and Altenburger Land's enterprise strategy on the service sector Land governments, public banks, traded service sector (where most people are employed today) warrants review and increased private banks, Chambers of attention. While traditional industry and technology skills remain a major Commerce and Trade, source of new projects, the use of those skills in the service sector may Chambers of Crafts, Crafts deliver greater opportunities. A strategy and focus by Altenburger Land and Association, InnoRegio initiatives Mittweida on the service sector in their regions as a source of new jobs and, in particular, on the internationally traded sector should be developed further. The establishment of a special Task Force to develop a regional and local strategy on the service sector might be considered as a first step. This Task Force should ideally have representatives of responsible ministries, agencies and especially expert representatives from service business companies (both domestic and international) in Thuringia and Saxony.
5 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
Expand export initiatives There is scope and need for new export promotion initiatives and export Land governments, public banks, support services. private banks, Chambers of Commerce and Trade, Chambers of Crafts, Crafts Association, InnoRegio initiatives Focus on growth enterprises Mittweida and Altenburger Land should review the scope of their support to Land governments, public banks, SMEs and seek to focus support in a more concentrated way, across all private banks, Chambers of sectors, on those companies that have the best prospects for future growth. Commerce and Trade, Other SME company segments should continue to have support relevant to Chambers of Crafts, Crafts their needs and stage of development, for example, website information, Association, InnoRegio initiatives selected business development advice, information on quality standards and training. * This is not an exhaustive list of stakeholders and actors. It needs to be adapted to and completed for the local context.
INFRASTRUCTURE AND PREMISES
What How Who*
Consider the establishment of Stronger emphasis should be placed by Mittweida and Altenburger Land on Local governments, land business incubators developing and extending incubation centres as a way to provide appropriate governments, public banks, premises for new and small businesses. To ensure that the range of services private banks, Chambers of provided matches with OECD best practice the opportunity for 'twinning' and Commerce and Trade, regular experience sharing with successful and innovative incubators in other Chambers of Crafts, Crafts countries should be explored. For Altenburger Land it could be Association, InnoRegio initiatives recommendable to conduct a study on the need and possible utilisation of such business incubators or technology centres in the district. In case of insufficient demand, possibilities to use existing facilities in neighbouring Districts should be elaborated by public institutions in charge.
* This is not an exhaustive list of stakeholders and actors. It needs to be adapted to and completed for the local context.
6 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
POLICY DELIVERY ARRANGEMENTS
What How Who* Establish a vision and strategy A clear and mutually agreed strategy for entrepreneurship aims to formalise Local governments, public banks, for entrepreneurship policy the aspirations and co-operation of key partners locally. A strategy such as, private banks, Chambers of for instance, 'Entrepreneurship and SME Development Strategy 2006-2010', Commerce and Trade, should be the product of public debate, deliberation and consensus building Chambers of Crafts, Crafts amongst relevant local institutions, as well as consultation amongst relevant Association, InnoRegio communities, and seek to develop a comprehensive and integrated approach. initiatives, public employment Once established, the strategy can be translated into an action plan with clear service (Agentur für Arbeit) priorities and roles for partners, timescales and resources. Enhance policy co-ordination A broader entrepreneurship strategy may necessitate further co-operation Local governments, land and co-ordination in functional policy areas between local institutions at the governments, public banks, District level. Key local partners may benefit from more formalised joint private banks, Chambers of working, for example using partnership models. While offering a degree of Commerce and Trade, flexibility and built upon well established local contacts, the relatively informal, Chambers of Crafts, Crafts issue-based and ad hoc current system raises questions about how Association, InnoRegio institutional relations and contacts renew themselves over time and maintain initiatives, public employment their problem solving capacity. If the District level is too small, then ways need service (Agentur für Arbeit) to be developed better to co-ordinate and integrate policy horizontally between Districts and vertically with the Land. Looking beyond the District boundary may provide a stimulus to collaboration, innovation and joint working. Simplify the interface with Local Economic Development Offices should also play a stronger pro-active Local governments, public banks, SMEs role in working with SMEs. This entails understanding the strategic issues private banks, Chambers of faced by such companies in achieving growth and maintaining close and Commerce and Trade, regular contact with them. The co-ordination of support services to such Chambers of Crafts, Crafts companies and simplification of procedures – in cooperation with all regional Association, InnoRegio partners: technology and R&D centres, universities, training bodies, banks, initiatives, public employment venture capital groups – should be a priority task. The clarity, transparency service (Agentur für Arbeit) and communication of business support services for local entrepreneurs and businesses may be improved by the establishment of a single institutional identity or brand and gateway, for example using the 'One Stop Shop' model to provide a single and widely communicated information point for services. A free public access website may further underpin this model, for example drawing upon the experience of the Virtual Start-Up Centre of the Chambers of Industry and Commerce in Thuringia or the joint Internet portal of Chambers of Industry and Commerce and Crafts in Saxony.
7 OECD LEED Local Entrepreneurship Review, East Germany : Action Plan Districts Mittweida (Saxony) and Altenburger Land (Thuringia)
Focus on linkages with more Both Districts should build on the potential to benefit from a location adjacent Local governments, development dynamic regions to growth areas in the Dresden-Leipzig-Chemnitz triangle. They have a agencies, InnoRegio initiatives comparative advantage as proximate, well connected and lower cost business locations, particularly given air and road infrastructure upgrading.
Adopt the policy cycle Policy development should be thought of as involving four linked stages – All institutions involved in policy methodology. problem definition, design, delivery and evaluation. These stages underpin a and programme development potentially stronger and more systematic approach to entrepreneurship policy. The policy cycle also includes a more forward looking policy development approach. This may begin to foster a more proactive approach locally that may be more future-oriented rather than reactive in its responses to local economic change and Land level initiatives.
Tailor policy to the local and Building a more systematic approach to policy development amongst local All institutions involved in policy regional context institutions provides an opportunity better to shape policy more effectively to and programme development address particular local and regional conditions rather than relying upon generic, 'off-the-shelf' instruments. For local institutions, this may involve seeking to establish local policy-making discretion within their competence in the Land context or using existing policies in different ways. Given the potential this creates for policy divergence and diversity, efforts will be required to maintain co-ordination and integration between different institutions working at different geographical levels.
Establish clear priorities An entrepreneurship strategy, local institutional framework and systematic All institutions involved in policy approach to locally-oriented policy provide a means for identifying key and programme development priorities. A clear focus can help local institutions to be more discerning about the quality of entrepreneurship, potentially seeking to encourage and support those entrepreneurs and businesses with growth and sustainability potential. Priority policy areas can also be targeted at key needs and/or bottlenecks locally, for example developing micro-finance instruments together with local financial institutions to address the weak capital base of local SMEs, and extending current knowledge transfer activities to encourage innovation in SMEs.
* This is not an exhaustive list of stakeholders and actors. It needs to be adapted to and completed for the local context.
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