Searching for the micro multinationals
A PwC report on behalf of Microso! and Baltic Development Forum
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Jon Arwidson, Patrik Dreber, Magnus Kolsjö et.al. 2014-05-20 Foreword
The countries in the Baltic Sea Region (BSR) have business to new markets. But also to inspire key established themselves as front runners in many policy makers and businesses cross borders to aspects of the ICT sector. Over the last decade join forces and to act on some of the concrete they have succeeded in a!racting huge foreign policy recommendations. direct investments in this highly competitive sector. The BSR is still among the world leading Launched together with this report at the BDF ICT regions with high level competences, talents, Summit in Turku, Finland, June 2014, “Top of start-ups, and track record. However, as we are Digital Europe” welcomes partners within busi- entering a new era with new challenges and ness, politics, academia and other actors with an tougher global competition, how can the BSR interest in ICT as a driver for growth and com- maintain and further develop its leading role? petitiveness in the Baltic Sea Region and beyond.
There is a need to focus on joint business-society This report is elaborated by PriceWaterhouseC- opportunities and take action on key areas ooper (PwC) in Sweden, Finland, Estonia and within the digital economy to continue to be Denmark, on behalf of Microso" and BDF. PwC internationally competitive and further growth is responsible for the report, except for foreword the potential. and a"erword. An Advisory Group for “Top of Digital Europe”, key representatives within the On the initiative of BDF and Microso" the digital sector in the region, has contributed with Top of Digital Europe was launched at the 16th Baltic regional ICT think tank “Top of Digital Europe” comments to the policy recommendations. Development Forum Summit in Turku, Finland, 3-4 June has been established to support and promote the 2014. Top of Digital Europe is part of Baltic Development Forum (BDF) that has for years been driving ICT policy Baltic Sea Region as a leader in the ICT sector. The work is conducted by Microso" and BDF. discussions in the Baltic Sea Region. “Top of Digital Europe” is a neutral, non-profit Joakim Lundblad, Chamber of Industry & Com- think-tank. It facilitates dialogue on how the merce in Southern Sweden, has given priceless www.bdforum.org region’s role can be strengthened and provides support and advice to the scope and content to concrete recommendations as to how this role the report. can be pursued and how to further fuel the digi- tal economy. Hans Brask This report is the first delivery from “Top of Director, Baltic Development Forum Digital Europe”, and is a study on the state and ecosystem of ICT-related start-ups and SMEs, the Nanna-Louise Wildfang Linde so-called “Micro-multinationals” in the Baltic Assistant General Counsel WE-N, Microso! Sea Region. It is a first and much needed step towards a be!er understanding of the potential within the fast growing digital market.
Our hope with the report is to put a spotlight on some of the growth barriers and opportunities of SMEs in the ICT sector and the challenges they are facing when they want to expand their
ICT SME REPORT 4 Executive Summary Contents
page 4 page 25 1 6 The global market place has changed dramati- recommendations, there are three initiatives that cally for smaller and mid-sized companies with we would like to highlight below that we believe Introduction to the Study Estonia and Tallinn the evolution of the Internet. Today, almost any will be of greater benefit to help ICT SMEs to company can potentially sell its products and grow within the Baltic Sea Region: 6.1 Key Findings page 5 services anywhere in the world. With Internet as 2 6.2 Characteristics and A!itudes of the Interviewed Companies a channel for sales, marketing and production, “Baltic Sea Region Information 6.3 The General Business Environment small and medium-sized companies can expand Society Business Academy” Brief Description of our Approach 6.4 ICT SMEs their business across the globe and become a so- An academy for SME employees that primarily 6.5 Innovation called “micro multinational”. aims at further developing ICT-related niche 2.1 Definition of the ICT sector 6.6 Public Policy and Support competencies, but also to enable cross border 2.2 The Desktop Studies 6.7 Perceived Obstacles for ICT SMEs and Potential Micro The ICT-sector has a relatively large number of networking within the sector. This academy 2.3 The Interviews Multinationals micro multinationals. The aim of this study was should be a cooperative e"ort between existing page 7 page 31 to learn more about the entrepreneurial envi- universities and private companies, whereby the 3 7 ronment within the ICT-sector in order to be!er training takes place in di"erent Baltic Sea Region understand how public policies in the Baltic Sea countries, and should include a large number of Sweden and Malmö European Initiatives to Support Region could enable and strengthen the ICT virtual courses. Digitalisation and SMEs related SMEs’ growth. The countries in scope for 3.1 Key Findings this study were Sweden, Finland, Denmark, and Baltic Sea Region crowd 3.2 Characteristics and A!itudes of the Interviewed Companies 7.1 The Digital Agenda for Europe Estonia. funding platform 3.3 The General Business Environment 7.2 The Innovation Union Financing at early stages in the business life 3.4. ICT SMEs 7.3 The Small Business Act for Europe The results of the study indicate that there are cycle, so called “seed financing”, is a perceived 3.5 Innovation 7.4 Networks and Exchange Programmes several cross border obstacles which SMEs in the problem for many SMEs. We, therefore 3.6 Public Policy and Support 7.5 Information and E-services studied countries face on their way to becoming recommend that a Baltic Sea Region crowd 3.7 Percieved Obstacles for ICT SMEs and Potential Micro page 33 international. Some examples of these findings funding platform is implemented, commi!ed to Multinationals 8 are: SMEs in the region. This platform should then page 13 operate on a multinational level to promote Baltic 4 Observations Di!culties in finding competence on Sea Region SMEs. the labour market and securing highly Denmark and Copenhagen 8.1 Introduction specialised skills. Tax reduction for business 8.2 Key Observations support services 4.1 Key Findings page 35 A need for extended understanding of In order to facilitate the access to, and use, of 4.2 Characteristics and A!itudes of the Interviewed Companies 9 and connection with other markets. business support services that SMEs need to 4.3 The General Business Environment grow their business into a micro multinational 4.4 ICT SMEs Cross Border Recommendations Di!culties in obtaining seed financing we recommend a tax reduction for the SME that 4.5 Innovation and financing for the development or uses these services. The idea is inspired by the 4.6 Public Policy and Support 9.1 "Baltic Sea Region Information Society Business Acadamy" realization of new tax reduction currently available, for example, 4.7 Perceived Obstacles for SMEs and Potential Micro 9.2 Lower Requirements for European Blue Card products or ideas. in Finland and Sweden where people who hire Multinationals 9.3 Bring a SME Abroad services for repairs, conversion, and extension 9.4 Peer-to-Peer Coaching Network page 19 A need for a"ordable business or cleaning, maintenance and laundry can have 5 9.5 Cross Border Business Checks support services within such areas as a tax reduction of a certain percentage on the 9.6 Baltic Sea Region Crowd Funding Platform accounting, legal advice, labour costs, limited to a certain amount. Finland and Helsinki 9.7 Improved Public Services for SMEs and marketing. 9.8 Tax Reduction for Business Support Services 5.1 Key Findings A central cross border finding is also comprised 5.2 Characteristics and A!itudes of the Interviewed Companies of the fact that a number of the interviewed 5.3 The General Business Environment References and Sources SMEs, regardless of the sub-region, do not, at 5.4 ICT SMEs pages 38 - 40 present, have the intention or wish to grow or 5.5 Innovation expand their businesses. This is an important 5.6 Public Policy and Support Apendix A - Methodology finding as public policies in such cases may not 5.7 Perceived Obstacles for SMEs and Potential Micro page 42 have the desired e"ect on the ICT sector. Multinationals Apendix B - Interview Questionnaire Based on our findings, we have suggested eight page 47 cross border recommendations in order to fa- cilitate and stimulate the international growth of SMEs in the ICT-sector. Among the eight
2 ICT SME REPORT ICT SME REPORT 3 Introduction to Brief Description the Study 1 of our Approach 2
A few decades ago the global market places were Our approach in this study has been to conduct In accordance with the Commissioner’s request, PwC has dominated by larger corporations; size ma!ered a country analysis for each of the four regions in conducted this study in two parallel work streams, a desktop study when starting up activities in new countries. A scope, Sweden, Finland, Estonia, and Denmark. per country; Sweden, Denmark, Estonia, and Finland, as well physical presence was o#en needed in order to The individual country analysis is based on a as through 30 interviews with local entrepreneurs in each of the complete sales transactions across borders. For desktop study where di"erent statistical sources sub-regions; Malmö, Tallinn, and Helsinki. A total of 25 interviews smaller and mid-size companies, local markets have been measured in order to draw conclu- were conducted in Copenhagen. were the easier choice and o#en the only choice. sions on the state of the ICT environment in This has changed dramatically with the Internet each country. Parallel with the desktop analysis, and Internet enabled technologies such as cloud we have also conducted 115 interviews (30 computing, social media, big data analytics and interviews in the sub-regions Malmö, Tallinn, mobile services. and Helsinki; 25 interviews in Copenhagen) 2.1 2.2 2.3 with SMEs to obtain a be!er understanding In today’s digital economy, almost any company of the practical di$culties entrepreneurs may DEFINITION OF THE THE DESKTOP STUDIES THE INTERVIEWS can potentially sell its products and services have in growing their companies into micro ICT SECTOR anywhere in the world, regardless of financial multinationals. The desktop study was completed by local In order to capture an entrepreneurial strength, number of employees, or even pro- Varying a!empts have been made to PwC teams in Denmark, Estonia, Finland view of the ICT SME environment, 115 in- duction facilities for that ma!er. Most products Observations and recommendations which we define the ICT sector, but there is a general and Sweden to ensure that PwC made full terviews were conducted, divided between and services, regardless of industry sector, have believe could facilitate growth for these ICT lack of relevant public statistical infor- use of local statistical material, previous the four sub-regions of Malmö, Helsinki, an ICT component. Even a small one-man soap related companies going forward have been mation about ICT related companies and studies and contextual understanding. In a Copenhagen (25 interviews), and Tallinn. producer in the Baltic Sea region, that normally formulated from these countries analyses. Micro Multinationals. The public statistics broad sense there were five areas that this falls outside of an ICT sector definition region, Recommendations proposed in this study are o$ces in Sweden, Denmark, Estonia and part of the study should cover: These interviews were mainly held by can manufacture its products in China and, then, not intended to be complete reforms ready to be Finland gather information about com- telephone or through personal meetings. sell them to customers in Indonesia, Mexico or implemented in each country. The proposals are panies’ activities as such, but are not able The amount of (ICT-related) SMEs, All sub-regions used the same template of Chile at the click of a bu!on. With the Internet based on common issues within the countries to collect information as to the degree to potential micro-multinationals, questions so that cross sub-region conclu- as a channel for sales, marketing, and sometimes aimed at promoting hands- on policy initiatives which the companies rely on ICT related and their share of the economy, sions could be drawn from the received even production, any great idea can be spread both within and between the countries. Each products and services to support their information. All interviewees were pro- to the four corners of the world. The common country has its own policy environment with business models. Start-up rate vided with the questions in advance. The term for these companies is “micro multination- its own framework to be considered. Also, the interviews were held in the local language als”. A business segment with a relatively large recommendations are formulated on the basis To overcome the short comings of the ex- Firm growth and expansion and the transcripts were then translated number of such Micro Multinationals is the of the desktop research and the interviews, both isting classification systems, the OECD has into English. The interviewer had the ICT-sector (“Information, Communication, and focusing solely on SMEs within the ICT sector. developed a definition for the wider ICT Fail rate possibility to freely elaborating on areas of Technology”). In shaping implementable policy, consideration sector or the “information society” that has interest or “digging deeper” where they felt must be given to the fact that the issues ad- become commonly accepted and is being Specific policy programs for SMEs necessary. On average, the interviews took The aim of this study is to learn more about the dressed are part of a larger business environment used by the OECD and the International (ICT related) about 50 minutes. entrepreneurial environment within the ICT- which is not covered in this study. Telecommunication Union (“ITU”). The sector in order to be!er understand how public definition is based on the International For this purpose, and on the basis of the policy could enable and strengthen the ICT Standard Industry Classification (“ISIC 4”), OECD definition of the ICT sector, the of- related SMEs’ growth and empowerment within but captures the cross-sectorial nature of ficial statistical sources provided the most the Baltic Sea region. One of the underlining the ICT-sector. This makes the definition relevant information for our purposes. The assumptions is that existing entrepreneurs may useful as it provides a map between nov- majority of the statistics were also compa- foster and inspire an entrepreneurial neighbour- elties and existing traditional statistical rable between countries, to a large extent hood peer e"ect1, and thus increase entrepre- sources. due to the fact that the national bureaus neurship in the long run. have to report data to Eurostat. However, PwC has, with regards to the limitations in some cases local statistics o$ces have in the data collected from third parties, been able to provide data specific to a cer- based the analysis on the above mentioned tain area which their counterparts in other OECD definition 2,3. countries have not been able to produce with reasonable cost and e"ort.
4 ICT SME REPORT ICT SME REPORT 5 3
Sweden and Malmö
Authors: Patrik Dreber, Magnus Kolsjö and Andrea Sandin Viberg SE SWEDEN AND MALMÖ SWEDEN AND MALMÖ Basic Data appear to be content with their current size applications and individual use of ICT. ICT SMEs appear more stable in the later FIGURE 2 3.1 and scope of business. Population (2012): Among the weak areas are the govern- stages of the start-up phase. ment’s procurement of advanced tech- NUMBER AND SHARE OF SMEs KEY FINDINGS In general, it has also been di$cult 9,482,855 nology, government’s online services and In later years, the importance of the ICT to convince female entrepreneurs to e-participation9. sector for employment has diminished as GDP (PPS per capita 2012): 40.000 5,40% Sweden has a relatively large ICT sector agree to interviews. The same goes for has the sector’s contribution to Sweden’s at 6.40 percent of GDP in 2010, compared young entrepreneurs and those with 32,200 € Given its high ranking in international GDP. A#er the financial crisis the sector 35.000 5,35% with the EU27 average of 4.38 percent. In non-Swedish backgrounds. One rea- comparisons, it can be seen as surprising has, as share of the GDP, recovered some- 30.000 5,30% 2012, a total of 66.09 percent of the compa- son for this is that there are not many Number of ICT SMEs that Sweden only ranks at 20th place when what and also shows signs of improved nies were SMEs and of those, 5.34 percent, individuals from these groups who per million of inhabitants (2012): it comes to the number of digital natives productivity. 25.000 5,25% were active in the wider ICT sector includ- are entrepreneurs in the ICT sector. i.e. a youth aged 15 to 24 inclusive, with 20.000 5,20% ing content and media production4. 3,911 five years or more experience using the 3.4.1 Markets and Growth Plans Internet. Only 89.4 percent of the youth 15.000 5,15% Share of ICT SMEs failing (2012): ICT SMEs seem to be a bit more resilient 3.3 (11.7 percent of the total population) are Even though Sweden has fallen in rank 10.000 5,10% than average SMEs, showing a lower fail 3.3% considered digital natives. This can be when it comes to barriers to trade and rate both in the start-up phase and in later THE GENERAL BUSINESS compared to Finland with 98.3 percent, investment, it ranks sixth in the Doing 5.000 5,05% stages. Content and media companies in ENVIRONMENT ICT sector’s share of GDP (2010): Denmark, 96.9 percent or Estonia at 96.0 Business Index when it comes to trading 0 2008 2009 2010 2011 2012 5,00% particular demonstrate a higher resilience percent10. The share of digital natives cor- across borders with both less paperwork, with an average fail rate over the five year Sweden ranks number 20 in the Index of 6.4% relates, among other things, with enrolment fewer days for both import and export and period of 2008-2012 of 3.45 percent. In the Economic Freedom 2014 and number 21 in secondary and tertiary education, areas lower costs than the OECD average. Number of ICT SMEs same period, the overall average fail rate in the Economic Freedom of the world Persons employed in the ICT sector found to be weak points for Sweden in, for Share of ICT SMEs (share of total employment 2010): for SMEs was 5.27 percent. report 2013. Economic freedom is limited example, the Network Readiness Index11. A majority of the Swedish exports are by comparatively high taxes and the size of 4.41% made to other European countries with Sweden in many aspects provides a good government5. According to the European Union Digital neighbouring Norway, Finland and environment for potential micro multi- EPO ICT patents Agenda Scoreboard, Sweden ranks high Denmark all being among the top five FIGURE 3 nationals with an open economy, high This is also reflected in the interviews per million of inhabitants (2010): in many areas. Even though the costs export markets. Just as with exports, the Internet maturity and a good climate where the level of taxation is so#en for Internet connections are among the majority of imports come from European ICT SECTOR’S SHARE OF GDP for innovation. Taxes, labour market brought up. But there is also a general per- 39 highest in Europe (22nd place out of 28) countries with Germany, Netherlands, AND EMPLOYMENT regulation and, in some instances, edu- ception that it is fairly easy to do business Sweden has the highest rate of connected Norway and Denmark being the largest cation weighs down Sweden’s ranking in Sweden. households at 87 percent and the second sources for imported goods and services. 2007 2008 2009 2010 in international comparisons. These are highest rate of mobile broadband connec- also the areas most o#en brought up by In general, the Swedish FIGURE 1 tion at 102 subscriptions per 100 persons. The majority of the interviewed compa- 7,0% our interviewees as needing improve- market is relatively good from an The ICT skills are high with 63 percent of nies have their main activities in Sweden. 6,5% ment. However, it is not just a question of entrepreneurial point of view.” NUMBER OF START!UPS the individuals having medium or high The ones having activities in or exports to lowering taxes and improving education. per million of inhabitants1 computer skills and 22 percent having other markets o#en list Denmark, Norway 6,0% For instance, the awareness among SMEs Sweden keeps its position as number 14 wri!en a computer program12. and sometimes Finland and the US as their 5,5% of public enterprise support is, in general, in the World Bank’s and International 12.000 other important markets. Many of the in- fairly low. Also, public support structures Finance Corporation’s Doing Business terviewees say their companies have been 5,0% 10.000 are considered to be outdated and lacking Index 20146. But according to OECD’s 3.4 international from the start, others that it 4,5% in the relevant knowledge and approaches Indicators of Product Market Regulation, 8.000 took them between six and 24 months to to help potential micro multinationals. Sweden is losing grounds when it comes become international. 6.000 ICT SMEs to both barriers for entrepreneurship, ICT sector’s share of GDP where the country has fallen from 12th to 4.000 There were 37,084 SMEs in the ICT and For future expansion, Denmark and 3.2 19th place between 2003 and 2013, and as content and media sector in 2012 (ICT Germany are said to be the most interest- Percentage of the ICT personnel on 2.000 total employment regards barriers to trade and investment SMEs). The share of ICT SMEs in Sweden ing markets. However, it is also stated by CHARACTERISTICS where the fall is even greater, from 13th to 0.000 2008 2009 2010 2011 2012 has been relatively stable the last few years several of the interviewees that Denmark AND ATTITUDES OF 23rd place in the same time period7. at around five percent of all SMEs. is a di$cult market to expand to due to the THE INTERVIEWED cultural di"erences between the countries. COMPANIES The number of start-ups measured in Since 2008, the share of ICT start-ups has TABLE 2 terms of the number of companies per TABLE 1 diminished from 5.15 percent in 2008 to The Baltic countries (Estonia, Latvia and The interviewees from Malmö mainly million of inhabitants shows a small in- 4.40 percent in 2012. That the share of ICT Lithuania) are not perceived as a!rac- MOST IMPORTANT EXPORT MARKETS14 consisted of representatives from com- crease between 2008 and 2012, from 8,594 MOST IMPORTANT IMPROT SOURCES13 SME remains constant or even shows a tive. The reasons for this are said to be Share of exports panies working with systems develop- to 9,276. Share of imports small growth can be explained by a slight- di$culties in ge!ing paid, low purchasing ment, programming and IT consultancy. ly lower fail rate among ICT SMEs, 1.03 power and the proximity to Russia. Poland Norway 10.3% Media and content companies have o#en Sweden scores high in all international Germany 16,1% percent (2008-2012) compared with 5.21 is in some interviews mentioned as more Germany 10.2% declined interviews, stating they do not comparisons regarding Digitalisation Netherlands 9,0% percent (2008-2012) interesting for expansion than the Baltic United Kingdom 7.5% see themselves as belonging to the wider and ICT maturity. The International Norway 8,2% countries, mostly since it is considered Finland 7.2% ICT sector even though PwC approached Telecommunication Union ranks Sweden Denmark 7,2% The risk of failure is higher in the first to have a higher purchasing power and a Denmark 7.0% the companies by explaining its definition at second place in its ICT Development United Kingdom 6,0% few years of a company’s activities. The further developed market. USA 6.1% and the scope of the study. Another o#en Index8 and The World Economic Forum Finland 5,5% average fail rate in the start-up phase is Netherlands 5.6% Russia 5,1% France 4.9% cited reason for declining to participate in ranks Sweden at third place in its Network China 4,9% 11.30 percent (1010-2012) for SMEs, in gen- We prefer to focus on the interview study was that the company Readiness Index. Sweden is especially eral, and 10.88 percent (1020-2012) for ICT markets that are known and Belgium 4.8% France 4,4% China 3.4% did not have any interest in growing or strong in the areas of availability of the Belgium 3,9% SMEs. Notably there is some ICT SMEs understandable. The Baltic market expanding its business. A significant por- latest technology, business absorption of that fail within the first year, while this is unknown and considered to be tion of SMEs whom we have approached new technology, number of ICT patents has not been reported for other SMEs but unsure.”
