2014 Andrés Rodríguez-Pose Marco di Cataldo Alessandro Rainoldi S3 Policy Brief Series No. 04/2014 The Role of Government Institutions for Smart Specialisation
Setting the adequate conditions for achieving a competitive position in the knowledge economy is far from a simple process.
where the core actors and suitable investment priorities and to allocate resources efficiently are more easily identifiable.
The main objective is to provide a clearer understanding of how local quality of government institutions conditions the effectiveness of innovation investments.
This analysis looks at the potential for knowledge-based transformation of the regional economy and is based on the assessment of the supportive infrastructure for innovation existing in the region,
The role of government institutions in this phase is to provide the adequate incentives for the development of effective collaborations among all stakeholders in the innovation system
However, the risk is that vested interests from the most powerful regional stakeholders and lobbies may condition decision-makers,
when so-called leading stakeholders play the game of partnership with the sole aim of perpetuating their consolidated position in the regional system,
the spatial weight of business R&d expenditures, to proxy for knowledge spillovers from R&d investments in neighbouring regions(;
Therefore, the analysis confirms that a sound institutional environment is a determining factor for enhancing the technological and economic competitiveness of a region.
The endowment of human capital and the share of high-tech employment contribute to increase the potential of the local industry to generate knowledge
a region may gain higher returns from additional investment in innovation. The Quality of Government Index is subdivided then into its four components to identify the key institutional factors affecting the successful promotion of innovation at the regional level in Europe.
if corruption is rife and public officials have developed close personal ties with the local business environment.
In these circumstances, investments in innovation activities become more costly and the application of long-term development strategies of the kind linked to Smart Specialisation more complex to achieve.
while the value for the‘periphery'is only 0. 59 (recall that the index is normalised between 0 and 1). 9 Investments in R&d from the private sector show a strong connection with innovation in the core group,
Conversely, the evidence of a positive effect from R&d investments is marginal or absent in the periphery.
Local and regional authorities become key players in the promotion of the interactive collaboration between all relevant regional stakeholders for the collective identification of key innovation assets and long-term strategic priorities.
These results suggest a number of relevant implications for the definition of an ideal institutional environment for Smart Specialisation and subsequent public policy action.
and universities in joint projects exploring prospects for related variety in the regional economy. Collaborative leadership is developed by inducing participants to share their substantive knowledge, professional networks,
Beyond the participation in transnational co-operation networks, where regional policy-makers can take profit from each other's experience and practice,
Especially in peripheral economies in Europe, but not exclusively, corruption can be regarded as one of the main barriers to innovation.
and accountability can further contribute to minimise opportunities for corruption by reducing the distance between policy-makers and the civil society.
and Schulze, W s. 2009) Entrepreneurship, innovation, and corruption. Journal of Business Venturing, 24: 465 476.
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Jaffe, A. 1986) Technological Opportunity and Spillovers of R&d: Evidence from Firms'Patents, Profits, and Market value, American Economic Review, 76 (5): 984-1001.
Kaufmann, D.,Kraay, A.,Mastruzzi, M. 2009) Governance matters VIII: aggregate and individual governance indicators 1996-2008.
In response to calls in the Open Innovation (OI) literature, this paper aims to create a better understanding of the role of OI practices in the innovation efforts of Small-and Medium-sized Enterprises (SMES
Existing research on developing economies has shown that SMES typically act as catalysts of economic growth and the scarce literature on OI in SMES indicates that small firms engaging in OI practices are more innovative
Role of the Owner/Manager. 2 1 Introduction The purpose of this explorative paper is to generate insights into the effective use of Open Innovation (OI) practices in Small-and Medium-sized Enterprises
and resulting innovation capacities serve as catalysts to (developing) economies (Benácek, 1995; Peng, 2001; Wachtel, 1999.
As SMES are important actors in all types of economies (Lukács, 2005), but most notably in developing ones (Peng, 2001), we choose to study the OI activities of a sample of Hungarian and Romanian SMES.
