Abstract

PUBLIC AUTHORITIES
Decentralization, globalization and European
Union cohesion and competitiveness agendas FOR
have shifted the focus of development
policies from the central to the regional and ENTREPRENEURSHIP
local levels. Most studies on economic
development are informed by macroeco- A management approach to
nomic and entrepreneurial theories, the
normative implications of which are unclear execute competitiveness
for public authorities attempting to enhance policies
competitiveness and entrepreneurship in their
communities. This paper discusses the
centrality of implementation efforts for the Veronica Vecchi,
effectiveness of regional and local competi-
Manuela Brusoni and
tiveness programmes and policies. Striving to
capture the challenges posed by the interna- Elio Borgonovi
tional literature, the paper presents a man-
agerial approach, developed under an Veronica Vecchi
inductivedeductive method grounded in Public Management & Policy Department
some Italian cases of entrepreneurial devel- SDA Bocconi School of Management
opment. The intention is to provide a Milano
reference point for regional and local public Italy
managers whose task it is to select and E-mail: veronica.vecchi@unibocconi.it
execute actions and instruments to support
businesses start up and growth. Manuela Brusoni
Public Management & Policy Department
SDA Bocconi School of Management
Milano
Italy
Key words E-mail: manuela.brusoni@unibocconi.it
Competitiveness, SMEs, execution, local
authorities
Elio Borgonovi
Department of Public Management
Bocconi University
Milano
Italy
E-mail: borgonovi@unibocconi.it

2012 118, iFirst article

Public Management Review ISSN 1471-9037 print/ISSN 1471-9045 online
2012 Taylor & Francis
http://www.tandfonline.com
http://dx.doi.org/10.1080/14719037.2012.725759
2 Public Management Review

INTRODUCTION

Entrepreneurial development is becoming one of the most important determinants of

local economic development and thus plays a crucial role in public policy design and
implementation (Gilbert et al., 2004; Karlsson and Andersson, 2009). Entrepreneurship
is also one of the main priorities of European Union competitiveness and growth policy,
as stated in its Europe 2020 strategic plan, which represents one of the main items of
the European budget.1 This policy is mainly planned and implemented at a regional
level within Structural Funds programmes, which are co-funded by Member States and
regions (on the so-called additionality principle) and managed by the latter coherently
with their main local priorities (on the so-called concentration principle) (Ansell, 2000;
Bachtler and Mendez, 2007).
Since there is a wide convergence towards entrepreneurship as the main focus of
local2 development policies, how can policy makers, public authorities and other local
actors (chambers of commerce, associations, development agencies and so on)
maximize their prospects of achieving that strategic goal?
This question is at the core of the academic literature, suggestions from which
include:

. publicprivate venture capital (Aernoudt, 1999; Lerner, 1999; Mason, 2009;

Murray, 1998);
. incubators (Acs and Szerb, 2007; Aernoudt, 2004; Pena, 2002; Sternberg and
Wennekers, 2005);
. high growth start-ups or gazelles support (Mason and Brown, 2011; Shane,
2009);
. do not harm approach (Hospers et al., 2008).

This question has also arisen from our teaching and research activities on
competitiveness and local development policies, where we have encountered and
discussed the related challenges with more than 150 Italian public and private managers,
whose main concern is what to do to support businesses when global economic crisis
has seriously affected the already weak local economies. In line with the literature, they
reported that municipalities, provinces, regions, development agencies, chambers of
commerce, business and entrepreneurs associations and other organizations working in
this field are mainly oriented to projects and actions with short-term objectives
(Malecki, 1984; Rubin and Zorn, 1985), aimed at demonstrating the spending power
(Brusoni and Vecchi, 2010),3 often following fashions and trends, according to a
picking winners approach (Hospers et al., 2008).
The request done by the Italian managers we encountered for a more practical
oriented research is not a mere practitioner point of view. In the last ten years, several
scholars have also underlined implementation as a relevant issue for local economic
policies. Mason and Brown (2011) report that literature is often vague when providing
 Vecchi et al.: Local authorities for small-medium enterprises 3

