This entry is an excerpt from the OECD’s International Compendium of Entrepreneurship Policies (2020), which contains 16 case studies from 12 OECD countries. The Compendium examines the rationale for entrepreneurship policy, presents a typology of policy approaches and highlights principles for policy success. Case studies span policies for regulations and taxation, entrepreneurship education and training, advice and coaching, access to finance, internationalization, innovation, and holistic packages for ecosystem building. (OECD Publishing, Paris, https://doi.org/10.1787/338f1873-en.)
This particular case study explores how the program that created five Regional Business Development Centres evolved in Denmark. The Regional Business Development Centres program was part of wider efforts to reorganize local governance, which included a move towards a regionalized system to support business development and economic growth. The vision was to address the regional dimension of growth by responding to local and regional business needs while contributing to national growth targets.
The Regional Business Development Centres were the predecessors to the Denmark's regional Business Hubs, which currently serve as one-stop-shops for local business development support, and provide an entry point to national entrepreneur support programs.
The Regional Business Development Centres program (2007-2018) aimed at increasing awareness among Danish entrepreneurs and small businesses of their growth potential, by helping them identify and exploit growth opportunities. To do so, Regional Business Development Centres were set up to provide a range of business support services in collaboration with private and public sector providers. These Centres focused on addressing identified weaknesses in the capabilities of start-ups and SMEs, and on facilitating future growth.
The Ministry of Business and Growth was responsible for the program's strategy, and the Danish Business Authority was responsible for national implementation.
Ultimately, however, the Regional Business Development Centres were managed locally. When the five regions were formed in 2007, each of them established a Growth Forum with the active participation of regional stakeholders and local authorities and governments. This Growth Forum oversaw the establishment, development and management of the Regional Business Development Centres.
This program spanned the 2007-2018 period.
A new framework was signed between Local Government Denmark (KL) and the Ministry of Business and Growth for the period 2016-2020. After the formal closure of the Regional Business Development Centres, six regional Business Hubs were established in January 2019.
The objectives of the centres were set in the National Agreement on Regional Business Development Centres. National targets for the Regional Business Development Centres were set annually. The evaluation of the performance of the Regional Business Development Centres took into consideration three key areas and 9 corresponding KPIs:
Volume KPIs: the extent of services provided and the number of clients involved
- The Regional Business Development Centres carry out 2000 mappings and motivate another 2000 companies for growth.
- At least 80% of companies are referred to other services and 70% to private services.
- The Regional Business Development Centres jointly develop and implement at least one collective process for a minimum of 12 companies with special development potential within digitalisation / automation.
Quality KPIs: an assessment from the clients’ perspective of the quality of the services provided
- At least 70% of companies experiencing positive effects.
- Minimum Net Promoter Score of 601.
Effect KPIs: the extent to which growth among beneficiary firms can be attributed to the Regional Business Development Centres
- 10% growth in employment of participating companies over comparable companies.
- 15% higher growth in revenue of participating companies over comparable companies.
- The share of Regional Business Development Centre users with foreign sales to increase by 5% compared to the previous year.
- The proportion of Regional Business Development Centre users lifted to the “growth layer” of Danish companies increases to 15%.
Performance against these 9 KPIs was assessed based on three methodologies:
- An examination of the data collected by the Regional Business Development Centres’ Client-Relations-Management systems;
- Interviews with clients and a survey conducted by external consultants; and
- A statistical exercise conducted by Statistics Denmark in order to determine the impact of the Regional Business Development Centres on enterprise growth in terms of employment, turnover and exports.
No information is available on the monitoring and evaluation methods of the newly established Business Hubs, however, continuity between the two programs suggests that some of the KPIs and methods may carry over into the evaluation process of the Business Hubs.
Results by 2013: An evaluation undertaken in April 2013 by the Iris Group for the Danish Business Authority concluded that the five Regional Business Development Centres had different competences and priorities, but that, in general, they fulfilled their role as business advice centres for the different private and public stakeholders.