How many new products/services have introduced you in the past 5 years or since you started up your company?;
For how many of these new products/services have collaborated you with external partners?;With what type (s) of partner (s) did you collaborate?;
Which are, in your opinion, the main advantages and drawbacks of jointly developing new products/services?
Existing research on the important catalyst role of SMES in developing economies and the articles that have come into existence on the driving force of OI practices behind SME innovativeness, survival, and growth.
and we zoom in on two showcase examples of innovative products/services introduced by the small firms in our sample, the role of OI in these innovations,
and their OI Activities for Eastern europe SMES are viewed as drivers of economic growth and development as they account for over 90%of all businesses in most economies (Brunswicker and Van de Vrande, 2014).
This catalyst role seems to be particularly important in developing economies, such as Hungary and Romania (Pfirrman and Walter, 2002),
and is related to the innovative strength of SMES compared to their larger counterparts where these small firms possess more specialized (technical) knowledge
despite their large presence in the economy, however, Hungarian and Romanian SMES only account for about 49%and 54%of the total economic value added, respectively (EC, 2014).
In terms of innovative performance, as measured by both the number of new product/service introductions as well as innovative collaborations with external partners,
and improving the business environment for SMES in Eastern europe through both financial and nonfinancial assistance (human capital
In addition to the environmental limitations that are characteristic of developing economies (Uzkurt et al, 2012), Hungarian and Romanian SMES also face restrictions in terms of underdeveloped skills
and a scarcity of resources (a lack of both human and financial assets) that are typical for the SME context at large (Parida et al, 2012).
and individual inventors, generate a higher number of new products/services than their peers that do not actively practise openness (Brunswicker and Van de Vrande, 2014;
The extent to which owners/managers‘preach'openness in their company, forge trustful relations with partners, proactively seek new OI opportunities,
Particularly in developing economies it is important to study the effectiveness of approaches in SMES that help these small firms in playing their catalyst role.
what innovation management means for their individual organizations have had a substantial influence on the quality and quantity of input received.
while the youngest a private art/creative services practice inaugurated in late 2014. Figure 1 The breakdown(%)of the sample into four distinct age categories:
industry breakdown, indicating the percentage of SMES active in different sectors of industry. 43%of our sample consists of service firms e g. health services (clinics), computer-programming services, design, advertising, consulting practice
A‘ready mix'(or Simple capital replacement or Catering business: We have introduced on the 8 products
Highly specialized, on-demand professional services LEAN manufacturing consultancy:''Rent a manager'or‘rent specialist'.(
identifies sale opportunities (stock liquidations), purchases a given number of cars at an advantageous price and finally sells these cars further to clients.
having introduced between 1 and 5 new products/services in the previous five years or since their establishment (the innovativeness of the SMES in our sample is representative of the larger SME population,
The remainder of the sample is distributed approximately equally between the two extremes. 9 Figure 4 The innovativeness of the sample measured by number of new products/services introduced in the past 5 years
a sustainable business model is taking shape with the help of OI: Everything starts from myself, Richard,
Figure 5 The importance of Open Innovation practice in the sample measured by the number of new products/services resulting from collaboration Fewer than five companies in our sample responded that they typically conduct all of their innovation activities internally without any influence of external
and their peers (i e. other SMES that are not in direct competition with them). Suppliers are recognized in the OI literature as important sources of (joint) innovation (Ragatz et al, 1997.
For SMES, working with clients and involving them in innovation could be important in terms of gaining access to information regarding clients'needs as well as creating market acceptance of new products/services more easily (Lasagni,
As such, they see a clear link with their competitive position where they are equipped better to compete in their respective industries, such as health services and consulting,
to the extent that their new services are developed in collaboration with partners. 13 By contrast, the SMES in our sample have reported also a number of drawbacks to OI (see Table 2). Some of these drawbacks are typical for the employment of OI practices in an SME context:
and have introduced fewer than five new products/services on the market since their establishment. In undertaking this exploration,
and their willingness to take risks are viewed as important drivers of innovation and economic growth in developing economies (Peng, 2001;
Furthermore, despite their majority stake in these developing economies in terms of sheer numbers, they do not generate a correspondingly high share of the total economic value created by firms of all sizes in Hungary and Romania (EC, 2014).