suggestions to policy makers or authorities: it does not give specific guidance and the
tendency is to focus on what not to do. McGuire (2000) calls for more complete
empirical studies to support managers and professionals involved in the implementation
of local development policies, as the literature on the topic emphasizes policy design at
the expense of policy operation. Audretsch (2004) recommends that future research be
more focused on how public policies can best be deployed to promote innovative
entrepreneurship.
Starting from these considerations, the objective of this paper, focused on Italy but
informed by international literature, is to illustrate how a management approach in the
definition and implementation of development programmes and projects aimed at
improving the competitiveness of enterprises is essential to generate results suitable for
achieving the aspirations and objectives of regional, national and supranational
entrepreneurship policies. In essence, the objective is to identify, represent and discuss
a process, called here 3Es, that supports managers in the implementation of a system of
services, activities and financial measures to improve competitiveness.
The paper is structured as follows: section The Background of the Research
analyses the background of our research; section Methodology presents the
methodology underpinning the work; section An Analysis into some Cases of Local
Development discusses the main observations from five case studies, which have
supported the definition of a managerial framework (presented in section A
Management Process for the Implementation of Entrepreneurial Policies at the Local
Level: The 3Es) useful to drive local authorities in charge of local development policies
implementation; section Application of the 3Es Process to the Province of Reggio
Emilia describes how that framework was tested in Reggio Emilia province, especially
for the design and implementation of the Reup initiative, dedicated to start-ups, and
the results achieved. The final section discusses the main conclusions and suggests
further development.

THE BACKGROUND OF THE RESEARCH

Theoretical background

In the last two decades, we have shifted, especially in Europe, to a growing involvement
of regional and local levels in economic development policies due to the consequences
of a number of trends, namely:

1. decentralization of competences and increased autonomy of local authorities

(Pollitt et al., 1998);
2. centrality played by European Union structural funds, the functioning of which
is based on subsidiarity and multi-level governance principles (Governa and
Salone, 2004; Percoco and Giove, 2009; Pichierri, 2002);
4 Public Management Review

3. globalization. When globalization affects jobs and economies, local actors strive
to plan, design and implement actions to support their communities and
businesses (Ansell and Gash, 2007). Furthermore, globalization and the shift
towards knowledge based economies in the developed world (Cooke, 2001)
have made traditional monetary and fiscal based national public policies less
effective and have stimulated at all government levels new entrepreneurial
policies (Audretsch, 2004; Gilbert et al., 2004).

Therefore, a growing number of actors are involved in the design and execution of
local development policies (Agranoff and McGuire, 1998), which very often lie outside
traditional jurisdictions and operate according to network governance models (Agranoff
and McGuire, 1998; Ansell, 2000; Cooke and Morgan, 1993), providing a stimulus for
the development of various form of partnerships (horizontal or interorganizational and
vertical or intergovernmental; Marks, 1992; Percoco & Goive, 2009), where
collaboration is the main determinant of successful implementation (Ansell and Gash,
2007; OToole, 1995, 1997).
Despite the recognition of the central role played by local actors and the quest for
more practice-oriented evidence, the literature about local development, which
incorporates analysis informed by several disciplines (Becattini, 2001) such as
macroeconomics and entrepreneurial theory, is focused on the determinants of
economic development and businesses competitiveness. More effective public
policies are advocated (Karlsson and Andersson, 2009, p. 127) and public
programmes are analysed (OECD, 2010b; Storey, 2004) but in a rather broad and
general way that fails to provide clear guidance for managerial action. In some cases,
we found several and controversial results and suggestions and often misleading
examples of superficially treated snapshot cases, when referred to Italian
geographical areas that we know very well (among others Ansell, 2000; Storey
and Theter, 1998), perhaps caused by the exhausting search for a quantitatively
relevant number of observations. In other cases, we have found interesting research
inputs that have informed our work: a result based legitimacy of public authorities
involved in local economic policies (Malecki, 2002; Rondinelli, 2003); the
suggestions provided by Cheshire and Magrini (2002) to invest on value-added
interventions (such as services for the improvement of tangible or intangible
conditions to empower businesses, education and training, infrastructures, better
legal and regulatory framework) instead of on pure waste (territorial marketing and
promotion interventions) or zero sum (fiscal or financial incentives to attract
investments) interventions. Equally useful are the five rules suggested by Waits et al.
(1992), namely: (i) think economic process not agency functioning; (ii) think system
not economic development programme; (iii) think customer demand not programme
supply; (iv) think catalyst non-direct supplier; (v) think impact and accountability
not proliferation.
 Vecchi et al.: Local authorities for small-medium enterprises 5