8 ICT SME REPORT ICT SME REPORT 9 SWEDEN AND MALMÖ SWEDEN AND MALMÖ
It should, however, be noted that the con- Those looking to hire in spite of this state cost is too high and they do not want to 3.6.4 General Awareness of cerns regarding the Baltic countries are, that it is di$cult to find people with the 3.5 3.6 lose control over their company and in the Available Support to a large extent, based on preconceived right qualifications. The qualifications direction in which it should be developed. notions as most of the interviewees did not available are o#en too narrow. SMEs need INNOVATION PUBLIC POLICY AND Most of the interviewees think they have Most of the interviewees are aware of have any experience from doing business people with skills, for example, in both SUPPORT access to external financing if they would the possibility to seek public support but with these countries. However, since this programming and business, as well as with Sweden is among the top nations when it need it but some say they would like to they can only name a few of the possible was a reoccurring opinion among the an understanding of the entrepreneurial comes to innovation, ranked 2nd with 61.36 3.6.1 Public Policy have more knowledge about the kind of sources, if any. The most commonly named Swedish interviewees, it could have a environment. It could be argued that this points in the Global Innovation Index 2013. financing options that are available. Those are Almi and Vinnova. Those who have negative e"ect on the a!empts to promote is partially due to a generation gap and Its weakest areas are considered to be in The Swedish Corporate tax rate is 22 who already have used external financing some knowledge about the di"erent forms the Baltic Sea Region as an internationally that several educational programs have trade and competition, and creative out- percent, pu!ing it below both the OECD have o#en done so to finance a new idea of support are o#en negative. They say the competitive growth region. been implemented to deal with this issue, puts, especially intangible assets, but the average of 25.5 percent23 and the EU27 or project. public support is not used in an e$cient e.g. engineering management programs at average of 23.0 percent24. The tax burden manner and that the individuals involved 3.4.2. Securing of Skills and the universities. Some problems with these country is still among the top 40 nations or “tax wedge” on labour income for single It is di!cult to find proper in the decision making regarding support Knowledge educational programs, however, is stated even in its weakest areas. In spite of these persons without children earning 100 financing in Sweden as most of the lack adequate knowledge of entrepreneur- by the interviewees to be that the students weak points, Sweden displays a gener- percent of the average wage is 42.9 percent venture capitalists available want ship and innovation. In the Economic Freedom of the World graduating from these programs are 1) hav- al strength in all pillars in the Global compared to the OECD average of 35.9 per- a high return on investment and Index Sweden ranks 127th in labour ing theoretical business knowledge but still Innovation Index, and is also among the cent25. In total, Sweden ranks number 41 as significant influence businesses In addition, it can be concluded that even freedom15, and in OECD’s Indicators of lack experience and 2) are educated in how leaders when it comes to the quality of regards paying taxes in the Doing Business that they do not know anything though most of the interviewees state that Employment Protection Sweden has a to manage large enterprises and not how to innovation, ranking number eight among Index. Important factors to this ranking about.“ they are aware of possible sources of public score of 2.52 out of 6 regarding protection manage SMEs. high income countries19. are the high tax levels but also the number support, none of the interviewees have of permanent workers against individual of hours (122 per year) that it takes for a 3.6.3 Non-Financial Support mentioned Verksamt.se. Since, several of and collective dismissals. This can be com- 3.4.3 Use of Networks Sweden is, together with Denmark, company to file their tax returns26. the interviewees have requested the type pared to the OECD average of 2.2916. Finland and Germany, one of the in- As with financial support, there are many of support o"ered by Verksamt.se, it can be There is a large variation in how and which novation leaders in Europe. However, 3.6.2 Financial Support variations of non-financial support. At concluded that the general awareness of According to data from Eurostat, the networks are used by the interviewees. Sweden has among the lowest innova- Verksamt.se28 the government has gathered this single-point-of-access for information main reason SMEs in Sweden looking for In general, it can be said that informal tion performance growth. The country’s There are many di"erent forms of public all information and e-services for starting and support is low among the interviewed personnel with ICT skills are finding it networks are considered to be the most largest relative strength is, according to financial support available to startups and and running a business, as well as provid- SMEs. di$cult to recruit is the lack of academic valuable and these are used for advice the Innovation Union Scoreboard, “Human SMEs, loans, grants and venture capital. ing several on-line tools and templates. ICT related qualifications and/or training. and inspiration, as well as a source for Resources” meaning a relatively high quota The table below shows some examples Besides the on-line help, for example, A source of information to The interviewees, for example, common- recruiting. of new doctorate graduates and youths of these. At the Swedish “Point of Single Almi, The Swedish Trade and Investment which SMEs can turn to in order ly state that it is di$cult to find skilled who have completed tertiary and second- Contact” Verksamt.se there is a fuller guide Council and several regional organisations to obtain information and help, programmers and developers, especially Informal networks are ary education. The largest relative weak- to the di"erent forms of support available27. o"er advice and support for SMEs. such as the customer services those who are passionate about their work fundamental for SMEs and are nesses are stated as “Firm investments” i.e. department at the Swedish Tax and have experience within the field. In one of the main drivers behind this R&D expenditure in the business sector Of the interviewed companies, very few A need for support that reoccurs in several Agency, would be helpful.” a survey conducted in 2007, a total of 70 business sector” and Non-R&D innovation expenditures, have used any form of external financing. interviews is the need for support when percent of the respondents reported this as and “Economic e"ects”, such as sales of However, many of the interviewees also entering new markets, for example, help a reason for di$culties in filling vacancies. There are, however, some cases where new to market and new to firm innovation, state that they have had the need for it with cultural understanding, marketing This is higher than the EU28 average of 62 smaller, formal networks with peers in and knowledge intensive service exports22. while others have actively chosen not to and tax regulations. percent17.The lack of qualification among similar situations have been considered to use external financing as they feel the applicants for ICT related positions can be highly valuable. For example, one inter- partially be related to a low enrolment rate viewee has been using a forum/think tank in secondary and tertiary education, where where people from di"erent markets and FIGURE 4 TABLE 3 Sweden ranks 39th and 18th according to the industries with di"erent skills and knowl- Network Readiness Index. The quality of edge are able to li# problems and help NEW PATENTS ORIGINATING FROM SWEDEN SOURCES OF PUBLIC SUPPORT the Swedish math and science education each other with problem solving which is per million of inhabitants20 th VINNOVA VINNOVA ALMI INVEST ALMI SWEDISH PUBLIC also ranks low, 36 place compared to considered to have been highly valuable. Provider: EMPLOYMENT SERVICE Sweden’s overall Network Readiness rank Other interviewees use similar concepts, 2.450 of three18. although in virtual form on social media 2.400 Name: Research & grow VINN NU Venture capital Export loans Start-up support such as LinkedIn. 2.350 Start-ups Start-ups SMEs in the SMEs wanting Star-ups It feels like when I hire a Phase: (>1 year) (<1 year) seed, start-up or to expand to (The first 6 months) person, I also become responsible When it comes to formal and/or govern- 2.300 expansion phase new markets for this person’s entire life. This ment supported networks, the views tend 2.250 responsibility, together with all to vary. These vary from interviewees Targets start-ups Targets start- 115-230.000 EUR in Export loans The entrepreneur must the necessary administration requesting more government supported 2.200 older than 1 year. ups younger the seed phase and to companies be unemployed and fulfill Limitations: than 1 year. up to 460.000 EUR with less certain requirements. and accounting, o#en becomes forums where entrepreneurs who want to 2.150 in the expansion than 250 start a business can come together, to those overwhelming since I do not 2.100 2009 2010 2011 2012 phase. employees. have knowledge or experience in thinking there are too many meetings and managing these sorts of things. seminars about ideas without any real sup- The aims The aims The vision is to To help SMEs Helping unemployed This is associated with a lot of port of the kind start-ups actually need i.e. to promote to promote create possibilities expand by persons with a business idea anxiety for me as the owner of an support with product development and the sustainable sustainable for all sustainable exporting their to start their own company. Goal: growth by growth by ideas and products and SME.” practical testing of their idea or product. improving the improving the companies to services to conditions for conditions for develop. new markets. The interviewees are reluctant to hire innovations. innovations. new personnel as they think that this is associated with large risks and high costs.
10 ICT SME REPORT ICT SME REPORT 11 SWEDEN AND MALMÖ
3.6.5 Requested Policies and Support from the Interviewees
In general, the interviewees request “more carrot and less stick”. The govern- ment must show that entrepreneurship is something good and that they want small companies to grow. There are several ways 4 that the government can do this according to the interviewed companies: simplifying the procedure around taxes, making it easier and less expensive to employ people, reducing the regulation associated with e-commerce, introduce apprenticeship ed- ucations for ICT and expanding the forms of non-financial support o"ered.
3.7 PERCEIVED OBSTACLES FOR ICT SMEs AND POTENTIAL MICRO Denmark and MULTINATIONALS
Lack of competence : The lack of competence comes in many di"erent forms. The interviewees Copenhagen have listed the lack of ICT skills, that the candidates applying for a position are too specialised to work in a small company, that it is di$cult to find personnel who have an understanding for entrepreneurship and SMEs. Authors: Di!culties to expand Sebastian Bay, Anders Dalho" to new markets: and Mads Østerby Many lack the necessary knowledge in their own company or the resources to pay for professional services required to venture into new markets. The companies need, for example, knowledge about cultural di"erences, the local market place and tax and other regulations.
High risk and high costs associated with hiring: The interviewed companies who have hired or thought of hiring personnel believe that the costs and risk for doing so are excessively high. Some also say that potential employees regard accepting a position in a start-up or SME to imply a higher risk than working for a larger company. Many think it is too big of a responsibility to hire people and say that they rather work with subcontractors and as a part of a network with other SMEs.
12 ICT SME REPORT DK DENMARK AND COPENHAGEN DENMARK AND COPENHAGEN Basic Data However, on a global level Denmark ranks The digitalisation strategy – 4.3.2.Securing of Skills and TABLE 5 4.1 as number 40 in 2014 with 4 procedures Population (2012): The Danish public sector is going through Knowledge and 5,5 days to start a business and a mini- a major digital transformation in all areas KEY FINDINGS mum capital for a limited company in the 5,602,628 in order to digitalize as many processes Our company is comprised MOST IMPORTANT IMPORT MARKETS equivalent of 23.9 percent of income per as possible in order to save both time and Imports in millions DKK GDP (PPS per capita 2012): of very talented and specialized The most important aspect for the Danish capita in Denmark. This can be compared resources for government, companies and technical personnel, so sta!ng is ICT interviewees was the use of their with the OECD average of 5 procedures, citizens. definitely a barrier. This applies Germany 112,609 32,100 € Sweden 68,069 networks to secure a customer base, busi- 11.1 days and a 10.4 percent capital require- particularly if we have to a$ract Netherlands 40,840 ness support and advice as regards their ment or New Zealand, ranking as number Number of ICT SMEs However, even though these initiatives foreign specialists to come to China 35,843 per million of inhabitants (2012): activities. one, with 1 procedure, 0.5 days and no have been put into place, there is still work in Denmark, where labour Norway 30,819 capital requirement. room for improvement. In 2014 Denmark costs for technical consultants are United Kingdom 28,304 The largest barrier seemed to be the 2,878 ranked at 9th place in the EU regarding the unreasonably high in comparison Italy 18,517 di$culty in securing financing for their According to the Doing Business Index perceived administrative burdens enforced Poland 18,438 Share of ICT SMEs failing (2012): with other countries, due to the companies and, in particular, due to the Denmark also has some work to do in by government. In comparison, Finland, high Danish income taxes.” France 15,751 fact that the Danish banks increased simplifying and speeding up the processes N/A Estonia, and Sweden ranked as the top USA 12,686 their requirements for SME financing in around enforcing contracts, the country three countries in the EU, with the least According to the Economic freedom of Denmark in 2009. ranks as number 32 with 35 procedures ICT sector’s share of GDP (2010): perceived burdens in regard to administra- the world index Denmark’s regulatory and ranks as number 32 with 410 days to tive demands.35 environment is one of the world’s most enforce a contract. The index also includes 4.8 e$cient. Relatively flexible hiring and As shown in Figure 7 (page 16), the portion 4.2 the cost of enforcing a contract as a per- 4.3.1 Markets and Growth Plans dismissal regulations sustain an e$cient of ICT professionals in the Danish work- centage of the claim. With a cost factor of Persons employed in the ICT sector labour market. In the above mentioned force is below the figures from Sweden, (share of total employment 2010): CHARACTERISTICS AND 23.3 percent Denmark ranks as number 32 According to the interviewees from the report Denmark is ranked as the 5th best Finland and Estonia, but still well above ATTITUDES OF THE in the area of enforcing a contract. 4.47% Danish survey the companies are fairly nation in regards to labour freedom and the EU average of less than 4 percent. INTERVIEWED equally distributed between those who the 2nd best in regard to busines freedom. COMPANIES It was particulary emphasized by our in- EPO ICT patents do not currently have growth ambitions, The interviewees contacted in our study terviewees, that the administrative burden per million of inhabitants (2010): companies that find it adequate to only In regard to personal and collective were divided according to their perception The interviewees from Copenhagen of establishing and running a company in expand in Denmark within the next 5 dismissals Denmark ranks as number 18 of the di$culty in finding competent sta" mainly consisted of representatives from Denmark is quite low. This information is 21 years, and companies who wish to expand in 2013. This Danish figure is almost equiv- for their businesses. Some found it, for companies who deliver or act as advi- supported by the fact that between 2001 internationally. The primary export mar- alent to the OECD average, which is 2.29 example, very di$cult to find a competent sors for di"erent IT support systems to -2010 the government has succeeded in kets that have been considered relevant by on a scale from 0-6.36 lead developers at a"ordable salary rates other SMEs geographically spread around cu!ing companies’ administrative burdens the interviewees are mostly Scandinavian for a small and young company, whereas Denmark. No obvious pa!ern was noted as by 25 percent32. The governmental focus FIGURE 5 countries, but Germany is also mentioned The below chart, illustrating, in percent- others saw no issues in the accessibility to regards the companies participating in this of minimizing administrative burdens as a potential market for expansion. ages, the di"erent reasons why vacan- IT skilled employees in the current state of study. However, the initial hit rate, when for Danish companies is still a very high cies have been hard to fill, indicates that the market. approaching companies and asking them priority.33 NUMBER OF START!UPS Denmark lacks a su$cient number of ap- to participate in the study was very low. per million of inhabitants31 plicants with ICT skills and with academic A total of 81 percent of the population in Less than 1 percent, wanted to participate. The Danish Business Authority (Danish ICT related qualification. Denmark is using the Internet daily, which Ministry of Finance) launched several 4.000 is well above the EU average of 59 percent. di"erent new initiatives in 2012 aimed 3.000 People that have never used the Internet 4.3 at decreasing company administrative 34 2.000 burdens : FIGURE 6 THE GENERAL BUSINESS 1.000
ENVIRONMENT Company forum – 3.342 3.593 0.000 37 A forum which all companies can contact EUROSTAT SURVEY 2014 "PERCENTAGE OF ENTERPRISES WHICH HAD HARD!TO!FILL VACANCIES FOR JOBS REQUIRING ICT!SPECIALIST SKILLS# 2010 2011 Denmark ranks as number 10 in the Index regarding requests for simplification of 90 % of Economic Freedom 2014 and as number administrative demands and tasks. 14 in the Economic Freedom of the World 80 % Report 2013. The economic freedom is Prevention of burdens – 70 % limited by the comparatively high taxes The Danish Business Authority estab- TABLE 4 and size of government. Denmark ranks lished at task force called Team E"ective 60 % high when it comes to investment freedom Regulation (TER) with the objective to 50 % nd st (2 ), financial freedom (1 ) and property make sure that new rules do not imply MOST IMPORTANT EXPORT MARKETS freedom (2nd), as well as freedom from unnecessary new burdens for businesses. Exports in millions DKK 40 % corruption (2nd)29. 30 % EU smart regulation – Germany 101,275 In 2013 and 2014 Denmark ranked as num- In extension to TER in Denmark, the Sweden 74,348 20 % ber 5 in the World Bank’s and International Danish Business Authority cooperate United Kingdom 52,888 10 % USA 43,714 EDEN EDEN EDEN EDEN ENMARK ENMARK ENMARK ENMARK STONIA STONIA STONIA STONIA Finance Corporation’s Doing Business closely with the EU in regards to limiting INLAND INLAND INLAND Norway 41,867 0 % D E F SW D E N/A SW D E F SW D E F SW Index30. administrative burdens. Netherlands 26,760 Enterprises where main Enterprises where main Enterprises where main Enterprises where main France 20,159 reason for hard-to-fill reason for hard-to-fill reason for hard-to-fill reason for hard-to-fill In the Doing Business Index, Denmark AMVAB – China 19,240 vacancies for ICT specialist vacancies for ICT specialist vacancies for ICT specialist vacancies for ICT specialist ranks well in comparison the OECD Which is the Danish equivalent of the Finland 17,773 jobs was lack or too low jobs was lack of ICT related jobs was lack of work expe- jobs was salary requests number of applicants with qualifications from educa- rience in the field of ICT too high average in several areas that can be of SCM method (Standard Cost Model); a tool Poland 15,340 ICT skills tion and/or training importance to start-ups and SMEs looking for measuring and pin-pointing adminis- to become micro multinationals. trative burdens.
