Synopsis: Entrepreneurship:

67 Innovation friendly business environments for SMES...70 Research infrastructures, centres of competence and science parks...

66 Figure 8-Matrix of business functions and international services...96 4 LIST OF REGIONAL EXAMPLES Example 1-Analysis of the regional context Skåne's innovation capacity...

THE POLICY CONTEXT OF SMART SPECIALISATION Europe is facing major economic challenges that require an ambitious economic policy for the 21st century.

sustainable growth, promoting a more resource efficient, greener and competitive economy; inclusive growth, fostering a high employment economy delivering economic, social and territorial cohesion.

Investing more in research, innovation and entrepreneurship is at the heart of Europe 2020 and a crucial part of Europe's response to the economic crisis.

So is having a strategic and integrated approach to innovation that maximises European, national and regional research and innovation potential.

and aims to deliver sustainable economic growth and social benefits from Information and Communication Technologies (ICT).

The concept of smart specialisation has also been promoted by the Communication'Regional Policy contributing to smart growth in Europe 2020'.6 In this document the Commission encourages the design of national/regional research

and the knowledge economy in all regions. 2 http://ec. europa. eu/europe2020/index en. htm 3 See previous footnote. 4 http://ec. europa. eu

place-based economic transformation agendas that do five important things They focus policy support and investments on key national/regional priorities,

and aim to stimulate private sector investment; They get stakeholders fully involved and encourage innovation and experimentation;

They are based evidence and include sound monitoring and evaluation systems. The RIS3 approach is relevant to all three priorities of Europe 2020 i e. smart, sustainable and inclusive growth.

because the development of an economy based on knowledge and innovation remains a fundamental challenge for the EU as a whole.

as an important innovation effort and considerable investment is required to shift towards a resource-efficient and low carbon economy,

offering opportunities in domestic and global markets. Finally smart specialisation contributes to inclusive growth between

and within regions by strengthening territorial cohesion and by managing structural change, creating economic opportunity and investing in skills development, better jobs and social innovation.

and a global role for every national and regional economy, including both leader and less advanced territories.

not only investment in research or the manufacturing sector, but also building competitiveness through design and creative industries, social and service innovation, new business models and practice-based innovation.

All regions have a role to play in the knowledge economy, provided that they can identify comparative advantages and potential and ambition for excellence in specific sectors or market niches.

The concept of smart specialisation is also consistent with and supports the main reform goals of the proposals for the EU Cohesion Policy 2014-2020,

and the eminent role the various innovation stakeholder and entrepreneurs are 8 Council Conclusions on Innovation Union for Europe, 3049th Competitiveness Council meeting.

and knowledge-based investments that are most likely to deliver growth and jobs in the regions.

And it is not only a reinforced stakeholder involvement and strong internal connectivity that counts but smart specialisation is also pointing regions towards more strategic cross-border

as it is the one of the essential keys for ensuring that all stakeholder incentives and behavioural responses are aligned correctly

and linking them to a limited number of priority economic activities, countries and regions can become

and remain competitive in the global economy. This type of specialisation allows regions to take advantage of scale, scope and spillovers in knowledge production and use,

Furthermore, strategies that combine innovation with specific strengths of the national/regional economy offer a much greater chance of success. Imitating other regions by trying to create'miracle growth'in headline industries such as semiconductor

i e. the regional innovation and economic system is considered often in isolation. They are not in tune with the industrial and economic fabric of the region;

This issue is even more critical in the current economic crisis where public and private financial resources are scarce.

The smart specialisation concept therefore promotes efficient, effective and synergetic use of public investments and supports countries and regions in strengthening their innovation capacity,

while focusing scarce human and financial resources in a few globally competitive areas in order to boost economic growth and prosperity. 14 For more information about previous innovation activities funded by the EU,

likely competitors and the entire set of input and services required for launching a new business activity.

The synthesis and integration of this previously dispersed and fragmented knowledge should help to create a vision for opportunities in existing or new sectors.

However, who has the entrepreneurial knowledge in the regional economy? It may be held by firms, which is often the case in'advanced'regions rich in entrepreneurial experiments and discoveries.

and one to encourage entrepreneurship. On the contrary, these two policies are mutually reinforcing; without strong entrepreneurship, the strategy of smart specialisation will fail because of a deficit in the entrepreneurial knowledge needed to feed

and nurture this strategy. How: Setting in motion regional change Smart specialisation strategies will usually require some sort of structural change,

Some companies are responding to these opportunities by increasing their overall internal R&d investment which is aimed not only at implementing available technologies

Many future goods and services will be driven by KETS such as semiconductors, advanced materials, photonics and nanotechnology.