Italian background: Competitiveness and regional and local development

policies

The most recent data on Italian competitiveness shows a very critical situation: it has
fallen from third last place in 2009 to second to last in 2010 on the OECD scale, which
measures the conditions for the development of business activities (OECD, 2009,
2010a) and is considered a moderate innovator by the European Innovation Scoreboard
(Innometrics, 2011). Moreover, for twenty years, Italy has shown an increase in
productivity significantly lower than the EU average (WEF, 20102011). However, the
resources available for competitiveness programmes are massive: the quadro strategico
nazionale (national strategic framework), which defines the main measures for
supporting competitiveness and socio-economic cohesion for the 20072013 period,
fixes an overall budget of 124 billion euro to be added to the funds for underdeveloped
areas, amounting to 54 billion euro over the same period.
In Italy, Regions play a central role in planning economic development policies, which
are implemented through regional agencies (as financial agencies that provide different
financial tools to businesses, like grants, subsidized loans, mezzanine financing, equity and
guarantee) or through different local authorities or institutions, depending on regional
institutional settings. For example, provinces implement training and social inclusion
policies, mainly funded by the European Social Fund; in some cases, the execution of
national and regional policies relies on local partnerships (Governa and Salone, 2004;
Percoco and Giove, 2009; Pichierri, 2002). In that very variegated framework, other
institutions are also active, especially in the entrepreneurship field, sometimes in
partnership and sometimes through stand-alone actions: they are chambers of commerce;
associations; private consortia of businesses or clusters (Brusoni and Vecchi, 2008; Vecchi
et al., 2012). Also in Italy, as it happens elsewhere, development policies often go
beyond traditional administrative borders. Therefore, in this paper, we use the term
local to refer not only to local level strictu sensu but also to the regional level.

METHODOLOGY

The research method underpinning our work is framed within an inductivedeductive

approach, typical of the management and economics of business literature (e.g. Masini,
1979) and public administration studies (e.g. Jensen and Rodgers, 1996).
In the period between 2006 and 2009, we engaged more than 150 Italian public and
private managers involved in local development programmes, working in 65
organizations. The typological breakdown of these organizations is as follows: regions
(7); regional financial agencies (4); provinces (8); municipalities (17); chambers of
commerce (8); business associations (8); development agencies (9); incubators and
technology parks (4).
6 Public Management Review

From this engagement, we selected five cases, aimed at supporting the creation of
start-ups and businesses innovation processes and internationalization, that we
considered transparently observable (as recommended by Eisenhardt, 1989) and exemplary
(as defined by Flyvbjerg, 2006) to provide a description of managerial processes
embedded in policy implementation (Kidder, 1982). They are:

. Mi@rti, the project to develop craftsmanship of excellence in the municipality

of Milan;
. The administrative simplification process (red tape reduction) promoted by the
Businesses Association of the province of Pisa in collaboration with the local
authorities;
. The public and private Venture Capital fund of the Liguria region (the project is
run by FILSE, its financial agency);
. The I3P incubator of the Politecnico of Turin; and
. The From Research to Business initiative of the Development Agency of the
province of Trento.

