Entrepreneurship Policy Effectiveness
Still, the merits around the connect between entrepreneurship and economic growth are highly disputed in scientific literature, as there is also evidence indicating it does in fact not always contribute to economic growth (Kösters 2010).
It is shown by many researchers, that high-growth entrepreneurship disproportionately effects innovative change and economic growth (Autio 2005b, Henrekson & Johansson 2008, Stam et al. 2009), while other forms of entrepreneurship do not.
Most small firms do not grow (or do so only very slowly) while a few high-growth ventures are responsible for job creation (Ács & Mueller 2008). Although forms of entrepreneurship such as self-employment are preferable to unemployment, there is no evidence that it is economically preferable to regular employment (Autio 2005b).
To promote economic growth and job creation, public policy should therefore focus specifically on entrepreneurial firm growth. Since high-growth ventures are different from any other kind of new firm formation, they require unique forms of support.
The main differentiators between regular entrepreneurship policy and high-growth entrepreneurship policy are quantity and quality. While regular entrepreneurship policy tries to increase the number of new firms and their stability, high-growth entrepreneurship policy focusses on quality and dynamism (Autio et al. 2007).
The most relevant differences between regular entrepreneurship policy and high-growth entrepreneurship policy are illustrated below (see table 5). Although the importance of high-growth ventures for economic growth has been substantiated in empirical research and the intention to foster high-growth ventures is commonplace among policy makers, only very few public policy agendas target them explicitly or exclusively (Autio et al. 2007).
Providing public resources at some level to every entrepreneurial entity is not compatible with the goal of generating economic growth and job creation. Still, most policies remain general, unfocused and accentuate quantity. Economic impact requires more complex policy designs at different levels, well thought implementation and monitoring (Autio et al. 2007).
Entrepreneurship policy should cover various layers of society (see table 6) - from the individual entrepreneur to national economic and societal context - since it might not lead to positive outcomes if specific layers are ignored (Ács & Armington 2006).
Only if balanced measure are taken, considering both regional economic and social contexts, high-growth entrepreneurship can be stimulated. This calls for broad collaboration between multiple political stakeholders and policy shaping departments or ministries; and requires them to target their measures horizontally rather than vertically and expects active participation from industry, university as well as financial entities (Autio et al. 2007).
Entrepreneurship Policy Categories
Public policy measures for supporting high-growth oriented entrepreneurial ecosystems can be categorised as follows according to an examination of support initiatives in nine countries undertaken by Autio et al. (2007):
• BA and VC access
• Business coaching
• Business idea competition
• Commercialisation subsidies
• Consulting subsidies
• Entrepreneur training
• Entrepreneur spawning
• Incubation and technology parks
• Internationalisation financing
• Loan subsidies
• One-stop information shop
• R&D tax cuts
• Research commercialisation centers
• Research commercialisation grants
• Technological development subsidies (equipment & IP)
• Venture capital (tax) subsidies
• Venture capital funds
Furthermore, these measures can be clustered around pre startup formation and post startup formation as well as assigned to traditional policy domains such as innovation policy, business/industrial policy and financial market policy for a better understanding of the complexity (see fig. 7). In order for entrepreneurship policy to foster high-growth ventures, policy agendas have to cross typical policy silo limitations (Autio et al. 2007).
In terms of this thesis, any measures taken by regional or national government in regards to the startup economy can be considered as public policy towards entrepreneurship, regardless wether it is part of an official innovation policy program or and independent action.
Figure 7: Thematic Categorization of High-Growth Entrepreneurship
Support Measures
3 Introduction to Hamburg’s Entrepreneurial Ecosystem
According to the KfW Startup Monitor 2015, Hamburg is the second largest startup location in Germany after Berlin. The city has a startup rate of 2.36% for the years 2012-2014 (as opposed to 2,6% in Berlin) and is further closing the gap in recent years. It has been the second largest startup location from 2008-2010 and from 2012 onwards (Metzger 2015). Even in 2003, more than 10 years ago, Hamburg had the highest Entrepreneurial-Acitivity-Quote (EAQ) in Germany (Losse 2004) and was one of the major centres for startups (Rooney 2012).
As city states, locations like Berlin, Hamburg and Bremen largely benefit from their metropolitan areas, accumulating startup activities within their vicinity. With highly attractive industry sectors such as media and IT as well as related creative industries, Hamburg has a disproportionately high rate of freelancers among new entrepreneurs (2014: 46%) compared to other locations in Germany (Metzger 2015).
Apart from freelance entrepreneurs, Hamburg also has a considerable history of high-growth ventures. Many Hamburg based startups have become well established, international corporations such as Innogames, Bigpoint, Coremedia, Facelift, Goodgame Studios, Jimdo, mytaxi, Parship, Statista or XING. Recently funded startups of note include Dreamlines, Kreditech, Protonet and Sonormed. Many international internet corporations subsequently chose Hamburg for their German headquarters over the years, such as AOL, Google, Facebook, Twitter, Hootsuite and Yelp (nextMedia.Hamburg 2016c). Just recently, hyped U.S. based startups such as Airbnb and Dropbox chose Hamburg for new office locations as well (Tracey 2016).
In accordance with the strong growth of the local startup economy over the past years, the City of Hamburg wants to position the metropolitan area as a leading region for innovation in Europe until 2020.
Among other actions, the city plans to invest more than EUR 100 million into a “Smart-City” and the local startup economy (Tangermann 2016), although concrete implementation strategies for this plan remain to be announced as of November 2016.
Evidently, Hamburg has been a vibrant location for innovative startup activities over the past decades. Not only was Hamburg at the epicentre of the dot-com era in Germany, it provides an attractive