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Economic Development Association Scotland

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					SUBMISSION FROM ECONOMIC DEVELOPMENT ASSOCIATION (SCOTLAND) Economic Development Association (Scotland) is a professional association of around 3,300 of those who work in and have a strong interest in economic development. This is a submission to the inquiry to assist the committee in their deliberations. It is based on a survey of members which received 36 responses. While around 10% of membership, of the responses, 91% have worked directly in business development, 82% have worked in the private sector and 75% have worked in the development of strategy or policy for business development. While the response rate from the local authorities has been greater and the response rate from the Enterprise networks has been lower than the overall membership of EDAS, the results are presented as an informed view of those directly working in business support. The key findings are: • the most important challenges seen in relation to business growth, broadly relate to competitive and commercial issues and are prioritised as: o productivity o infrastructure o corporate R&D o culture and attitude o commercialisation of research • considering issues outside the operation and support of the individual business, the most important issues were cited in order as: o tax and fiscal incentives o level of regulation/paperwork o Infrastructure o Micro support to businesses Issues which were considered between important and neither/nor important were: o Effective of public sector support o Location This places business support below the importance of fiscal and tax incentives and level of regulation/paperwork

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Respondents tended to: o agree that support should be available to all companies o agree that a greater focus should be given to supporting existing businesses rather than new firm formation o agree that support should be focused on creating a good business environment rather than support to individual companies o disagree that support should be restricted to growth sectors o disagree that support should be focused on fewer businesses o clearly disagree that supports should be focused on larger companies The most important areas for support were identified as technology and innovation, entrepreneurship/culture, management development and training and skills of the workforce.

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Views of the Support Structure • Respondents view most existing business supports as ineffective. o support on exporting/internationalisation and investment/loan support was seen as more effective than ineffective o All other supports were seen as being ineffective • A majority felt that the: o existing public sector support structure was ineffective o number of public sector support agencies should be reduced o number of support programmes should be reduced o skills of public sector advisors was not strong; and o linkages between support agencies and advisors was ineffective

Enterprise network vs Local Authority responses There is a clear split in approach to business support between the Enterprise networks and Local Authorities with the former focusing support on growth companies through account and client management process, providing a basic, minimum level of support on a reactive basis to all other companies. At the same time Local Authorities, where business development is undertaken, tend to provide support on a more universal basis. In disagreggating the results, the views of members from local authorities, compared to those from the Enterprise networks identify that they are: • more likely to regard the existing public sector support structure as ineffective • more likely to agree that the number of public sector support agencies should be reduced • less likely to agree the public sector and private sector advisors’ skills are strong • less likely to agree that supports should be available to all companies • more likely to disagree that supports should be restricted to growth sectors.

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Conclusions A number of wider challenges and issues have been identified which are currently constraining business growth in Scotland. While the public sector support structure is seen as important, it is not regarded as effective by respondents. Improving the effectiveness of this structure would appear a matter of priority. Areas of improvement highlighted include: • reducing the number of organisations involved in undertaking business support • reducing duplication in programme • provision of greater local flexibility and decision making • improving skills of advisors

Jean Hamilton Chair Economic Development Association (Scotland) 27th May 2005

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EDAS SURVEY OF MEMBERS: BUSINESS GROWTH INQUIRY DETAILED RESPONSES (Response Rate: 36) Q1: How would you rate these importance) Very Important Productivity 17 (50%) Infrastructure 17 (50%) Investment Corporate R&D 11 (32%) Culture and attitude 14 (41%) Commercialisation 14 (40%) of Research University/Research 6 (17%) Institute R&D Business Start Ups 6 (18%) and closures Demographic 6 (18%) Changes Economic Inactivity 7 (21%) challenges in terms of importance to Business Growth in Scotland? (Ranked by Important Neither Nor 15 (44%) 2 (6%) 14 (41%) 2 (6%) 21 (62%) 16 (47%) 16 (46%) 26 (74%) 20 (61%) 17 (50%) 15 (44%) 2 (6%) 2 (6%) 3 (9%) 2 (6%) 7 (21%) 10 (29%) 10 (29%) 12 Not Very Important 0 1 (3%) 0 2 (6%) 2 (6%) 1 (3%) 0 1 (3%) 2 (6%) No Response 2 2 0 2 1 1 3 2 2 Average Score* 1.44 1.38 1.26 1.24 1.2 1.06 0.97 0.82 0.79

