EU Science Hub

Country-specific advice to strengthen entrepreneurship and scale-up companies

Nov 28 2016

What type of support do EU countries offer firms to foster their creation and growth? Are the existing ecosystems comparable across the EU? Could EU countries learn from each other? These were the main questions posed in a research project on Entrepreneurship and Scale-up Indices (ESIS), the results of which have just been published by the JRC.

This project assesses European countries according to the framework conditions that affect the creation and growth of businesses, including scale-up companies. Thanks to a newly-created set of composite indicators, the research reveals strengths and weaknesses in seven areas: culture and institutions, access to human capital, creation of knowledge and networking, market conditions, access to finance, tax and regulations, infrastructure and support. The resulting report provides a working tool to monitor and benchmark EU Member States in the creation of a business-friendly environment that can foster both the creation and the growth trajectories of firms.

EU Member States benchmark on the Scale-up index
The figure presents the ranking of EU Member States by their scores on the Scale-up index, which measures each country’s framework conditions for firm growth.

©EU, 2016

To find out how each country scores on every indicator check the Entrepreneurship and Scale-up Indices (ESIS) report.

The Entrepreneurship and Scale-up Indices gives interesting input to the discussion on what countries can do to improve the condition for start-ups to grow in Europe. Concrete recommendations on policy measures to complete the single market, mobilise capital, activate talent and to power innovation were provided from the start-up and scale-up grassroot ecosystems in the Scale-up Europe Manifesto. The European Commission adopted a Communication on a Start-up and Scale-up initiative on 22 November 2016, with direct actions on EU and Member State level. The Commission's Start-up and Scale-up Initiative aims to give Europe's many innovative entrepreneurs every opportunity to become world leading companies. It pulls together all the possibilities that the EU already offers and adds a new focus on venture capital investment, insolvency law and taxation.

ESIS report main findings

The analysis groups countries according to the quality of their framework conditions, and also provides insights into how each country could improve. For example, although Denmark and the Netherlands have excellent conditions for the creation of firms, they are lagging behind in terms of access to finance. Countries such as Germany and Austria rank highly in market conditions and knowledge creation, but face challenges in regulation and financial infrastructures for firm creation. Differences can also be observed between countries as regards the conditions they offer for the growth of firms. Belgium has the best score for access to human capital, but ranks lower in terms of regulations that favour firm growth, while the opposite is true for Estonia.

Countries with excellent framework conditions have high levels of entrepreneurial culture, easy access to financial instruments, and outstanding human capital is available. Well-developed physical and logistics infrastructure and promising market conditions are found in countries with very good frameworks for the creation of firms, where strong digital infrastructure and broad market expansion commonly contribute to the growth of firms. In less business friendly territories, however, entrepreneurial culture, R&D investments and intellectual property initiatives are areas which could be improved. Finally, access to finance and suitable human resources are the main challenges for countries with worse framework conditions.

ESIS results were presented at the conference "European Innovation Policies for the Digital Shift" which took place in Brussels on 22 November 2016. The conference took stock of the outcomes of EURIPIDIS, a joint research project of the JRC and Directorate-General for Communications Networks, Content and Technology which aimed to improve understanding of innovation in the ICT sector and of ICT-enabled innovation in the rest of the economy.