and management skills of individuals in the senior management team and developing in-house coaching capacity;
If any of the persons identified is an independent expert participating in the evaluation of the proposals for the call in question,
and guidance on how to better use professional legal consultants; 2. the professional consultants were prepared better to deal with SME specific challenges 3. cross-border information about IPR issues would be easily available on the internet
and 4. National Intellectual Property Offices (NIPOS) would provide better IPR services to SMES. Scope:
R&d service providers or private consultants to either conduct small innovation projects or to explore the feasibility of larger ones.
to make a high-quality assessment tool and trainings available to business consultants, and to develop the market for innovation management consulting by enhancing quality
but seek to source new ideas and technologies worldwide and to tap into knowledge generation and the pool of scientists and qualified workers in third countries.
EUR 0. 02 million from the 2014 budget and EUR 0. 02 million from the 2015 budget 8 External expertise This action will support the use of appointed independent experts
The experts concerned will be qualified highly with specialist expertise in the field of financial instruments such as bankers, venture capital (VC) and other risk-capital fund managers, business angels,
In order to attract experts of sufficiently high calibre, a special allowance of €450/day will be paid to highly qualified,
2015budget EUR million Experts (expert evaluators, experts groups, monitors) 0. 92 of which 0. 10 from 02.040203 and 0. 82 from 08.020203 1. 14 of which 0
) Promoting Entrepreneurship and Innovative SMES in a Global economy Towards a More Responsible and Inclusive Globalisation Executive Summary of the Background Reports Istanbul,
such as those affecting labour markets, tax design, competition, financial markets and bankruptcy laws. The PROMOTING ENTREPRENEURSHIP
Policy design in areas such as competition, the regulatory framework, the tax system, labour markets, financial markets and bankruptcy laws should take account of the way these areas impinge on SMES and innovation in knowledge-based economies.
Using the US ratio between number of employees and selfemployment, it is estimated that the self-employed women in surveyed European countries might employ around 15 million persons.
and their prospects for success. PROMOTING ENTREPRENEURSHIP AND INNOVATIVE SMES IN A GLOBAL ECONOMY 14 OECD 2004 Figure 1. Female employers and own-account workers Percentage of total employers and own
-account workers Source: United nations Economic commission for europe, Gender Statistic Database.%%50 45 40 35 30 25 20 15 1050 Austriabelgiumbulgaria Czech Republicfinlandgreecehungary Icelandireland Italypolandromania Russian Federationsloveniaturkey United kingdom Selected European countries, 2000 Source:
Progress can be made by removing obstacles to female participation in the labour force, An important area where progress can be made is in removing obstacles to female participation in the labour force.
Family-friendly policies, notably as regards child care, parental leave arrangements and other child-related financial support
and SMES looking for risk Key policy recommendations Increase the ability of women to participate in the labour force by ensuring the availability of affordable child care and equal treatment in the workplace.
Regulations and supervisor arrangements designed to safeguard the soundness of financial systems can affect the provision of risk finance to SMES.
therefore, increasingly important for entrepreneurs, inventors, researchers, SMES and business consultants to have a good understanding of the intellectual property system,
50-299 employees instead of 50-249 and 300 or more instead of 250 or more. For Japan, businesses with 100 or more employees.
For The netherlands, 50-199 employees instead of 50-249. For Switzerland, 5-49 employees instead of 10-49 and 5 or more employees instead of 10 or more.
For Mexico, Businesses with 21 or more employees, 21-100 employees instead of 10-49,101-250 instead of 50-249,151-1000 instead of 250 or more. 3. Internet and other computer-mediated networks.
Source: OECD, ICT database and Eurostat, Community Survey on ICT usage in enterprises 2002, May 2003.100 90 80 70 60 50 Finland 10-49
Swedendenmarkcanada2 Australia Czech republic (2001) Austriajapan2 New zealand (2001) Germanyirelandspain Norway (2001) Netherlands (2001) 2, 3 Luxembourg Switzerland (2000) Italy Portugal (2001
A third option is to engage specialist outsiders such as consultants or academics. Both these groups have the advantage of being less clearly subject to capture
According to the latest available data from the Census, more than 99 per cent of active firms (out of 4 million) have fewer than 250 employees (95 per cent have fewer than 10 employees,
All firms with more than 500 employees were included, whereas smaller firms were selected using a sampling design stratified by geographical area, industry,
imposing a threshold of 250 employees, in line with the definition of the European commission; we end up with an unbalanced panel of 9, 674 observations on 7, 375 firms,
Not surprisingly, in both cases, the firm size distribution is skewed to the right for both groups of firms, with an average of around 50 and 53 employees respectively.