We have considered these cases exemplary for the following reasons. They embrace key
development and competitiveness policies, dealing with complex aims or problems:
empowerment and internationalization of small businesses (Mi@arti, Trento initiative and
publicprivate venture capital); red tape reduction (Pisa); support to R&D investments and
technological development of SMEs (I3P incubator and Trento initiative). Furthermore,
these cases focus on different public authorities and institutional levels, embracing a wide
territory (sometimes a region, sometimes a province or in the case of Mi@art one of the
biggest Italian cities). They also effectively capture the broad, often fragmented (Brusoni
and Vecchi, 2012) and multi-actor framework in which local development policies are
defined and implemented in Italy. Some of them show how a structured managerial
approach, as opposed to a picking winners approach (Hospers et al., 2008; Vecchi and
Brusoni, 2012), can generate some impressive local development results, even if they are
small wins (Martin et al., 2012). Furthermore, these cases play also as exemplars for
other organizations. In fact, roles played by the actors involved, especially by leading
organizations, are aligned to their institutional missions and perimeter, and they act within
the given judicial framework without any special powers conferred by an ad hoc law.
Two of them are retrospective cases (Trento case was analysed in 2007 and I3P in
2008) and three are longitudinal cases, analysed over the 20072009 period (Jensen and
Rodgers, 1996; Voss et al., 2002).
While studying them, we had also examined literature and that continual cycle
(Eisenhardt, 1989) helped us to shape a conceptual framework that was then applied in
an experiment conducted in 20092010 within the Reggio Emilia province plan for
crisis recovery.
The choice of Reggio Emilia appeared adequate to test the framework for the
following reasons. The Reggio Emilia territory, whose economy had been developed
 Vecchi et al.: Local authorities for small-medium enterprises 7

in the last fifty years through micro and small businesses and on a deep
entrepreneurial culture (Bianchi, 1998), was experimenting with a dramatic
economic crisis, as described in section Application of the 3Es Process to the
Province of Reggio Emilia. As a consequence of that, the province and local
stakeholders were keen to develop a well-structured programme, to be defined
according to an informed and managerial approach, aimed at relaunching economic
development, leveraging the well-rooted entrepreneurial identity.4 The openness of
the province and local stakeholders to introduce innovations and to experiment with
new approaches allowed us to find suitable conditions to test the managerial
framework.
The analysis of cases and the pilot study have been conducted in a team through
observations, interviews and documental examination and data collected have been
triangulated (Yin, 2003).

AN ANALYSIS INTO SOME CASES OF LOCAL DEVELOPMENT

This section describes the five cases observed which have contributed to the definition
of the proposed managerial process. They are analysed according to a common
reference scheme based on three main issues: objectives of the public project/
initiative/programme, context characteristics and actions taken (Table 1).
The cases described highlight a management approach that seems to have been an
important point of strength for the implementation of development policies at the
local level.
In particular, the actions taken can be categorized as follows:

1. Analysis of business requirements, the peculiarities of the local area and the
point of view of stakeholders as a basis for the definition of the activities to
support enterprises;
2. Development of legitimacy and leadership based on the ability to respond to the
needs and achievement of tangible results;
3. Prevalence of public support based on services, sometimes intangible, such
as training (even informal and coaching), rather than on tangible
investments;
4. Subordination of financial aids to the creation of adequate development
conditions within businesses (through services and training) in order to invest
public funds on businesses and projects with high potential of development; and
5. Replacement of grants with more efficient public financing methods able to
stimulate private co-financing.