Moreover, these goods and services will be crucial in addressing the'grand societal challenges'facing the EU,

it has not been as successful in translating research results into commercialised manufactured goods and services.

In such cases the discovery concerns potential synergies (economies of scope and spillovers) which are likely to materialise between an existing activity and a new one.

what can be described as social capital to create knowledge based growth. Nevertheless, local interaction can also be negative

both digitally (with ICTS) and physically (with transport infrastructure) may lead to a flow of human capital out of the region (in a process labelled'brain-drain').

For example, increasing human capital through a programme to enhance skills should match the needs of emerging industries.

therefore integrate policies that are formulated with demand side considerations, through approaches such as public-private partnerships.

RIS3 needs to be based on a sound analysis of the regional economy, society, and innovation structure, aiming at assessing both existing assets and prospects for future development.

The common principle that is central to such analyses is the adoption of a wide view of innovation that spans across economic activities

such as technological infrastructures, linkages with the rest of the world and the position of the region within the European and global economy,

and dynamics of the entrepreneurial environment. Regional assets: a strategy rooted in the regional specificities First,

and key challenges both for the economy and the society. Economic differentiation is one of the central principles behind smart specialisation.

which suggests that a regional economy can build its competitive advantage by diversifying its unique,

relatively substantial resources are invested in the early stages to pick up ideas that have the potential to become new enterprises,

a region should be able to identify relevant linkages and flows of goods, services and knowledge revealing possible patterns of integration with partner regions.

because the concept of smart specialisation warns against'blind'duplication of investments in other European regions.

whenever similarities or complementarities with other regions are detected. 20 The public administrators of the Top Technology Region contracted The swiss research firm BAK Basel to benchmark

The research resulted in an analysis and international benchmark of the region's strengths and weaknesses.

This analysis aims to build a systematic understanding of the areas in the economy and society that have the greatest potential for future development,

The analytical effort carried out in order to generate the basic information input for a RIS3 should have a special focus on the regional entrepreneurial environment,

and vetting business plans and loan applications was established to close the gap between validation of technology and market assessment.

Ensuring participation and ownership The fact that RIS3 is based on a wide view of innovation automatically implies that stakeholders of different types

Innovation users or groups representing demand-side perspectives and consumers, relevant nonprofit organisations representing citizens

or major regional stakeholders. In order to secure that all stakeholders own and share the strategy, governance schemes should allow for'collaborative leadership,

'meaning that hierarchies in decision-making should be flexible enough in order to let each actor to have a role

'which are selective investments in future-oriented domains with a high innovation and growth potential and large societal impact.

Step 3-Elaboration of an overall vision for the future of the region Analytical evidence should be used to depict a comprehensive scenario of the regional economy

society, and environment shared by all stakeholders. The scenario constitutes the basis for developing a vision about where the region would like to be in the future,

in order to keep stakeholders engaged in the process, a task that is particularly challenging, given that a RIS3 is a long-term process.

An element closely intertwined to formulating an effective vision is RIS3 communication. Both during the RIS3 design process and all along the process of implementation of the strategy

it is crucial to have good communication. This is a way of spreading the vision, ultimately generating a positive tension in the regional society towards strategic goals,

thus allowing to embark new stakeholders and keep the current ones engaged. Example 4-The vision of Flanders Step 4-Identification of priorities Priority setting in the context of RIS3 entails an effective match between a top-down process of identification of broad objectives aligned with EU

Publications such as the joint 2011 OECD/European commission book'Regions and Innovation Policy'or the 2011 EC Communication'Regional Policy for smart growth in Europe 2020'identify taxonomies of delivery instruments

Its aim is to gain insight into the results of innovation support services with the aim of improving delivery instruments,

During the workshop, the region under review presents its strategy and has an opportunity to engage in dialogue with peer regions,

suggesting that a regional economy can build its competitive advantage by diversifying its unique, localised knowledge base (existing specialisation) into new combinations/innovations

'where mismatches between SME latent and implicit needs and demand for support, on the one hand, and the effective value added of the existing support,

Hence, the work for this analytical step of a RIS3 strategy should combine the above types of analyses with other analyses aiming at shedding light on potential for knowledge-based transformation of the economy, based on information on the positioning of the regional

economy in international value chains and on identification of specific key assets. Several methods can be used to support the identification of potential niches for smart specialisation.

and foresight provide the opportunity to integrate the field knowledge held and concrete experimentation carried out, by regional actors in the spirit of an'entrepreneurial discovery process'.

analyses of specialisation of R&d investment, publications and citations, and patent applications and citations by'field'.

which do not match current product mixes (e g. the difficulty of defining environmental product or services'sectors').

quantitative analyses calculate degrees of specialisation of regional economies on the basis of employment (or value-added) data.

