Growth Entrepreneurship and Finance

Gordon Murray, Ari Hyytinen and Markku Maula

A chapter in The Evaluation of the Finnish National Innovation System - Full Report, 2009, pp 147-202 from The Research Institute of the Finnish Economy

Abstract: Tax policy should explicitly recognize the incentives needed for talented persons to consider an entrepreneurial career choice as well as for potential High Growth Entrepreneurial Firms (HGEFs) to pursue (international) expansion. The planned reform of the Finnish tax system presents a unique opportunity to make the taxation treatment of equity income more favourable to entrepreneurial risk-taking and creation of potential HGEFs. The Ministry of Employment and the Economy and the Ministry of Finance should publicly assume joint operational responsibility for policies that aim at promoting entrepreneurship and knowledge-based HGEFs. The present public support system is in need of a major revision. Issues of access and relevance are particularly important for HGEFs. It is believed that both the governance and cost-effectiveness of the support system could be improved by reducing its complexity. The Finnish innovation system suffers from a mismatch between 1) the growing demand by Finnish HGEFs for global insight, foreign expertise, international networks, and 2) an insufficient supply of inward foreign spillovers due to the scarcity of world class human capital, foreign R&D and cross-border venture capital within Finland’s borders. Even if there is no single policy measure that can resolve this issue, it should be urgently recognized and addressed. The Finnish educational sector has a greater role to play in the creation of HGEFs. The reform of the Finnish university sector and the creation of Aalto University present an important and timely opportunity to create world class infrastructure for entrepreneurial education, training and research accessible to both Finnish and collaborative foreign interests involved in growth oriented and new knowledge based enterprise.

Date: 2009
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