62%of the firms 4 We require that sales per employee be between 2000 and 10 million euros, growth rates of employment and sales of old and new products between-150 per cent and 150 per cent,
and excluding firms with fewer than 20 employees, for comparability the samples used by Griffith et al (2006) for France, Germany, Spain and UK.
around 60 per cent of the firms in the Italian sample for the year 2000 belong to the smaller class size (20-49 employees), a figure much larger than that for other countries. 6 Interestingly,
Also,(relatively) larger firms tend to do less R&d per employee than small firms (the 11-20 size class),
i 1 i 2 i 3 i i y=p k+p PROD+p PROC+v (4) 13 where yi is labor productivity (sales per employee, in logs),
we built building a slightly different sample of firms from our data that removed firms with fewer than 20 employees
and included firms with more than 250 employees. 13 Using this sample, we are able to compare our results to those for France, Germany, Spain and the UK (Griffith et al, 2006),.
in this sample, they are more rather than less productive per employee than firms in other countries.
%of firm in age class (15-25 yrs) 30.48 31.12%of firm in age class(>25) 37.07 44.78 Number of employees:
mean/median 49.45/32 53.48/36 Group (in%)20.07 16.25*Units are logs of euros (2000) per employee. 24 Table 2 Descriptive statistics, high tech and low tech industries.
%of firm in age class (15-25 yrs) 31.67 29.98%of firm in age class(>25) 35.54 37.71 Number of employees:
mean/median 54.17/35 47.46/30 Group (in%)25.26 17.89*Units are logs of euros (2000) per employee. 25 Table 3 R&d intensity (STEP 1:
Dependent variable, R&d intensity R&d Expenditure per employee All firms High tech Low Tech (in logarithms) D (Large firm competitors) 0. 062 0. 197-0. 028
) Investment per employee 0. 125***0. 050 0. 120***0. 047 0. 129***0. 051 (in logs)( 0. 011)( 0. 021)( 0
labor productivity All firms High-tech firms Low-tech firms (sales per employee in logs)( 1)( 1a)( 2)( 2a)( 3)( 3a) Predicted probability of 2. 624***0. 193
. 083)( 0. 093)( 0. 149)( 0. 200)( 0. 118)( 0. 122) Investment per employee 0. 099***0. 073***0. 109***in logs
) per employee. This table is based on tables in Griffith et al. 2006. Data are from the third Community Innovation Survey (CIS 3) for France, Germany, Spain,
a) This column shows data for all 3 periods in Italy (1995-1997,1998-2000,2001-2003). 29 Figure 1 Value added per employee.
(Census data)% of firms with innovation (CIS survey on firms with more than 10 employees) 31 Appendix Variable Definitions R&d engagement:
R&d expenditures per employee, in real terms and in logs. Process innovation: dummy variable that takes value 1
real sales per employee, in logs. Investment intensity: investment in machinery per employee, in logs.
Public support: dummy variable that takes value 1 if the firm has received a subsidy during the three years of the survey.
Employees: number of employees, headcount. Age: firm's age (in years. Size classes: 11-20,21-50,51-250 employees.
Age classes:<<15,15-25,25 years. Industry dummies: a set of indicators for a 2-digits industry classification.
Time dummies: a set of indicators for the year of the survey. 32 Wave dummies:
377 Continuous R&d engagement (in%)35.0 39.5 20.9 26.7 49.8 48.9 R&d per employee (for R&d-doers, mean) 6. 9 5. 2 4. 3
137.7 143.4 173.8 187.1 Investment per employee (mean) 6. 0 8. 3 8. 3 6. 3 8.