Location quotients measure whether some sectors are represented over in a regional economy compared to other regions or countries.

prioritisation of public investment in research/education/innovation in the region (by all levels of government;

predictability of the innovation policy framework for regional stakeholders; reliance on the consultation and support of regional stakeholders as a basis of innovation policy;

degree of control over strategic regional assets. Policy mix and framework conditions: cooperation between the local, regional, national and EU levels in the relevant policies (R&d, innovation, education, ICT;

consistency between policies addressing the supply and the demand (take-up) of innovations. Entrepreneurship: Favourable conditions for equity investment, business angels and venture capitalists;

business environment favourable to the creation of new SMES; existence of policies and instruments to foster the commercialisation of the output of innovation;

existence of specific measures to support young innovative companies; appreciation of regional inventions. Assessment and mapping of digital infrastructures and e-communication services:

existing and planned technology infrastructures (broadband networks) and other telecom-and internet-related services are presented in the Digital Agenda Scoreboard. 21 Human resources:

Attractiveness of working conditions for researchers compared with other employment opportunities; facilitated mobility of research and innovation personnel between the public and the private sector.

Public sector: Existence of specific provisions in standard public procurement procedures to foster innovation; the introduction of innovations within public sector organisations.

existence and coverage of training on entrepreneurship and creative problem-solving; autonomy and transparency of education and research organisations;

stability of public investment in research, education and innovation; proper balance between institutional and competitive funding for innovation;

This involves expert work on value chain analysis (undertaken in an international environment and enlightening the spatial division of labour),

identification of opportunities and barriers; stimulation of entrepreneurship/management of risk and uncertainty; market formation;

mobilisation of resources; and legitimation. These types of analysis are conducted by experts who study the cases in close cooperation with cluster actors:

this helps to take into account innovation opportunities identified by leading actors (companies, universities, intermediaries, etc. Mixing regional experts with international experts helps to give more weight to the international competitiveness issue.

Adding key stakeholders from foreign clusters brings in a useful peer review dimension to the analysis. 4. Foresight:

), Skill-relatedness and firm diversification, Papers on Economics and Evolution 0906. Jena Evolutionary Economics Group, Max Plank Institute of Economics. 23 Henning M.,Moodysson J. and Nilsson M. 2010), Innovation and Regional Transformation:

from clusters to new combinations, Region Skane. 24 European commission (2001), FOREN Guide-Foresight for Regional Development Network-A Practical Guide to Regional Foresight.

Potential actors relevant to the RIS3 process span from public authorities to universities and other knowledge-based institutions, investors and enterprises, civil society actors,

since different stakeholders will have different expectations and agendas on the question at stake, often restricted to their own areas of action.

the above wide view means that several policy areas are concerned with the RIS3, beyond the traditional science and technology and economy ministries and agencies.

Interministerial Committees are tools to cope with this need for a wide conclusion of stakeholders. A RIS3 is an exercise that deals with policies developed by local,

This multilevel dimension of policy implies that governance mechanisms need to include stakeholders and decision-makers from these various levels.

How Europe's Economies Learn. Coordinating Competing Models: Different modes of innovation. 35 delivery instruments

inductive Creative process Collaboration within and between research units Interactive learning with customers and suppliers Experimentation in studios and project teams Strong codified knowledge content, highly abstract, universal Partially codified

it is a time-consuming process that should be seen as an investment rather than a burden.

The most important types of organisation that need to be involved in the RIS3 process are public authorities, universities and other knowledge-based institutions, investors and enterprises, civil society actors,

and peer review services, for example. Figure 1 exemplifies a number of organisations belonging to each of the previous categories,

groups that were interested more in preserving the regional status quo than transforming the regional economy through innovation.

the regional governance system should be opened to new stakeholder groups coming from the civil society that can foster a culture of constructive challenge to regional status quo.

it is imperative that new demand-side perspectives, embodied in innovation-user or interest groups of consumers, are represented

RIS3 processes can develop environments which both support and utilise user-centred innovation activities also with the aim of securing better conditions to commercialise R&d efforts.

managerial leadership (the people who manage the'enterprise function'in the public, private and third sectors;

as in the case of RIS3, collaboration among stakeholders holds the key to successful implementation of innovative practices,

This in turn helps to overcome the sectoral and disciplinary silos that reproduce old habits and routines, locking regional economies into their traditional paths of development.

disciplines and professions and they are fashioned invariably in action learning environments where there is a high degree of novelty associated with the activity.