14 ICT SME REPORT ICT SME REPORT 15 DENMARK AND COPENHAGEN DENMARK AND COPENHAGEN
FIGURE 7 4.6.2 Financial Support FIGURE 10 4.5 SHARE OF ICT PROFESSIONALS IN THE TOTAL WORKFORCE IN EU27, 21. Vækstfonden (The Danish Growth Fund) NEW PATENTS FILED INNOVATION is a government funded venture fund that per million of inhabitants41 7 % aims to create and support more start-ups The innovation aspect has generally not as well as growth among companies in 2.500 6 % been commented upon as a pressing issue Denmark by providing capital and indus- 2.000 5 % during the majority of the interviews. try expertise. Since 1992, Vækstfonden Innovation has mostly been referred to have provided more than DKK 12 billion 1.500 4 % as a response to growing market com- through co- investments to approximate- 1.000 3 % petition. As an example, the market for ly 5,000 companies. As a part of Danish 500 standard ERP and so#ware infrastructure entrepreneurial environment and to reach 2 % 2.031 2.125 1.911 consultancy solutions is quite saturated as wide as possible, Vækstfonden colla- 0 1 % 2010 2011 2012 2013
EDEN in Denmark, whereas the market for cloud bourates with other venture funds, private ENMARK W
0 % FINLAND S MALTA SLOVAKIA KINGDOMUNITED LUXEMBOURG ESTONIA D BELGIUM IRELAND REPUBLIC CZECH SLOVENIA HUNGARY NETHERLANDS AUSTRIA EU FRANCE GERMANY SPAIN ITALY POLAND LATVIA BULGARIA CYPRUS PORTUGAL ROMANIA LITHUANIA GREECE based solutions is not yet as saturated, investors, financial institutions, innova- which provides added possibilities for tion communities and regional growth Source: Empirical calculations based on Eurostat Labour Force Survey, 2011 growth in this new market. hubs such as Accelerace and CONNECT Denmark, which primarily support start- The competition in ups with entrepreneurial and venture 4.7 the traditional Microso# experience. account for a small 6 percent which is well acquaintances have been considered as FIGURE 8 infrastructure market is very PERCEIVED OBSTACLES below the EU average of 22 percent. one of the most important aspects for an tough both locally and globally Another early-stage investor is DTU FOR ICT SMES AND SME by all of our interviewees, both in NUMBER OF ICT SMEs since it is something that has Symbion, which is Denmark’s largest pre- POTENTIAL MICRO New data on mobile use of the internet terms of establishing customer contacts, per milion of inhabitants39 been around for quite some time. seed venture capital investor. Its primary MULTINATIONALS shows that in Denmark, a total of 61 but also very much in terms of support and As a consequence of this, and areas of focus are life science, ICT, medico percent of the population accessed the advice regarding entrepreneurial barriers. 3.000 other factors, we have chosen to and technologies within cleantech. Like Financing seems to be the largest obstacle Internet via mobile devices in 2012, one of 2.500 intensify our focus on the cloud other Danish pre-seed investors, DTU for Danish ICT SME’s according to inter- the highest rates along with Luxembourg, In terms of non-financial based solutions, given that the Symbion mostly invests government viewees. In particular, it was noted that 2.000 Sweden, and the UK and well above the support, we have been extremely local market is not as tough.” capital on behalf of the Danish Agency for the Danish banking sector has changed EU average of 36 percent. In the same satisfied with the support we 1.500 Science, Technology and Innovation. drastically since 2008 in regard to credit manner, 63 percent of the companies in have received from the Danish 1.000 policies, which has made it far more di$- Denmark provided their employees with consulate in Chicago, which 4.6 The venture funds mentioned above are cult for the ICT SME’s to secure financing. portable devices to access the Internet in should really be exposed as a 50 drivers for many startups in Denmark. 2.878 2012, which put Denmark amongst the top best practice example. They have 0 2.717 PUBLIC POLICY AND Nevertheless, the ICT companies inter- Also, the strict immigration policies make countries together with the Czech Republic o"ered us a large number of 2010 2011 SUPPORT viewed for this report have solely relied it very di$cult for ICT SME’s to a!ract and Finland, and well above the EU aver- growth based initiatives and they on bank loans and were not in a dialog international labour to Denmark. age of 48 percent. are generally a super professional We are living in a whole new with any venture funds. Our interviewees’ incubator for our company in the era – the financial downturn initial financing of the ICT startups were Furthermore, the high income tax rate According to a survey conducted by the Chicago region.” in 2008 has changed the way mainly done via banks, which allowed an in Denmark also makes it very di$cult European Schoolnet, more than 80 percent 2.878 businesses operate and make overdra# for the company, but since the for ICT SME’s to a!ract international of Danish 8th grade students have broad- money. Before we focused on the financial crisis, banks in Denmark have labour to Denmark. Immigration policies band connection of more than 10 mbps. In 4.4 FIGURE 9 ‘functions’ our clients needed, now greatly intensified the demands in regard and income tax also comprised a major comparison, this only applies to less than it is all about being the cheapest” to risk and security for new company motivational factor for some of the inter- th 38 40 percent of the EU 8 grade students . ICT SMES NUMBER OF ICT SMEs40 startups. Because of the recent sharpened viewees to actually consider establish- 4.6.1 Public Policy demands by Danish banks, the di$culty ing themselves abroad, as they perceive Based on studies by World Economic The number of ICT SMEs per million of finding financial support was regarded that Denmark is disadvantageous as a % 300.000 % Forum in 2013, Denmark ranked in the inhabitants was approximately 2,900 in The Danish Corporate tax is 25 percent as the largest barrier for almost all of our base when running an international ICT
250.000 5,5 5,8 network readiness index at an overall 8th 2011. This was a minor increase compared and will be gradually reduced to 22 percent interviewees. company. place with a score of 5.58, yet is only 4th with 2010. 200.000 by 2016, pu!ing it below both the OECD 42 among the Nordic countries. Down four 150.000 average of 25.5 percent and the EU27 4.6.3 General Awareness of Public funding o!erings and bank places from the previous year, the country Furthermore, the number of ICT SMEs was average of 23.0 percent43. Furthermore, the Available Support loans seem to be an equally a!ractive (or worsened its ranking in almost two-thirds approximately 5.8 percent of all SME’s in 100.000 e"ective rate might be lower, as busi- una!ractive) alternative for ICT SMEs to % % of the indicators comprising the Network Denmark in 2011. All in all, there were ap- 50.000 ness expenses and depreciations are tax Our interviewees did not mention any real finance their businesses, which implies a 44
Readiness Index, however the level of net- proximately 16,000 ITC SMEs in Denmark 94,5 94,2 deductible . The tax burden or “tax wedge” viable alternative to finance their company risk for slower growth if the Danish ICT worked readiness remains quite good over- in 2011 and approximately 277,000 SMEs 0 on labour income for single persons startups other than via Danish banks. SMEs go unfunded. 2010 2011 all. On a global comparison level, Denmark in total. without children earning 100 percent of Denmark does have initiatives in place tops the individual usage score, boasting the average wage is 38.2 percent compared to assist companies during their start-up Number of SMEs not ICTs some of the highest rates of Internet usage to the OECD average of 35.9 percent45. phase, e.g. The Growth Fund (www.vf.dk), (6th), households with personal computers Number of ICT SMEs Eurostat reports that the tax wedge for sin- which some of our interviewees men- (6th), broadband Internet subscriptions (3rd), gle persons without children is 67 percent tioned. This however, was not considered and mobile broadband subscriptions (6th). of the average wage. Measured as such, the to comprise a be!er alternative than their Danish tax wedge in 2012 was 36.6 percent bank. 4.3.3 Use of Networks compared to the EU27 average of 39.9 percent46. The use of networks and relevant
16 ICT SME REPORT ICT SME REPORT 17 5
Finland and Helsinki
Authors: Jukka Karimaa, Marko Korkiakoski and Lauri Lehtovuori FI FINLAND AND HELSINKI FINLAND AND HELSINKI Basic Data IT consulting or data infrastructure. entrepreneurial activity and innovation. share this view of expanding the business be excessive. This is below the EU28 aver- Technology entrepreneurship has tradi- Population (2012): Commercial operations are handled with rapidly to other geographical markets. age of 53 percent but higher than Sweden’s 5.1 tionally been male-dominant and less than transparency and speed, and corruption is 33 percent58. 10 percent of the interviewees were female. 5,426,674 perceived as almost non-existent53. However, in the Doing Business rankings by OECD, Finland renewed its ranking at KEY FINDINGS GDP (PPS per capita 2012): For this study, over 300 companies were Several companies interviewed for this 9 in 201454 in trading across borders. ICT Finnish industries are heavily dominated contacted in order to conduct 30 inter- 29,400 € study noted that the overall business envi- services account for 7 percent of total ex- by SME companies as they represent some views. Roughly speaking, early-stage ronment in Finland is supportive towards ports (above the EU average) while goods 99.8 percent of the nation’s corporate- companies (founded a#er 2011) with high Number of ICT SMEs ICT companies as innovativeness and account for a total of 4 percent (below EU base. This is also the case within the growth plans were more willing to give an per million of inhabitants (2012): entrepreneurship are both highly valued in average)55. Finnish ICT sector. SME ICT companies interview than companies that have been the country. Further, Finland was seen as FIGURE 11 represent some six percent of total SME operating for a longer period of time and 2,281 a safe business environment due to stable 5.4.2 Securing of Skills and companies. During the past few years, who do not have high growth ambitions. legal and regulatory environment. Several Share of ICT SMEs failing (2012): Knowledge the Finnish ICT SMEs have, on average, interviewees saw a need for a change in ICT SECTOR’S SHARE OF GDP AND EMPLOYMENT outpaced the SME segment in terms of N/A the overall business culture as larger cor- In the 2014 Index of Economic Freedom, revenue growth; between 2010 and 2013 5.3 porations are, according to the interview- Finland was rated 151st in terms of la- 2007 2008 2009 2010 the Finnish ICT companies grew some 7.4 ICT sector’s share of GDP (2010): ees, reluctant to buy from or partner with bour freedom56. The non-salary cost of percent compared to 5.6 percent of all of THE GENERAL BUSINESS small companies. This can be challenging employing a worker is high in Finland, 9,0% the SME companies. Furthermore, on av- for the smaller companies to grow their but severance payments are not over- ENVIRONMENT 5.47% 8,0% erage they employ more people than other business in the already small market. ly burdensome. According to OECD’s industries, with 35 employees compared Finland ranks number 19 in the Index of Persons employed in the ICT sector Indicators of Employment Protection 2013 7,0% (share of total employment 2010): to 28 employees, respectively, applying the Economic Freedom 2014 and number 9 in report, Finland has a score of 2.17 out of 6 6,0% same time period. the Economic Freedom of the World Report 3.95% 5.4 regarding protection of permanent workers 2013. Economic freedom is limited by the against individual and collective dismiss- 5,0% During the past few years, Finland has comparatively high taxes and size of the EPO ICT patents ICT SMES als. On average the score among OECD 4,0% undergone a cultural shi# that has raised government47. per million of inhabitants (2010): countries was 2.2957. awareness of and interest in the ICT In recent years’ economic turmoil the ICT- industry, especially as regards so#ware In the World Bank’s and International 31 sector’s share of GDP declined steeply by According to studies by Eurostat, 85 entrepreneurship. Most notable are compa- Finance Corporation’s Doing Business almost 4 percent. The decline in ICT-sector percent of ICT enterprises considered the nies such as Rovio, the developer of Angry Index 2014 Finland kept its place at 1248. In personnel has not been as drastic; howev- reason for hard-to-fill vacancies for ICT Birds franchise, and Supercell which was areas important to start- up businesses, for er, it remains to be seen if personnel cuts specialist jobs to be the lack of, or too few, one of the most profitable mobile game de- example, the ease of starting a business, for the first time, thanks to improvements will follow or if the portion of GDP will applicants with ICT skills, well above the ICT sector’s share of GDP velopers in 2013 with their games Clash of Finland fell from 48 to 55 between years across the board. It shows progress on grow once again. EU28 average of 71 percent. The salary Clans and Hay Day and who has served as 2013 to 2014. In Finland it takes 14 days to two-thirds of the 54 indicators of the NRI requests of ICT professionals in Finland Percentage of the ICT personnel on total employment an example for new, young entrepreneurs. start a business and a minimum capital and posts a very consistent performance 5.4.1 Markets and Growth Plans were not as big a concern, 43 percent of The key personnel and founders of these for a limited company is to be equivalent across all categories of the NRI. Especially ICT enterprises considered the requests to successful, new companies are commi!ed to 1.1 percent of the Finnish income per interesting are the high rankings in laws The simple fact is that the to building the basis for the future devel- capita. This can be compared with the relating to ICTs (4), availability of latest domestic market in Finland is opment of Finnish ICT industry. According OECD average of 5 procedures, 11.1 days technologies (3), impact of ICTs on new insignificant. We need to look TABLE 6 to this study, these examples and new and a 10.4 percent capital requirement or services and products (1), number of proce- other markets for growth in start-up initiatives have a positive impact New Zeeland, ranking as number one, dures to start a business (10) and venture order to survive in the global MOST IMPORTANT TRADE PARTNERS on the a!itudes and growth ambitions of with 1 procedure, 0.5 days and no capital capital availability (13). However, rankings competition. If we don’t grow we (Statistics Finland) Finnish technology entrepreneurs. requirement. in total tax rate, percentage profits (81) and won’t exist a#er 10 years.” MOST IMPORTANT IMPORTS SHARE OF TOTAL EXPORTS SHARE OF intensity of local competition (68) are not TRADE PARTNERS M€ IMPORTS "%# M€ TOTAL EXPORT "%# It should be noted that the small size of the However, in many indicators, Finland as fla!ering. Sweden, Russia and Germany continue Finnish domestic market requires growth hovers close to the OECD averages. For to dominate as Finland’s most important Russia 10 520 18,1 5 353 9,6 companies to expand into new geograph- example, in terms of the cost of establish- The Digital Agenda for Europe measures trade partners. International trade is an Sweden 6 674 11,5 6 475 11,6 ical markets rather swi#ly and their ex- ing a company as percentage of income digitalisation in multiple categories52. In important factor for businesses, something pansion o#en begins with other Northern per capita and paid-in minimum capital exporting of ICT services, Finland comes that was also reflected in the conducted Germany 7 323 12,6 5 427 9,7 European countries. (percentage of income per capita), Finland in at 7 percent of total exports in 2012. The interviews. The vast majority of the inter- Netherlands 3 354 5,8 3 460 6,2 ranks fairly averages with 1.1 and 7.0 levels of computer skills are relatively high viewed companies considered the Finnish compared with the OECD averages 3.6 and with the percentage of population with domestic market to be rather small. China 3 676 6,3 2 764 4,9 5.2 10.4. In protecting investors, Finland ranks high computer skills being 41.3 percent, United States 1 960 3,4 3 560 6,4 at 68. In the OECD ranking regarding en- well above the EU27 average of 25.6 Based on the interviews it can be stated CHARACTERISTICS forcing contracts, Finland kept its 8th place percent. Finland has the highest share of that early-stage companies with high United Kingdom 1 851 3,2 2 907 5,2 AND ATTITUDES OF and was ranked 3rd in resolving insolvency, ICT-professionals in the total workforce at ambition levels and growth plans regard THE INTERVIEWED but only 42nd in securing credit. just below 6 percent. the Baltic and Scandinavian countries France 1 917 3,3 1 827 3,3 COMPANIES as their logical first steps in expanding Estonia 1 683 2,9 1 747 3,1 Finland was ranked 5th globally by the Finland’s strong competitiveness is built their businesses and building internation- The interviewed companies in the International Telecommunication Union49 on flexibility and openness. The economy al presence. However, these early-stage Belgium 1 231 2,1 1 922 3,4 th Helsinki sub-region consist mainly of in ICT development index, 7 by the Web continues to be amongst the world leaders companies have plans to operate in larger Other countries 18 046 31,0 20 553 36,7 ICT companies employing a maximum of Index of the World Wide Web Foundation50 in several of the 10 economic freedoms, markets, such as in the United States and ten people and they have been founded and 1st in the World Economic Forum including business freedom, property China, within 5-10 years. Companies that TOTAL 58 236 100 55 994 100 a#er 2000. The majority of the companies Networked Readiness Index51 while rank- rights and freedom from corruption. The have remained small in terms of annual operate within so#ware development, ing reaches the top of the NRI rankings sound regulatory environment encourages revenue and employment o#en do not
20 ICT SME REPORT ICT SME REPORT 21 FINLAND AND HELSINKI FINLAND AND HELSINKI