Results by 2014: The Regional Business Development Centres conducted 2124 company growth assessments (their core service) nationwide, almost 6% above the target set.
Results by 2015: A performance assessment carried out by the Danish Business Authority found that the Business Development Centres had contributed to creating 1305 jobs from 2013 to 2015. The evaluation estimated that the economic return on the investment made by the municipalities (DKK 98 million in 2013, approximately EUR 13 million) was DKK 5.07 for every DKK 1 invested (Danish Business Authority, 2016).
As part of this evaluation, companies were also asked to assess the assistance received from the Regional Business Development Centres. Some 93% reported that it had had a high or moderate positive effect on their firm’s development. As with previous evaluations, the assessment found that companies who used the Regional Business Development Centres continued to outperform similar ones that did not. This was true for growth in employment, turnover and exports, although the differences between the Regional Business Development Centre users and the control group was narrower than the previous year for the first two variables. Some 60% of companies using the Regional Business Development Centres experienced growth in employment (10% more than in the control group), while 5% more companies than in the control group experienced turnover growth.
Results by 2016: The Centres conducted 2146 growth assessments, and 88.2% of these were referred for further advice to private or public sector specialists. Another 3181 enterprises were served by the Regional Business Development Centres in another manner that year. These figures showed a small increase over the previous year (0.5% increase in growth assessments conducted; 1.5% increase in referrals for further assistance; 0.3% increase in more general interactions). Another 3385 companies participated in other Regional Business Development Centre activities, such as conferences and workshops.
The alignment challenge:
The alignment of the national strategy defined by the Ministry of Business and Growth with the concrete actions and business support offered by the Regional Business Development Centres at the regional level required coordination among:
- The Danish Business Authority, in charge of the program at the national level,
- Local and regional government authorities, in charge of business support and promotion in their region; and
- Regional Business Development Centres managers.
To address this challenge, a multilevel governance framework was defined and adopted for the program, with both top down and bottom up contributions. This notably involved regular meetings bringing together the Danish Business Authority and the five Regional Business Development Centres.
Coordination and efficiency challenges:
In 2017, the government established the Commission on Simplification of Danish Business Promotion to revise the structure of the Danish business-support system. The Commission recommended bringing all business development support under a single umbrella to increase clarity for entrepreneurs and improve efficiency as well as further decentralizing support and anchoring it at the local level. Following this consultation, business promotion efforts were reorganized in 2018 as a two-level system:
- At the national level, the Danish Executive Board for Business Development and Growth sets national strategic objectives.
- At the local level, six Business Hubs were created as one-stop-shops centralising local business development support and providing an entry point to national programs (European Commission, 2019; European Commission, 2018).
Previously, there were two entry-points for local business support: basic business support was provided by municipalities while Regional Business Development Centres offered support to growth-oriented entrepreneurs.
In 2018, the five existing Regional Business Development Centres were closed, and soon after were six Business Hubs were created. Some resources and staff were transferred from the defunct Regional Business Development Centres. A digital platform was also introduced as part of the reform.
Another initiative addressing coordination challenges for the Business Hubs is the co-operation agreement signed between nine municipalities to form of a cross-municipal collaboration under the auspices of the Business Hub, bringing together all business support and simplifying the regional landscape.
Lessons for other ecosystems:
Overall, the Regional Business Development Centre program was successful in providing businesses to local firms and promoting job creation and supporting firm development. However, the business development service system was still deemed complex and was further simplified through the transition to the Business Hubs program. Based on the experience of the Regional Business Development Centres, some key factors can be identified for similar programs to be successful:
Initiatives seeking to implement regional one-stop-shops should seek to involve local stakeholders in the governance and strategic development of the hubs. The local ownership of Regional Business Development Centres was positively perceived by local authorities and was thought to help adapt the offer to the local context.
Set aside resources to gather feedback on user experience in different centres as well as monitor longer-term impact of support on firms. The use of control groups to evaluate impact on firms was a strong feature of the Regional Business Development Centres evaluation design.