Unequal access to 3 (9%) 16 (50%) 1 (3%) 4 0.66 broadband and other infrastructure Unequal business 4 (13%) 16 (53%) 7 3 (10%) 3 0.64 rates (23%) % of those who responded Average Score were Very Imp = 2, Imp = 1, Neither/Nor = 0, Not Very Important = -1

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Q2: What other challenges do you see as important? Issue

No. times cited Labour force skills 5 (14%) Quality of business leadership/managers 5 (14%) Market conditions/productivity/trading challenges 4 (11%) Too much bureaucracy/regulations 4 (11%) Lack of a long term strategic, sustainable approach by the public sector, listening to 4 (11%) business Various incentives to SMEs 2 (5%) (for those cited more than once) Q3: How would you regard the following in terms of importance to business growth Very Important Neither Not Very No Average Important Nor Important Response Score* Tax and Fiscal 15 (45%) 15 (45%) 2 (6%) 1 (3%) 3 1.33 incentives Level of 19 (56%) 6 (18%) 6 3 (9%) 2 1.21 regulation/paperwork (18%) Infrastructure 13 (38%) 16 (47%) 4 1 (3%) 2 1.21 (12%) 23 (68%) 3 (9%) 0 2 1.15 Micro support to 8 (24%) individual businesses Effectiveness of 6 (18%) 21 (62%) 4 3 (9%) 2 0.88 public sector support (12%) Location 3 (9%) 18 (55%) 12 0 2 0.71 (36%) % of those who responded Average Score were Very Imp = 2, Imp = 1, Neither/Nor = 0, Not Very Important = -1

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Q4: To what extent do you agree or disagree with the following statements (reported in order of agreement) Averag Neither Disagr Strongl No Strong Agree Resp e /Nor ee y ly Score disagr Agree (*) ee Supports should be available to all 7 15 (47%) 3 (9%) 6 (19%) 1 (3%) 4 0.6 companies (22%) Greater focus should be given to the support 9 8 (25%) 9 (28%) 4 (13%) 2 (6%) 4 0.53 of existing companies rather than new firm (28%) formation Support should be focused on creating a 6 10 (31% 11 4 (13%) 1 (3%) 4 0.46 good business environment and not support (19%) (34%) to individual companies Support should be restricted to growth 1 (3%) 7 (22%) 7 (22%) 14 3 (9%) 4 -0.33 sectors (44%) Support should be focused on fewer 1 (3%) 6 (19%) 9 (28%) 12 4 (13%) 4 -0.38 businesses (38%) Supports should be more focused on larger 0 0 5 (16%) 16 11 4 -1.52 companies (50%) (34%) Average Score: Strongly Agree = 2; Agree = 1, Neither/Nor = 0, Disagree = -1, Strongly disagree = -2 % of those who responded

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Support for existing companies should be focused on: (reported on extent of agreement) Strong ly Agree Technology and innovation Entrepreneurship/culture Management Development and training Skills of workforce Marketing and sales Strategy Development/business planning Process and productivity improvement Investment/Loan Support Exporting/internationalisation Recruitment 16 (52%) 15 (48%) 13 (42%) 12 (39%) 7 (23%) 8 (27%) 8 (26%) 4 (13%) 7 (23%) 3 (10%) 0 Agree Neither/ Nor Disagr ee Strongl No Resp y disagr ee 0 5 0 0 1 (3%) 0 0 5 5 5 5 6 5 5 5 Averag e Score (*) 1.17 1.08 1.08 1.06 0.86 0.83 0.78 0.61 0.53 0.29 -0.03

