The business environment is extremely SME-friendly in Denmark, that ranks above OECD median in many dimensions. The Implementation Council was introduced in 2015 to oversee the implementation of EU legislation into Danish law with a view of minimising extra expenses for SMEs. Moreover, the government strengthened an existing plan to reduce burdensome regulation for businesses and save up to EUR 533 million by 2020. All new pieces of legislation are also subjected to a Regulatory Impact Assessment (RIA) on compliance costs for businesses which includes an SME test.
OECD SME and Entrepreneurship Outlook 2019
OECD SME and Entrepreneurship Outlook
Chapter 15. Denmark
Figure 15.1. Structure and performance of the SME sector in Denmark
Sources: Charts A, C, D: OECD Structural and Demographic Business Statistics Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Chart B: OECD Timely Indicators of Entrepreneurship Database 2018; Chart E: OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset.
SME business conditions and access to strategic resources
Institutional and regulatory framework
Market conditions
Denmark is 3rd on the World Bank’s Ease of Doing Business ranking 2018. The Danish Business Authority (DBA) manages an e-government business initiative, and building on the Modern IT platform launched in 2015, it launched in 2018 a new customer-centric portal for company registration, data maintenance, distribution, analysis and supervision. Danish companies have a strong presence in global markets, with the share of SMEs exporting online doubling from 5% to 10% from 2009 to 2015. The Export Credit Agency issued 493 guarantees to Danish companies in 2016. The 2016 Public Procurement Act makes requirements for bidding companies more flexible and incentivises the splitting of public contracts in smaller lots, making it easier for SMEs to participate.
Infrastructure
The quality of Danish infrastructure is above the EU average for railroad, roads, and in particular for air transport and port infrastructures, which are among the best in Europe. Regarding the ICT infrastructure, the government’s goal is to make 100 Mbps download and 30 Mbps upload speeds available for all households and businesses by 2020, making Denmark a frontrunner in the field. Moreover, the “Digital Enhancement of SMEs” is a core pillar of the government’s 2018 digital strategy, including targeted initiatives (e.g. the Danish GTS facilities, where SMEs have access to testing of new technologies).
Access to finance
Start-ups and SMEs face much higher obstacles in accessing financing than their European peers. In particular, the cost of borrowing for small loans and the rejection rate of loans applications are both higher than the EU average. Policies are in place to face these challenges: the amount of growth loan guarantees offered by the Danish Growth Fund increased sharply from DNK 174 million in 2007 to DKK 470 million in 2015. And in 2018, the European Investment Fund (EIF) and the Danish Growth Fund entered into a new guarantee agreement worth DKK 1.6 billion, which will allow a further increase in financing for SMEs.
Access to skills
Denmark performs above average in adult literacy and training, as well as in student proficiency, but ranks below the OECD median in terms of entrepreneurial intentions and perceived capabilities. A Technology Pact has been established (DKK 95 million over 2018-21) to support the Government’s objective to get more people interested in technical and digital skills at all levels of education, to get more people to educate themselves within it, and to get more people employed where these skills are under high demand. In addition, the national pool of regional funds allocates DKK 35 million to improve digital skills among managers in SMEs.
Access to innovation assets
SME uptake of digital technologies is high in Denmark and SMEs have closer linkages with knowledge networks than in most OECD countries. However, SME participation in R&D and innovation activities remain a challenge. The 2018 Strategy for Denmark Digital Growth (DKK 80 million over 2018-21) includes a digital transformation and e-commerce scheme that aims to provide SMEs with a better overview of technological opportunities and standards in robotics, digital and innovation systems, and that offers funding for innovation projects. In 2016, the Danish Government established the Production Panel 4.0, later renamed Digital Growth Panel, to support the digital transition in the economy, and in particular SMEs.
The full country profile is available at https://doi.org/10.1787/34907e9c-en
References
Danish Business Authority (2018), Our Digital Journey: E-government Initiatives for Businesses, Presentation by Morten Uhrskov at the OECD Working Party on SMEs and Entrepreneurship, Paris, October 2018.
Danish Government (2018), Strategy for Denmark's Digital Growth, Ministry of Industry, Business and Financial Affairs, https://em.dk/english/publications/2018/strategy-for-denmarks-digital-growth (accessed on 23 August 2018).
European Commission (2019), SBA Factsheet 2018 - Denmark, https://ec.europa.eu/docsroom/documents/32581/attachments/8/translations/en/renditions/native.
European Commission (2018), Digital Single Market - Country Information Denmark, https://ec.europa.eu/digital-single-market/en/country-information-denmark.
European Commission (2018), SBA Factsheet 2017 - Denmark, https://ec.europa.eu/docsroom/documents/29489/attachments/8/translations (accessed on 23 August 2018).
European Commission (2017), Denmark - Country Information - Mobility and Transport, https://ec.europa.eu/transport/facts-fundings/scoreboard/countries/denmark/investments-infrastructure_en.
OECD (2018), Denmark - Economic Forecast Summary (May 2018), http://www.oecd.org/economy/denmark-economic-forecast-summary.htm (accessed on 23 August 2018).