This book is the result of an OECD review at national and local levels of small and medium-sized enterprise (SME) and entrepreneurship issues and policies in Poland, undertaken as part of the 2009-2010 programmes of work of the Working Party on SMEs and Entrepreneurship (WPSMEE) of the Committee on Industry, Innovation an and Entrepreneurship (CIIE) and of the Local Economic and Employment Development Committee (LEED). These independent reviews are undertaken by the OECD Secretariat at the request of OECD member and non-member country governments, and the analysis and recommendations are agreed by Working Party and Committee delegates.

The rapid growth of small, private companies over the past 20 years has been one of the greatest successes of the post-Communist transformation in Poland. The small and medium-sized enterprise (SME) sector today contributes 69% of employment, nearly 60% of turnover and 56% of value added in the Polish economy. As in most countries, SMEs allocate relatively little, less than 5% of revenues, to fixed investment and their productivity is less than in large enterprises. But productivity in the sector, especially in micro-enterprises, has nevertheless risen more rapidly than in large enterprises. Both entry and exit rates for enterprises, almost entirely small ones, are higher in Poland than on average in the EU. This indicates considerable dynamism in the sector which has contributed to the progressive diversification of the Polish economy since the end of central planning.

SMEs in Poland contribute significantly to employment, investment and value-added, as well as to economic diversification. However, the sector remains weak. There is a disproportionate share of micro-enterprises, with fewer than 10 employees, and relatively few firms in the intermediate size classes, especially the 10-49 employee class. SMEs in Poland are rarely involved in export activity, they tend to lack the capacity, resources or willingness to invest in new technology and the low quality of their products or processes makes them generally uncompetitive in global markets. In addition, variations in framework conditions are reflected in significant regional variations in SME performance and new venture creation rates. Key barriers to SME development include: i) regulatory complexities and administrative costs; ii) high tax rates; iii) inadequate access to financing; iv) lack of qualified labour; and v) deficiencies in knowledge, management and competitiveness.

Many elements of the transformation of the business environment in Poland to make it supportive of small- and medium-sized enterprises (SMEs) and entrepreneurship have been accomplished during Poland’s accession to the World Trade Organization and the European Union. Today the strategic policy framework for pursuing structural reform and economic development in Poland is built around the Lisbon Strategy at the EU level and the National Development Strategy at the national level. Implementation takes place through the Operational Programmes (OPs) of the National Cohesion Strategy, which determines the allocation and distribution of the EU Structural Funds amounting to around 3% of gross domestic product (GDP) over the period 2007-13. This approach provides scope for improving framework conditions, notably by reinforcing the “Better Regulations” framework in areas such as taxation, inspections and reporting requirements with a view to reducing compliance costs and administrative burdens. But addressing some barriers will involve institution building and longer term reform, such as adapting the educational and vocational training systems better to the needs of the economy and strengthening the capacity of the financial sector to meet the needs of SMEs and growing firms.

Poland offers comprehensive support for small and medium-sized enterprises (SMEs) and entrepreneurship, but improvements can be made in a number of areas. The regulatory and administrative environment for entrepreneurs and SMEs can be further simplified; loan guarantees and loan funds strengthened and rationalised; the use of equity promoted; and new activities introduced to improve the skills of SME managers and employees. SME innovation can be promoted through an incubator policy, simplified intellectual property rules and cluster building, and government and large firm procurement can be influenced to improve SME access to markets. More understanding is needed on opportunities and barriers to entrepreneurship by under-represented groups including women, unemployed people, people with disabilities and young people. Entrepreneurial attitudes and culture should also be strengthened. A further serious challenge is to clarify the overall policy support structure. There is no explicit policy framework for SMEs or entrepreneurship in Poland, leaving relevant policies embedded in the activities of several ministries and scattered across many operational programmes and organisations. The result is an absence of overall design and coherence, and excessive complexity, lack of clarity, fragmented initiatives and lack of critical mass.

There is a significant local dimension to small and medium-sized enterprise (SME) and entrepreneurship policy in Poland, reflecting the need to respond to significant regional disparities in incomes and employment opportunities. This can be done by strengthening SME and entrepreneurship performance in less favoured regions and tailoring policies to varying local economic structures. Approximately one-quarter of EU Operational Programme financing is allocated directly to the 16 regions, for programmes that are designed and delivered at the regional level. There is a strong need at the local level to increase the visibility, accessibility, branding and quality standards of policy support. National government and agencies can play an important part by helping build delivery capacity for regional support actions. There should be a clearly branded and limited number of publicly supported organisations which can provide a set of support schemes to all target groups where private organisations cannot do the job. Better vertical dialogue across government levels and horizontal dialogue across and within regions would also help increase policy visibility and coherence.

The central issues Poland needs to address are: i) developing a strategic policy design and building coherence of the institutional structure for both formulating small and medium-sized enterprise (SME) and entrepreneurship policies and programmes; and ii) delivering support. The starting point should be the affirmation of the lead and co-ordinating role of a single, appropriately resourced, ministry for SME and entrepreneurship policies. This should be accompanied by the reconstitution of an explicit strategic framework for SMEs and entrepreneurship to ensure coherence, consistency and comprehensive coverage of a broader set of innovation and entrepreneurship issues. The process of developing the strategic framework for SMEs and entrepreneurship also requires better co-ordination among policy-making bodies. At the national level, this should involve an inter-ministerial council, under the Prime Minister, to co-ordinate policy formulation. Priorities for substantive policy action co-ordinated through this strategic framework concern improving framework conditions in the economy; building capacity for entrepreneurship support in infrastructure and institutions; streamlining support delivery processes; better co-ordinating policy support at all levels; reinforcing the Polish Agency for Enterprise Development’s focus on supporting enterprise development; and making programme design and delivery of support more effective, including by strengthened policy evaluation.