Units are logs of euros (2000) per employee. 34 Table A2 A nonparametric selectivity test Dependent variable Prob (R&d>0) R&d expend. per employee D (Large firms
***0. 120***per employee (0. 011)( 0. 013)( 0. 011)( 0. 013) Log capital stock 0. 098***0. 041***per employee (0. 013
)( 0. 314)( 0. 370) Log investment 0. 081***0. 072***0. 018 per employee (0. 011)( 0. 017)( 0. 015) Log
capital stock 0. 108***0. 111***0. 101***per employee (0. 016)( 0. 007)( 0. 010) Log likelihood-27,119. 9-27,110. 0
56 4 1. 0 EXECUTIVE SUMMARY The National Institute of Standards and Technology (NIST) contracted with the Smeal College of Business at The Pennsylvania State university to conduct a review of literature that concerns how small
and the ability of MEP consultants to assist SMES in this endeavor. SMES face unrelenting pressure from powerful customers and competitors to lower prices
This can be facilitated by development of a dynamic knowledge management portal that MEP consultants can access to share ideas across the entire MEP network on the most effective methods to bring about change. 5 2. 0 INNOVATION STRATEGIES FOR SMALL
which narrows senior management's range of acceptable strategies (including innovation). Private capital providers (personal, family, friends,
Moreover, owner-managed SMES often favor placing family members in senior management positions over hiring outside professional managers,
there is the question of senior management's motivation to invest resources in their continued development through training,
) SMES have fewer employees, each with multiple roles (Yap et al. 2005), but they may be able to form cross-functional teams more easily than large enterprises
Employees of SMES interact more often with their counterparts and may have shared or swapped tasks with them.
Assuming that senior management has a clear idea of what it wants its cross-functional teams to do,
For example, Flinchbaugh Engineering, a small employee-owned company in Pennsylvania, now operates transfer lines for customers such as Caterpillar, SKF and Siemens that previously owned these lines (Anonymous, 2006.
and indeed a different organizational structure and culture both within the management of SMES and the consultants that can help them. 3. 2 Why Add Services?
Often, where customers and employees are in relatively constant contact, interpersonal experiences are critical to the delivery of service products (Tidd and Hull, 2002).
but not necessarily, takes place in interaction between a customer and service employees and/or physical resources or goods and/or systems of the service provider,
training, employee attitudes, and perception of management support also moderate the effectiveness of adoption of new IT tools (Agarwal and Prasad, 1997;
New service ideas come from a close interaction between customers and employees. Thus, although product and service innovation are thought often of as the same,
Unlike products, many services are delivered by individual employees and the quality of service can vary greatly depending on the training and experience of employees.
As a result, it is critical that personnel training is conducted properly regardless of whether the solution is a product,
This is normally achieved by affinity diagrams (a sorting process conducted by the firm's employees),
, employees, lead users), groups (e g.,, brainstorming external search (e g.,, patent search, new use of existing products/services, competitors, upstream and/or downstream channel members) or collaboration (e g.,
) Effective transition into a service-centered business requires a transition strategy as well as management of employee motivation and supporting organizational structure and culture.
communicate the decision broadly and consistently to all employees, and provide the resources to assure that the path is taken.
Consolidation also helps to establish a separate reward structure that rewards employees for culture-supportive behavior.
Employees in this unit will need to be motivated to relate to customers differently than those in manufacturing units.
Dialogue is essential for success. These employees may need to be trained to relate to customers
It is important that employees understand their function within the company and how it relates to the whole company.
Values, norms and beliefs shape the firm and drive employee behavior. Some companies will have a tougher time with the transition to a service-centered culture;
It is critical that goals are applied not too aggressively as research shows that unrealistic and unattainable goals result in unmotivated and cynical employees (Gebauer et al.
) When employees can see that their task contributes to the overall strategy and goals of the firm,
These performance measures include customer satisfaction, employee satisfaction and business success (Gebauer et al. 2005). ) In a productcentered firm, customer satisfaction is based on the product,
but in a service-centered firm it is based on service delivery, employee friendliness, value-added, flexibility, customization, etc.
management must motivate the employees to reach their goals and be rewarded. Employee motivation can be described in terms of employee-push
and-pull (Gebauer et al.,2005). ) Employee-push refers to management's desire to motivate employees to engage in the service business.