Table 2 shows the presence of these managerial success factors in the cases
analysed.
Table 1: The five cases analysed: objective, context and actions undertaken by the local authority
Case and local
authority leader
Mi@rti
Municipality of Milan
Administrative
simplification
Industrial Union of Pisa
Start-up incubator
I3P, Polytechnic of Torino
Objective
Develop artistic craftsmanship of
excellence to improve tourist
attraction of the city and
stimulate the development of
micro-entrepreneurship, also
among the young
Reduce bureaucracy and
cumbersomeness of
procedures for businesses in
the province of Pisa
Support the creation of innovative,
science-based businesses.
Context
Fragmentation of stakeholders and
initiatives
Search for an immediate answer
(short cut): construction of a
physical incubator
Despite numerous initiatives at a local
and regional level (integrated
procedures, computerized
systems), the perception of
bureaucracy among the 85% of
entrepreneurs was very strong and
widespread.
Widespread tendency (not only in Italy
but also in Europe, Aernoudt 2004)
to create business incubators as
physical places, designed to
provide low rent laboratory and
office space and to share the
overall cost of operation.
Actions
The Municipality involved all the relevant stakeholders
and a group of craftsmen to understand how to
concretely support the local artistic craftsmanship.
The process led to the design of a virtual incubator
(called Mi@arti) as a space where aggregate
8 Public Management Review
already existing real services (provided by
associations and the chamber of commerce);
where demand and supply of training and
professional internship can meet and where each
craftsmen can promote their unique production.
The Industrial Union of Pisa promoted a round table
between public local authorities and businesses
aimed, in the first place, at fostering mutual
awareness and subsequently at improving, also on
the basis of feedback from entrepreneurs, existing
procedures and services and launching other
innovative ones.
I3P has been conceived with a different approach:
greater investments in intangible (real services)
rather than tangible assets. Among the services
provided: strategic consultancy to support the
development of the entrepreneurial idea; training
and coaching activities; networking with
entrepreneurs, professionals, managers; support
matching of venture capital supply and demand.
(continued)
Table 1: (Continued)
Case and local
authority leader Objective
Business innovation Recover the legitimacy of the
support Agency.
Trento Development Concretely support the innovative
Agency capacity of traditional
businesses. Improve public
private financing leverage.
PublicPrivate Venture Stimulate a more efficient process
Capital Fund of allocation of public
FILSE, financial agency of resources and channel private
Liguria Region funds towards the closure of
equity gaps of SMEs, whilst
promoting the creation, growth
and competitiveness of
innovative start-ups.
Context
In the province of Trento, businesses
were accustomed to receiving
generous grants despite their level
of innovation and efficiency, thanks
to rich public budgets as a
consequence of a special fiscal
regime agreed to the province by
the Italian constituency.
Since 2000, the European Union has
promoted the creation of public
private venture capital funds. As a
consequence, several regional
mixed funds flourish in Italy and
Europe, without achieving the
desired results due to the
inadequacy of the ecosystem and
the lack of deal flow (potential
SMEs to be funded).
Actions
Trento Development Agency launched the initiative
from research to business to help
entrepreneurs, with the support of recognized
champions, to understand how to innovate their
businesses. Champions supported entrepreneurs
to discover innovation potential and prepare
business plans that would have specifically funded
by the Agency, not only by traditional grants, thus
channelling in more effective ways public
resources for competitiveness and innovation.
A deep analysis of the context and regional public
private venture capital funds experience across
Europe led Liguria region to support the
effectiveness of the fund with actions aimed at
developing ecosystem and businesses deal flow
(based on real services).
Vecchi et al.: Local authorities for small-medium enterprises
9
10 Public Management Review

Table 2: Success managerial factors of the five cases observed

Success factors Mi@arti Pisa I3P Trento Development Agency Regione Liguria

Analysis of needs and context X X X X

Legitimacy X X X
Real services vs. financial aid X X X
Real services (intangible) vs. X X
tangible investments
Innovative financial methods X X

A MANAGEMENT PROCESS FOR THE IMPLEMENTATION OF

ENTREPRENEURIAL POLICIES AT THE LOCAL LEVEL: THE 3Es

From the literature analysis, particularly in relation to the ideas developed by Cheshire
and Magrini (2002) and Waits et al. (1992) and by the observation of the five cases and
the main actions undertaken, we have drawn a three-step process to empower the
execution of local entrepreneurial policies. The three steps have been defined by
rearticulating the five actions derived by the cases analysis, as shown in section An
Analysis into some Cases of Local Development.
The three steps of this process are formed by (i) system actions, (ii) business support
services and (iii) financial aid. The process is defined by the authors as the 3Es, or the
three-step management process for policy execution.5
The system conditions represent hygiene or contextual factors, i.e. necessary elements
to begin effective development programmes, also of an entrepreneurial nature. Once
the fertile ground has been created, it is possible to move to the second phase: the
provision of services, which also includes training. Business support services have the main
objective of launching a business (start up) or improving the competitive capacity of
those existing. Once the so-called business deal flow has been created, it is then
possible to enter the third phase in which authorities can devote resources to financing
businesses in a selective and incentivising manner.
Below we outline the nature of these three phases in more detail.
Among the system conditions, of particular importance are: adequate hard facilities, such
as infrastructures (not only main national ones but also regional and local) and lean rules
(Porter, 2000); leadership of public authorities based on the effective ability to respond to
problems and to generate results (Malecki, 2002; Rondinelli, 2003; Ansell and Gash,
2007) and a co-evolution of public and private players. Co-evolution can be identified as
the ability to listen to the enterprises and more in general the stakeholders needs and as
the definition of integrated (publicprivate) paths for development (Agranoff and
McGuire, 1998; McGuire, 2000; OToole, 1995, 1997). Business needs understanding is
rare within entrepreneurial public programmes but it has proven essential for their
 Vecchi et al.: Local authorities for small-medium enterprises 11