Examples of such activities include technology transfer, knowledge exchange, venture funding, regional economic development, business services

and management consultancy, all of which afford an overview of the regional economy. Formal recognition of the boundary spanning role,

and its significance for universities, businesses and the regional economy, would do much to promote a skill set that is critically important to the moderation of the RIS3 process, particularly of the entrepreneurial process of discovery,

Communications: a clear communications strategy was deemed to be of enormous importance, especially for the business community.

The businesses actually involved in RIS projects also required honest and timely feedback; Management: the Management Team and Steering Group personnel often played a key role in maintaining effective communication,

especially where the chair of the Steering Group or the leader of the Management Group was a prominent local business leader

regional authorities and development agencies will need to behave less like traditional public bureaucracies and more like innovation animateurs, brokering new connections and conversations in the regional economy.

New opportunities are emerging in old regions as a result of connections and conversations that are now occurring but

universities, development agencies and regional governments could jointly identify a project to explore the prospects for related variety in the regional economy.

as well as their own diagnosis of the strengths and weaknesses of the regional economy, and these views were subjected to critical review through a combination of SWOT analyses and collective debate.

Giving all participants the opportunity to shape the policy priorities is the key point to establish

It is therefore vital that the regional Knowledge Leadership Group includes stakeholders operating both outside and in the region.

Such knowledge needs to be shared amongst the regional stakeholders, as all too often partnerships fail because of a lack of understanding of the other's business drivers.

environment, transports, etc. When developing RIS3 strategies, Member States and regions need to take into account/be involved in the discussions on

of course, have to make their own analysis of funding needs and opportunities for their RIS3 strategies.

This includes private investments, as one explicit goal of RIS3, included in the criteria for the conditionality, is to leverage private RTD investments.

If such an analysis has not yet been initiated, RIS3 presents an opportunity to do so and will enable regions

and their innovation actors to identify and articulate funding needs for their strategies. Figure 5 illustrates these issues.

it should attract regional stakeholders around a common bold project, a dream, which many feel they can contribute to and benefit from.

Times of crisis often provide a good opportunity to generate such new Visions, starting from the wellacknowledged need to escape the crisis. The main difficulty for a Vision is to be ambitious but still credible:

if the Vision cannot be taken seriously by regional stakeholders. At this stage, the purpose is to reach the willingness to act towards the transformation of the regions

These justifications go much beyond the alleged classical benefits of innovation for job and economic value creation.

and energy challenges is based on the relationship between the built environment and the natural environment.

primarily rural near urban, primarily rural and primarily urban and coastal, closely resembles the OECD (2011b) regional typology based on the dominant built environment and natural environment features,

Regional Innovation Monitor, 32 based on Benneworth and Dassen 201133 An element closely intertwined to formulating an effective vision is RIS3 communication.

Good communication of the RIS3 is essential to ensure its endorsement by all stakeholders of the region, and beyond.

Communication is needed all along the process, adapting the content to the stage reached (adoption of a vision, adoption of policy priorities, endorsement of an action plan, implementation of key projects, etc..

The implementation of RIS across Europe has delivered the following lessons regarding the crucial components of a communication strategy,

and extending this target group by embarking stakeholders that are not yet part of the process. And it may serve the wider purpose of informing public opinion about the need to support the development of knowledge-based business in the region;

Report for the OECD. 34 Innovative Regions in Europe Network (2005), RIS Methodological Guide, Stage 0. 50 2. Identification of the stakeholder groups and their motivation:

To this end, appropriate communication methods and expected results need to be spelled out for each target group;

3. Definition of traditional communication tools: the tools include the use of a logo which builds and reinforces the regional identity and puts innovation at its core;

newsletters and leaflets to complete the information with traditional communication tools; specific publications on certain aspects of the RIS (key analyses, peer review reports, etc.;

which give the opportunity to diffuse synthetic material on the RIS; and press and TV campaigns.

The content of the communication should include strategic lines and priorities but also communication and demonstration on flagship projects;

4. Definition of active communication tools: active tools mainly include pro-active activities such as targeted visits to stakeholders or concerted workshops and seminars.