On the other hand, employee-pull refers to employees'enthusiasm and self-motivation to commit to the new service initiative,
resulting from understanding the benefits and results of pursuing services. Although employeepush might be sufficient initially,
the goal in service firms is to stimulate employee-pull in order 45 Attribute Definition le Statements Alignment The degree to
which the interests and actions of each employee support the clearly stated and communicated key goals of the organization We have clear aims and objectives
which each employee feels empowered by managers and the organization As a manager, I am expected to delegate;
we recognize the individual Honesty The degree to which each employee has total confidence in the integrity, ability and good character of other employees and the organization, regardless of their role
employees and managers take risk I am encouraged to experiment; we take calculated risks; we encourage trial and error Stimuli The degree to which it is understood that unrelated knowledge can impact product, service and operations improvements
we use consultants in focused roles Support The degree to which new ideas are encouraged from all sources
Table 5. 2 Cultural Attributes of Successful Innovative Enterprises 46 to get employees involved. Internal marketing is one way that firms sell the service concept to their employees
in order to get them to buy-in to the new initiative. Management should provide excess human resources while service-centered learning is underway
so that employees are free to engage in service exploration. Once the change process takes off and employee-pull is set in motion,
employees will become the driver of new ideas. During shifts from product-focus to service-focus there are often conflicts between departments because of perceived status
either increased or decreased. For instance, production personnel may feel downgraded because of the new interest in service sales.
Once employees are motivated and united to achieve service-centered goals, they will need to be equipped with training that will help them meet their objectives.
and to increase the creative and problem-solving capacities of employees. In product-centered firms, sales people view products as the main source of revenue and services as add-ons that are obligatory
If the firm chooses to hire new employees it is critical that the new hires fit with the new service-centered culture
) It is imperative that employees believe the internal marketing before they can get involved in external or interactive marketing.
External and interactive marketing are strategies that can help employees to sell services. External marketing is about portraying the firm's image to customers,
but before employees can make that portrayal they must be sure of its existence, a 47 belief that relates back to the firm's internal marketing.
Once the employees are assured that the internal marketing is credible (i e.,, the firm will be able to keep the promises it makes),
it is likely that its customer/employee interaction includes advertising, sales promotions and publicity. It is important to use the relationships that are created originally in this phase to help develop more strong and long-lasting relationships in the future.
Front-line employees, the ones who commonly work the most closely with customers, need to be in-tune with customer needs,
These employees also need to be committed and able to come up with possible ideas and solutions for customer problems.
which entails engaging the customer in serious dialogue where the employee listens intently and asks questions to make sure he
Exceptionally creative employees can listen to customer problems, generate their own ideas and solutions, and share them with others to stimulate maximum problem-solving ability.
It is important that they share their ideas with employees, stimulate communication within the organization,
and provide leadership to motivate employees (Johne and Storey, 1998). All too often service firms view their people simply in terms of an approach to deliver the product, i e.,
However, because of the inseparable nature of services, front-line employees shape the quality of a customer relationship. de Brentani (2001) concludes that having a highly trained workforce that has an intimate knowledge of the customer plays an important role in the success of new services.
Often, new service initiatives do not sufficiently involve input from front-line employees. In this case, the employees who should play a critical role in the process are uninformed
and underutilized and will build resentment to the new initiative. As a result co-workers can be the biggest resistance to innovation efforts,
Accordingly, management must consistently support the innovation process, encouraging employee involvement, and ensuring communication among the different functional areas (e g.,
When workers experience autonomy, they feel less constrained to explore opportunities and to generate ideas.
Similarly, information sharing among employees should be encouraged so as to generate more ideas to satisfy unmet customer needs (de Jong and Vermeulen, 2003).
, having employees cross-trained and able to perform other company tasks) also helps to broaden employees'points of view
Thus, if an employee took the initiative to generate ideas for solving a customer problem and failed,
as long as the employee (and the firm) learns from the mistakes. An open culture should value experimentation
) Employees should understand that learning from failures is often a key to success (Susman et al.
Flat structures allow employees to see the big picture and minimize distortion by reducing the levels through
Flat structures also encourage an open door policy where employees have easy access to top management.
This helps employees to be able to contact people in other functions directly without going through and/or clogging other channels.
Employees should be permitted to seek advice from those who have authority based on knowledge as well as position.
