EN

Enterprise and Industry

SBA Fact Sheet 2013

NORWAY

In a nutshell
Norways business sector counts more than 267 000 active enterprises, of which a large majority (99.8%) are SMEs. In 2012, they employed more than one million private sector workers and produced about 127 billion euros in economic value added. Norwegian SMEs contribute significantly more to GDP, as compared to their EU peers (71.9% vs. 58.4%) and have a significantly higher labour productivity. Norway displays a very positive SBA profile, with above-average results in almost all areas for which a score could be calculated. The country offers a very favourable business environment for small firms, with good framework conditions for starting up a business and internationalization. The SBA strategy Small Businesses Large Values adopted in March 2012 has been successful in putting SMEs at the centre of the policy agenda. The strategy is wide-ranging, including measures on bureaucratic simplification, access to finance, innovation/R&D, skills development, internationalization, public procurement and industrial rights.

About the SBA Fact Sheets1

The Small Business Act for Europe (SBA) is the EUs flagship policy initiative to support small and mediumsized enterprises (SMEs). It comprises a set of policy measures organized around ten principles ranging from Entrepreneurship, to Responsive administration to Internationalisation. As a move to improve the governance of the Small Business Act, the 2011 review of the Small Business Act asked for an improved monitoring. The SBA Fact-Sheets are produced annually and aim to improve understanding of recent trends and national policies affecting SMEs. Since 2011, each EU Member State has appointed a highranking government official as its national SME envoy. SME envoys spearhead the implementation of the SBA agenda in their countries.

1. SMEs in Norway basic figures

Num ber of enterprises Norw ay EU27 Num ber Micro Small Medium-sized SMEs Large Total 244.911 19.967 2.732 267.611 569 268.180 Share 91,3% 7,4% 1,0% 99,8% 0,2% 100,0% Share 92,2% 6,5% 1,1% 99,8% 0,2% 100,0% Num ber of em ployees Norw ay EU27 Num ber 361.208 377.414 267.801 1.006.423 456.632 1.463.055 Share 24,7% 25,8% 18,3% 68,8% 31,2% 100,0% Share 29,7% 20,6% 17,2% 67,5% 32,5% 100,0% Value added Norw ay Billion 74 27 27 127 50 177 Share 41,5% 15,1% 15,4% 71,9% 28,1% 100,0% EU27 Share 21,5% 18,6% 18,3% 58,4% 41,6% 100,0%

Estimates for 2012, based on 2008-2010 figures from the Structural Business Statistics Database (Eurostat). The estimated have been produced by London Economics. The data cover the 'business economy' which includes industry, constructions, trade, and services (NACE Rev. 2 sections B to J, L, M and N). The data do not cover the enterprises in agriculture, forestry, fishing and the largely nonmarket services such as education and health. The advantage of using Eurostat data is that the statistics from different countries have been harmonised and are comparable across countries. The disadvantage is that for some countries these data may be different from data published by national authorities.

Norways business sector counts more than 267 000 active enterprises, of which a large majority (99.8%) are SMEs. In 2012, they employed more than one million private sector workers and produced about 127 billion euros in economic value added. What sets Norways SME sector apart from the EUs is the significantly higher than average contribution to GDP (as measured by the share of value added): Norwegian SMEs account for almost 72% of the value added generated in 2012, as compared to an EUaverage of 58.4%. At the same time, SMEs in Norway account for a similar share of employment (68.8% vs. 67.5% in the EU), which means that Norwegian SMEs have a much higher labour productivity than their EU peers. SMEs are more important in Norway than in the European Union also because the branches that are currently doing well, such as the marine sector and petroleum supply sectors, are dominated by SMEs (e.g. share of SMEs in value added of the Mining (B) sector is about 73%). Additionally, the vast majority of SMEs are owned and managed by individuals or families and Norway has a longstanding culture that is well-tuned for the effective and sound management of small companies. This cultural factor, the use of modern technology and, of course, local natural resources provide a strong business environment that makes many Norwegian SMEs successful. The importance of SMEs is reflected in the sectors of the business economy. Consequently, they dominate SBA Fact Sheet 2013 Norway