Examples of active tools are: visiting the sites, marketing of the participants to the project;

since all stakeholders in the region are supposed to adhere to the strategy and implement it in their own area. 51 Step 4-Identification of priorities Smart specialisation involves making smart choices.

and channelling resources towards those investments that have the potentially highest impact on the regional economy.

in order to select a few priorities focusing on the existing strengths of the economy but also on emerging opportunities.

economies of scope and local spillovers can be realised fully in the process of knowledge production and distribution. A regional economy clearly provides the appropriate dimensional framework for such processes of decision

strategic implementation, agglomeration of resources and materialisation of spillovers. However, national economies might also be a good framework,

particularly in the case of small countries. 52 But how to present the prioritised areas?

spreading the money across the most powerful lobbies with the frequent outcome that there were too many priorities aimed at preserving the status quo rather than looking at future opportunities;

Research and innovation strategies for Smart Specialisation should address the difficult problem of prioritisation and resource allocation based on the involvement of all stakeholders in a process of entrepreneurial discovery

development Human capital for S&t Science Parks Technology Transfer Offices and schemes Technology brokers Mobility schemes,

talent attraction schemes Innovation awards Incubators Start-ups support innovation services (business support and coaching) Training

and clusters Venture and seed capital Guarantee schemes for financing for innovation Experimental instruments Cross-border research centres Open source-Open science Markets for knowledge Regional industrial policy;

and focus of innovation support services for SMES Target of support Reactive tools providing input for innovation Proactive tools focusing on learning to innovate Global connections Excellence poles Cross

matchmakers Innovation vouchers Support for regional networking of firms Schemes acting on the culture of innovation Individual firms Incubators with'hard'support Traditional'reactive'technology centres Seed

and venture capital funds R&d subsidies or tax incentives Management advice Incubators with'soft'support'Proactive'technology centres Audits,

2003) 36 and Technopolis (2011) 37 36 Asheim B.,Isaksen A.,Nauwelaers C. and Tötdling F. 2003), Regional innovation policy for small-medium enterprises

and for cooperative projects Participation in national and international competitive research programmes Research spin-off promotion schemes (e g. regional seed and venture capital funds) Regional high-tech clusters, S&t Parks,

incubators Global talent attraction in targeted new sectors Strategic intelligence exercises (regional foresight) Complement national investments in research infrastructure Participation in national competitiveness poles/centres

incubators Entrepreneurship stimulation packages Global talent attraction in targeted new sectors Promotion of participation of public and private actors in international technology networks Lobby national government

for public investments in large S&t infrastructure linked to regional advantages Participation in national competitiveness poles/centres programmes (limited regional funding) Attracting FDI of knowledge-intensive companies and MNCS (infrastructure,

labour force) S&t parks and incubators Promoting national talent attraction schemes Knowledge vouchers Platforms to define development visions for high tech niches Strategy:

strengthening synergy between S&t developments and production activities S&tintensive production regions Industrial production regions including second-tier hubs in knowledgeintensive countries Investments in scientific or technology

linked to S&t infrastructure investments Competence centres and competitiveness poles relevant for regional industry Entrepreneurship and spin-off support (business plans competitions, regional venture capital funds) Incentives for regionally-relevant public research Entrepreneurship support (networks of individuals, training courses,

brokerage with business angels, specialised seed capital funds, etc. Infrastructure for business creation (incubators) and S&t parks Support for firms to hire qualified graduates Support to regional actors in international public-private knowledge partnerships Support to internationalisation

of business clusters Promotion of innovation in services Technology parks and incubators Innovation vouchers in selected specialisations Place-branding activities Source:

OECD 2011 56 Table 8-'Supporting socioeconomic transformation':'examples of regional strategies and associated policy mixes Type of OECD Degree of regional STI policy competences region by economic profile High Medium Low Strategy:

and service providers Industrial production regions with relatively high knowledge absorptive capacities Supporting science-industry linkages (personnel exchange and placement schemes, technology advisory services, technology

combining technology transfer with other services Promote innovation start-ups (business angel networks, mentoring schemes, regional seed and venture capital funds) Densification and internationalisation of regional production clusters Regional public procurement oriented towards innovation Technology platforms (linking technical schools and SMES) Technology transfer centres in relevant sectors,

co-funded by national government Regional advisory network, networks fostering synergies and complementarity between national agencies in the region and regional agencies Innovation vouchers for SMES Support for young

and entrepreneurship culture promotion Supply-chain management initiatives to reduce fragmentation Innovation-oriented public procurement Redefinition of programmes for regional technical schools Innovation awareness-raising,

entrepreneurship promotion events Develop latent demand for innovation (innovation vouchers, placement of students in SMES) Orient polytechnics centres to new qualifications Training for low-skilled and unemployed

upgrading and retaining human capital, creating critical masses and increasing quality of connectivity Primary sector intensive regions Rural areas in lagging countries, specialised in primary sector activities Regional agencies for business development

and export agencies Attracting national investments in vocational and tertiary education Promoting national training, lifelong learning schemes for companies and individuals Engaging regional stakeholders in external production networks Securing national infrastructure investments to enhance connectivity Source:

OECD 2011 58 Developing a RIS3 involves a degree of risk-taking, since there is always some uncertainty in the choice of priorities,

'Provide a signal to underline the fact that the strategy is going to be implemented concretely rather than remaining a concept, contributing to the communication of the RIS3 as a whole;

Medium/long-term results Increase awareness of a set of new technologies Awareness campaign, visits to fairs, advisory services Adoption of technologies Improved business performance;

, increase in prototypes New products and services based on innovation, increased quality of production Increase of research activity in a region Research subsidies to enterprises or universities/research centres Increase in research expenditure in firms, increase in patents or publications Improved innovation performance,

enhanced reputation Stimulate the start-up of new technologybased companies Finance and information for future entrepreneurs, incubation Creation of new hightech companies Long-term growth and sustained development of new

Number of new enterprises created in the region, number of enterprises having adopted a new technology, number of staff reporting new working behaviours, etc.

Increase rate of productivity in regional SMES Increased share of turnover based on innovation, increased export share, new products on the market

1. Is the strategy based on an appropriate stakeholder involvement? How does it support the entrepreneurial discovery process of testing possible new areas?

For this reason, the major aspects related to the current and projected structure of the regional economy should be investigated in the preliminary,

Additional elements of interest with a view to a RIS3 are distribution by size and the innovativeness of firms in the regional economy,

such as the existence of a number of industries in need of modernisation or the dependence of the regional economy on a limited number of industries.

and channelling resources towards investments with a potentially higher impact on the regional economy. The distinctive elements that can guide review,

Particular attention should hence be devoted to the regular exploration and consideration of emerging opportunities. If such a process of discovery is found missing or wanting,

This means, for instance, verifying that market opportunities and the comparative advantage of the region with respect to other EU

Mechanisms should be in place to detect activities facing increasing competition and to devote special attention to these,

Finally, the existence of relevant constraints to the redeployment of physical, human and intellectual capital should be inspected:

Clusters, Innovation friendly business environments for SMES, Research infrastructures, centres of competence and science parks, Universities-enterprise cooperation, Digital agenda, Key enabling technologies, Cultural

In order to help regional stakeholders to capture the critical lessons and knowledge about those delivery instruments,

i e. why the instrument is perceived as important for economic growth, what are the challenges and barriers,

rationale Smart specialisationguide Knowledge for Growth FWP evaluation Endogenous growth Innovation systems Innovative milieux Evolutionary economics Economic geography Policy Experimentation RIS-RITTS

and Innovation Policy IRE-RIS Guide Directory No-nonsense to build S3 Diagnostic Systèmes d'Innovation (Praguer) Entrepreneurship and incubation Internationalisationcompetitive

allowing regions to create more value, reaching higher levels of excellence and thriving in the global economy.

and compare economic activities, including agriculture, and strengths with other regions in the EU. In the implementation phase, clusters can be used as efficient platforms that can focus on

educational and skills development issues, cooperation with local incubators and efficient cluster management, which, all together, will allow clusters fully exploit their potential in the context of smart specialisation.

The European Cluster Observatory tool offers such benchmarking opportunities; Collect, if necessary, more detailed statistical data and perform qualitativebased surveys to better understand the dynamics of regional clusters to be used for implementing smart specialisation strategies.

in particular by making use of the European Cluster Collaboration Platform. 43 41 The Smart Guide to Innovation-Based Incubators,

www. clustercollaboration. eu. 70 Innovation friendly business environments for SMES Why should an innovation-friendly business environment be part of smart specialisation?

Furthermore, SMES are key players in introducing new products/services into the market place and offering innovative solutions to the grand challenges.

Entrepreneurship is necessary to make sure that innovation ideas are turned into sustained growth and quality jobs.

and existing enterprises to innovate and develop. The support should aim to increase the innovation capacity of SMES

Regional policy makers also have to understand the different forms of innovation such as non-technology services, cross-sector technology integration, system and business model innovation,

It is relevant for the regional authorities to adapt their offer of support services to the demand of the different types of enterprises:

and especially micro-enterprises, are heavily dependent on their regional environment where proximity plays a key role for innovation,

SMES need policy support in tapping into the necessary outside resources, principally access to knowledge in the form of advice through innovation support services and tailored counselling, technology or qualified human capital,

to face up to the new forms of competition that are developing in the global economy. SMES are thus at the core of Cohesion Policy.