effectiveness (Waits et al., 1992; Freel, 1998; Bennet and Robson, 2003). Mason and
Brown (2011) suggest also that it could be useful to employ champion entrepreneurs to
support businesses in the analysis of their development requirements. Joint training
programmes for public and private operators represent a milestone of the co-evolution
process and could support the co-design of new specific services for businesses. However,
creating a common knowledge and sharing an appropriate vocabulary are effective
facilitation agents for a reciprocal understanding of needs and goals (Cigler, 1999).
Business services are aimed at supporting enterprises in those activities (accounting and
finance, marketing and commercialization) for which they do not have specific competences
and for which the purchase of consultancy could be too expensive. These services could be
delivered through dedicated agencies (such as development agencies); through business
incubators (Mason and Brown, 2011; Pena, 2002) or private partners (Bennet and Robson,
2003). These services along with specific training support, even informal support (Storey,
2004), are necessary to create a flow of high potential businesses (Autio et al., 2007; Fischer
and Reuber, 2003; Hallberg, 1999; OECD, 2010b), which could benefit from additional
public support, such as through access to funding (Almus and Czarnitzki, 2003).
As for financial aid, public authorities should recognize the most appropriate facilities
on the basis of business type and objectives. For example, subsidized loans and public
private venture capital funds can be more efficient alternatives to traditional grants,
because they stimulate the private co-financing and the beneficiaries commitment
(Hallberg, 1999; Mason et al., 1996). However, financial programmes should be the
result of a well-planned integration of public and private sources of funding and not the
result of random choices, as is often the case (Oakey, 2003).
That process could be depicted as a flow of actions that take place in multi-
stakeholder patterns: essential ingredients for the process to work are co-evolution and
legitimacy, which must be verified and reinforced in the first phase. Therefore, the
three phases identified here should not be interpreted and implemented in a mechanistic
or unidirectional manner: taking time for assessing and listening to partners and
beneficiaries of the interventions is important in order to identify possible
improvements and activate a collaborative learning process (Ansell and Gash, 2007).

APPLICATION OF THE 3Es PROCESS TO THE PROVINCE OF REGGIO EMILIA

Here, we describe how the Province of Reggio Emilia has explicitly applied the 3Es
process to cope with the dramatic economic crisis started in the years 20082009.

The context and the goals

The crisis that hit the global economy at the end of 2008 led many Italian public
authorities to seek the best way to support businesses and the recovery of
12 Public Management Review

competitiveness in their territorial areas. In particular, the increasingly scarce

economic resources available to Italian local public authorities led administrators and
managers to experiment forms of support/intervention able to combine efficiency and
effectiveness.
The Province of Reggio Emilia, among the richest and most developed areas in Italy
and Europe, in early 2009 faced a serious crisis in the local industry (in particular
mechanical and ceramics): the unemployment rate rose by 88% in a few months, youth
unemployment doubled and the rate of unoccupied young people reached approx. 30%
(Source: Province of Reggio Emilia). In this crisis context, the situation was further
exacerbated by the reduction of European Union and regional funds.
Given this scenario, the Province agreed to apply the 3E process analysed above6 to
select and implement the most appropriate actions to support businesses, workers,
young people and families.