The few publications on OI in SMES that have come into existence so far have found that the effective use of OI practices in small firms can help these companies innovate
Indeed, the owners/managers of the SMES in our sample who have engaged in OI for at least part of their portfolio of new products/services on the market point out that accessing innovative knowledge
the speed with which they are able to introduce new products/services on the market,
The positive relation between OI and innovativeness in terms of number of new products/services brought to market in our sample of SMES is portrayed also in Table 3. The table shows that more innovative Eastern European SMES are more likely to report that all of
their new products/services were realized with the help of collaborators than less innovative SMES. Table 3 The relation between Open Innovation and innovativeness Number of new products or services/Role of OI in innovation 1 2-5>5 None 7%6%0
%Some 12%24%21%All 3%15%12%Although researchers in OI and entrepreneurship have begun only just to study the role of the individual owner/manager in the success of OI within an SME context (Lambrechts et al
2015), this scarce research does suggest that the open mind-set of the owner/manager, his/her proactivity in terms of seeking OI opportunities and forging trustful OI relations,
and his/her leadership with respect to managing the OI network positively contribute to OI effectiveness in SMES.
Educating owners/managers of SMES in developing economies with respect to the long-term benefits of openness and the effective management of OI may
and their overall innovativeness benefiting the economy at large. 15 When it comes to the main OI challenge reported by the owners/managers of the SMES in our sample,
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Finance, human capital, technical assistance, and the business environment in Romania. Economic Development and Cultural Change, 54,33-70.
Brunswicker, S. & van de Vrande, V. 2014. Exploring Open Innovation in Small and Medium-Sized Enterprises.
In H. W. Chesbrough, W. Vanhaverbeke, & J. West (Eds.),New Frontiers in Open Innovation, 135-156, Oxford, Oxford university Press.
SME Performance Review-Small and medium sized enterprises-Enterprise and Industry Online. Brussels. Available: http://ec. europa. eu/enterprise/policies/sme/facts-figuresanalysis/performance-review/index en. htm. Communities, S. O. o. t. E. 2005.
Oslo manual: Guidelines for collecting and interpreting innovation data, Publications de l'OCDE. Fletcher, D.,Helienek, E. & Zafirova, Z. 2009.
A comparison of small and medium-size enterprise development in Central and Eastern europe. Comparative Economic Studies, 43,35-68.
The effect of intellectual capital on product innovativeness in SMES. International Journal of Technology Management, 53,1-18.
Orchestrating innovation ecosystems through an IP-based business model: The case of IMEC, a world-class research institute in nano-electronics.
The economic role of SMES in world economy, especially in Europe. European Integration Studies, 4, 3-12.
How entrepreneurs create wealth in transition economies. The Academy of Management Executive, 15,95-108. Pfirrmann, O. & Walter, G. H. 2002.
Small Firms and Entrepreneurship in Central and Eastern europe, Springer. Ragatz, G. L.,Handfield, R. B. & Scannell, T. V. 1997.
Open innovation practices in SMES and large enterprises. Small Business Economics, 41,537-562. Uzkurt, C.,Kumar, R.,Kimzan, H. S. & Sert, H. 2012.
The impact of environmental uncertainty dimensions on organisational innovativeness: An empirical study on SMES. International Journal of Innovation Management, 16,1-23-23.