15 3 (10%) 1 (3%) 5 (48%) Property 8 (26%) 16 5 (16%) 2 (6%) 5 (52%) Average Score: Strongly Agree = 2; Agree = 1, Neither/Nor = 0, Disagree = -1, Strongly disagree = -2 % of those who responded

12 (39%) 11 (35%) 13 (42%) 15 (48%) 19 (61%) 15 (50%) 16 (52%) 18 (58%) 11 (35%) 9 (29%)

1 (3%) 3 (10%) 5(16%) 3 (10%) 3 (10%) 6 (19%) 3 (10%) 5 (16%) 8 (26%)

2 (6%) 2 (6%) 0 0 2 (6%) 1 (3%)

4 (13%) 0 4 (13%) 0 3 (10%) 2 (6%)

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Existing Support for companies is effective in: (reporting by extent of agreement) Strongl y Agree Agree Neither /Nor Strongl No Resp y disagr ee 3 (10%) 0 6 Disagr ee Averag e Score (*) 0.33 0.09 -0.03 -0.06 -0.06 -0.18 -0.26 -0.30 -0.41 -0.41 -0.67

Exporting/internationalisation

14 (47%) Investment/loan support 0 12 6 (20%) 1 (3%) 6 (40%) Technology and Innovation 0 12 8 (27%) 1 (3%) 6 (40%) Recruitment 1 (3%) 4 (13%) 18 6 (20%) 1 (3%) 6 (60%) Property 0 6 (20%) 16 8 (27%) 0 6 (53%) Strategy development/business planning 0 5 (17%) 16 7 (23%) 2 (7%) 6 (53%) Marketing and sales 0 2 (7%) 18 9 (30%) 1 (3%) 6 (60%) Skills of workforce 1 (3%) 3 (10%) 13 9 (31%) 3 (31%) 7 (45%) Process and productivity improvement 0 2 (7%) 14 12 2 (40%) 6 (47%) (40%) Management development and training 0 2 (7%) 13 12 2 (41%) 7 (45%) (40%) Entrepreneurship/culture 0 2 (7%) 12 10 6 (33%) 6 (40%) (33%) Average Score: Strongly Agree = 2; Agree = 1, Neither/Nor = 0, Disagree = -1, Strongly disagree = -2

2 (7%)

11 (37%) 11 (37%) 9 (30%)

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To what extent do you agree or disagree with the following statements? Strong ly Agree The existing public sector support structure is effective The number of public sector business support agencies should be reduced The number of public sector business support programmes should be reduced The skills of public sector advisors is strong The skills of private sector advisors is strong 1 (3%) 5 (16%) 6 (19%) 2 (6%) 0 Agree Neither /Nor Disagr ee Strongl No Resp y disagr ee 8 (25%) 4 5 4 Averag e Score (*) -0.82 0.54 0.41 -0.38 0 -0.58

4 (13%) 15 (48%) 9 (28%)

6 (19%) 6 (19%)

13 (41%) 4 (13%) 1 (3%) 3 (9%) 2 (6%)

The linkages between the support agencies and 0 13 5 (16%) 5 advisors is effective (42%) Average Score: Strongly Agree = 2; Agree = 1, Neither/Nor = 0, Disagree = -1, Strongly disagree = -2

12 (38%) 3 (10%) 11 (35%) 9 (29%) 14 (45%) 5 (16%) 8 (26%)

11 4 (13%) 5 (35%) 7 (23%) 1 (3%) 5

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What do you think could be done to improve the effectiveness of the public sector support structure? Reduce duplication and competition between support 6 agencies/simplify structure Improved targets/outputs/evaluation/identification of good 6 practice Improve the Skills of business advisors 5 Local flexibility and decision making in supports 4 Improve overall strategy/approach. 3 Increased focus on delivery improvement by the support 3 agencies. Make them more entrepreneurial Support a broader range of companies 2 Reduce the number of initiatives 2