and improving their investment in R&d, facilitating innovation and promoting entrepreneurship. Cohesion Policy in fact provides the largest financial Community support to SMES through financial engineering instruments such as JEREMIE. 45 For the period 2014-2020,

the Commission has proposed an even stronger focus on enhancing the competitiveness of SMES in the context of Cohesion Policy. 44 See for example the Regional Innovation Monitor initiative at:

covering all phases of enterprise creation and development, and a link to European activities that support SMES in setting up or joining cross-border knowledge networks

The European Small Business Portal provides information on possible funding opportunities for SMES. 46 How to act?

which is a framework for building a more friendly business environment in Europe. Regional authorities should focus on the content of the SBA

supporting entrepreneurship spirit and enterprise creation and development; enhancing innovation support for existing SMES; building capacities in innovation agencies and SMES by spreading information on new tools to support innovation in SMES

or testing new ways to access high added-value support services: vouchers, innovative procurement, market replication, proof of concept, lead markets, 47 Key Enabling Technologies (KETS),

46 http://ec. europa. eu/small-business/funding-partners-public/finance/index en. htm 47 See for example the Lead Market Initiative of DG Enterprise and Industry at:

http://ec. europa. eu/enterprise/policies/innovation/policy/lead-market-initiative/48 http://www. europe-innova. eu/web/guest/home 49 http

providing market opportunities via market replication projects, for which SMES constitute the main target group;

interconnecting SMES through the Enterprise Europe Network and in particular via brokerage events, platforms, survey mechanisms, Internal Market information, etc.

and management to commercialisation of project results) as part of the regional innovation support services, use of financial engineering instruments to promote commercialisation of promising EU research and innovation results by regional actors,

Useful links and further information Enterprise Europe Network52; Support services based on direct customised assistance: o the IPR Helpdesk provides information on intellectual property issues related to FP753;

o the Business Innovation Centres (BIC) provide innovation related business services on a commercial basis;

o the China SME IPR Helpdesk provides free information, first-line advice and training support to European SMES to protect

and transfer of knowledge between research organisations and various kinds of SMES and a blueprint paper on new emerging forms of SME support in the context of open innovation and public-private partnerships (including benchmarks).

59 For the 2014-2020 programming period, the European commission has proposed establishing a Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME.

and sustainability of the Union's enterprises, including the tourism sector, o encourage an entrepreneurial culture

p=9 eranet 52 http://www. enterprise-europe-network. ec. europa. eu/index en. htm 53 http://www. ipr-helpdesk. org/54

http://www. china-iprhelpdesk. eu/55 http://ec. europa. eu/enterprise/sectors/ict/key technologies/index en. htm 56 http://ec. europa

. pdf 74 o improve the framework conditions for the competitiveness and sustainability of Union enterprises,

o promote entrepreneurship including specific target groups, o improve access to finance for SMES in the form of equity and debt,

systems and related services that are used by research communities to conduct top-level research in their respective fields.

They represent an aggregate European investment of more than EUR 100 billion. Some 50,000 researchers a year use them to produce 3, 000 to 6,

The resulting innovation ecosystem spurs new ideas, solutions and innovations of benefit to the European economy and society, as well as science.

should help to concentrate regional human capital (e g. training and attracting international researchers and technicians) and thus stimulate turning science and innovation into a key instrument of regional development,

Research Infrastructures are integrated often in a wider ecosystem encompassing science parks, incubators, sectoral excellence centres, living labs, prototyping centres, intellectual property right (IPR) centres, technology

Science parks provide the advanced infrastructure on which research-intensive enterprises rely, besides the location factor, often in close proximity to a university.

They can also provide complementary services and support to local firms. Spinoffs and SMES can find wider support services that allow them to better focus on their core business and on research for the development of innovations in science parks.

They are associated usually with strong networking effects and high levels of social capital. They also provide visibility

and hence attraction to wider local strategies aimed at the creation of conditions for high-tech industries to prosper.

sectoral centres targeting specific industries (providing a range of specialised services, directly to firms) and cross-sector centres concerned with generic issues (such as product development and work in partnership).

or region in order to offer a range of integrated guidance and support services for projects carried out by innovative SMES,

(or the members of a to-be ERIC) based on regular peer review. 62 The Smart Guide to Innovation-Based Incubators (IBI).

and that they are able to provide high added-value, financial and nonfinancial support services to SMES,

and avoid duplication of investment in infrastructures similar to those already in place nearby. How to act?

and services that create growth and jobs. The contribution of the stakeholders at regional and national level needs therefore to be enhanced.

Regional and local authorities should work in partnership and take measures that would create a'stairway to excellence'for research and innovation infrastructures and businesses within their areas of responsibility.