(share of more than 50%) all sectors, except one, with respect to value added with shares often significantly above EU equivalents. The exception is Manufacturing (C), where the share of value added, although above the EU average by about a tenth, is below 50%. When considering the distribution of SMEs across sectors, another Norwegian peculiarity is found. In the EU, the important sectors are Wholesale and Retail trade and Manufacturing, with a share in value added of about 22%, and 21%, respectively. At the bottom in the EU is Mining, with a share of about 1%. The distribution of SMEs across sectors in Norway is completely different. Unlike the EU, the sector with the largest share in value added among Norwegian SMEs, with about 30%, is Mining. The next most important sectors for SMEs are Wholesale and Retail trade and Manufacturing, but with a shares of 14% and 10%, respectively. The large share for Mining reflects the fact that Norway is a major oil and gas producer. The business economy experienced a severe decline in value added in 2008/2009. Yet, data also show that SMEs were not hit as hard as the large enterprises. To some degree, this is due to the fact that the large companies are to a larger extent active in sectors with a stronger focus on exports, like the manufacturing. The trend in the Norwegian business demographic is clearly positive. The number of registered businesses was 334 433 in 2008 and has grown since. In 2011, 2

SME trends in Norway4

362 977 businesses were registered. Moreover, a total of 55 415 new enterprises were registered in 2012, an increase of 10.9 per cent compared to 2011.2 Although the number of deregistrations is currently not available for 2012, a further increase in the number of businesses can be expected. This presumption is supported by the fact that the number of bankruptcies is falling while the number of newly established firms is increasing.3

SBA Fact Sheet 2013 Norway

2. Norways SBA profile as a part of its process of monitoring and evaluating the new SME strategy. Overall it can be considered that the government policies and measures for 2013 (in the context of the Europe 2020 strategy) are aligned with the expectations of the SME sector and the SBA principles. Given the adoption of the new SME strategy, it is very likely that the focus on SMEs in 2013 will be even stronger than in recent years. Based on measures announced and implemented in 2012, the focus will be on the continuing to strengthen the provision and uptake of e-services to/by SMEs and other businesses, through the e-portal Altinn and the launch of BankID.

Norway displays a very positive SBA profile, with above-average results in almost all areas for which a score could be calculated. The country offers a very favourable business environment for small firms, with good framework conditions for starting up a business and internationalization. It is clear that Norway has put a strong focus on SME policy in recent years. The SBA areas with substantial policy progress have been responsive administration, access to finance and second chance, due to the introduction of concrete measures in these areas. In the other SBA areas a limited number of measures have been introduced which fit the criteria of the SBA principles. The SBA strategy Small Businesses Large Values adopted in March 2012 has put SME policy on the agenda. The Strategy focuses on the importance of SMEs and their contribution to the Norwegian economy and contains concrete measures aimed to improve business environment and access to markets for SMEs. Among these are the bureaucratic simplification, access to finance, innovation/R&D, skill development, internationalization, public procurement and industrial rights. The main body responsible for

the implementation in Norway is the Ministry of Trade and Industry. Norway also monitors the SBA implementation
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Norways SBA performance: Status quo and development over 2008-20135

I. Entrepreneurship

SBA Fact Sheet 2013 Norway

Norways score in this dimension surpasses by far the EU average, although its performance across the different indicators varies to a large degree. For example, the level of entrepreneurial activity as measured by the self-employment rate is half the EUaverage, yet the entrepreneurship rate, with 29% of the adult population having started a business, stands above the EU-average of 23%. Again, despite favourable conditions for becoming entrepreneurs (as attested by the higher-than-average preference for and feasibility of self-employment) fewer Norwegians

show an intention to open up a business in the near future (5% of the adult population, as compared to 13% in the EU). Norway outperforms the EU-average in most of the remaining indicators in this dimension, offering very positive societal and media perception of entrepreneurs. The countrys education system it is also very successful in equipping future entrepreneurs with the skills and sense of initiative necessary for opening up a business. No major policy initiatives have been reported for 2012 and the first quarter of 2013.

