Governments should look to partner with the private sector to devise successful SME policies, reveal a series of policy profiles from the Global Entrepreneurship Monitor (Gem).
The profiles of 19 countries were published in January. A key theme running through most is how the state has partnered or incentivised the private sector to support or invest in small businesses - rather than go it alone in dispensing support or finance.
These include the state's role in setting up a venture capital (VC) sector in for example Israel’s Yozma Programme or how the City of Buenos Aires's has co-invested with business accelerators through its BA Emprende Accelerator Programme,
South Africa's use of Black Economic Empowerment (BEE) codes to get big companies to support small businesses through mentoring and finance though more interventionist, is one way that the state can bring small and big firms together.
Working with business advisors is also key, such as in Canada where the National Research Council’s (NRC) Industrial Research Assistance Program’s success are its over 240 industrial technology advisors (ITAs) located across Canada,
Germany’s Exist programme initially focused on getting various regional partners to work together, before it introduced seed funding for university start-ups. Today the programme uses champions - individuals and institutions - who are prepared to serve as promoters to attract other institutions.
The use of the internet to deliver things like e-procurement or to facilitate business registrations can also lower the cost and ease for doing business.
However a key challenge to measuring the effect of entrepreneurship policies, particularly in emerging economies, is the lack of data - on small businesses and on the performance of programmes in respective countries.
Authorities must not only develop reliable methodology and datasets on the small business population in their countries, but must also be able to measure the impact of their respective programmes and benchmark these against those in other countries.
Because of this it's at times difficult to ascertain how successful many of the policies contained in Gem's policy profiles publication have been, particularly it's not clear whether some have had an effect in influencing things like the country's entrepreneurship rate.
No silver bullet
However it often takes various policies and measures to effect change in for example the number of those who opt to start a business or the number of firms that survive or the declining rate of informality in Brazil or increasing entrepreneurship rate in Chile.
Often this means little without the help of stable and efficient government administrations - those skilled enough to tweak or scrap policies when they don't work and mature enough to continue with them when they as part of a new government come to power.
Timm is a South African who writes on small business. He helped compile and write the profiles featured in the Gem policy profiles report. Click here to download the report.
Stephen Timm is a