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BUSINESS INQUIRY QUESTIONS Why is business growth in Scotland lower than other parts of the UK and other regions and countries worldwide? Issue Raised No. Times Cited Confidence/culture/attitude/non entrepreneurial 13 (36%) Location/periperality/access to markets/low local 7 (19%) market Lack of coherent, quality support structure 3 (8%) Venture Finance/banks 3 (8%) Uniform business rates 2(6%) Bureaucracy/red tape 2 (6%) Infrastructure 2 (6%) (for those cited more than once) What challenges will we face as we seek to stimulate long-term sustainable business growth in Scotland? Issues Raised No. Times Cited 10 (28%) Grow/improve 7 (19%) 6 (17%) 4 (11%) 4 (11%) 3 (8%)

Demographics/skilled labour Aspiration to competition/culture Infrastructure Improve skills of managers/leaders Improved business support structure Globalisation/position of Scotland globally (for those cited more than once)

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What are we currently doing to tackle these challenges, how effective are our efforts and what should we be doing both in the public and private sectors to increase their effectiveness? General acceptance that currently the activity to address these challenges is limited, with a low awareness or focus on the problems. Measures cited to increase the effectiveness of activities: Issues Cited No of Cited Seek to improve the delivery of the supports, more risk 6 (17%) taking, better partnership working, more front line activity, less bureaucracy Enhance workforce development incl managers 4 (11%) Encourage local public/private sector partnerships 2 (5%) More on infrastructure 1 (3%) Local flexibility and decision making 1 (3%) Identify and adopt good practice 1 (3%) Improve focus 1 (3%) More robust evidence to support any action 1 (3%) Improved Education – less political 1 (3%) Post school education – more outside universities 1 (3%) Improve planning 1 (3%) Increased support for growing businesses 1 (3%) times

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Can we learn from others and can we identify best practice than can be replicated in Scotland? Universal agreement that we can. Suggested countries: Japan Canada USA Ireland Concerns that: little can be replicated from another country. Care that it is good practice and not just different In terms of business support structure, Scotland is ahead of the game If change, need to be willing to go the whole way, and not just adopt small parts Need to look at failures are closely as successes May be as effective to learn from within – do we not know the answer, but are just not doing it?

What is our vision for the next decade in terms of business growth and how are we going to get there? A range of visions were put forward, including attributes such as: • clear, detailed and realistic targets • creating the right economic and cultural climate • focus on opportunities and successes • be outward looking • focus on business growth • culture of entrepreneurship, celebrating success and “can do” • good, effective support structure for businesses, but recognising the businesses are in lead, minimising the role of public sector • include effective delivery in any vision • highly skilled workforce • strong R&D, innovation and knowledge economy

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THE RESPONDENTS Response Rate: 36

What 'sectors' of economic development have you worked in? Yes Enterprise network Local Authority Community Economic Development Higher/Further Education Scottish Executive/Central Government Consultant/Academia Business Support Agencies Private sector Other (please specify) 6 16 9 5 3 9 7 14 4 No 29 19 26 30 32 26 28 21 31 % Yes 17% 44% 25% 14% 8% 25% 19% 39% 11% % No 81% 53% 72% 83% 89% 72% 78% 58% 86%

Other: Public sector Overseas Development Curriculum Authority Voluntary work for Trade Associations

How would you describe yourself? % of respondents to that question Yes No Worked directly in business development 20 2 (9%) (91%) Worked in the private sector 18 4 (18%) (82%) Worked in strategy/policy development 15 5 (25%) for business development (75%) Have a particular interest or knowledge in 25 1 (4%) business growth (96%) % of total survey respondents % Yes % No 56% 6% 50% 42% 69% 11% 14% 3%

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