Entrepreneurship in the transition economies of Central and Eastern europe. Journal of Small Business Venturing, 14,417-425. i The survey was administered originally to a sample of SMES in three Eastern European countries:
and attracting venture capital for promising projects. 18 iii It is important to note that collecting sensitive information from SMES (i e. information about their innovation projects,
This tendency can be attributed to the growing number of innovation management related events in Romania, the establishment of crowdfunding platforms such as www. crestemidei. ro,
a maturing venture capital scene as well as higher workforce mobility. v Each participating SME's core area of operation was standardized using the Standard Industrial Classification (SIC) system whereby‘Finance,
and does not fall under‘Services'.'vi Although the Oslo Manual differentiates between four major categories of innovations,
The Oslo Manual considers both goods and services as‘products, 'whereas the survey employs the classic‘product/service'dichotomy. vii More specifically,
As one health-services company owner/manager remarked:(in our organization) new needs are identified on a permanent basis
investment for growth and jobs. For Europe's universities, most importantly, their education and training capacities should be linked crucially to research and innovation activities
. and science must meet regional policy and enterprises. Universities are increasingly called upon to adjust their work, both in terms of research activities and human capital development,
One of the key messages underscored in the pursuit of RIS3 is untapped the often potential of universities to contribute to regional development and the need for their fuller integration with the regional economy.
including the research community and enterprises. It must be stressed that Structural Funds are intended not to cover the general operational costs of universities the main source of financing for universities will continue to come from national or regional budgets, competitive funding and increasingly from the private sector.
It will be the basis for Structural Fund investments in R&i for the period 2014-2020.
Smart Specialisation provides an opportunity for universities to be engaged constructively, together with other stakeholders, including the private sector, in identifying areas of potential specialisation in regions and Member States. 8 REPORT ON JOINT EUA-REGIO/JRC SMART SPECIALISATION PLATFORM
EXPERT WORKSHOP: THE ROLE OF UNIVERSITIES IN SMART SPECIALISATION STRATEGIES Maria da Graça Carvalho Member of the European parliament Research and innovation are the foundations on
and regional authorities have a unique opportunity to form close partnerships that, together with industry and other stakeholders, can maximise the use of EU Structural Funds for research
and innovation to deliver economic and social development. From the perspective of universities, it is vital that there is more clarity on how they can benefit from the Structural Funds
recognition of the role of universities as a key partner in taking forward successful Smart Specialisation Strategies in partnership with other stakeholders in the region;
the need for Smart Specialisation to build on the specific profile and opportunities of European regions,
active promotion and publication of Research and Innovation Strategies for Smart Specialisation (RIS3) to motivate participation of key stakeholders;
creation of opportunities for the alignment of university research portfolios to RIS3 priorities, including through balanced recognition and incentive mechanisms for both research and innovation activities in universities;
better alignment of timelines for the different stakeholders (universities, regional authorities and other external actors;
development of appropriate instruments for synergy opportunities in competitive/structural funding with respect to: R&d capacity-building in infrastructure but also crucially in human resources and multidisciplinary approaches;
investment in high-risk spin-offs and venture capital; local firms and universities to work collaboratively; and ensuring the sustainability of Smart Specialisation Strategies beyond the structural funding timeframe.
For regions, the benefits should not be simply new infrastructure in physical terms but also importantly in investment in human capital development and services to the region.
to better understand the opportunities, challenges and obstacles for regions to form collaborative partnerships in research and innovation with universities in the future programming period of EU European Regional Development Funds (ERDF), the European Social Fund (ESF
and to prepare for a conference to disseminate the results of the workshop among university leaders, policy makers and other stakeholders.
The discussions revolved around the potential opportunities, challenges and obstacles for cooperation. The workshop was highly interactive,
But their investment is aimed often at short-term rather than long-term goals. Physical buildings and infrastructure can be achieved in the short term (within the political framework/time cycle.
and expansion of required human capacity skills to maximise the impact of the infrastructure in the region in enhancing employment, goods and services.
Synergy between innovation policy and regional policy initiatives/investments is often lacking or under-used.
Measures for the further enhancement of mutual understanding between universities and regional authorities and agencies of their respective roles, contributions, opportunities and constraints are required.
National ministries of education, science and technology are often spatially blind in their R&i investments,
therefore is to marry the curiosity-driven research interests of universities with the demand-driven R&i interests of regional authorities.
