Entrepreneurship in Spain and the Role of Policy. Decentralization and Coordination As Policy Challenges

Friday, June 24, 2016: 10:45 AM-12:15 PM
420 Barrows (Barrows Hall)
Begona Cueto, University of Oviedo, Oviedo, Spain
Maria C. Gonzalez, University of Oviedo, Oviedo, Spain
The promotion of entrepreneurship is a key goal of the European Union and of the Spanish employment policy amidst a record high level of youth unemployment. The association between entrepreneurship and economic growth has increased the role of policies fostering self-employment as a way to reduce unemployment. However, this kind of policies has been criticised because of lack of effectiveness. Some experts consider that policy-makers are not able to ‘pick winners’ so they are not promoting high quality firms but subsidizing any kind of firm with low job creation probability (Shane, 2009). Other scholars blame the formulation process and consider the institutional context as a key factor to explain the (un)effectiveness of entrepreneurship policy (Arshed, Carter, & Mason, 2014).

In this paper, our aim is to analyse policies supporting entrepreneurship in Spain, their strengths and weaknesses, as well as the main changes during the economic downturn. To do this, a qualitative methodology is used to explore the policy process. Specific interviews with policies responsible, technicians of business incubators, representatives of young self-employed associations and young self-employed workers were conducted. Based on this information, policy recommendations are proposed to improve the effectiveness of entrepreneurship policy.

Policies supporting entrepreneurship are developed at the national, regional and local level. At the national level, there have been legal changes to facilitate self-employment and reductions in social security contributions. At the regional level, they consist mainly of different kind of financial subsidies. The majority of these programmes support any kind of self-employment. Any new self-employed worker, regardless of age, qualification or activity can be a beneficiary of the programmes. Therefore, policies do not support the particularities and disadvantages of specific groups such as young workers or women or less-skilled individuals. However, the requirements to participate in these programmes are usually rigid and stringent in terms of minimum investment, guarantees, schedule of payments, obligation to survive or of maintaining the number of employees, etc. Fulfilling all these requirements is complicated for new firms, discouraging participation. In this sense, these programmes, as Shane (2009) states, probably are not effective.

Although the majority of the policies supporting entrepreneurship are developed at the national and regional level, at the local level a promising policy that fulfils the requirement of specificity emerges: the support of public business incubators. These instruments provide a variety of personal and general services to the self-employed such as information, counselling, a space to work and to meet customers and other self-employed, and training. Providing information about all the procedures necessary to become self-employed is their main strength. Assistance in business incubators via tailored counselling focuses on adjusting expectations to reality and facing all the implications of running a business via development of a viability plan, business project follow-up, information on the legal context for business constitution (types, taxation), and on the programmes available providing financial or other types of support.

General training is freely provided and varied - marketing, finance, teamwork, and so on - often with other businessmen/women teaching at them. They also provide low-priced facilities until the firm is consolidated. Cleaning services and other common services such as printing or meeting rooms are usually included in the price. Incubators operate as a meeting place for people in the same situation where they can network, share their experiences and learn from each other in co-working spaces. Business incubators can be considered as the policies currently working best in terms of supporting the setting up of a business and contributing to the long-term success and probably growth, probably innovativeness of the start-ups.

The major advantage of business incubators is their closeness to entrepreneurs that allow them to identify their needs and to adapt their services, selecting ‘winners’ and probably discouraging business with low survival probabilities. They also act searching information from the regional and national administration to advise entrepreneurs. However, unsatisfactory coordination among different administrations can generate misunderstandings and uncertainty among entrepreneurs because there are many information points ran by different public agencies and administrations (including incubators) and private-sector associations (Chambers of Commerce, employers’ associations). Greater coordination can improve the system efficiency by avoiding duplicities, clarifying information for entrepreneurs and targeting better the potential entrepreneurs.

A challenge in the policy formulation is that the information that business incubators obtain because of their personal contact with entrepreneurs can be used in the policy design. In this sense, two barriers are observed. Firstly, a bottom-up approach needs to be used. Second, coordination among different levels of administration needs to improve.  

Since business incubators technicians are close to nascent entrepreneurs, they have information of the weaknesses of regional and national programmes. They can know which programmes are more effective for them and which ones are not useful. However, the insufficient coordination among administration makes difficult that the information reaches the level of decision at the regional and national level.  


Arshed, N., Carter, S., & Mason, C. (2014). The ineffectiveness of entrepreneurship policy: is policy formulation to blame? Small Business Economics, 43(3), 639–659. http://doi.org/10.1007/s11187-014-9554-8

Shane, S. (2009). Why encouraging more people to become entrepreneurs is bad public policy. Small Business Economics, 33(2), 141–149. http://doi.org/10.1007/s11187-009-9215-5