Vast majority of interviewees felt they had to foster start-ups and growth entrepre- Germany. Its innovation performance is Public support for early stage companies policy, Finnvera will phase out its invest- targeted at SMEs’ working capital and ex- access to the skills and knowledge neces- neurship in Finland and the Baltic Areas. above the EU average for most indicators, in Finland is strongly driven through the ment fund activities and Tekes has begun ports, and investments. It provides venture sary for the business at this point in time. Most notable, has been the network being although its performance relative to the Ministry of Employment and Economy making preparations for launching these capital for new innovative companies. For scalable businesses, the most sought formed within the operations of the EU has been declining from its peak of 131 and organisations operating under it. activities. Finnvera will continue its direct Finnish Industry Investment promotes the a#er skills were experienced so#ware Startup-Säätiö60 Foundation. The foun- percent in 2008 to 123 percent in 2013. Ministry for Employment and Economy investment activities in early-stage, tech- growth and internationalisation of compa- development and sales and marketing. As dation was established in 2012 with the (MEE) is responsible for creating a support- nology-intensive small enterprises with nies by means of capital investments and regards to so#ware development skills, the help of Finnish technology entrepreneurs Finland had a relatively high number of ive environment for entrepreneurship initial and follow-on investments until the through international networks. interviewees referred primarily hands-on and well-known and well-established patents filed per million of inhabitants in and innovation in Finland. It oversees end of 2017. development work as opposed to “so#ware business executives. Startup-Säätiö is a 2010-2012, with 341, 328 and 337 respec- the employment market and regional de- In addition to these, there are accelerators (systems) management” work. not-for-profit organisation that aims to tively, compared to Sweden with 273, 249 velopment in a global operating environ- Finnish Industry Investment Ltd is a and incubators operating under univer- foster start-up and growth entrepreneur- and 257. The EPO ICT patents at the na- ment. The ministry was formed in 2008 government-owned investment compa- sities, but their e"orts are more focused Roughly half of the interviewees primarily ship in Finland and develop capabilities tional level have been fewer, around half by merging the Ministry of Trade and ny investing in Finnish companies, both on developing the companies and less on representing the companies with high for international growth. The Foundation of that of Sweden, with 531, 496 and 163 in Industry with the Ministry of Employment directly and through private equity funds. raising and o"ering funding. However, their growth plans acknowledged that they is in charge of organizing the annual 2008-201062. and the regional development functions It invests in rapid growth, internationalisa- impact has been more important in raising might have di$culty in obtaining a skilled start-up and technology conference Slush, of the Ministry of Interior. The Ministry is tion, spin-o"s, major industrial invest- awareness and interest towards entrepre- and experienced workforce in the future as the start-up acceleration program Start-up In the Global Innovation Index (2013)63 responsible for innovation and technology ments, as well as sectorial, corporate and neurship among students and the wider the company grows. Young innovative ICT Sauna and the internship program employ- Finland is ranked 6th out of the 142 coun- policy, international development, techni- ownership restructurings. Since 1995, it general public. Accelerators, such as Startup companies seem to require that employees ing university students and researchers in tries compared, behind the 2nd ranked cal safety, market functionality, as well as has made investments totalling one billion Sauna and student organisations, such as can self-educate themselves rather rapidly ICT start-up companies, Startup Life. Sweden but before other Nordic and Baltic competition and consumer a"airs. euros. The portfolio currently comprises Aalto Entrepreneurship Society, have played as the companies do not have significant countries. Particularly high rankings were altogether 510 companies68. an important role among entrepreneurs, and resources to facilitate company-wide The conference (Slush) is received in institutions (2) and human cap- 5.6.1 Financial Support even politicians, in trying to create a more training. Also, it was pointed out that as playing a key role in Finland as ital and research (1). Market sophistication Finpro is the national trade, internation- supportive atmosphere for entrepreneurs69. the industry is constantly in rapid devel- it a$racts international venture and business sophistication were ranked Tekes, ELY Centres, Finnvera plc, Finnish alisation and investment development opment, employee self-management and capitalists and smart money to the out of the top-10 at 19 and 14, respectively, Industry Investment Ltd and Finpro organisation in Finland. A public-private Many of the interviewed companies had training is critical. region and serves as a gathering which may indicate that Finland has high provide financing, expert services and net- organisation and part of the Ministry of utilized the wide o"ering of public finan- for startup entrepreneurs where levels of research with lower capabilities of working services for launching a business Employment and the Economy Group, cial support. The most well-known organi- The two most important you can exchange ideas and get monetizing the results. and further developing it. Finpro also works closely with other play- zation to support ICT companies was Tekes skillsets for us are sales and inspired” ers in Finnish innovation ecosystem such and its di"erent financial instruments. marketing, and so#ware Finnish society and general perception Tekes (the Finnish Funding Agency for as ELY-centres, Tekes and the Ministry for Overall the public financial support was development. Both of these Awareness of these formal and informal has long been very appreciative towards Innovation) funding can be applied for by Foreign A"airs. seen as important to support the growth require a deep understanding networks seems to be high amongst ICT innovation and innovation-led business. companies, research organisations and of small companies. However, some noted and previous experience in the entrepreneurs. According to the inter- Clear indication of this is that Finland’s organizers of public services operating Vigo is an acceleration program designed that the support is currently geared too field. Sales and marketing have views, the importance of networks varies. R&D expenditure has been over 3 percent in Finland. Tekes provides funding for to complement the Finnish innovation heavily towards innovation activities, such to understand the technological Many see networks important for inspira- of GDP during the last 10 years and with research, development and innovation. Its ecosystem. The programme aims to bridge as research and development, while the products and so#ware developers tion and motivation and peer-to-peer sup- a peak in 3.96 percent in 200964. The gov- most important target group consists of the gap between early stage technology companies would be in the need for sup- the need of the customer.” port and pressure are regarded as import- ernment has had a systematic approach small and medium-sized enterprises seek- firms and international venture funding. port of international sales activities. ant. The concrete benefits of such networks to promoting innovation for years, with ing growth from globalisation. The funding The backbone of the programme is formed Young start-ups also seem to rely some- for business development purposes are a national innovation strategy, various is o"ered for business planning, research by the 11 Vigo Accelerators, independent 5.6.2 Non-Financial Support what on outsourcing di"erent tasks even few. Several early-stage growth compa- technology programmes, and a network of and product development and internation- companies run by experienced entrepre- in so#ware development and local com- nies with high ambition levels mentioned regional science and technology parks65. al growth. In 2013 Tekes dealt 577 million neurs and executives. These accelerators There is wide range of di"erent public panies may utilize the workforce of other that they felt the new networks, such as euros in funding, of which 133 million help the most promising startups to grow organisations operating on national or young companies through rather informal Slush, to be significantly important. The went to what Tekes categorizes as young into the global market. The accelerators city / local level and who provide company partnerships. reason for this is that the networks build a 5.6 growth companies and 67% of funding to invest in the companies they work with to non-financial support to ICT SMEs. Many more favourable culture in which start-up SME’s67. guarantee common goals and a dedicated of these organisations can be categorized as 5.4.3 Use of Networks companies can operate. This makes it eas- PUBLIC POLICY AND development e"ort. The Finnish Ministry incubation or acceleration programs. Some ier for the companies to look for venture SUPPORT ELY Centres (Centres for Economic of Employment and Economy launched the operate under a certain city e.g. in Helsinki Traditionally, networks of ICT companies capital and recruit talented young people. Development, Transport and the Vigo Programme under Tekes in 2009. this is done through the city’s subsidiary have been built through formal industry The taxation policy in Finland should, Environment) are responsible for the Enterprise Helsinki, in Aalto University organisations, such as The Federation by all accounts, be relatively competitive regional implementation and development The Ministry of Employment and the through Aalto Startup Center and in the of Finnish Technology Industries59 or 5.5 at OECD level. In the Doing Business tasks of the central government. They seek Economy and the aforementioned parties Jyväskylä region through KasvuOpen. The Finnish So#ware Entrepreneurs ranking Finland placed 21st in paying taxes and evaluate inventions and innovative have introduced the Growth Track service Based on the interviews legal and taxation Association. These organisations have dif- INNOVATION –category66. The corporate tax rate is 24,5 ideas by private individuals and startup model to ensure that companies venturing advice received through such organisa- ferent o"erings to facilitate the networking percent. Finland is strong in supporting companies, and assist in developing them into international business have faster tions have benefi!ed the companies. Other of their member companies e.g. training, The problem with Finland early stage companies through govern- for business purposes at the startup phase. access to services meeting their needs. To non-financial support, such as business networking events, business development is not innovation, it is growth. ment programmes and initiatives. enable enterprises to grow, Finpro provides development or sales and marketing forums and growth clinics. However, We need to focus more on how Finnvera is a specialised financing com- expert services supporting entry into assistance, has not seen as critical, or even these organisations are also heavily geared to grow businesses, to create There are several things pany owned by the State of Finland. It international markets. ELY Centres seek something that can be described as rather towards trusteeship in order to impact the products others want to buy and Finland could and should do to in provides its clients with loans, guarantees, and evaluate inventions and innovative helpful. governmental and industry-level decision then sell them. We have focused terms of taxation policy changes venture capital investments and export ideas by private individuals and start-up making. too heavily on just research and in order to boost growth in ICT credit guarantees. Finnvera is the o$cial companies, and assists in developing them 5.6.3 General Awareness of development.” startups. We could benchmark Export Credit Agency (ECA) of Finland. Its for business purposes. Available Support In addition, during the past few years Estonian taxation and see what we funding is o"ered for purchases, invest- Finland has seen new forms of networks In the 2014 Innovation Union Scoreboard61, could learn from our neighbors.” ments and working capital during the early For this enterprise segment, Tekes o"ers Overall, the companies consider them- being established. Instead of trusteeships, Finland ranked 4th and ahead of Finland stages of a business. In accordance with funding for young innovative companies, selves to be up-to-date on the support that these networks and organisations aim were only Sweden, Denmark, and Ministry of Employment and the Economy while Finnvera focuses on financing is available through public organisations,
22 ICT SME REPORT ICT SME REPORT 23 FINLAND AND HELSINKI
such as Tekes and Finnvera. This is not surprising as both of the organisations are 5.7 generally known in the business world. The question remains how well the companies PERCEIVED OBSTACLES know which instruments and programs FOR ICT SMES AND are available to be utilised in their business POTENTIAL MICRO operations. To elaborate, the young innova- MULTINATIONALS tive companies (YIC) program by Tekes was widely recognized by many of the inter- Constant need to find and recruit 6 viewees that fulfil the requirements of that experienced workforce program, however, newer instruments such Companies operating in the rapidly as the Vigo program were not as familiar. developing ICT industry need to have high standards for their recruitment. 5.6.4 Requested Policies and According to the interviewees, skills Support from the Interviewees and a deep understanding in so#ware development and systems require constant The policy and support recommendations learning and update on knowledge. can be categorized in three main categories: According to some, so#ware development 1) developing early-stage and growth fund- and entrepreneurship should be taught ing instruments and programs 2) developing in school from early on in order to taxation to boost growth for new companies have skilled workforce in the future. and 3) changes to labour laws. Furthermore, Finland should more e"ectively a!ract and grant immigration The seed and venture capital market has visas to talented people (who might be Estonia and been developing in Finland during the past moving from outside of the European few years but can still be described as rather Union e.g. Russia or India). small. The Finnish Funding Agency for Technology and Innovation, Tekes, plays a Insu!cient smart money (from key role in funding early-stage innovative starting the company to scaling Tallinn ICT companies. According to the inter- the operations) views Tekes and other public organisations The vast majority of interviewed providing financial support are seen as companies stated that resources and bureaucratic sources of funding. In order to capital are restricting their growth and receive funding from these organisations, global expansion. From global viewpoint, Author: the companies have to deal with a signifi- Finnish public funding programs can cant amount of paperwork and usually the be described as unique instruments that Kaarel Koosapoeg funding will be delivered in exchange for have been designed to help innovative ICT and Mihkel Lauk receipts for work performed i.e. the compa- companies. However, these programs and ny has to carry a financial risk and first be funding vehicles should, according to the able make payments and receive funding interviews, be more e"ective and be more from Tekes a#erwards. Many of the inter- integrated into smart money investments. viewees were hoping to see these processes to become more e$cient and transparent. Bureaucratic and stagnated In addition, the inclusion of a smart money public structures and policies component was widely requested. Examples Based on the interviews, it can be were given where the government would concluded that entrepreneurs see take more active part in private investment. public policies and structures as having One way could be that the government stagnated. The companies hope for be!er would match the private arm’s length in- taxation policies to drive new growth. In vestments with grants, rather than equity. addition, labour laws should be reviewed in order to make it possible for companies Taxation and labour laws were also seen as to operate swi#ly and e"ectively. too heavy for early-stage companies. It was hoped that Finland would pay closer a!en- tion to helping to grow young businesses through taxation and some suggested Finland should benchmark Estonia for these purposes. Hiring full-time workforce was seen challenging by many companies. Firstly, a#er the employee trial period has ended it might be di$cult to adjust the workforce and secondly the indirect wage costs impose a financial risk to the company. 24 ICT SME REPORT EE ESTONIA AND TALLINN ESTONIA AND TALLINN Basic Data of fixed broadband was lower than the ground for business, due to the flexibility, FIGURE 13 the target companies required convincing Population (2012): average in the EU, although the 4G mobile simplified business founding rules and 6.1 that their business was related to the ICT broadband is more available and its take- innovativeness. At the same time they ICT SECTOR SHARE OF GDP COMPARED sector, which meant that some background 1,325,217 up is above the EU average. admi!ed, that in order to thrive interna- TO NUMBER OF COMPANIES work was required by the interviewer. tionalization is a necessity. KEY FINDINGS GDP (PPS per capita 2012): 2) Internet usage and digital skills in 2013 2009 2010 2011 2012 2013 Nearly 98 percent of Estonian ICT com- Most Estonian companies were optimistic 18,200 € – 75 percent of the Estonians use internet panies are SMEs. The total number of ICT about the future and growth, but there was on a regular basis, compared with an aver- 6.4 10,00% companies is increasing, at the same time significant part of entrepreneurs who were Number of ICT SMEs age of 73 percent in the EU. Use of mobile the total share of the ICT sector has not satisfied with their current size and did not per million of inhabitants (2012): devices to connect to internet was the ICT SMES 5,00% grown at the same pace. It is notable that have plans for growth. same as the EU average, 37 percent. Use of the number of personnel working in ICT 3,781 internet banking in Estonia is 68 percent The Estonian ICT sector share was 5.9 companies remained almost the same over while in the EU the average is 40 percent. percent of GDP in 2009, and during the 0,00% Share of ICT SMEs failing (2012): the years. This leads us to conclude that 6.3 Computer skills are at the samelevel as following years this rose to 6.9 percent, but the increase of ICT companies is caused by the EU average. E-commerce was at a sig- there was a setback in 2012 when the ICT 6.74% ICT sector share of GDP an employment market shi# – instead of THE GENERAL BUSINESS nificantly lower level in Estonia compared sector share fell to 6.5 percent. In 2013, the ICT companies share of total employment, ICT specialists prefer to act ENVIRONMENT ICT sector’s share of GDP (2010): with the EU, with an average of only 23 sector share rose back to 6.9 percent. The as subcontractors. percent, while the EU27 average was 45 share of ICT sector companies in terms of The Doing Business Index ranks Estonia 6.8% percent. Furthermore, Estonia is highly number of companies has been steadily The new generation of ICT entrepreneurs in 22nd position in 2014 and it was number ranked in e-government rankings based rising from 4.58 percent of total enterpris- is more focused on product development 21 in 201370. Estonia is a member of the Persons employed in the ICT sector on a citizen uptake of 55 percent using es, to 5.84 percent of total enterprises. world77. Estonia’s main trading partners are (share of total employment 2010): than on providing services. This shi# has European Union and the Eurozone. In the filled-in forms. the countries around the Baltic Sea. One of taken place with the help of support mea- OECD Product Market Regulation, Estonia 6.8% The number of ICT SMEs has grown over the more important sectors is logistics and sures which young companies have o#en has improved its ranking when it comes to 3) Education 2013 – Access to computers the period of 2010-2013. Due to this, the there is heavy emphasis on transit of goods utilised, such as grants and/or mentoring the Barriers to entrepreneurship indicator. EPO ICT patents in schools is, on an average, at European share of ICT SMEs has increased from 5.1 between Western Europe and Russia. programs. In 2008 it had the 16th position and in 2013 per million of inhabitants (2010): level, but many of the schools have high percent in 2010 to 5.8 percent in 2012. The Estonian companies are interested in the the position was number 13. In “Barriers to speed broadband connections. Teachers number of startup companies per year Scandinavian market as they can get be!er Due to the small size of the internal trade and investment” Estonia ranked as 16 3 use ICT equipment frequently in lessons increased from 752 in 2010 to 1249 in 2013. prices for their goods and services. Many Estonian market, many companies focus in 2008 and in 2013 the country fell to the and students o#en have their own laptops Later data is not available. Scandinavian companies have invested in on foreign markets, mainly Scandinavia. 24th place. In State Control aspects Estonia or mobile phones. Teachers have confi- Estonia and, therefore, a significant part of Growth is hindered by the lack of qualified was ranked at the 4th position in 2008, as dence in the skills of students and the The number of ICT SMEs goes hand in specialists and the lack of skills in busi- well as in 2013. In 2008, the Estonian over- FIGURE 12 school support for ICT tools is strong. hand with the total number of ICT compa- ness development, sales, and marketing. all position in Product Market Regulation nies. The proportionate share is somewhat TABLE 7 International expansion is also di$cult was at number 9 and during 2013 that 4) ICT R&D 2013 – In the period between stable around 97 percent but is slowly due to the general lack of trust towards position fell to number 13. STARTUPS 2007 and 2012, only 20 companies re- increasing and by the end of 2013 it was per million of inhabitants ESTONIA’S MAIN IMPORT MARKETS companies from Eastern Europe. Also, ceived financing from the EU Framework approaching to 98 percent. Share of imports (%) social security contributions are consid- The Global Competitiveness Report 2013 Program, and 7 companies received ered excessively high for ICT companies, ranks Estonia in 32nd place and points out 15.000 financing for R&D activities. A total of 52 Despite the fact that the number of com- Finland 14.90 which have started to negatively impact the country’s excellent educational system, 14.500 percent of the funding went to research panies has been increasing, the number Germany 10.58 competitiveness. highly developed goods, and the financial centres and universities. The main areas of employees in ICT sector had signifi- Sweden 10.12 14.000 Latvia 9.52 market. On the public sector side, the pos- of funded activities were education, future cant growth in 2010 when it increased by 13.500 Lithuania 8.94 itive note is Estonia’s strong commitment and emerging technologies, and trust- 2,000. A#er that, it decreased by 498 in Poland 7.94 6.2 to advancing technological readiness and 13.000 worthy ICT. Areas with low participation 2012. In 2013 it increased, again, by 771 Russia 5.77 macroeconomic stability sustained by well were photonics and organic and large area and the size of ICT sector surpassed the United Kingdom 4.18 CHARACTERISTICS managed public finances. Compared to the 12.500 electronics. 