Information should also be shared with employees at all levels (e g.,service, production, financial, marketing) by publishing newsletters or using other communication channels.
or signals of status differences so that some employees don't feel less valued than others. In order to encourage teamwork and idea sharing,
it is important that employees feel equal with their peers. 5. 2 Phase II: Services Provided to the Installed Base The next step is to extend services from the sale of existing products to providing services to the firm's installed base or even to its competitors'products.
The skills of the firm's employees now must extend beyond accurate diagnosis and speedy repairs
Customer interaction in this phase should include employees creating a friendly and helpful atmosphere for the customer.
Firms should encourage employees who are in regular contact with customers to share ideas with other employees concerning optimal use of the product,
In this phase, employees should be immersed in their customer's business. Employees should be able to see the points of pain (Gustafsson and Johnson
2003), or frustrations that customers have with existing offerings, and generate ideas for new solutions.
Since the employees are very close to the customer, the solutions generated from this type of encounter are often very valuable to the customer.
if the relevant consultant skill set can be tapped. Before suggesting how this might arise, it is necessary to understand the current focus of this network. 6. 2 Current Skills within the MEP Network
Consultants rarely refer to the success stories posted on the website for information and insight.
and experiences of the MEP outreach consultants indicate that, before these changes can be transferred to the SMES seeking to expand,
and techniques deployed by these consultants. Indeed, they themselves may not be able in most cases to absorb
etc. there is a limited supply of consultants who have the appropriate knowledge, skills, and application to affect the sorts of change management
current consultants within the MEP network are sufficiently knowledgeable to engage and excite SME owners
Maximizing the use of the scarce consulting resources available to help SMES Adding new skills via focused training of those local consultants who have the propensity to provide outreach services in the field of change management
which would stimulate consultants nationwide to offer advice, cases, and possibly direct involvement. Recommendation 2 Develop new skills Our analysis shows that there is a major shortage of appropriate skills in the MEP consultant network.
In order to increase the availability of growth strategy and change management skills, it is necessary to expand the population of consultants versed in such skills.
We recommend the development and provision of a training program for existing MEP linked consultants to provide them with the skills to excite MEP targeted SMES in the opportunities for growth,
to analyze the existing firm positioning and possible new opportunities, and to guide the client through the change process.
The consultants would learn how to use tools specifically designed for tackling the challenges faced by SMES.
This program would be positioned as a retraining program for MEP consultants. The target should be one consultant from each location identified
and qualified by the MEP team at that location. Recommendation 3-Analyze use of the current MEP database We recommend a web-survey of existing MEP centers to determine:
Experts do not remember how they learned and hence set expectations too high novices may then just give up.
Experts tend to emphasize their most recent experiences to the detriment of the earlier supporting knowledge and experience.
Experts do not work in isolation and, responding to a specific need, they are more likely to offer tacit information as well as tapping into their own extended expert networks.
and approved and relevant consultants who are able to address the new issues confronting SMES.
Bios and contact information for the consultants. 59 The aim of these tools and support data is to prime the outreach function at the MEP offices on
The posting person can select which consultants and experts may be able to help. The case is posted then
and all the selected possible experts are mailed e with a password to access that case and invited to comment,
suggest help, guide to materials, etc. This dialog is selected open to the community as well as the company executives
so that they can also participate in the knowledge exchange and thereby become engaged and encouraged to continue.
and thereby become part of an ongoing and active database for future projects as the links can be used to tie in the experts for future cases. 60 7. 0 REFERENCES Agarwal, R. and J. Prasad (1997)."
Discusses the advantages to having employees understand their function in the company and how it relates to the rest of the company.
Employees that understand their part in the firm are more likely to engage in behaviors that support the firm's strategy.
SMES had high percent of R&d and R&d employees per sale. They also had fewer patents than large firms
Discusses the effect of managerial influence on employees'willingness to adopt innovation. Lindman, M. T. 2002."
It draws from papers prepared for the OECD by a number of experts, in particular: David Audretsch, Bart Clarysse and Vincent Duchêne.
many experts predicted the demise of SME competitiveness as globalisation increased. While many SMES have succumbed indeed to a deterioration of competitiveness,
and inter-country labour mobility. But in order to answer how these 1. During the last five years, SMES were responsible for more than 80%of the jobs created (European SME coordination unit, CEC, 1999.