Several examples demonstrated the challenges and opportunities of the use of these funds. For the Highlands and Islands region of Scotland the Structural Funds were used to maximise the asset base,
In general also, innovation is seen too often in solely technology-driven terms with less focus on the importance of social innovation in the development of new skills and services.
and better understand business opportunities. b) Universities'potential contribution to regional goals Regional policy debates have a tendency to adopt a conventional approach of viewing a university's role in regional development as focused solely on technology transfer.
enterprise and business development: promoting enterprise development and growth; human capital development: contribution to human capital and skills development;
and enhancing social equality: improving social equality through regeneration and cultural development. 6 Main themes emerging from the workshop debate 16 REPORT ON JOINT EUA-REGIO/JRC SMART SPECIALISATION PLATFORM
EXPERT WORKSHOP: THE ROLE OF UNIVERSITIES IN SMART SPECIALISATION STRATEGIES There are many different resources within universities that can be mobilised to help achieve these objectives, some
but on a more strategic level through market-driven education, commercially relevant research and connectedness with enterprises and local authorities, all of which raise the profile of the university,
c) Smart Specialisation as a new opportunity for collaboration between universities and regions The new emphasis on innovation strategies for Smart Specialisation in the EU provides a great opportunity for many universities to engage with regional
The opportunities for regional cooperation vary across the countries depending on specific national contexts, but also geographic and institutional factors.
and opportunities from an independent perspective (though they too have interests that should be recognised). Finally, universities are under pressure to specialise as well in terms of teaching and research,
and the Smart Specialisation Strategy formation process provides a window of opportunity to better align university and regional priorities.
rationalisation of the course portfolio and research capabilities of universities to match with industry demands and regional priorities;
and/or due to the long-term nature of the investment that the partnership requires compared to the shorter-term periods/cycles of governments.
Competition or lack of alignment between national and regional political and policy objectives and strategies may make dialogue difficult between universities and regional authorities.
dialogue, trust and alignment of university portfolio and regional strategies Dialogue/communication between universities and regions is crucial:
These topics have been so far exclusively an issue for regional authorities with limited consultation of stakeholders.
(and EUA as the European stakeholder for Europe's universities have focused upon and contributed actively to the debate shaping EU Research Framework Programmes and their rules of participation.
each element has to undertake the appropriate tasks in constant communication with partners. For example, universities can provide research
and within the regional higher education landscape there will be different types of institutions to provide different services.
Consultancy services may also be developed for the execution of projects. In particular, multi-disciplinary research and management skills are needed to address many business innovation problems or societal challenges.
Structural Funds can be used to build research excellence through investment in research infrastructures and attracting leading researchers.
There was a general consensus about the importance to include all relevant stakeholders in the definition and implementation of an RIS3 strategy.
Greater dissemination and communication of these experiences of promoting entrepreneurial spirit in universities will be a crucial requirement to fulfil their engagement in contributing to regional development in the context of RIS3.
It is important to note that in the less-developed regions universities have fewer opportunities to engage with the business sector
Regional Development Commission of Algarve Miguel Angel Aguirre Spain Andalusia Adviser, Andalusian Regional Government, Ministry for the Economy, Innovation, Science and Employment Annex 1:
and Communication Manager Per Erik Sørås Norway Sør-Trøndelag County Senior Adviser Armin Mahr Austria Federal Ministry of Science and Research Head
coordination research locations & EU Cohesion Policy Anders Olsson Sweden Värmland Enterprise and Innovation Manager Rui Monteiro Portugal Norte Head of Unit, Science
Leader, Smart Specialisation Platform, JRC-IPTS Dimitri Kyriakou Spain EC Senior Economist, JRC-IPTS John Edwards Spain EC Researcher, JRC
Synergy effects can be seen in the investment in research infrastructures that are required for successful research collaboration.
and collaborative research can be built with those universities to maximise this investment within the country as a whole (at least 50%of the Czech republic's education
Such collaboration and critical mass development of human and physical capital will be crucial for the career development of young researchers in the future in addressing national and European innovation goals.