2,000 employee mark. The number of China 3.36 2010 2011 2012 AND ATTITUDES OF rest of the EU, Estonia has a more flexible 12.000 2013 ICT companies grew, while the number Netherlands 3.29 THE INTERVIEWED and e$cient labour market71. Starting a As a result of high Internet penetration, of employees remained the same. Taking COMPANIES business takes only 6.5 days, while the there are many online financial services. account of the fact that the ICT sector OECD average is 11 days. New enterprises A total of 94 percent of taxes are filed share grew at a slower pace than new th 73 It was relatively di$cult to gain accep- can be registered via e-services and the to 5.1 and the ranking to 24 place . In online, 98 percent of bank transactions companies being formed, points to the fact TABLE 8 tance from the entrepreneurs for the in- current record is 18 minutes and 3 seconds. 2013, the score remained the same but are executed online, and parking fees that each new company adds actually less terviews. Interview requests were usually the ranking had declined to 22nd place74. and bus tickets can be paid by the use of value to the economy than what the pre- turned down by companies who had zero The number of start-ups measured, as the The 2012 Global Information Technology cell phones. In addition, Estonia has 100 viously newly founded companies added. ESTONIA’S MAIN EXPORT MARKETS Share of exports (%) employees and small turnover. Companies number of companies per million of in- Report classifies Estonia as a transitional percent coverage of 3G network, with 4G This could be explained due to two factors: who had achieved some kind of success habitants, shows a small increase between country in terms of digitalisation, while growing rapidly.76 1) companies have decreased their size, Sweden 16.79 were keener to participate. Only one out of 2004 and 2011, from 4,351 to 6,443, with other countries in the CEE region are clas- or 2) employees have founded their own Finland 16.13 the 30 interviewees was a woman. one exceptional year of 2008. sified as advanced although coming in at a Estonia is too small to companies and are working as subcon- Russia 11.44 lower level in the network readiness index. produce out of the box products. tractors for larger ones and owners of new Latvia 10.37 In the future, the only barrier Based on studies conducted by World Consequently, the company has companies have founded the companies to Lithuania 5.84 will be my old age.” Economic Forum in 2009/2010, Estonia The Digital Agenda for Europe applies a to produce a lot of tailor-made manage their own personal finances Germany 4.56 was ranked at 25th place with a score of 4.8 couple of categories to measure digital- so#ware and this prevents Norway 3.65 The activities of the micro companies in the network readiness index. This score isation. The summary of these categories growth.” 6.4.1 Markets and Growth Plans United States 2.92 participating in the survey were quite ver- remained the same in the following year, points out the following: 75 2.40 Denmark 2.31 satile and ranged from digital media pro- although, the ranking had, then, declined During the interviews companies’ per- According to the Economic Freedom duction to so#ware developing. Certain of to 26th place72. By 2012, the score had risen 1) Broadband in 2013 – The take-up ceived Estonian market as a good starting Index, Estonia is ranked on 11th place in the
26 ICT SME REPORT ICT SME REPORT 27 ESTONIA AND TALLINN ESTONIA AND TALLINN
Estonia’s international trade is undertaken According to data reported by Eurostat, companies o#en saw their chances in innovation follower, who is slightly below goals: 1) Information and communication 6.6.2 Non-Financial Support between international parent companies the main reason why SMEs in Estonia, direct contacts that could be established EU average. However, on average, Estonia technology horizontally across sectors, and their Estonian subsidiary. who are looking for personnel with ICT in fairs. has the fastest growth in this category. 2) health technologies and services, and Mentoring programs organized by the skills, considers it hard to recruit these Estonia’s main strengths are within finan- 3) e$cient use of resources. In order to EAS are o"ered to entrepreneurs who Most significant barrier has skills is that there is a lack of candidates Most common types of networking were cial and corporate investment categories. achieve these goals, a focus has been have been active 1-3 years and who have been finding qualified labour. The with ICT skills. The second reason is mentoring programs, accelerators and Additional strengths are in intellectual placed on developing networks, creating specific business goals in terms of what second issue is product-market that the salary requests are too high. incubators. In addition, one company had assets. Estonia’s weaknesses are within the market demand for innovative products, they want to achieve. Findings from the match and finding that match. Hence, there is a problem for the Estonian created its own support network for foreign areas of research systems and the econom- supporting startup companies on how to interviews indicated that younger entre- These are everlasting problems.” economy in that there are not enough ICT entrepreneurs in Estonia. ic efects of innovation.81 find new sectors and niches. The main preneurs considered these to be somewhat specialists. It is predicted that by 2020, implementing agencies are: 1) Estonian valuable for but not crucial to their busi- Due to multiple language skills, Estonia is Estonia will need 4,500 experts within Development Fund – long term policy ness. Privately founded business accelera- in a favourable position, where Russian can this field79. The lack of these specialists 6.5 6.6 and economic analysis, 2) KredEx– o"ers tor programs were not referred to the same be used to conduct business in the East and is a severe limitation to the development di"erent financial instruments (loans, degree, however, the interviewees spoke English can be used to do business in the and growth of ICT companies. INNOVATION PUBLIC POLICY AND credit insurance, state guaranties, and 3) highly of them dwue to the strong focus on West. Both languages are quite widespread SUPPORT Enterprise Estonia (EAS) – implementation business development of such programs. in the Estonian population. Also, the good The second identified issue related to The Global Innovation Index in 2013 of innovation and entrepreneurial policy, On some occasions it was mentioned that knowledge of the Finnish language is a skills, according to the interviews, is the ranked Estonia at 25th place with a score The tax for corporate entities in Estonia consulting, training and grants. Full infor- founders of accelerators invested into reason why Estonia has very good trade lack of business development skills. This of 50.6, which is a decline from 2012 is 21 percent, although enterprises do not mation on starting a company and apply- companies.. relationships towards the North. problem is currently primarily solved when it ranked at19th place and had a have to pay income tax on funds rein- ing for di"erent support measures can be by including experienced people on the score of 55.3. The highest scores were in vested into the company. The enterprise found in point of single contact eesti.ee. 6.6.3 General Awareness of According to the interviewees, growth boards of the companies, either as inves- areas regarding creative outputs, which income tax is only applicable to dividends. Available Support plans are o#en oriented towards markets tors of mentors. consisted of trademark registrations, Several interviewees pointed out that the 6.6.1 Financial Support where companies already have a presence. business model creation, creative goods social security contributions are too high; Overall, the awareness was quite high in Companies with developed and existing Largest barrier was, and still &services, and online creativity. Other the tax burden percentage of labour cost Financial support measures in Estonia regards to financial support measures. products are more inclined to enter new is the lack of business development strong aspects included the infrastructure is around 40 percent. Considering the fact are divided in two groups: Grants and Companies knew about di"erent agencies markets, their one major obstacle being skills and being Green and too where Estonia was ranked at 11th place. that wages in the ICT sector are higher Financial instruments. The interviewed providing grants and about the related pro- sales channels. Companies o"ering devel- focused on so#ware development.” These areas consist of ICT use, e-participa- than average, this becomes a significant ICT companies preferred grants and only a cedures. The most commonly mentioned opment on an hourly or consultancy basis tion, general infrastructure and ecological burden according to some of the inter- few had considered financial instruments. support was the EAS grants, but since the experience more di$culties as they need The third identified issue is related to sustainability. Estonia was lagging behind viewed companies. Some companies have The most widely used measures were EAS is a relatively well-known state insti- an actual manpower increase to sell their marketing and international sales skills. in market sophistication where it came even mentioned that labour related costs start-up grants and development grants. tution, this is not surprising. Awareness services in other countries. There are not a lot of sales people available in at 42Unitednd place. Kingdom The components of this can make up for 90 percent of a company’s Startup grants were necessary in order of non-financial support was significantly who have experience with international area are access to credit, investment and expenses. to create the company, while develop- lower. The support that was most o#en Start-up companies have had a more out- sales. The available sales personnel usually trade, and competition. Another area in ment grants were especially helpful when mentioned was mentoring and certain spoken plan in terms of heading into the either do not have knowledge about the which Estonia was lagging behind was Public procurement developing a product taking a long time to training programs, but, overall, this was international market. Mature companies technology or they do not have knowledge in knowledge and technology outputs procedures should be changed so develop. not considered to be very important. have, in some cases, the same objective, about the target markets. This issue is where Estonia was ranked at 40th place. that they take account of quality, but international expansion is more o#en usually solved by cooperation with foreign This area consists of knowledge creation, not only cheapest price.” A couple of the interviewed companies 6.6.4 Requested Policies and a natural result of their growth. At some companies, in-house training, mentoring knowledge impact, and the most seriously mentioned that they had researched finan- Support from the Interviewees point in these mature companies’ devel- or the CEO taking over this role in the impacted score, knowledge di"usion. In The current system is going through a cial instrument opportunities but had not opment, they consider their home market company. other respects, Estonia was close to the reorganizing phase and some support mea- used them as these were considered to be The policy suggestions from interviews to be too small and, desiring larger profits, final ranking of 25. Overall, Estonia was sures are being discontinued while new more suitable for industrial enterprises. were primarily related to 1) grants, 2) tax, they seek clients outside Estonia. In some 6.4.3 Use of Networks the most innovative country in the Central ones are being created. The Estonian entre- and 3) mentoring. rare cases, companies were referenced by and Eastern European region; however, it preneurship strategy 2014-2020 has three their clients, resulting in internationalisa- From the interviews, it has been noted was behind the Scandinavian countries in tion taking place more or less by accident. that the awareness of formal and informal these areas.80 TABLE 9 There were also some rare cases in which networks seems to be quite low. For exam- the interviewed companies were created ple, during the interviews, the interviewer The Innovation Union Scoreboard 2013 GRANTS THAT WERE MENTIONED IN INTERVIEWS to undertake a one-time-project for an o#en had to explain the meaning of the undertaken at the request of the European international client and, as a result of good term “network” and give practical exam- Commission classifies Estonia as an performance, the owners deemed the op- ples. Among the companies who were Provider: EAS EAS ESTONIAN UNEMPLOYMENT INSURANCE FUND erations to comprise a viable business and aware of networks, they preferred informal FIGURE 14 Name: Start-up grant Development grant Business start-up subsidy decided to further develop the company. networks that were based on personal con- tacts. Formal networking institutions were Phase: Founding the company Already established company Before founding a company NEW PATENTS somewhat less valued and more suitable 6.4.2 Securing of Skills and per million inhabitants Limit: 5 000 € 32 000 € 4 474 € Knowledge for the time when company had grown over certain size. Preference of informal 250 The expected result The expected result of The subsidy is granted in order to develop an of the program is the program is launching economic activity with the purpose to obtain a The Economic Freedom index ranks and personal networks can be explained 200 Estonia at the 111th position in 201478. by the small size of the country where it achieving the goals of the sales of the started sufficient income. According to OECD’s Indicators of is possible to get a hold on somebody by 150 Goal: created companies in companies on the export a manner described in markets and achieving the Employment Protection, Estonia has just one or two phone calls. This actually 100 the business plan. results in a manner described a score of 2.07 out of 6 in terms of the compensates o$cial participation. The in the business plan. protection of permanent workers against preference of personal networking can be 50 individual and collective dismissals, observed in the case of trade fairs, which 0 2008 2009 2010 2011 2012 while the OECD average was 2.29. were highly regarded among interviewees. Instead of being a part in formal delegation
28 ICT SME REPORT ICT SME REPORT 29 ESTONIA AND TALLINN
Grant related measures included making available. As a result, they had to focus on the system more transparent and less internal training programs to turn those bureaucratic. The main complaint towards general IT personnel into specialists in the EAS was that since the application to specific fields. Due to the small size of receive any kind of grant from the EAS is the country, this issue will probably not too lengthy, it is hardly worth the e"ort to be solved by the educational system, due apply as the time spent had a higher value to very high costs of creating specific than the actual grant. educational programs. 7 Tax related suggestions referred to tax Trust exemptions on social security contri- Companies trying to become international butions for micro companies in order to had encountered a serous barrier of trust make it easier to start a company. Another as they were perceived as having inferior suggestion was to provide sector specific skills or being untrustworthy because of remissions. their base location.
The third type of suggestion was related to “The most significant barrier, mentoring and advisory services. Several so far, has been convincing companies said that it would be of interest multinational clients that Estonian European Initiatives to to have international mentoring programs. competencies are as good as The suggestions included creating more British competencies.” specific chambers of information, either Support Digitalisation based on specific activities, such as a legal O!cial networks are undervalued counsel, or based on target markets, such Most companies were not part of the as exporters targeting the UK. o$cial networks. Some said that the and SMEs o$cial networking institutions like the association of Estonian ICT companies was 6.7 suitable for medium and large companies. Despite lack of o$cial networks most PERCEIVED OBSTACLES interviewees mentioned consultations FOR ICT SMES AND with friends whom they knew to have POTENTIAL MICRO entrepreneurial experience of working MULTINATIONALS in same business area, so the value of informal networking was much higher. Lack of qualified labour This problem has been mentioned in several interviews, as well as in Within the European Union several main obstacles for Europe to harness the In brief the seven pillars cover among many studies and newspaper articles. initiatives have been taken to support full potential of digitalisation: other things: Essentially, companies want to expand but digitalisation and pave the way for new there are not enough specialists available. and growing SMEs. Among these initia- 1) Fragmented digital markets 1) Digital single market – boosting the There have been many solutions proposed tives are the Digital Agenda, The Small 2) Lack of interoperability content download business, open up public to deal with this problem, starting from Business Act for Europe, Enterprise 3) Rising cybercrime and risk of low trust data resources for re-use, establishing a improving to educational system, to Europe Network and Erasmus for Young in networks single area for online payments and fur- making IT education vocational or easing Entrepreneurs. Entrepreneurship, inno- 4) Lack of investment in networks ther protect EU consumers in cyberspace up on the immigration of specialists. vation and new technologies are at the 5) Insu$cient research and innovation core of the Europe 2020 growth strategy e"orts 2) Interoperability and standards – Insu!cient sales and business and an essential part of many of the 6) Lack of digital literacy and skills improved standard-se!ing procedures, development skills seven flagship initiatives. Successful 7) Missed opportunities in addressing legislation on ICT- interoperability and Several companies mentioned in the ICT SMEs can also contribute to meet societal challenges83 the European Interoperability Framework interviews that when they started they the challenges identified by providing implemented by member states did not consult with anyone, although, for example solutions enabling a more The Agenda was updated in December at the same time, many said that they resource e"cient Europe or opportuni- 2012. The full implantation of the Digital 3) Trust and security – a coordinated need someone with sales and business ties for jobs and social inclusion. Agenda is estimated to increase the European response to cyber-a!acks development skills in order for the European GDP with 5 percent or 1,500 and reinforced rules on personal data company to grow. To deal with such issues, Euros per person, over the next eight years protection especially within the area of business creating 3.8 million new jobs in the long development, mentoring programs were 7.1 term. 4) Fast and ultra-fast Internet access started, but unfortunately amongst – funding of high speed broadband, the people interviewed, only a few had THE DIGITAL AGENDA In all the Digital Agenda contains 101 national broadband plans in member states participated in these activities. FOR EUROPE actions organised in seven pillars. Progress and safeguarding the open Internet for is measured towards 13 specific goals and consumers Niche education is lacking The Digital Agenda for Europe is one reported annually in the Digital Agenda Many companies requested more specific of the seven flagship initiatives of the Scoreboard where achievements can be 5) Research and innovation – a new skillsets from the labour market, while Europe 2020 strategy82. The strategy was followed per member state84. generation of web-based applications and only very general IT specialists were launched in 2010 and identified seven services, web entrepreneurs action plan,
30 ICT SME REPORT ICT SME REPORT 31 EUROPEAN INITIATIVES