II. Second chance

Second Chance is another dimension where Norway performs better than the EU average, apart from the degree of support for a second chance, which is only slightly lower than par, i.e. 80% of Norwegians are willing to give entrepreneurs a second chance, compared to 82 % in the EU.

Last but not least, the costs of closing down a business in Norway are extremely low compared to the EU average. The time to close a business is also half of the EU average - taking less than one year in Norway. No major policy initiatives have been reported for 2012 and the first quarter of 2013.

III. Think small first

Norway has an average performance on this dimension. The two indicators that measure Communication and simplification of rules and regimes and the Burden of government regulations SBA Fact Sheet 2013 Norway

score slightly above par. However, on the other hand, Norway scores slightly below the EU average when the licences and permits systems are compared. No 6

major policy initiatives have been reported for 2012 and the first quarter of 2013.

IV. Responsive administration

Once again, Norways scores are well above the EU average for all indicators in this dimension, offering an administration very responsive to the needs of businesses. Norway offers very good conditions for starting a business as well as short and cheap procedures for transferring property. Very importantly, the licensing complexity index, measuring the economic impact of legal and administrative procedures for post-registration licensing is very low as compared to the EU-average. This means that it is comparatively cheaper and faster for Norwegian businesses to go through the bureaucratic hassle of getting licenses as compared to their EU peers. As far as policy is concerned, the Ministry of Trade

and Industry implemented in 2012 the strategy "Small Enterprise Large Value" consisting in measure aiming at the simplification of procedures, access to finance, innovation and R&D, skill development, internationalisation, public procurement and industrial relations. The same Ministry is running the Altinn portal since 2003. This has been recently re-launched in a redeveloped and strengthened form. Finally, the Ministry of Trade and Industry introduced in 2012 the possibility of starting up a firm with a share capital of 30,000 NOK (4,000 approx) reducing it from 100,000NOK (13,500 approx).

SBA Fact Sheet 2013 Norway

V. State aid & Public procurement

It is not possible to calculate Norways overall score as data are only available for two indicators, namely, the average delay in payments from public authorities and the use of e-procurement services by SMEs.

However, on both indicators Norway leads the EUaverage once again. No major policy initiatives have been reported for 2012 and the first quarter of 2013.

VI. Access to finance

Only 7 out of 9 indicators are available for this dimension (there is obviously no information on EUsupported structural and regional funds dedicated to financing businesses) and Norway fares better than the EU average in all of them, except for two where is is on par (Strength of legal rights and Depth of credit information). Access to private bank loans and public financial support, as well as venture capital investment, are all

areas where Norway scores better than the EU average. It also displays good results in terms of short payment durations 30 days as against 52 days for the EU. Furthermore, proportionally fewer payments are lost by businesses. On the policy side, no major policy initiatives have been reported for 2012 and the first quarter of 2013.

SBA Fact Sheet 2013 Norway

VII. Single market

No information is available on this dimension.

VIII. Skills and innovation

Skills and innovation is a dimension where the situation less clear-cut, although Norways average score is still above par. When looking at individual indicators, the results seem to diverge. In particular the innovation activity of firms seems to be less intensive in Norway than in other EU peer countries. Thus, Norway has below-average results in what concerns the share of SMEs introducing product and marketing innovations, the share of SMEs innovating in-house, as well as share of firm revenue generated by these innovations.

On the other hand, Norway has the most remarkable performance on the two indicators for SMEs selling/buying online. Norway also beats the EU average by a large margin in terms of the share of employees taking part in education and training. On the policy side, the Ministry of Trade and Industry has introduced the opportunity of using companies' BankID as a unique log in point for the electronic services offered by the Public Administration.

SBA Fact Sheet 2013 Norway

IX. Environment

There are only five indicators available for tracking performance on environmental aspects. Norwegian SMEs provide a wider range of green products and services although they have benefitted less from

public support measures in this area. They have also taken more resource-efficiency measures. No policy initiatives have been reported for 2012 and the first quarter of 2013.