3Es first step Co-evolution within the board of stakeholders

The first phase of the process, i.e. the creation of the system conditions, is mainly
focused on the establishment of a board, led by the Province, to put together all the
local stakeholders. All the forty-five municipalities in the Province, the Chamber of
Commerce, all business associations and all other significant entities such as local
foundations, banks and educational bodies took part in the board (still active at the
time of writing). The leadership of the Province had to be built and could certainly not
be taken for granted for the simple fact of having set up that board. Moreover, it could
not be built via a series of meetings, but rather by demonstrating an effective capability
to make decisions and obtain concrete results, to the achievement of which the other
stakeholders had to contribute. Therefore, joint co-evolution initiatives were initiated
such as the organization of thematic meetings, with the participation of external
experts such as the European Investment Bank and IBAN (the Italian Association of
Business Angels), in which clear and structured programmes/actions and hypotheses
were presented, developed according to a project management approach, with the
identification of significant players and resources necessary for their implementation.7
Overall, the action plan, called Reggio Emilia beats the crisis, forecasted, for the
20092010 period, a mobilization of public and private resources for approx. 76
million euro, of which 8 million invested directly by the Province. The operations of
the board were ensured by a task force set up within the Province, which worked in
close contact with some of the most significant and active stakeholders, such as
the Chamber of Commerce. Once the necessary system conditions had been
created, also facilitated by the significant social capital, which distinguishes the
territory of the Province of Reggio Emilia, it was then possible to activate the second
phase of the process, dedicated to the detailed design and execution of the identified
activities.
 Vecchi et al.: Local authorities for small-medium enterprises 13

3Es second and third steps Reup project to support start-ups

To describe and analyse the second and third steps of the process, we use the Reup
initiative (short for Reggio Emilia start-ups), launched within the scope of the main
programme with the aim of supporting the creation of new businesses. Reup was designed
not as an initiative to subsidize business start-ups, but rather as a coaching process to
support new and aspiring entrepreneurs in the development of their business idea. The idea
behind Reup is that financing a generic business idea might not be efficient and effective
(both from the perspective of allocation of public resources and that of the economic
redevelopment of the area). A specific and personalized training and coaching appeared to
be more coherent to verify and strengthen the excellence of business ideas, their feasibility
and their bankability (Mason and Brown, 2011). At the end of the process, the best business
ideas would have benefited from a provincial grant (defined according to the business plan
drawn up during the coaching) and the opportunity to be introduced in the business angel
and venture capital network, thanks to the involvement of IBAN (Italian Business Angels
Network) and AIFI (Italian Association of Venture Capital and Private Equity).
Ten business ideas were selected8 (among a group of twenty candidates) on the basis
of a set of criteria, including: level of innovation of the business idea, sustainability,
completeness and consistency of former business plans, potential degree of interest for
private investors, environmental sustainability and equal opportunities. The selection
was conducted according to the typical assessment methodologies applied by business
angels and venture capitalists, whose associations representatives were involved in the
project, in order to avoid the adverse selection that frequently occurs under a pure
public evaluation process (McGlue, 2002). Training and coaching was mostly focused
on the following elements: the business plan; technical solutions for the specific
product/service of each business idea; role and features of an entrepreneur and
negotiation with investors (elevator pitch).
The third phase of the process coincided in Reup with the issue of a grant for each of
the ten participants, of different amounts, based on an evaluation of their business plans,
the results achieved and development goals planned.
Even though Reup program formally ended with the third phase, supporting
activities provided by the Province to the entrepreneurs kept going on. In fact, at the
time of writing, businesses continued to benefit from the support of the Province: a
dedicated expert helped businesses to identify and get access to regional, national and
EU financial programmes and to get in contact with further partners relevant for the
development of their business activities.

Reup results

Already during Reup, some new/aspiring entrepreneurs experienced the first results of
the programme: one enterprise increased its equity with the entry of new shareholders
14 Public Management Review

and a second started negotiations with a number of business angels. At the end of Reup
(in 2010/2011), one enterprise started to produce and commercialize its product,
thanks to the support of a local firm; another one commenced a stable research
collaboration with a local listed company; five enterprises were contacted by potential
investors and two decided not to open their own company. Furthermore, various local
banks showed interest in supporting the launch of a second edition of Reup,
appreciating the quality of the business ideas and plan (which is planned by the end of
2012). During the project closure event, the Regional Councillor for innovation
identified Reup as a reference model to support the creation of different types of start-
ups (not only hi-tech based, which are often excluded by traditional system to support
business creation, i.e. incubators) and guide them towards suitable paths of
development,9 attracting potential investors, business partners or incubators. The
result generated by Reup stimulated a local company to develop (in 2011) a specific
initiative devoted to support business ideas in the automotive sector, in partnership
with some Italian incubators and with the Province itself. In 2011, two Associations of
Young Entrepreneurs of the Lombardy Region, inspired by Reup approach, developed
a similar project, even if this was more focused on training and coaching, which was
very appreciated by young participants.10