a more business friendly environment for and entrepreneurship is rewarded Enterprise Europe Network brings together start-ups and doubling the annual public 2) Ensure that honest entrepreneurs who 600 organisations in more than 50 coun- spending on ICT research and develop- have faced bankruptcy quickly get a sec- tries94 to o"er advice, access to finance and ment by member states ond chance research funding, and help with network- 3) Design rules according to the “Think ing and matchmaking between potential 6) Enhancing digital literacy, skills and Small First” principle business partners in new markets95. inclusion – digital literacy policies in 4) Make public administrations respon- member states, grand coalition for digital sive to SMEs’ needs Erasmus for Young Entrepreneurs is a part jobs and skills and prioritising digital lit- 5) Adapt public policy tools to SME needs: of the Youth on the Move flagship initia- 96 8 eracy and skills in the 'New skills for jobs' facilitate SMEs’ participation in public tive . The programme aims to give young flagship procurement and be!er use State Aid pos- entrepreneurs the chance to learn from sibilities for SMEs more experienced entrepreneurs in other 7) ICT-enabled benefits for EU society 6) Facilitate SMEs’ access to finance and countries. The exchange is meant to be –seamless cross-border e-government develop a legal and business environment beneficial for both parties where the young services, Points of Single Contact should supportive to timely payments in commer- entrepreneur acquires the skill to run a function as fully fledged e-government cial transactions small business and the host will get fresh centres and measures to support cultural 7) Help SMEs to benefit more from the perspectives and the opportunity to learn and creative industries85. opportunities o"ered by the Single Market about a foreign market97. 8) Promote the upgrading of skills in Observations SMEs and all forms of innovationvv 7.2 9) Enable SMEs to turn environmental 7.5 challenges into opportunities THE INNOVATION UNION 10) Encourage and support SMEs to bene- INFORMATION AND fit from the growth of markets90 E#SERVICES Another of the seven flagship initiatives is the Innovation Union. The initiative aims When the Small Business Act was The European Union has worked purpose- to make Europe into a world-class science reviewed in 2011 emphasis was put on fully to collect and disseminate infor- performer, remove obstacles to innovation actions in the areas of smart regulation, mation regarding regulations, business and revolutionise the way public and pri- SMEs’ financing needs, enhancing market support and entrepreneurship to promote vate sectors work together86. To reach the access for SMEs, helping SMEs to contrib- growth and the creation of new companies, goals set out the initiative comprise 34 dif- ute to a resource-e$cient economy, and as well as to promote the free movement ferent action points covering for example promoting entrepreneurship, job creation within the Union. Information is available education and skills development, mobility and inclusive growth91. Similar actions are both at a EU level through the European and cross-border cooperation, initiatives also a part of the Entrepreneurship 2020 Small Business Portal98 and Your Europe99 to ensure simple access and stronger Action Plan built on three pillars: where it is also possible to find comprehen- involvement of SMEs in research and sive information about the more important innovation programmes, and initiatives to 1) Entrepreneurial education and training regulations and support systems in each international comparisons as regards both enhance access to finance for innovative 2) Creation of an environment where entre- member state. 8.1 8.2 to enrolment, the quality of the education companies87. preneurs can flourish and grow, for exam- and the results achieved by the students. ple, through be!er access to finance, easier On a member state level, each country INTRODUCTION KEY OBSERVATIONS It is therefore important to focus available business transfers and unleashing new has a point of single contact where it is resources to improve both secondary and 7.3 business opportunities in the digital age possible to access e- services and find the The four countries in scope for this study 8.2.1 Sweden tertiary education. 3) Developing role models and reaching information necessary to start and run a are geographically close to one another THE SMALL BUSINESS ACT out to specific groups such as women, business100. and the four di"erent country reports that There is a broad consensus in Swedish pol- 8.2.2 Denmark FOR EUROPE seniors, migrants, the unemployed, young have been presented above show that there itics regarding the comprehensive welfare people92 Through the pilot project Simple are many common aspects of the SME ICT state. A consequence of this is a higher The interviewees in the Danish ICT sample The Small Business Act for Europe Procedures Online for Cross- Border environment between the countries. The than average tax pressure. Because of this, were using their networks to a large extent from 2008 pre-dates the Europe 2020 One example of a contribution to the Services (SPOCS), the EU, together with need for specialised competences is one we are not suggesting any major changes to build and manage their customer base, strategy and was developed under the Entrepreneurship 2020 Action Plan is the member states, worked between 2009 such area which many of the interviewed in taxation. but also in order to receive useful business Lisbon Growth and Jobs strategy. It has Startup Europe, focusing on strengthening and 2012 to build the next generation of entrepreneurs in all of the countires have support and advice. Networks are therefore since been enhanced and supplemented the business environment for web and ICT the points of single contact. The project re- seen as important to future growth. Another challenge for Sweden is the high deemed as an important aspect in order to through a review process and with the entrepreneurs93. sulted in a number of building blocks that cost and extensive regulation of labour. grow their businesses. Entrepreneurship 2020 Action Plan taking can be used to o"er cross border e-services However, there are also many ways in Labour regulation is a coin of two sides. into account more recent developments through the points of single contact101. The which these countries di"er, both in terms It can appear burdensome for the com- Concerning the obstacles to growth, and the Europe 2020 strategy88,89. 7.4 result of SPOC is now being further devel- of general business culture and in terms of panies but it also provides security for financing was brought forward as the ma- oped within the e-SENS large scale pilot102. more tangible aspects, such as, the manner the employees. There are room for reform jor barrier to growth, especially since the The Small Business Act for Europe list NETWORKS in which the labour market policies and within the Swedish model of collective new requirements from the post-financial ten principles to guide the conception and AND EXCHANGE taxation laws are formulated. There are bargaining but it would be irresponsible to crisis when it comes to bank loans. implementation of policies both at EU and PROGRAMMES also a number of local initiatives in these take part in a race to the bo!om regarding member state level in order to create a level countries that are already in place to labour right. Instead Sweden ought to press Danish immigration policies were also playing field for SMEs and improve the There are two key network and exchange promote the empowerment and growth of for international agreements raising the highlighted as a barrier to growth, making business environment throughout Europe: programmes available to SMEs and SME companies. level of worker protection. it more di$cult for Danish firms to use entrepreneurs. They are the Enterprise these means to overcome the lack of local 1) Create an environment in which entre- Europe Network and Erasmus for Young The third challenge is within the educa- competencies with the help of foreign preneurs and family businesses can thrive Entrepreneurs. tional system. Sweden fares badly in many labour. The relatively high income tax
32 ICT SME REPORT ICT SME REPORT 33 OBSERVATIONS rate further builds on this problem since 8.2.4 Estonia it increases the motivation, according to some of the interviewees, for some compa- Many entrepreneurs said that the pressure nies to establish themselves abroad. They of taxes is high for start-up SMEs, but perceive Denmark to be disadvantageous because the policy goal in Estonia is to in terms of serving as a base when running keep the tax system as simple as possible; an international ICT company. there are no suggestions for major changes in the system. 9 8.2.3 Finland The first suggestion is to build cross-border First of all, Finland should review its coaching and networking in order to gain taxation, labour and funding policies in trust and establish contacts more e$cient- order to boost new growth in SME ICT ly. This type of coaching should lead to companies. door-opening activities so the SMEs can leverage from the existing networks. Secondly, it should be made easy for com- panies to find (or train) skilled workforce, Secondly, any measure adding skilled ICT especially in international sales and workers to the market is most welcomed. marketing and so#ware development. This However, this requires long- term strate- Cross Border could be facilitated through pan- Baltic gies and does not result in quick wins. education programs where di"erent na- tionalities would learn key competencies Concrete suggestions that could generate Recommendations and also build cross-country networks in quick wins would be measures helping their field of work. SMEs to gain skills in areas of interna- tional business development, sales, and Lastly, venture capital and ‘smart money’ marketing. These measures can be either investment activities should be made investment support for the learning or more e"ective and transparent. Baltic hiring programs. countries could have an e"ective asym- metric funding program/vehicles that A third suggestion for measures is invest- would have more resources than current ment support for niche education abroad. national funding schemes and which could This can help SMEs to secure necessary a!ract interest from the wider public i.e. skillsets much quicker, supports growth international venture capitalists. Boosting and can help them to be more successful in cross-border investments within the Baltic Baltic Sea Region. area and a!racting international venture capital to the Baltic area could have a However, the fact that they are technically skills, as well as secure personnel pos- significant positive impact on the develop- 9 easy to implement does not necessarily sessing a broad range of knowledge (e.g. ment of individual companies and on the mean that they are politically easy to bring technology knowledge, as well as business area in general. CROSS BORDER to fruition. knowledge). We have also found that there RECOMMENDATIONS is a demand for be!er networks between It should also, however, be noted that a peer, as well as between large companies. The similarities and di"erences mentioned central cross border finding is that a num- In order to meet these needs and barriers, above under section 8 are, of course, ber of the interviewed SMEs, regardless we recommend the implementation of making it challenging to formulate cross of sub-region, do not, at present, have the a niche education forum/academy, e.g. border recommendations applicable to all intention or wish to grow or expand their “Baltic Information Society Business Baltic Sea Region states. Our objective, businesses. This is an important finding Academy”. when formulating these recommendations, since public policies in these cases may not has been to address as many issues as have the desired e"ect on the sector as a In our oppinion the academy should possible as regards the common challenges whole. organize educational activities for SMEs faced by these entrepreneurs in all four in the Baltic Sea region in cooperation countries. These recommendations are the results with universities and private companies. of a common e"ort by the four local PwC This could, for example, include educa- Our ambition with these recommendations teams editing the country reports. tional programs with courses organized is to inspire reforms that can improve the in varying countries to which the SMEs business environment and help SMEs in can send their employees in order for the Baltic Sea Region to become micro 9.1 them to gain specific technology skills and multinationals. Our proposals do not business training, learn about the cultural provide a detailed road-map for each “BALTIC SEA REGION di"erences, and network with SMEs in the reform, but rather, recommendations and INFORMATION SOCIETY other countries. Even though we believe ideas that may require further studies and BUSINESS ACADEMY” it is important to include universities preparations. Some of these proposals may in this cooperation the training o"ered be technically easier to implement than During the study, we have noted that sev- through the academy should not be limited others, since a functional framework upon eral of the interviewed SMEs consider it to academic course. There is also a need which they can be built already exists. to be di$cult to secure highly specialized for specialized vocational training. Other
34 ICT SME REPORT ICT SME REPORT 35 CROSS BORDER RECOMMENDATIONS CROSS BORDER RECOMMENDATIONS
o"ered activities should, for example, For many SMEs looking to hire special- far as we can see from the interviews, not investors” to sponsor the program by We further recommend that civil servants include virtual guest lectures from expe- ists, these requirements can be too high. 9.4 well known among the startups and micro leveraging the crowd’s contribution with a working with SMEs receive training in rienced entrepreneurs or the possibility to A skilled hacker can be more valuable companies. corresponding amount. understanding the entrepreneur’s envi- participate in courses sponsored by other than a person with an academic degree. PEER TO PEER COACHING ronment and the challenges of running companies. Furthermore, a SME might not be able to We recommend that a cross border busi- We regard this as an initiative where a small multinational business. This will pay the minimum wage required for an It has been noted during the study that ness check be introduced for the SMEs the private sector needs to take responsi- improve the civil servants ability to guide One of the reasons behind this recommen- EU Blue Card or to promise employment there seem to be a demand for support seeking to implement or grow their activ- bility for the implementation of the policy the entrepreneurs through the bureaucrat- dation is that it is more cost e$cient to or- for at least a year. Lowering the require- that can facilitate SMEs’ entry into new ities in other Baltic Sea Region countries. recommendation. Initially public funding ic burden. ganise this kind of exchange and training ments to a minimum, for example, of a international markets and help them to Even though this should be a cross border may be necessary to act as a catalyst to on a multinational level. The academy will valid work contract or binding job o"er find new business opportunities. We have initiative, this should be administrated by get the crowd funding platform started. increase the possibility for SMEs to further matching the person’s qualifications to a also found that the kind of networks that local publicly funded organisations that An important contribution where public 9.8 educate their employees according to their salary equivalent to at least an acceptable are most appropriate for SMEs are those have the possibility and competence to resources would be of help, even in the specific needs and, hence, reduce the prob- living standard in the member state, would where they can discuss actual challenges procure professional services. This can longer term, is to market the platform TAX REDUCTION FOR lems related to finding and recruiting these increase the possibilities for SMEs to find and lessons learned with peers in similar preferably be set up as a consumer-choice internationally, for example through the BUSINESS SUPPORT types of skills and knowledge. It could also the required competencies, as well as ex- situations. system, meaning that the user is free to business a!aché network. SERVICES potentially facilitate cross-border network- panding their networks in other markets. choose a service provider among those ing between SMEs and, as a result, also With this in mind, we recommend the im- procured by the public organisation. The One commonly noted problem among the open up new international markets and plementation of a cross border peer-to-peer procurement in itself could be made on a 9.7 interviewed SMEs is that although they of- cooperation opportunities for the SMEs. In 9.3 coaching network between SMEs in the Baltic Sea Region level. ten possess the necessary knowledge about addition, the possibility for SMEs to o"er Baltic Sea Region. The “Enterprise Europe IMPROVED PUBLIC their specific technologies or provided “in-house” training for their employees BRING AN SME ABROAD Network” has a database with potential There are certain national and regional SERVICES FOR SMES services, they o#en find it complicated to could potentially increase the a!ractive- business partners and a list of events programs o"ering business advice and/ handle other areas of their business, such ness of SMEs as employers. One of the ways that some of the inter- where networking can take place. The or access to publicly procured professional With the implementation of the Service as accounting, legal issues, and marketing. viewees in this study have been able to purpose of the network that we propose services, o#en through di"erent variations Directive103 all EU member states now have There is plenty of professional expertise become micro multinational is to work in goes even further than this. It is intended of “Business checks”. These types of pro- what is called a “point of single contact”. available on the market for hire within 9.2 close relation with larger corporations, ei- to create a channel for SMEs to learn about grams can serve as a model for developing Through this point, companies can obtain these areas, however, since these are ther as a sub-contractor or as a supplier of regional di"erences from SMEs in the cross border business checks o"ering start- all relevant information and deal with usually expensive, many of the SMEs are LOWER REQUIREMENTS products and services implemented by the other countries. As a result, the SMEs will ups and micro companies. all administrative formalities regarding currently not able to use these services. FOR EUROPEAN BLUE larger corporation in its global activity. The be able to help each other learn about the the establishment of a business and cross CARD benefits for the SME are many, but primar- business culture on the di"erent markets, border provision of services. Despite this, We recommend the implementation of a ily this gives them access to new markets establish customer and partner connec- 9.6 one of the most frequent requests from the tax reduction for business support services Several of the interviewees have men- and knowledge about how to do business tions on new markets, and also enable and interviewees is be!er and more accessible in order to meet the needs described above. tioned that they have di$culties in finding in these markets. Working with larger facilitate the possibility of cross border BALTIC SEA REGION information and e-services. Our conclu- Such a recommendation is inspired by the right competence on the labour market. international corporations will also give business initiatives. CROWD FUNDING sion is that the interviewees’ knowledge the tax reduction possibilities currently Some have also pointed out the problems well needed references in new markets PLATFORM regarding each national point of single available in, for example, Finland and in hiring specialists from, for example, when seeking other customers and skilled Models for this can also be found in the contact is low. Sweden where people contracting services Russia or India due to current immigration workers for the market in question. “Nordic - Baltic mobility programme Several of the interviewed SMEs considers within the areas of repairs, extensions and regulations. They have also mentioned the for public administration” and “Nordic it to be di$cult to get seed financing and In addition, SMEs that have been in conversions to homes, or cleaning, main- need for ways to extend their understand- We recommend a mentor program – Russian cooperation programme in financing for the development or reali- contact with public agencies experience tenance and laundry work can receive a ing of and connections with other markets. initiative that can incentivise larger education and research”. To initiate a zation of new products or ideas. It is, for that these agencies have a low degree of tax reduction equivalent to a certain per- corporations to “Bring an SME abroad” programme like this, a certain amount of example, stated that the currently avail- understanding of entrepreneur’s situation centage of the labour costs, up to a certain The European Union today has a common more systematically. This can for exam- public funding and organisational support able options are either based on terms and and need. Structures and procedures are amount. work permit regiment called “EU Blue ple be modelled a#er, or built upon, the would be necessary. conditions that are considered to be too de- perceived as bureaucratic and di$cult to Card” for highly skilled workers. The “Enterprise Europe Network”. One can manding or that they are too complicated approach. In a similar manner, we suggest that requirements for obtaining an EU Blue liken this concept to the remora fish that to warrant applying for them. the SMEs should be able to receive a tax Card are: accompanies