2019 EC-OECD STIP Survey: Innovation in firms and innovative entrepreneurship policy area


Contents

  1. Key messages
  2. Main national policy debates
  3. Snapshot of policy initiative data
  4. Annex A: Raw data for national policy debates

1. Highlights

National policy discussions frequently debate the best ways to increase business expenditures in research and development (BERD), including forms of financial and non-financial support. Countries often focus efforts around specific business sectors and/or technologies.
The theme most frequently addressed by policy initiatives are financial support and targeted support to SMEs.
Technology extension and business advisory services is the most common form of non-financial support.
Policy initiatives often indicate yearly budget expenditures ranging between 1M and 20M EUR, which typically address start-ups and SMEs and combine forms of financial and non-financial support.
The largest budgets are allocated for schemes providing corporate tax relief for R&D and innovation.

2. Main national policy debates

In their response to the 2019 EC-OECD STIP survey, countries indicated the main policy debates around government support to Innovation in firms and innovative entrepreneurship (raw data included below in Annex A). Several patterns can be identified from these responses:

A frequent overarching goal is to increase the private sector's share of national gross expenditures in research and development (GERD). In New Zealand and Finland, business expenditures are seen as critical to achieve GERD targets of 2% of GDP by 2027 and 4% of GDP by 2030, respectively. Poland and Thailand highlight how business expenditures have rose to 66% and 80% of total GERD in recent years, respectively.

A recurring issue in national debates focuses on determining the most effective modalities of support. Most countries highlight growing roles of financial support. In particularly, several have indicated expanding provisions in tax credit schemes to answer a wider variety of needs. This includes Argentina (exemptions for innovation), Chile (administrative and staff cost for R&D; start-ups), China (angel and venture capital investment), Italy (digital skills investments) and Poland (income from intellectual property rights). Other countries emphasise the role of public procurement in promoting innovation in firms. Finland, for instance, aims to raise innovative public procurement as a share of total procurement to 10% by 2023, from its current level of about 5%. Japan is reviewing procurement practices to encourage the development and introduction of advanced technologies. Under Spain's STI State Plan for 2017-2020, public procurement procedures have been revised to increase their effectiveness in promoting innovation and to bring greater clarity and transparency for both procurers and suppliers.

Some governments seek to create a coherent and comprehensive mix of financial support, that meet a variety of needs specific to nascent firms, SMEs and larger, established companies. For example, Belgium's Brussels authority seeks to provide financial assistance across each step of the business innovation cycle. Canada aims to ensure a streamlined delivery of programmes to companies as they develop across various stages: from being established, to scaling-up and entering international markets. In Italy, an extensive portfolio of incentives was laid out to support innovative start-ups and SMEs at all stages of their life cycle, from incorporation to expansion and maturity.

Besides direct funding, many governments also discuss the provision of non-financial support. Lithuania, for example, aims to establish a favourable business environment through a package of measures, including start-up visas, business advisory support and the streamlining of licensing procedures. Thailand has built a National Science and Technology Infrastructure to provide testing and consultancy services that attend the growing demand for high quality product testing in the Thai industry. Several countries seek to improve the regulatory framework as a means to encourage entrepreneurship and business innovation. Australia, for example, is aiming to enact regulatory changes to counter a culture of risk aversion. Brazil and Ireland envisage reform reducing regulatory barriers to entrepreneurship. The Netherlands is finding the right balance in regulation for new forms of financing for innovation, such as crowdfunding.

Many governments emphasise specific support directed to SMEs. For instance, Germany seeks to motivate and enable especially SMEs and young enterprises/start-ups to innovate through networks and clusters and thus strengthen their market position. Ireland has identified raising productivity growth in SMEs and increasing the business start-up rate as critical challenges. The Netherlands is establishing field labs that place equipment at the disposal of SMEs for testing through small scale production, with coaching and training (e.g. for 3-D printing, handling composite materials). Sweden, viewing start-ups and SME as strategically important, is creating ecosystems of incubators and accelerators that link large multinational enterprises with innovative start-ups.

National debates on support to business innovation and innovative entrepreneurship often spin around specific sectors and/or technologies. Several EU Member countries, such as Cyprus, Estonia, Latvia and Romania, structure their policy initiatives around smart specialisation strategies that target specific business sectors. The European Union shapes its agenda around strategic Key Enabling Technologies (KETs): advanced materials and nanotechnology, photonics and micro- and nano-electronics, life science technologies, advanced manufacturing and processing, artificial intelligence and digital security and connectivity. Many countries seek to harness opportunities brought by digitalisation and the so-called fourth industrial revolution. Turkey's National Development Plan 2019-2023, for example, prioritises areas such as artificial intelligence, internet of things, augmented reality, big data and cyber security. Belgium's Flemish authority is developing an integrated agenda for digital entrepreneurship and innovation. Portugal is seeking to accelerate the adoption of its digital transformation agenda by the business fabric, promoting national technological suppliers as industry 4.0 players to become an attractive pole for related investments. The Russian Federation's National Programme "Digital Economy" provides a number of new grants and subsidies to support innovative SMEs within the IT sector.

Finally, another salient trend in national debates concerns seizing opportunities of business innovation and innovative entrepreneurship to address societal challenges. Finland's government programme for 2019-2023, for instance, aims at creating international billion euro ecosystems that provide solutions to global societal challenges. The United Kingdom' Industrial Strategy also establishes a series of Grand Challenges to tackle global issues through which the country could be at the forefront of major industries of the future. Spain recognises the pressing need of fostering the development of digital “general purpose technologies” to tackle societal challenges. More information and analysis on initiatives addressing these challenges is available in the Research and innovation for society policy area.

3. Snapshot of policy initiative data

Themes within the Innovation in firms and innovative entrepreneurship policy area are ranked in Figure 1 by the number of initiatives addressing them. By a wide margin, the most frequently addressed theme is Financial support to business R&D and innovation, covering various types of funding schemes such as tax incentives, grants and debt financing programmes. Secondly comes Targeted support to SMEs, including various types of policies addressed to firms of this size (as opposed to large firms or companies in general). Policies supporting SMEs often include specific grants and subsidies, innovation vouchers and technology extension services, among other forms of support. This theme is followed by Non-financial support to business R&D and innovation, which consists of programs for the provision of non-monetary assistance such as technical expertise, training, mentoring, networking and marketing and advertising support. The fourth most recurrent theme is oriented to another class of firms, i.e. Targeted support to young innovative enterprises. It includes policy initiatives supporting the emergence and/or development of new innovative firms, such as specific programmes for start-ups. The fifth theme with most policies is Access to finance for innovation, covering incentives for business angels, venture capital investors and other types of investments allowing companies to raise funding.

Bokeh Plot

While, unsurprisingly, Figure 2 shows that Firms are the most frequently addressed target group, it is worth noting how many more policies address a specific size (SMEs) compared to firms by age (Young firms (1 to 5 years old)). SMEs are followed by Entrepreneurs, with keywords (obtained when hovering the corresponding bar with the mouse pointer) suggesting that many policies relate to start-ups, venture capital, business development and training. Some of these policies also target Private investors, seeking to encourage their contribution to the entrepreneurial activity. Many policies involve Public research institutes, Higher education institutes and Established researchers as well, e.g. aiming to commercialise the knowledge produced by these research actors and also fostering public-private collaborative projects. The National government is at times a beneficiary of these initiatives, for example in the procurement of R&D and innovation that benefits a public service or in national innovation strategies and plans. Several reported policies aim to address knowledge intermediaries: primarily Incubators, accellerators, science parks or technoparks but also Industry associations and Technology transfer offices.

Bokeh Plot