The upgrading of workforce skills is key to the competitiveness of SMEs. In today’s business environment there is a premium on innovation that enables firms to develop new products and services, new production processes and new business models. This requires both in-house innovation and the ability to absorb knowledge from other firms and organisations, both of which call for a skilled labour force. Skills are also a critical but understated resource for entrepreneurship seen in the sense of business creation. Similarly to workforce skills, entrepreneurship skills will boost the competitiveness of local businesses thanks to the improved strategic and management competences of the entrepreneur.

1. Anders Hoffmann,
Dorte Høeg Kock
David J Storey
Copenhagen 28 November 2012

2. + The “front-end” of policy: the strategic
decision of whether and how to “intervene”
+ The “back-end” of policy: did it work?
This is about the “middle” aspect of policy –its
implementation

3. 1. The policy-maker faces a wide range of
choices on how to deliver policy
2. The policy-maker may be unaware of the
options available
3. There is an absence of theory and reliable
practice to help in deciding amongst the
options
4. Effective implementation is vital for policy
success

4. The decision to focus on such firms has been
made. The issues are:
+ An advice service already exists
+ The tradition is to deliver advice regionally
+ The tradition is for this to be delivered by
semi-public bodies where local government is
present.
+ It is a classic Principal Agent problem

5. Central Government [Principal] wants: Growth Houses [Agent] wants:
+ To show the funding was distributed in + To exercise discretion on how money is to
line with stated public policies. be spent because of variations in local
circumstances which are imperfectly
+ To show it was spent on the policy areas understood by the Principal.
specified by the legislators. + To have discretion over the selection of
their client group of firms.
+ To demonstrate the impact of working
+ To show it contributed to achieving the
overall government objective of with a small group of firms with growth
enhancing enterprise. potential.
+ To enhance the performance of clients,
without having to “hand them over” to
+ To ensure it did not lead to private sector private sector consultants” prematurely.
consultants being “crowded out”. + To have a reward system that is based
+ To show the taxpayer got “value for upon factors under their control – such as
money” from the expenditure. number of hours of support.
+ To ensure an appropriate distribution of + To avoid having an uncertain rewards
funding amongst the regions. system which is heavily dependent on firm
+ To have a funding distribution system that performance -over which they have little
is flexible to changed circumstances and control
rewards good performance from Agents.

7. Table 3 - Goals for the Regional Growth Houses, 2007-2010
2007 2008 2009 2010
Recruiting Director April 1th. - - -
Cooperation agreements with
local business units
Min. 90 pct. - - -
Cooperation agreements with
other public actors
15 + agreements - - -
Co-operation agreements with
private operators
10 + agreements - - -
Deadline for the development
of website
December 1th. - - -
50+ associated
Mentor Networks - - -
mentors.
Completed first stage of
Networks to have completed
Competence development for competence
advisors
competency development over - -
development
two days.
programme
Users of the Growth Houses 5,075 2,500 2,000 2,500
% referred to private
consultants, public operators 75% + 75% + > 75 % >75%
etc.
% referred to private
consultants
- - - 70 %
% Satisfied or very satisfied
with Growth House services
80 % 80% >80% >80 %

8. Number of users of the Growth Houses 5,075 2,500 2,000 2,500
Share referred to private consultants,
>75% >75% Min. 75 pct. Min. 75 pct.
public operators etc.
Share referred to private consultants - - - 70 pct.
Users satisfaction with the Growth Houses
(Satisfied or very satisfied with the >80% > 80 % Min. 80 pct. Min. 80 pct.
services)
User satisfaction with the counsellors
- - Min. 70 pct. Min. 80 pct.
(satisfied or very satisfied)
Cooperative partner satisfaction with the
- >80% Min. 80 pct. Min. 80 pct.
Growth Houses (satisfied or very satisfied)
Create competency profiles on 50 +
- - -
Cooperation with private consultants private consultants
>10 % compared with
Employment growth in the counselled >10% compared with non-counselled Same growth rate as in
- the year of
enterprises enterprises the year of counselling
counselling
>20 % (compared with >15% compared to
Turnover growth in the counselled >20% compared with non-counselled
- non-counselled the year of
enterprises enterprises
enterprises counselling
Min. +20 percentage points
>20 % compared with >10 % compared with
Export growth in the counselled enterprises - (compared to non-counselled
year of counselling year of counselling
enterprises)
Share of high-growth enterprises in the Min. +2 percentage points (compared >1 % compared with last >2 % with compared
-
region to last year) year to last year
Arrange Jointly develop and Conduct 5 new
Development of new activities / services 40+ - implement 3+ new projects to develop
activities programmes service quality
The equivalent of 20+ %
Act as regional coordinator of a
of firms receiving
Events etc. - nationwide growth campaign from -
counselling participate in
November 17th - 23th 2008.
regional events.
Press coverage and the knowledge rate to
- - - >10 % improvement
the Regional Growth Houses

9. Deciding whether there was added value:
+ Over what period of time would we expect to
see impact?
+ Which metrics
+ Should we use control groups?
+ What control groups are appropriate?
+ THE GLOBAL RECESSION

10. Number of employees in firms using the
Growth Houses
Observation Period
Q1-Q2 Q3-Q4 Q1-Q2
2008 2008 2009 Q3 2009
Q1-Q2
2008 4240 4261 3744 3533
Counselling Period
Q3-Q4
2008 15047 15140 13419 12521
Q1-Q2
2009 9408 9778 8960 8443
Q3-Q4
2009 8164 8498 8056 7978
Source: Statistics Denmark.

11. Table 5: Sales Change for Growth House clients and Control group firms
Change 2008 Change 2009
Clients Control group Clients Control group
Clients in 2008 9.1 7.1 -12.8 -15.2
Clients in 2009 9.2 8.9 -8.6 -14.5

12. 2008-2009 2009-2010 2010-2011
Growth Control Growth Control Growth Control
House group House group House group
customers customers customers
Year -8,1 -7,9 -3 -3 4,2 2,7
2008
Year [-5,6] [-8,6] -1,2 -1,6 4,9 2,9
2009
Year [0,1] [-2,6] 8,0 7,4
2010
* Enterprises from same region, industries and of same
sizes, weighted data

13. + Implementation of policy faces key challenges
+ The Principal Agent framework is helpful since at its
core is the Contract
+ The terms of the Contract influences the behaviour
of those delivering the policy
+ The contract has to evolve over time to reflect both
“learning” and changed external circumstances
+ The availability of high quality current data is critical
for informing changes to the Contract.