larger water living animals 9.5 We recommend an e"ort be made to raise reduction up to a certain amount for the around the oceans. The benefits for the We recommend, in order to facilitate these the level of knowledge about the infor- cost of specific types of business support Valid travel documents larger corporations are primarily CSR CROSS BORDER BUSINESS types of financing for SMEs, the organisa- mation and services already available services, such as tax and legal advice, related (“Corporate Social Responsibility”), CHECKS tion of a Baltic Sea Region crowd funding through the point of single contact. One accounting services, translation services, A degree from an institution of higher but there are also long term business platform. Such a platform allows SMEs to way of doing this is to provide information light IT-consulting (e.g. web development), education involving at least three years advantages since the objective with such Many startups and micro companies campaign for their ideas and, as a result, regarding the point of single contact on the marketing and business development ser- of study post- secondary education or at an initiative also is to strengthen the home express the need for certain types of pro- receive contributions of di"erent sizes tax agencies’ web pages. The tax agency vices within the new cultural context, and least five years of relevant professional market and develop valuable know-how fessional services that they, for di"erent from anyone who would like to support the is the government agency with which other services needed for SMEs to expand experience and skills. For the larger corporations, reasons, require to expand their business- project or venture. The contribution could, all SMEs have reoccurring contact. It is their businesses to new markets. the costs associated with such initiatives es to new markets. Typically, these are for example, comprise funds provided also important to develop comprehensive A valid work contract or binding job o"er could, to a certain extent, be tax-deduct- general business development services as voluntary donations. It could also be channel strategies focusing on the relevant As a result, business support services for highly qualified employment for at least ible or shared through public financial such marketing and sales development or implemented as an investment where the target groups, taking into consideration the would be more a"ordable for the SMEs one year support. advice on legal and the regulatory envi- crowd is able to buy shares in the compa- fact that many SMEs do not even know and hence a larger number of SMEs would ronment of the new markets. To procure ny. We suggest a Baltic Sea Region crowd that the point of single contact exists. In be able to make use of the professional A salary equivalent or higher than 1.5 services on new and unknown markets funding platform commi!ed to SMEs in addition the SPOCS-project104 must lead services available on the market. In ad- times the average gross annual salary in can be di$cult for individual startups and the Baltic Sea Region, aiming to operate to useable results in order to serve its dition, one possibility to further enhance the member state micro companies and there is not much at a multinational level as a compliment purpose. the benefits for SMEs could be that the tax public support o"ered for these companies to similar existing platforms. This could reduction could be restricted to apply only Evidence of having, or having applied for, wanting to expand into new markets and be further developed with the possibility to services purchased from other SMEs. sickness insurance the support that is publicly available is, as for large companies and “smart money
36 ICT SME REPORT ICT SME REPORT 37 References
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enterprise/policies/sme/ en.html Street Journal www.heritage.org/ Utrikeshandel/Utrikeshandel- files/Denmark%20country%20pro- scoreboard/finland Technology Report 2012 h"p:// entrepreneurship-2020/ 126 Berit Westholm: index/, and Economic Freedom of med-varor/7223/7230/26637/ file.pdf www3.weforum.org/docs/Global_ index_en.htm 107 h"p://stats.oecd.org/ Företagsdatabasen (FDB) the World 2013, Fraser Institute 56 Index of Economic Freedom IT_Report_2012.pdf Beskrivning av statistiken 2011 www.freetheworld.com 22 Innovation Union Scoreboard 39 h"p://epp.eurostat.ec.eu- 2014, The Heritage Foundation and 90 Communication from the 108 h"p://www.oecd.org/ctp/ NV0101, Statistiska centralbyrån, 2013 h"p://ec.europa.eu/enter- ropa.eu/portal/page/portal/ Wall Street Journal h"p://www. 74 The Global Information Commission to the Council, tax-policy/tax-database.htm Avdelningen för ekonomisk statistik 6 Doing Business Index www. prise/policies/innovation/files/ european_business/data/database heritage.org/index/ Technology Report 2013 h"p:// the European Parliament, the doingbusiness.org 109 h"p://epp.eurostat.ec.eu- 127 h"p://www.balanceconsulting. ius-2013_en.pdf www3.weforum.org/docs/WEF_ European Economic and Social ropa.eu/portal/page/portal/ 40 h"p://epp.eurostat.ec.eu- 57 OECD Indicators of GITR_Report_2013.pdf Commi"ee and the Commi"ee of fi/ 7 OECD Indicators of Product 23 OECD Tax Database h"p:// ropa.eu/portal/page/portal/ Employment Protection h"p:// information_society/introduction Market Regulation www.oecd.org/ the Regions: “Think Small First” - A 128 Presentation of Data www.oecd.org/tax/tax-policy/ european_business/data/database www.oecd.org/employment/emp/ 75 Digital Agenda for Europe “Small Business Act” for Europe 110 h"p://epp.eurostat.ec.eu- eco/reform/indicatorsofproduct- tax-database.htm oecdindicatorsofemploymentpro- 2013 Estonia h"ps://ec.europa.eu/ in 2014 h"p://www.stat.ee/ marketregulationhomepage.htm 41 h"p://www.wipo.int/ipstats/ COM(2008) 394 ropa.eu/portal/page/portal/ andmete-esitamine-2014 tection.htm digital-agenda/en/scoreboard/ science_technology_innovation/ 24 Taxation trends in the en/ estonia 91 Communication from the 8 Measuring the information European Union h"p://ec.europa. 58 Eurostat data introduction 129 Statistical source for the society 2013, International 42 OECD Tax Database h"p:// Commission to the European Malmö region Infotorget by eu/taxation_customs/taxation/ 76 Measuring Information Society Parliament, the Council, Economic 111 h"p://ipstatsdb.wipo.org/ Telecommunication Union gen_info/economic_analysis/ www.oecd.org/tax/tax-policy/ 59 Representing companies with 2013 h"p://www.itu.int/en/ITU- Bisnode tax-database.htm 55 percent of total Finnish exports and Social Commi"ee and the ipstatv2/ipstats/patentsSearch 9 World Economic Forum: Global tax_structures/index_en.htm D/Statistics/Documents/publi- Commi"ee of the Regions: Review 130 Statistical source for the and 80 percent of total Finnish 112 Index of Economic Freedom Information Technology Report 43 Taxation trends in the cations/mis2013/MIS2013_with- of the "Small Business Act" for Copenhagen region: PwC database 25 Taxing Wages 2014, OECD R&D-investments h"p://www. 2014, The Heritage Foundation and 2013 European Union h"p://ec.europa. out_Annex_4 .pdf Europe COM(2011) 78 of all ICT CVR registered teknologiateollisuus.fi/en/ Wall Street Journal h"p://www. 26 h"p://www.doingbusiness. eu/taxation_customs/taxation/ 77 Index of Economic Freedom 10 Measuring the informa- org/data/exploreeconomies/ gen_info/economic_analysis/ 60 Startup Foundation in English 92 Communication from the heritage.org/index/ 131 Statistical source for the tion society 2013, International 2014 h"p://www.heritage.org/ Commission to the European Helsinki region: Fonecta Enterprise sweden#paying-taxes tax_structures/index_en.htm h"p://startup-saatio.fi/ 113 Doing Business Index h"p:// Telecommunication Union index/country/estonia Parliament, the Council, the Solutions Oy www.doingbusiness.org/ 27 h"ps://www.verksamt.se/ 44 Taxation in Denmark: h"p:// 61 Innovation Union Scoreboard European Economic and Social 11 Measuring the informa- 78 Index of Economic Freedom 132 Statistical source for starta/finansiera-starten/ www.investindk.com/Establishing- 2014, h"p://ec.europa.eu/enter- Commi"ee and the Commi"ee of tion society 2013, International 2014 h"p://www.heritage.org/ 114 h"p://www.heritage.org/ the Tallinn region: Estonian hi"a-o!entlig-finansiering a-business-in-Denmark/ prise/policies/innovation/files/ the Regions: Entrepreneurship Telecommunication Union index/country/estonia index/country/sweden Commercial Register Taxation ius/ius-2014_en.pdf 62 Eurostat 2020 Action Plan – Reigniting the 29 Index of Economic Freedom data 79 h"p://www.praxis.ee/ Entrepreneurial Spirit in Europe 115 Global Competitiveness Report 12 h"ps://ec.europa.eu/dig- 2014, The Heritage Foundation and 45 Taxing Wages 2014, OECD 133 h"p://ec.europa.eu/enter- fileadmin/tarmo/Projektid/ COM(2012) 795 2013 h"p://www3.weforum. ital-agenda/en/scoreboard/ Wall Street Journal h"p://www. 63 The Global Innovation Index prise/policies/sme/facts-fig- sweden 46 h"p://appsso.eurostat.ec.euro- Innovatsiooni_poliitika/IKTtoo/ org/docs/GCR2013-14/GCR_ ures-analysis/sme-definition/ heritage.org/index/, and Economic 2013, h"p://www.globalin- 93 h"p://ec.euro- pa.eu/nui/show.do?dataset=earn_ IKT_uuringu_lyhikokkuv6te.pdf CountryHighlights_2013-2014.pdf index_en.htm Freedom of the world 2013, Fraser novationindex.org/content. pa.eu/digital-agenda/ 13 www.scb.se/sv_/Hi"a- nt_taxwedge&lang=en statistik/Statistik-e#er-amne/ Institute h"p://www.freetheworld. aspx?page=data-analysis 80 The Global Innovation Index about-startup-europe 116 h"p://www.oecd.org/econo- 134 In Sweden SEK 364.421, in Handel-med-varor-och-tjanster/ com/ 47 Index of Economic Freedom 2013 h"p://globalinnovationindex. my/growth/indicatorsofproduct- Denmark DKR 392.591, Finland 64 h"p://www.tradingeconomics. 94 h"p://een.ec.europa.eu/about/ Utrikeshandel/Utrikeshandel- 2014, The Heritage Foundation org/content.aspx?page=gii-full-re- marketregulationhomepage.htm EUR 39.887, and Estonia EUR 30 Doing Business Index h"p:// com/finland/research-and-devel- port-2013#pdfopener mission med-varor/7223/7230/26643 www.doingbusiness.org/content. and Wall Street Journal h"p:// opment-expenditure-percent-of. 117 h"p://ec.europa.eu/ 11.777, according to OECD’s www.heritage.org/index/ 48 Doing 95 h"p://een.ec.europa.eu/services StatExtracts 14 www.scb.se/sv_/Hi"a- aspx?page=gii-full-report-2013#pd- gdp-wb-data.html 81 Innovation Union Scoreboard digital-agenda/en/scoreboard fopener 75 Innovation Union Business Index h"p://www.doing- 2013 h"p://ec.europa.eu/enter- statistik/Statistik-e#er-amne/ 96 h"p://ec.europa.eu/ 118 World Economic Forum: Scoreboard 2013 ec.europa.eu/ business.org/ 65 There are closer to 30 individ- prise/policies/innovation/files/ Handel-med-varor-och-tjanster/ youthonthemove/index_en.htm Global Information Technology enterprise/policies/innovation/ ual science and business parks in ius-2013_en.pdf Utrikeshandel/Utrikeshandel- 49 Measuring the informa- Report 2013 files/ius-2013_en.pdf Finland 97 h"p://www.erasmus-entrepre- med-varor/7223/7230/26637 tion society 2013, International 82 h"p://ec.euro- neurs.eu/index.php 119 Measuring the informa- 31 h"p://epp.eurostat.ec.eu- Telecommunication Union 66 Doing Business Index h"p:// pa.eu/digital-agenda/ 15 www.heritage.org/index/ tion society 2013, International ropa.eu/portal/page/portal/ www.doingbusiness.org/ digital-agenda-europe 98 h"p://ec.europa.eu/ country/sweden 50 World Wide Web Foundation, Telecommunication Union national_accounts/data/database small-business/index_en.htm h"p://www.thewebindex.org/ 67 Tekes 2014, h"p://www.tekes.fi/ 83 Communication from the 16 OECD Indicators of 120 World Wide Web Foundation, 32 h"p://enklereregler.dk/ data/index/ en/funding/ Commission to the European 99 h"p://europa.eu/youreurope/ Employment Protection www.oecd. h"p://www.thewebindex.org/ forslag/677879/19 Parliament, the Council, the business/index_en.htm org/employment/emp/oecdindica- 51 World Economic Forum, The 68 Finnish Industry Investment Ltd data/index/ European Economic and Social torsofemploymentprotection.htm 33 h"p://enklereregler.dk/ Global Information Technology 2014, h"p://www.industryinvest- 100 h"p://ec.europa.eu/ Commi"ee and the Commi"ee of 121 The Global Innovation Index Report 2013, h"p://www3. ment.com internal_market/eu-go/ 17 appsso.eurostat.ec.europa.eu/ the Regions: A Digital Agenda for 2013 h"p://globalinnovationindex. 34 h"p://erhvervsstyrelsen.dk/ weforum.org/docs/WEF_GITR_ index_en.htm nui/show.do?dataset=isoc_ske_ administrative_le"elser Report_2013.pdf 69 According to three interviewees Europe COM(2010)245 org/content.aspx?page=gii-full-re- itspvr&lang=en and several other sources e.g. news port-2013#pdfopener 84 h"p://ec.europa.eu/ 101 h"p://www.eu-spocs-starter- media: h"p://www.hs.fi/politiikka/ kit.eu/cross-border a1380072828077 digital-agenda/about-our-goals
38 ICT SME REPORT ICT SME REPORT 39 Sources Epilogue
Statistiska centralbyrån – Avdelningen för ekon- Statistic Sweden (SCB). n.d. h!p://www.scb.se/ in public support systems are three common core PRINTED omisk statistik,2011. (Accessed 2014-05-15). WHAT’S NEXT? SOURCES challenges among the interviewed companies. Andersson, Martin and Larsson, Johan P. Local World Wide Web Foundation. 2013 Web Index Startup-säätiö. n.d. h!p://www.startup-saatio. We are in the middle of a fundamental shi#. The Even though they are in no way exclusive to clusters of Entrepreneurs – neighbourhood peer Report. World Wide Web Foundation, 2013. fi/ (Accessed 2014-05-15). combination of digitization and globalization is micro multinationals, these challenges seem par- e"ect. Lund University, CIRCLE - Center for Technologia teollisuus. Teknologiateollisuus a worldwide game-changer in many areas, and ticularly important to promote a be!er ecosystem Innovation, 2013. ELECTRONIC ry. 2014. h!p://www.teknologiateollisuus.fi/ in this report we have focused on its impact on for ICT-driven startups and SMEs. Even with Bilbao-Osorio, Beñat, Du!a, Soumitra, and SOURCES (Accessed 2014-05-15). enterprise and entrepreneurship. We set out to global communication, people need networks Lanvin, Bruno, (eds.). Global Information Balance Consulting. Kauppalehti Oy. n.d. The Global innovation Index 2013. Cornell look for a new type of ICT-fueled SMEs with a to do business, access new markets and recruit Technology Report 2013. World Economic Forum, h!p://www.balanceconsulting.fi/ (Accessed INSEAD WIPO. 2013. h!p://www.globalinno- global market and a scaling business plan - micro new talents. Almost all of the interviewees report 2013. 2013-05-15). vationindex.org/content.aspx?page=GII-Home multinationals. di$culties in finding and recruiting people with (Accessed 2014-05-15). Du!a, Soumitra and Bilbao-Osorio, Beñat, (eds.). Danmarks Statistik. n.d. h!p://www.dst.dk/da/ a mix of business and technology skills. Finally, Global Information Technology Report 2012. (Accessed 2014-05-15). Tekes. n.d. h!p://www.tekes.fi/en/ (Accessed These new businesses o#en fall outside of public support systems o#en lack knowledge World Economic Forum, 2012. 2014-05-15). Dansk industri (DI). n.d. h!p://di.dk/Pages/ traditional policy frameworks for promoting about both new technologies and new business Du!a, Soumitra and Mia, Irene. (eds.). Global Forsiden.aspx (Accessed 2014-05-15). Vækstfonden. n.d. h!p://vf.dk/ (Accessed entrepreneurship, firm growth and internation- models. For instance, they could benefit from Information Technology Report 2010-2011. World 2014-05-15). alization. Historically, a company first developed using crowd funding or crowd sourcing tools to Economic Forum, 2011. Doing Business: Measuring Business Regulations. The World Bank Group. 2014. h!p:// Verksamt.se. Bolagsverket. n.d. h!ps://www. and grew on a national market before expanding be!er aid early-stage startups. Public actors need European Commission. Communication from www.doingbusiness.org/ (Accessed 2014-05-15). verksamt.se/en/web/international/home and opening o$ces in other countries. Micro to become more tech savvy, both to understand the Commission to the European Parliament, (Accessed 2014-05-15). multinationals, on the other hand, depend on micro multinationals and to be able to help them. the Council, the European Economic and Social Enterprise Europe Network. European Commi!ee and the Commi!ee of the Regions: Commission. 2014. h!p://een.ec.europa.eu/ Virksomhedsforum Enklere Regler. n.d. h!p:// international business models from day one, they A Digital Agenda for Europe COM(2010)245, (Accessed 2014- 05-15). enklereregler.dk/ (Accessed 2014-05-15). access new customers and enter into contracts Micro multinationals have a remarkable, but European Commission, 2010. over the internet, they use data about their cus- o#en not fully realized potential to boost the Erasmus for Young Entrepreneurs. Erasmus World Intellectual Property Organization European Commission. Communication from for Young Entrepreneurs Support O$ce. 2014. (WIPO). n.d. h!p://www.wipo.int/portal/en/ tomers to improve their business, they are just as economy in several ways. And The Baltic Sea the Commission to the European Parliament, h!p://www.erasmus-entrepreneurs.eu/index. index.html (Accessed 2014-05-15). likely to deal in data as in physical products or Region has all the prerequisites to become a fore- the Council, the European Economic and php (Accessed 2014-05-15). runner, both in the EU and globally, in promoting Your Europe. European Commission. 2013. h!p// services and they move fast. Social Commi!ee and the Commi!ee of the europa.eu/youreurope/business/index_en.htm ICT-driven startups and SMEs. However, this re- Regions: Entrepreneurship 2020 Action Plan – Erhervervsstyrelsen. n.d. h!p://erhvervs- (Accessed 2014-05-15). In the wake of this ongoing shi#, old policies are quires that the region comes together to not only Reigniting the Entrepreneurial Spirit in Europe styrelsen.dk/ (Accessed 2014-05-15). increasingly in risk of inhibiting new forms of look for micro multinationals, but also to enable COM(2012)795, European Commission, 2012. e-SENSE. The Ministry of Justice of the Land North Rhine-Westphalia. n.d. h!p://www.esens. UNPUBLISHED entrepreneurship. ICT-driven SMEs have a new and accelerate them. European Commission. Communication from SOURCES toolbox of opportunities at their disposal, but the Commission to the European Parliament, eu/ (Accessed 2014-05-15) the Council, Economic and Social Commi!ee Data from the Swedish Business Register com- they are also extra sensitive to time-consuming European Central Bank. n.d. h!p://www.ecb. piled for this study. and cost-driving bureaucratic processes and pol- and the Commi!ee of the Regions: Review of the europa.eu/home/html/index.en.html (Accessed "Small Business Act" for Europe COM(2011)78, 2014- 05-15). Data from the Estonian Business Registry com- icy frameworks. Political reforms aimed at tra- Top of Digital Europe European Commission, 2011. piled for this study. ditional business models are o#en too li!le, too European Commission. n.d. h!p://ec.europa.eu/ late and sometimes even completely wrong. In European Commission. Communication from (Accessed 2014-05-15). the Commission to the Council, the European fact, we know very li!le about the actual micro Parliament, the European Economic and Social Eurostat . European Commission. 2014. h!p:// multinationals and their conditions in the Baltic Commi!ee and the Commi!ee of the Regions: epp.eurostat.ec.europa.eu/portal/page/portal/ Sea Region. Therefore, the primary ambition of “Think Small First” - A “Small Business Act” for eurostat/home/ (Accessed 2014-05-15). Europe COM(2008)394, European Commission, this report has been to provide their perspective Industry Investment. Finnish Industry 2008. on the Baltic business climate. Investment Ltd. 2012. h!p://www.industryin- Gwartney, James, Lawson, Robert, and Hall, vestment.com/ (Accessed 2014-05-15). Joshua. Economic Freedom of the World: 2013 The interviews and the research presented here InfoTorg. Bisnode Information AB. n.d. h!p:// Annual Report. Fraser Institute, 2013. provides a starting point for adapting the busi- www.infotorg.se/ (Accessed 2014-05-15). ness climate to promote new, technology-driven International Telecommunication Union. Invest in Denmark. Ministry of Foreign A"airs Measuring the information society 2013, ITU, and global business models and enterprises. of Denmark. n.d. h!p://www.investindk.com/ 2013. Miller, Terry, Kim, Anthony B., Holmes, Cross-border networks, education and recruit- (Accessed 2014-05-15). Kim R.. 2014 Index of Economic Freedom. The ment of relevant skills and technology adoption Heritage Organisation for Economic Co-operation and Development (OECD). n.d. h!p://www.oecd.org/ Foundation and Wall Street Journal, 2014. (Accessed 2014-05-15). OECD. Taxing Wages 2014. OECD Publishing, Praxis. Praxis Center for Policy Studies. 2008. 2014. h!p://www.praxis.ee/index.php?id=96&L=1 OECD. OECD Guide to Measuring the (Accessed 2014-05-15). Information Society 2011. OECD Publishing, 2011. SPOCS Starterkit. European Commission. 2013 Schwab, Klaus (ed.). Global Competitiveness h!p://www.eu-spocs-starterkit.eu/ (Accessed Report 201-2014. World Economic Forum, 2013. 2014- 05-15). Westholm, Berit. Företagsdatabasen (FDB) Statistics Estonia (ES). 2014 h!p://www.stat.ee/ Beskrivning av statistiken 2011 NV0101. en (Accessed 2014-05-15).