The Entrepreneurial University at the university's Centre for Entrepreneurship and Innovation (CEI: this project is funded by the European Social Fund, the Danish Growth Council and Aarhus University.
Shortcut to Knowledge project at the university's Centre for Entrepreneurship and Innovation (CEI: this is a three-year project launched in January 2011.
Improving R&d infrastructure (incl. construction and renovation of buildings for teaching and research, investments in R&d equipment.
THE ROLE OF UNIVERSITIES IN SMART SPECIALISATION STRATEGIES Enhancing R&d cooperation between R&d institutions and enterprises (programmes supporting materials, environmental, ICT, healthcare, biotechnologies, energy.
Additionally, the value of ERDF funding for investment projects in research and equipment was €2. 3 million.
while ESF funding is important especially in projects related to training, entrepreneurship and regional competence building.
The building of this unit will make the research environment a global leader. 25 REPORT ON JOINT EUA-REGIO/JRC SMART SPECIALISATION PLATFORM EXPERT WORKSHOP:
Institut National Polytechnique de Toulouse, France Institut National Polytechnique de Toulouse (INP Toulouse) in its use of EU Structural Funds has focused on the development of advanced services
to enterprises especially SMES, for example, intensive computing facilities, experimental platforms (e g. agro-materials platform, chemical and physical analysis services.
Universities are obliged commonly to merge different competitive funding sources and since 2011 French universities as a whole have been involved fully in implementing the new national programme, Programme d'Investissements d'Avenir (PIA).
The university participated in the local regional board for the investment of approximately €200 million where 10%of funding was allocated to research-and innovation-related activities.
Over that period it would have amounted to approximately 25%(rough estimate) of public investment in university RDI.
The main investment areas have been: research buildings, laboratories and equipment; human capacity building through structured Phd programmes and postdoctoral programmes;
Since 2006 this investment in RDI capacity has been linked strongly to synergies with other major national investments,
Multiple national agencies have been required to cooperate in making this investment. Funding for innovation activities has been directed through a separate agency (Enterprise Ireland) as an open competitive process on a rolling basis. There is thus a considerable synergy between structural funding and national programmes,
but all administered at one step removed from the universities. ESF funding has largely been directed to subsidies for development
and research in computer science and information and communication technologies, and including dedicated incubation space. Project financed at circa 30%with ERDF funds,
and research institutions located in the region leading to new partnerships in teaching, research and common use of infrastructure and accumulation of human capital.
and a rigidity of administrative rules and procedures can hamper adjustments being made to meet changing opportunities and circumstances.
and access and use of major infrastructure investments in science and technology facilities, e g. the European Laboratory on Tissue Engineering and Regenerative Medicine, the Institute for Bio-Sustainability and the Incubator Spinpark.
Also, funding for basic research activities in university laboratories through key research staff and equipment investments can be gained through the ON2 programme Consolidation of the Research Network.
Research activities at TUKE are supported adequately from the national research grants (TUKE is the third most successful university in Slovakia in the competition for the subsidy resources.
enterprises and regional authorities. 2) Centre VUKONZE Project: Development of a research centre for the efficient integration of renewable energy sources The Technical University of Ko ice conducts this integrated project with a mission that focuses on the establishment of an open research and development network.
The main investments and activities covered by these funds were: Co-financing of the university's research facilities and equipment:
and use and quality of, information and communication technologies; promoting sustainable transport and removing bottlenecks in key network infrastructures;
protecting the environment and promoting resource efficiency; and investing in education, skills and lifelong learning.
and design support services including product design, prototyping and usability testing to develop innovative healthcare products.
and Innovation Futures West midlands project is designed to help businesses transform their processes to be oriented future to respond to growth opportunities through the exploitation of new technology developments.
The results of EUA's work are made available to members and stakeholders through conferences seminars, website and publications
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