CONCLUSIONS

Globalization has further increased the relevance of regional and local actors in
development and competitiveness polices (Karlsson and Andersson, 2009). Their actions
are the focus of many studies, mainly conducted under macroeconomic, policy design
and/or private entrepreneurial perspectives. In contrast, this paper strives to capture the
challenges posed by some scholars to provide useful guidance to managers involved in the
policy implementation. Both public and private managers are required to choose tools
and instruments to support enterprises growth and development; to network with local
stakeholders; and to search for additional resources (Agranoff and McGuire, 1998). Our
research, the results of which are discussed in this paper, is based on a deductive
inductive approach: the analysis of the experiences of the Italian managers encountered,
the international literature and the five Italian cases allowed us to define a managerial
process (3Es) that has been applied and tested on the Province of Reggio Emilia case. The
cases and the pilot test results show the relevance of implementation processes to achieve
development goals. Therefore, a managerial approach is crucial to focus efforts on
targeted actions (Waits et al., 1992), on services rather than on financial incentives
(Hallberg, 1999; Oakey, 2003), on a few businesses with the greatest growth potential
(gazelles), rather than on a widespread distribution of funds (Mason and Brown, 2011).
In other words, avoiding spreading the peanut butter too thin (Shane, 2009).
Public authorities can no longer afford to misallocate resources and the delegiti-
mization resulting from the inability to generate economic and social results from local
 Vecchi et al.: Local authorities for small-medium enterprises 15

development activities (Rondinelli, 2003), even in the short-term (Ansell and Gash,
2007), especially at the dawn of the 20142020 EU cohesion and competitiveness
framework, which will reduce funds for Member States. The 3Es managerial process
could be a possible framework to guide managers in their choices and in their execution
activities, to translate regional and local entrepreneurships political goals into efficient
and effective enabling actions. It could prove useful also for emerging countries, where
international institutions capacity building programmes are often focused on
entrepreneurship development (Martin et al., 2012). Therefore, it seems promising to
test the relevance and the robustness of the 3Es process, here drawn in pencil, outside
Italy, in different economic, institutional and political contexts.

NOTES
1 The EU budget is available at http://ec.europa.eu/budget/figures/fin_fwk0713/fwk0713_en.cfm#
cf07_13 (accessed on 27 May 2012).
2 The term local is used to refer not only to local level stictu sensu but also to regional level.
3 This means the mere use of resources instead of their allocation in ways really able to improve the productivity
of companies and the attractiveness of territorial areas, which is typical of an investment approach.
4 Personal communication of the President of the Reggio Emila Province.
5 Where three indicates the number of phases and E stands for execution, i.e. policy implementation. The
term 3E is also reminiscent of the conditions of efficiency, effectiveness and economicity on which the
public administrations actions should be based for the achievement of institutional objectives.
6 For the purposes of this article, the main elements of the management process implemented will be
described with reference to the more general process presented above (section A Management Process for
the Implementation of Entrepreneurial Policies at the Local Level: The 3Es) and to start-ups support,
without entering into a detailed discussion of all the actions executed.
7 Among the interventions identified by and within the board, the main were: unemployment and family
benefits, training, female micro-entrepreneurship development, guarantees to favour the access to credit for
businesses, real services, red tape reduction and administrative legality and transparency.
8 The ten business ideas were focused on the following businesses: vegan food production; a mobile phone
recharge system; software for business and automotive sector; biomass and wind energy generation;
healthcare devices technology.
9 Presentation by Councilor Bianchi at the closing convention of the Reup project, Reggio Emilia, on January
20, 2011.
10 As reported by the President of Young Enterpreneurs Association of Pavia.

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