40 ICT SME REPORT ICT SME REPORT 41 APPENDIX A % METHODOLOGY
or dissolved. This number has then been Finnish Sources and Definitions and restructuration or when a company divided with the number of comparable temporarily stops its operations. existing companies i.e. SMEs or ICT SMEs In addition to the aforementioned sources, the Finnish country reported included in- The Fail Rate includes companies Appendix A – Methodology Danish Sources and Definitions formation from various publicly available that have been deleted from the Estonian sources. These sources were mainly the Commercial Register due to mergers or In regard to the general broad statistical websites of organizations relevant to this divisions as they cannot be allocated on data regarding the number of SME’s start- study i.e. the Ministry of Economy and data level without extensive manual work. DESKTOP STUDY The Eurostat’s Information Society Swedish Sources and Definitions ed up in Denmark and the data regarding Employment. In such cases, entrepreneurs who had METHODOLOGY Database109 has been used to identify the the largest import and export markets for been active through the deleted company reasons for di$culties in filling vacancies In addition to the above sources, the Denmark, we have applied the Statistical There were di$culties in obtaining infor- will carry on their business through one The first task in the desktop study was for ICT specialist jobs in SMEs, the ICT Swedish portion of the desktop study has Bank of Denmark’s statistics (dst.dk). All mation on statistical data. The selected (merger) or several (division) new legal to identify sources that could contribute sector’s share of GDP and Percentage of the also used publicly available statistics from registered companies in Denmark are statistical data provider was not able to entities. to answering the questions set out by the ICT personnel on total employment. In this Statistics Sweden (SCB) regarding imports obliged to disclose information to DST, and produce reliable information on Finnish Commissioner. An á priori assumption database, the ICT sector is limited to ICT and exports123 as well as information this source is generally regarded as very SMEs and ICT SMEs. This information The Fail Rate does not include non-active was made that a mix of statistical sources manufacturing and ICT services and does regarding di"erent kinds of public support reliable and contains a vast quantity of included the number of active ICT SMEs companies (companies that have failed to and comparative studies, supplemented not include the content and media sector. to start/ups and SMEs available at the data as regards Danish companies. and SME during each year between 2011- submit annual reports) as the period of the with reports regarding specific national Data regarding innovation and patents has Swedish single point of contact Verksamt. 2014 and the fail rate on the same company deletion process of such companies varies conditions, would be necessary to produce been retrieved from the Eurostat’s Science, se124. In our analysis, a company is defined as categories and years. These di$culties ex- from approximately 2 to 5 years (this as- the best results. Technology and Innovation Database110, having been started up when it is regis- tended to include challenges in receiving sessment is based on general practice and and the World Intellectual Property The data regarding ICT SMEs and SMEs tered with a CVR number (VAT), which data on fail rates. not on any o$cial statistical data) as of the On this assumption, a set of statistical Organization’s IP Statistics Data Center.111 in general has been sourced from SCB spe- defines the company as being registered due date for the submission of the annual sources and international comparative cifically for this study. The data originates in the Danish tax registry. It has not been The growth rates and employment rates report. The process of the deletion of a studies was selected as the basis for the Comparative Studies from the Swedish Business Register125. possible to extract statistics of failed SME’s of Finnish SMEs and ICT SMEs were company from the Estonian Commercial study. These sources were, then, supple- The Business Register is comprised of in Denmark. We did make a request for calculated based on the data provided Register is described below. mented for each individual country with To compare the economic freedom and the data from several di"erent sources where this data which we sent to the Statistical by a Finnish statistical data provider, national statistical sources and studies as rules and regulations pertaining to the coun- the most important contributors are the Bank of Denmark, but they were unable to Balance Consulting, a service provided The Estonian Commercial Register may described below. tries, the following sources have been used: Tax agency, the Swedish Companies provide this information. by Kauppalehti Oy127. These rates do not issue a notice to delete ta non-active com- Registration O$ce and Svensk adressän- take into account companies with revenue pany from the register a#er 6 months have Sources of Statistical Information 2014 Index of Economic Freedom112 dring AB. The data in the database are Local Danish data used in the analysis is less than 1.1mEur. The ICT sector was been passed from the due date of the sub- updated with di"erent intervals, some as mainly comprised of known institutions determined applying the same NACE Rev mission of the annual report. The Estonian To create a be!er comparability between Doing Business 2014: Understanding o#en as every week while other data only which were referred to in the interviews. 2 codes as in the rest of the study. Commercial Register will prescribe a time the di"erent countries in the study, certain Regulations for Small and Medium-Size is updated on a yearly basis126. These include Vaekstfonden and the period (which shall not be less than 6 statistical information has been recalculat- Enterprises113 Danish Business Authority which are also Estonian Sources and Definitions months) to submit the annual report. If the ed to indicate a value per capita or in terms There have been some di$culties in re- considered to be rather reliable sources. non-active company fails to submit the of a specific number of inhabitants. The Economic Freedom of the World: 2013 trieving data to obtain the fail rate for ICT Two local sources were the Estonian annual report within the prescribed time numbers used as the basis for the popula- Annual Report114 SMEs and SMEs in general. The reason for Some of the interviewees and other Commercial Register and Statistics period, the Estonian Commercial Register tion parameter in this calculation are tak- this is that a great deal of the information statistical data addressed the subject of Estonia, both used the same statistical is entitled to publish a notice in the o$cial en from Eurostat’s population statistics105. Global Competitiveness Report 201-2014115 regarding a given company is deleted when bureaucratic di$culties of starting and NACE Rev 2 codes as in study. The first publication Ametlikud Teadaanded. By it closes down. To obtain the fail rate, the running a business in Denmark. For this, of these covers all of the companies publishing such a notice, the Estonian In instances where national curren- OECD Indicators of Product Market data from the year in which a company we have supported the analyses with registered in Estonia, however only 39% Commercial Register invites the creditors cies have been converted to Euro, the Regulation116 closes down needs to be compared with sources derived from initiatives taken by of companies send their data to Statistics of the non-active company to inform of European Central Bank’s Euro foreign the data from the previous year in order the Danish Business Authority, such as Estonia128. This is su$cient to undertake their claims and apply for the liquidation exchange reference rates annual averages The information society and ICTs have to re-introduce information regarding the Enklere Regler (Simpler Rules), which is a nationwide statistical analyses but the of the non-active company. The creditors have been used106. For background data been studied and compared by the use of number of employees, turnover and SNI task force launched to reduce the complex- number of companies is smaller, compared of the non-active company must submit regarding average annual wages we have the following indexes: codes (i.e. NACE codes). ity and bureaucracy of Danish business to the information received from Estonian their claims and apply for the liquida- used data from OECD StatsExtracts107. regulations. Commercial Register. Consequently, the tion of the non-active company within 6 The Digital Agenda Scoreboard117 In the Business Register the term for goal was to keep the information covering months as of the publication of the notice. Data from OECD available in the OECD start-up is “newly activated”. This means We regard all of our applied sources as one topic from one source, in order to make Should the creditors fail to notify their Tax Database108 has been used to analyse Network Readiness Index in The Global a company or place of business newly reg- very reliable and, therefore, do not consid- it comparable. claims or apply for the liquidation of the and describe corporate taxes and taxes on Information Technology Report 2013118 istered for VAT purposes, as an employer er that there are any major risks in regard non-active company, the register shall labour. or, regarding businesses exempt from VAT, to the validity of the data. According to the Estonian Commercial issue a court ruling for the deletion of the Measuring the information society 2013119 a business that has obtained a notice of Register, the inception of enterprise non-active company from the Estonian Where possible, we have used statis- assessment regarding corporation tax. The sources primarily used in the Danish is defined as the registering of the business Commercial Register. If the non-active tics covering the entire Information Web Index of the World Wide Web This means that start-ups are more or less segment of the report are the following: in register. Inception of enterprise is not company fails to appeal against the ruling Society (wider ICT-sector) as defined by Foundation120 limited to businesses with actual economic due to a merger, division, creation of spin- within 30 days as of the service of the rul- OECD. However, certain statistics are activity. di.dk o"s or restructuration of existing company. ing, the register shall delete the non-active only reported as ICT-sector excluding Last, in order to compare innovation be- doingbusiness.org Inception is not restoration of activities company from the Estonian Commercial the content and media producers of the tween the di"erent countries, the follow- As regards the fail rate, this is calculated dst.dk a#er period of inactivity. Register. Information Society or are only available ing sources have been used in the study: on the basis of “terminated companies” enklereregler.dk as statistics regarding SMEs in general. meaning companies that have been epp.eurostat.ec.europa.eu Death of enterprise is, according O#en, there are no statistics available for Global Innovation Index 2013121 closed due to bankruptcy, liquidation or erhvervsstyrelsen.dk to Estonian Commercial Register, the micro companies i.e. companies with nine merger and companies that have been investindk.dk removal of enterprise from the register. employees or less. Innovation Union Scoreboard122 deregistered, removed from the register oecd.org The death of a company is not caused by a vf.dk merger, acquisition, division, bankruptcy,
42 ICT SME REPORT ICT SME REPORT 43 APPENDIX A % METHODOLOGY APPENDIX A % METHODOLOGY
TABLE 1 The number of interviews for each catego- Danish Methodology Variation hit rate was too low and something di"er- ry reflected each category’s total number of ent had to be done. companies in relation to the total sample. The sampling of interviewees in Denmark REATER MALMÖ HELSINKI REGION COPENHAGEN CAPITAL REGION TALLINN The requirement was established that at was initially based on the construction As a consequence we decided to send out REGION (Cities of Metropolitan (Danmarks Statistik definition) (Defined as Harju County) least one interview had to be conducted of a contact list of all ICT companies a request to assist us with this study to our (SCB definition) Helsinki Area definition) in each category, regardless of the actual between 1-250 employees based in the SME ICT clients through our PwC audi- distribution of the sample. greater Copenhagen area. The list was tors, which ultimately secured a few more Burlöv, Eslöv, Höör, Helsinki, Espoo, Vantaa, København, Frederiksberg, Aegviidu Parish, Anija Parish, Kävlinge, Lomma, Kauniainen, Hyvinkää, Albertslund, Brøndby, Gento"e, Harku Parish, Jõelähtme Parish, generated from the PwC database of all interviews. A request for interview partici- Lund, Malmö, Skurup, Järvenpää, Kerava, Gladsaxe, Glostrup, Herlev, Keila, Keila Parish, Kernu Parish, The companies on the sample lists within ICT CVR registered companies listed in pation was also sent out to several di"erent Sta!anstorp, Svedala, Kirkkonummi, Mäntsälä, Hvidovre, Lyngby- Taarbæk, Kiili Parish, Kose Parish, Kuusalu each category were, then, randomized and the Copenhagen area. This initial list online platforms through Microso#’s Trelleborg and Vellinge Nurmijärvi, Pornainen, Rødovre, Tårnby and Vallensbæk Parish, Loksa, Maardu, Nissi approached in the order they occurred in comprised a total of 5,225 ICT companies partner channels. municipalities Sipoo, Tuusula and Vihti municipalities, part of Ballerup, Parish, Padise Parish, vPaldiski, the lists. in the range of 1-250 employees. A smaller Rudersdal and Furesø as well as Raasiku Parish, Rae Parish, Saku Ishøj By and Greve Strand By Parish, Saue, Saue Parish, Tallinn, sample of this list was then extracted in a This strategy does entail a somewhat Vasalemma and Viimsi One of the principal scopes of the entire randomisation process which produced a larger risk of generating a biased sample of study was to obtain a be!er understanding similar distribution of company sizes (em- interviewees as they are not selected from of the challenges existing within the ICT ployees) in the smaller list, and according a randomized sample, but based on compa- sector environment. PwC, therefore, decid- to which we established contact with the nies who are actively willing to participate ed that a few additional criteria needed to companies. in the interview. Division into Sub-categories employees”, the sampling must take be imposed. INTERVIEW into account another three criteria in In this way, we made sure that our compa- The Interview METHODOLOGY The EU definition of SME (“Small and order to secure a correct stratification of First of all, companies with very li!le ny selection resembled the general profile Middle size Enterprises”) is as follows133: companies: activity (or no activity at all) had to be of distribution in the Copenhagen area. The interviews were mainly held by From the desktop studies, many inter- eliminated. A minimum turn-over limit telephone or through personal meetings. esting aspects of the ICT environment Micro (start-up); companies with 0-9 1) Total turn-over must be lower than or was imposed, set at 50 percent of each The number companies willing to par- All sub-regions used the same template in the Baltic Sea Region as a whole were employees active for less than 36 months equal to €50m country’s average production worker’s ticipate in this study was, however, very ofquestions so that cross region conclu- identified in the desktop studies. In order salary134 (this limitation was set already limited. Five di"erent employees from sions could be drawn from the received to test some of the desktop hypotheses Micro (mature); companies with 0-9 2) A balance sheet total of lower than or during the initial sample selection). PwC have been engaged in booking these information. All interviewees were pro- and to be!er understand the everyday employees active for more than 36 months equal to €43m interviews, but have all had close to the vided with the questions in advance. The challenges facing ICT entrepreneurs in Secondly, when studying the same hit rate in regard to companies will- interviews were held in the local language the sub-regions, a total set of 115 inter- SME (start-up); companies with 10-249 3) Companies with less than 10 employees randomized sample lists some companies ing to participate. Several times, we tried and the transcripts were then translated views was conducted, divided between employees active for less than 36 months but with a balance sheet total of turn-over were fount that were part of larger groups to change the way in which we presented into English. The interviewer had the the four sub-regions of Malmö, Helsinki, of more than €2m are categorized as an (both local and international) and would the study to the potential interviewees, but possibility to freely elaborate on areas of Copenhagen (25 interviews), and Tallinn. SME (mature); companies with 10-249 SME. therefore not be suitable for the study’s with no remarkable di"erence in terms of interest or “dig deeper” where they felt it employees active for more than 36 months overall purpose. response. necessary. On average the interviews took The four sub-regions consist of the dis- about 50 minutes. tricts presented in Table A. In addition to the criteria “number of Thirdly, the Baltic Development With this initial approach we contacted Forum particularly wanted to interview more than a 150 companies by phone from OECD Definition of ICT sector Given the total number of ICT-related TABLE 2 companies with a multinational ambition the list, but with a hit rate of less than 1 SME’s in Copenhagen, Helsinki, Malmö and it was, therefore, decided that the percent. The tactic of contacting compa- The OECD definition is based on the ISIC4 and Tallinn, a total of 30 interviews per NUMBER OF ICT COMPANIES IN EACH SUB!REGION DIVIDED IN SUB!CATEGORIES interviewed companies must have a nies on the list and varying the presen- standard and has, for the purpose of this city is a relatively small sample when it is website wri!en in more than the local tation of the study was pursued for quite study, been “translated” into NACE codes intended that it should cover companies MALMÖ129 COPENHAGEN130 HELSINKI131 TALLINN132 language. some time, before we concluded than the as follows. of di"erent sizes and in di"erent stages Micro (start-up) 224 1,478 751 1,070 of maturity. PwC believed the best way to Micro (mature) 1,031 3,161 4,357 4,075 reach an acceptable result was to choose The 2006-07 OECD ICT sector definition (based on ISIC Rev. 4)* SME (start-up) 7 27 24 5 the respondents through a stratified selec- ISIC Rev. 4 NACE Rev. 2 tion method with a proportional number SME (mature) 228 559 932 212 of ICT-related SME’s in Copenhagen, Total 1,490 5,225 6,064 5,362 ICT MANUFACTURING INDUSTRIES Helsinki, Malmö and Tallinn, a total of 30 interviews per city is a relatively small 2610 Manufacture of electronic components and boards 2611 Manufacture of electronic components sample when it is intended that it should 2612 Manufacture of loaded electronic boards cover companies of di"erent sizes and in 2620 Manufacture of computers and peripheral equipment 2620 Manufacture of computers and peripheral equipment di"erent stages of maturity. PwC believed TABLE 3 2630 Manufacture of communication equipment 2630 Manufacture of communication equipment the best way to reach an acceptable result was to choose the respondents through NUMBER OF INTERVIEWS WITHIN EACH OF THE SUB!CATEGORIES PER SUB!REGION 2640 Manufacture of consumer electronics 2640 Manufacture of consumer electronics a stratified selection method with a pro- 2680 Manufacture of magnetic and optical media 2680 Manufacture of magnetic and optical media portional number of respondents in each MALMÖ COPENHAGEN HELSINKI TALLINN stratum. Micro (start-up) 5 1 4 6 ICT MANUFACTURING INDUSTRIES
In order to achieve a representative sample Micro (mature) 20 12 20 22 4651 Wholesale of computers, computer peripheral equipment and 4651 Wholesale of computers, computer peripheral equipment and software software for the interviews, PwC first studied each SME (start-up) 1 1 1 1 4652 Wholesale of electronic and 4652 Wholesale of electronic and sub-region’s total number of ICT compa- SME (mature) 4 11 5 1 nies according to the OECD sector clas- telecommunications equipment and parts telecommunications equipment and parts Total 30 25 30 30 sification a#er which four sub-categories were created.
44 ICT SME REPORT ICT SME REPORT 45 APPENDIX A % METHODOLOGY
ICT SERVICES INDUSTRIES
5820 Software publishing 5821 Publishing of computer games 5829 Other software publishing Appendix B – 6110 Wired telecommunications activities 6110 Wired telecommunications activities 6120 Wireless telecommunications activities 6120 Wireless telecommunications activities Interview Questionnaire 6130 Satellite telecommunications activities 6130 Satellite telecommunications activities 6190 Other telecommunications activities 6190 Other telecommunications activities 6201 Computer programming activities 6201 Computer programming activities BUSINESS If yes, what is your growth strategy? 6202 Computer consultancy and computer facilities management 6202 Computer consultancy activities and decline) did you seek external activities DESCRIPTION (Organic, Mergers & Acquisitions, financing? Did you get it? new products, new markets, etc.) o Do you know of any available 6203 Computer facilities management activities What product or service do you If no, why not? sources of finance from public 6209 Other information technology and computer 6209 Other information technology and provide? organizations? service activities computer service activities Did your company start as a pro- 6311 Data processing, hosting and related activities 6311 Data processing, hosting and related activities What year did you start your vider of local services/products If yes, which ones? business? and grew (or plan to grow) to be 6312 Web portals 6312 Web portals international, or was it interna- Do you have “access” to external 9511 Repair of computers and peripheral equipment 9511 Repair of computers and peripheral equipment What do you consider to be your tional from the beginning? financing to the extent you would 9512 Repair of communication equipment 9512 Repair of communication equipment market? like to support your growth strat- If it grew into an international com- egy? What markets/countries are you pany, how long was the process be- The 2006-07 OECD Content and media sector definition (based on ISIC Rev. 4)* active on today? fore you expanded internationally? If no, why not? ISIC Rev. 4 NACE Rev. 2 What was the first new market you What is the proportion of your entered? What types of non-financial sup- PUBLISHING OF BOOKS, PERIODICALS AND OTHER PUBLISHING ACTIVITIES turnover on your biggest markets? What, if any, were the key barriers port, from public or private sourc- in your case? es, have you benefited from. 5811 Book publishing 5811 Book publishing Who is your customer? 5812 Publishing of directories and mailing lists 5812 Publishing of directories and mailing lists What markets do you wish to en- For instance: How would you describe your ter next? What is the greatest bar- 5813 Publishing of newspapers, journals and 5813 Publishing of newspapers 1. Public Procurement process education periodicals competition? rier to enter that specific market? 5814 Publishing of journals and periodicals 2. Public internationalization programs/ How many Full Time Employees What markets do you wish to en- services (international fairs, trade mis- 5819 Other publishing activities 5819 Other publishing activities do you have in your business? ter in the next 5 years? sions, international matchmaking etc.) MOTION PICTURE, VIDEO AND TELEVISION PROGRAMME ACTIVITIES What do you perceive to be 3. Seminars/workshops, training pro- grams, public or private? 5911 Motion picture, video and television programme production 5911 Motion picture, video and television programme production SKILLS AND the greatest barriers to future activities activities KNOWLEDGE growth/expansion (growth strat- 4. Incubators, science parks or other public 5912 Motion picture, video and television 5912 Motion picture, video and television egy) organizations? programme post-production activities programme post-production activities Do you have (or have access to) the 5. Networking platforms, public or private? 5913 Motion picture, video and television programme distribution 5913 Motion picture, video and television programme distribution skills and knowledge necessary for Greatest barriers to internation- activities activities your business now/in the future? alization? (Local regulations, lack 6. Informal networks, startup communi- of knowledge about markets and ties and such 5914 Motion picture projection activities 5914 Motion picture projection activities Are there any skills necessary for cultures, financing, certifications, your business that are di!cult to the right competence, marketing, 7. Business coaching, public or private? SOUND RECORDING AND MUSIC PUBLISHINGACTIVITIES obtain? finding partnerships, language, 8. Others: 5920 Sound recording and music publishing activities 5920 Sound recording and music publishing activities administration, other?) How do you secure these skills? How important were those SOUND RECORDING AND MUSIC PUBLISHINGACTIVITIES (Recruitment, training, outsourc- SUPPORT non-financial support to your 6010 Radio broadcasting 6010 Radio broadcasting ing, industry partnerships, AND FINANCING business (Not important, Important, Mergers & Acquisitions?) Very important)? 6020 Television programming and broadcasting activities 6020 Television programming and broadcasting activities Have you ever sought external financing? Do you know where to obtain in- OTHER INFORMATION SERVICE ACTIVITIES GROWTH AND INTERNA# formation and help regarding the 6391 News agency activities 6391 News agency activities TIONALISATION If yes, what type of financing (VC, rules and regulations pertaining 6399 Other information service activities n.e.c. 6399 Other information service activities n.e.c. Loan, Family&Friends, Business to your business? Do you have plans to grow or ex- Angels, Public (for example, pand your business? Vinnova), Kickstarter, etc.?) How do you perceive the regulato- Why did you choose that specific ry burden for your business? If yes, where do you primarily plan form of financing? to expand (new geographic markets or within your existing market, or At what stage in the business life both)? cycle (start up, growth, maturity,
46 ICT SME REPORT ICT SME REPORT 47 APPENDIX B % INTERVIEW QUESTIONNAIRE
NETWORKS standards and certifications? Ad- ministrative and legal burdens?) Did you have any contact with other entrepreneurs when you Do these barriers still exist? started your business? o If yes, did they advise or inspire you to start If no, what do you believe will your business in any way? be your most significant barri- ers in the near future for your If yes, did they advise or inspire business? (Locally? Nationally? you to start your business in any Internationally? Politically and/or way? economically? Patents? Technical standards and certifications? Are you currently taking advice Administrative and legal burdens?) from any other entrepreneur or network regularly on how to de- What policy changes or public velop your venture? policies would you propose to facilitate and stimulate growth for If yes, what type of networks? SMEs in the ICT-sector? Do you mentor other entrepre- What kind of support would you neurs or startups? propose to facilitate and stimulate growth for SMEs in the ICT-sec- Do you have more contact with tor? (Governmental support, similar/competing firms? policy changes, structural changes or other support) Do you have any formal and informal networks in your geographical region and across di"erent regions?
If no, have you tried to make such connections or do you wish to?
What type of formal and infor- mal networks do you have in your business sector (locally, nationally or internationally)? Have you hired employees from outside of your geographical re- gion or other countries?
If yes, from which regions/ countries?
Do you wish to do so? Do you see any barriers to hiring from outside your geographical region or other countries?
BARRIERS $SHOULD CON# SIDER ALL OF THE AREAS ABOVE%
We have already discussed barriers with- in some specific areas before, but looking at it in general terms;
What have been the most sig- nificant barriers so far for your business? (Locally? Nationally? Internationally? Politically and/or economically? Patents? Technical
48 ICT SME REPORT