X. Internationalization

Norway display, once again, a strong performance on this SBA dimension. All indicators describing the framework conditions for trading are either above the EU-average or very close to it. The procedures for exporting/importing are done in a very timely manner, while their costs stand more or less on par with the EU-average.

On the policy side, Export Credit Norway has been instituted to act on behalf of the Norwegian Government in the provision of competitive loans and finance to export.

SBA Fact Sheet 2013 Norway

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3. Good practice
To show what the government does to promote SMEs, we include an example of good practice: Waiving Audit This measure furthers bureaucratic simplification for SMEs. It allows some enterprises with an accounting obligation to be exempt from the auditing obligation. This applies to enterprises with an obligation to keep accounts whose total operating revenues do not exceed NOK 5 million. If the annual accounts show that the operating revenues exceed the maximum amount, the auditing obligation takes effect from the subsequent financial year.

Reference: https://www.altinn.no/en/Start-and-Run-a-Business/Start-up-and-registration/Accountant-andauditor/Do-you-need-to-have-an-auditor/

About the SBA Fact Sheets

The Small Business Act (SBA) Fact Sheets are produced by DG ENTR as part of the SME Performance Review (SPR), which is its main vehicle providing an economic analysis of SME issues. They combine the latest available statistical and policy information for the 28 EU Member States and another 9 non-Member States which also contribute to the EUs Competitiveness and Innovation Framework Programme (CIP). The Fact Sheets produced annually help to organise the available information to facilitate SME policy assessments and monitor SBA implementation. They document the status quo and progress. They are not an assessment of Member State policies but should be regarded as an additional source of information designed to improve evidence-based policy making. For example, the Fact Sheets cite only those policy measures deemed relevant by local SME policy experts. They do not, and cannot, reflect all measures taken by the government over the reference period. More policy information can be found on a database accessible from the SPR website. Please also see the end notes overleaf.

For more information

SME Performance Review: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm Small Business Act: http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm The European Small Business Portal: http://ec.europa.eu/small-business/index_en.htm Entr-SPR@ec.europa.eu

SBA Fact Sheet 2013 Norway

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The SBA Fact Sheets 2013 benefited substantially from input by the European Commissions Joint Research Centre (JRC) in Ispra, Italy. The JRC made major improvements to the methodological approach, statistical work on the dataset and the visual presentation of the data.
2

Statistics Norway: http://www.ssb.no/en/bedrifter-foretak-og-regnskap/statistikker/foretak/kvartal/2013-0312#content; accessed: 11.04.2013.

3

The reader should note that the number of business registrations and bankruptcies is not directly comparable.
4

The three graphs below describe the trend over time for the variables. They consist of index values for the years since 2008, with the base year 2008 set at a value of 100. As from 2011, the graphs show estimates of the development over time, based on 2008-2010 figures from the Structural Business Statistics Database (Eurostat). The estimates were produced by London Economics. The data cover the business economy, which includes industry, construction, trade, and services (NACE Rev. 1.1 Sections C to I, K). The data do not cover enterprises in agriculture, forestry, fishing or largely non-market services, such as education and health. A detailed methodology can be consulted at: http://ec.europa.eu/enterprise/policies/sme/facts-figuresanalysis/performance-review/index_en.htm
5

The quadrant chart combines two sets of information: firstly it shows the status quo performance based on data for the latest available years. This information is plotted along the X-axis measured in standard deviations of the simple, non-weighted arithmetical average for EU-27. The vertical corridor marked by the dotted lines defines the EU average. Secondly, it reveals progress over time, i.e. the average annual growth rates for the period 2008-2013. The growth rates are those of the individual indicators which make up the SBA area averages. Hence, the location of a particular SBA area average in any of the four quadrants provides not only status quo information about where the country is located in this SBA area relative to the rest of the EU at a given point in time, but also to the extent of progress made in the period 2008-2013.

SBA Fact Sheet 2013 Norway

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