This publication presents the OECD country review of small and medium-sized enterprise (SME) and entrepreneurship policy in Canada. The report is part of the country review series of the Working Party on SMEs and Entrepreneurship and undertaken by the OECD Centre for Entrepreneurship, SMEs, Local Development and Tourism.

Small business and entrepreneurship performance is critical to the health of the Canadian economy, accounting for more than one-half of business sector employment. Canada has a vibrant small business sector and healthy attitudes to entrepreneurship. However, there are key challenges in scaling up small businesses, increasing the rate of business dynamism and high-growth firms, and increasing productivity and exporting in established small firms. This report examines the issues and identifies actions that public policy could take. Its proposals include developing a national strategy for small and medium-sized enterprises (SMEs) and entrepreneurship and increasing the range of programme interventions in areas such as financing, innovation, internationalisation, entrepreneurship education, management advice, and workforce skills development.

This chapter summarises the findings and recommendations of the OECD SME and entrepreneurship policy review in Canada. It presents key evidence and analysis on the structure and performance of SME and entrepreneurship activity, the business environment and framework conditions affecting SMEs and entrepreneurship, the strategic framework and delivery system for SME and entrepreneurship policy, federal SME and entrepreneurship programmes, approaches to tailoring SME and entrepreneurship policy to local conditions and ensuring coherence between national and local interventions, and policy to promote women entrepreneurship. It presents recommendations for government action in each of these areas.

This chapter describes the structure and performance of SME and entrepreneurship activity in Canada. It presents information on numbers of enterprises and employment by enterprise size class and the productivity of SMEs in Canada. It examines the proportions of high-growth firms and gazelles in the business population, rates of R&D and innovation in SMEs and the level of SME exporting in Canada. It also presents evidence on entrepreneurial attitudes and the rate of early-stage entrepreneurial activity in the Canadian population, and indicators of business demography covering business entry and exit rates. It points to the importance of small business to employment, a relatively large productivity gap between small and large firms, rates of high-growth firms and gazelles that lag the leading countries and relatively low business entry-exit dynamism. It shows that a high proportion of Canadian SMEs engage in innovation-related activities but Canadian SMEs are not very active in international markets.

This chapter assesses the business environment for SMEs and entrepreneurship in Canada. It examines relevant macroeconomic conditions, overall productivity conditions, taxation, product-market regulation, access to finance, the R&D system, human resources, the labour market, and foreign direct investment. The chapter points to generally favourable business environment conditions. The macroeconomic framework is solid, the labour market is flexible, business regulations are light, and taxation is friendly to business in general and SMEs in particular. On the other hand, Canada’s innovation and R&D system is relatively weighted to higher education and basic research, adult literacy and numeracy skills are below the OECD average and inward foreign direct investment in knowledge-intensive sectors is limited. The banking system is healthy, but SME lending decreased in relation to total bank business lending over the period 2007-14.

This chapter assesses the formulation and delivery of SME and entrepreneurship policies and programmes in Canada. It presents the main federal government organisations involved and assesses the process of policy design and delivery. It also offers a simple assessment of the distribution of the SME and entrepreneurship policy portfolio across different types of programmes. The chapter highlights the major roles played by federal government departments, the federal Regional Development Agencies and the Crown Corporations, such as the Business Development Bank of Canada. It points to the lack of a comprehensive SME and entrepreneurship strategy document for Canada, although other mechanisms support policy formulation, including government consultative bodies, independent advisory panels and formal programme consultations. It identifies important cross-government co-operations in policy delivery such as the Canada Business Network’s one-stop business centres and web portal. It also shows that a large share of federal support is provided through tax incentives rather than targeted programmes.

This chapter assesses federal small business and entrepreneurship programmes. It covers financing, innovation, exporting and internationalisation, entrepreneurship education, management consultancy, workforce training, access to public procurement and social and inclusive entrepreneurship. The chapter points to a strong overall package of support, but also to the existence of niche areas in which the scale of support is small compared to the scale of the target population and where potentially beneficial actions are not fully in place.

This chapter presents evidence on regional variations in small business and entrepreneurship activities and conditions, implying a need for some spatial differentiation of policy. It highlights the key mechanisms in place in Canada for spatial tailoring of small business policy. It also assesses mechanisms for co-ordination of small business policy between the federal and regional and local levels. The chapter points to the actions of provincial and territorial governments and the role of the federal Regional Development Agencies in tailoring small business policy to local needs. It also points to effective policy co-ordination mechanisms through the Regional Development Agencies, co-location of related business development infrastructures and supports on the ground and the co-ordination of provincial legislation. It highlights the need for further action to improve and harmonise provincial regulations affecting small businesses and support the exchange of local policy good practices.

This chapter assesses policies to promote entrepreneurship and small business development by women in Canada. It presents evidence on gender differences in the scale and nature of business start-up and small business ownership and on differences in previous management experience, access to markets and access to finance. It also assesses existing policies aimed at overcoming barriers to women’s entrepreneurship. It covers the measures to improve the institutional context, enterprise financing, business internationalisation, supplier diversity, and management skills, to offer awareness-raising for entrepreneurship as an option for women and to offer mentoring for women entrepreneurs. It also examines the co-ordination of women’s enterprise support policies across different providers. The chapter points both to significant gender gaps in entrepreneurship activity in Canada and active federal government policies to reduce the gaps.