During the 1980s, one in about 25 workers lost a job, and in the 1990s the figured has risen to one in 20 workers. 9. Much of the policy debate about globalisation has revolved around a trade-off between maintaining higher wages at the cost of higher unemployment versus favoring higher levels of employment
at the cost of lower wage rates. Globalisation has rendered the comparative advantage in traditional moderate technology industries incompatible with high wage levels.
yet the number of workers who can contribute to producing and commercialising new knowledge is limited to a few areas in the world.
Furthermore, demand for less skilled workers has decreased dramatically throughout the OECD, while demand for skilled workers has exploded. 6 11.
Given the shift in comparative advantage towards more knowledge based economic activity, many scholars have predicted the demise of SMES.
For example, the Gellman (1976,1982) data base identified SMES as contributing 2. 45 times more innovations per employee than do large firms.
Audretsch (1995) identifies SMES as contributing 2. 38 times more innovations per employee than do large firms.
and research oriented consultancies which include engineering services, technology consultants, and (2) R&d boutiques. As shown in table 1,
Other key factors generating new economic knowledge include a high degree of human capital, a skilled labour force,
and other knowledge workers as agents endowed with new economic knowledge. 34. When the focus shifts from the firm to the individual as the relevant unit of observation
a knowledge worker may choose to exit the firm or university where the knowledge was created initially.
and in a worker. The firm is created endogenously through the worker's effort to appropriate the value of his knowledge through innovative activity. 35.
What emerges from new evolutionary theories and the empirical evidence on innovation as a competitive strategy, is a picture of markets in motion with a lot of new firms entering
An executive of a company that makes laboratory equipment explained that the typical Mittelstand strategy"
%while five-year employee growth was 9. 8%.44. One of the keys to the success of the German Mittelstand has been their strong commitment to global expansion.
Indeed, non-marketing employees in the German Mittelstand engage in direct contact with customers at twice the frequency as in the largest German corporations.
and financial employees in order to make sure innovative activities truly meet customer needs. WK1 15 The Network and Flexible Production Strategies 47.
which employees perform a wide variety of different tasks. 15 Porter (1990) provides examples of Italian ceramics and gold jewelry as industries in
On the one hand, new economic knowledge embodied in skilled workers tends to raise the propensity for innovative activity to spatially cluster throughout all phases of the industry life cycle.
which are made easier by the mobility of workers and technicians, the activity of technical consultants,
Two-dimensional plot of SMES according to their innovative capacity Leading Technology Users 10-15%of the SME population(>5 employees) Technology Developers 1-3%of the SME population
(>5 employees) Non-Innovative SMES about 40-45%of the SME population(>5 employees) Potential Innovators about 40%of the SME population(>5 employees) IIII IV
In most national technology programmes, technical consultants are permitted frequently not to participate as contractors, so this category of SME is excluded often national R&d grant programmes,
15 40 Firm size (employees) 47 43 73 R&d budget as%of turnover 21,7%32,1%10,9%Growth during 1996-1999 (in terms of employees) 89
These organisations are typically technical consultants and count R&d as a non-core activity. Looking at firm growth rates during the three-year period preceding the study,
and employ a highly educated labour force. Public agencies have strong incentives to adapt their strategies to meet the needs of this population of SMES.
(or have a network of technical experts) who are trained to perform technological due diligence. The venture capitalists are more specialised in assessing business potential than technological viability.
<250 employees and independent. 25 Including CRAFT-projects (14,5%without CRAFT-projects. 26 In respect of Belgian (Flemish) definition of the SME:
less than 200 employees. 27 SME according to the Anvar-classification: less than 50 employees. 28 Only related to equity financing organised by the main R&d granting institute!
WK1 26 budget in the following years. R&d grants seem to have substantial additivity to the size of the R&d investments of leading technology users
A typical such SME might have three employees out of thirty who spend part of their time on R&d activities,
Technical experts in public research bodies or institutions are not of much assistance as their speciality is high end,
Because the mind set separating the world of technical experts and that of entrepreneurs is so large,
In some countries such as the US, technical and business consultants are important carriers of innovation to SMES
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