Investments in existing and new RIS should combine in the most efficient and effective way the instruments

the Council, 65 the Parliament66 and the Commission. 67 In this context, the Commission has produced the'Practical Guide to EU funding opportunities for Research

and translating it into innovative products and services, in cooperation with research centres and businesses.

Universities dealing with economics, public policy and administration, as well as those dealing with specific policy areas (such as industry, health, agriculture, environment and culture) can provide public authorities and private sectors with strategic advice,

as well as experts to work directly on regional development priorities. Universities are a critical'asset'of the region

and students, provide advice and services to SMES, and participate in schemes promoting the training and placement of high level graduates in innovative businesses.

They can also host incubators for spin-offs in science and technology parks and provide valuable input to innovative clusters and networks.

in line with the Commission's Communication on the modernisation agenda for universities COM (2006) 208.80 to respond to regional needs.

and knowledge that can contribute to regional growth and development (i e. demand side). Successful partnerships involve'boundary spanners'providing leadership within

Universities will appreciate the opportunities that their regions present for their activities as'living laboratories'opened to international linkages;

For the next programming period, the investment's priorities proposed under the Cohesion Policy cover these aspects with an emphasis on connecting universities to regional growth and developing stronger partnerships within the knowledge triangle.

Advisory services for the improvement of the economic and environmental performance as well as the climate-friendliness and resilience of the farms, forest enterprises and rural SMES,

and/or relevant investments; Studies and investments associated with the maintenance, restoration and upgrading of the cultural and natural heritage of villages

and rural landscapes, including related socioeconomic aspects; Co-operation among different actors in the Union, agriculture, food chain, forestry sector and among other actors (including Universities) that contribute to achieving the objectives and priorities of rural development policies (e g. pilot projects;

Information and communication technologies (ICT) are a powerful driver for economic growth, innovation and increased productivity.

sustainable and inclusive economic growth through the realisation of the digital single market and the exploitation of the potential for innovation of fast and ultra fast internet and interoperable services and applications.

at 100 Mbps minimum) and for wide deployment and more effective use of digital technologies, applications and services.

ecall), a cleaner environment and more efficient energy networks (smart grids, smart metering), inter-modal and sustainable cities (smart cities), new media opportunities and easier access

or trying to create the conditions to attract new investment, the smart specialisation strategy builds on or constitutes the first step towards local/regional'digital agenda'.

and the best leverages for the potential of digital technologies and services to meet today's challenges

and prepare for tomorrow's opportunities. The long-term competitiveness and innovation potential of regional and rural areas and the ability to achieve the fundamental objectives of both regional and rural policies depend on the good planning of these investments.

This is as much a socioeconomic as a cultural and political challenge which management authorities of EU funds cannot afford to miss. 77 See Digital Competitiveness Report 2010:

79 www. europeana. eu 83 The reviewing of the initial Digital Agenda Communication will redefine

Barriers and challenges Europe is facing an investment challenge in the financing of high speed internet infrastructure

The large amount of investment required to achieve ubiquitous coverage80 requires a combined effort from a large number of investors from the private and public domains

the adoption of open and long-term investment models81 and the use of a range of financial tools including grants and financial engineering.

and more effective use of digital applications and services spurring innovation, increased competitiveness and economic growth.

leveraging financing and investments in innovation and improved coordination and coherence between funding for research and innovation at European, national and regional level in Europe.

as well as ensuring investment in digital service infrastructures (trans-European high speed backbone connections for public administrations, cross-border delivery of egovernment services, enabling access to public sector information and multilingual

services, online safety and security, intelligent energy networks and smart energy services. To best harness EU funding from these various financial instruments, one of the key challenges for management authorities is

therefore to select investment models and strategic priorities that will foster the above efforts. 80 Estimated by the EC between EUR 180 and 270 billion. 81 See EU Broadband good practice site:

particularly research and innovation, promoting the competitiveness of SMES and the shift to a low carbon economy;

measures aiming at enhancing accessibility to the use and quality of information and communication technologies (ICT) in rural areas86;

broadband and NGA networks and Digital Service Infrastructures including core service platforms and generic services.

assessing the most suitable investment models, 89 etc. This may take the form of a stand-alone'Broadband Plan'(most Member States have one at national level)

and stimulating demand for new applications (cloud computing, ebusiness) and ICT usage (ecommerce for SMES and consumers, smart energy networks and low energy lighting, ICT R&d, etc..

id=158 Notably the Guide to Broadband investment: http://ec. europa. eu/regional policy/sources/docgener/presenta/broadband2011/broadband2011 en. pdf 85 The development of a chapter for digital growth within the smart specialisation strategy will enable regions

to identify the priorities for ICT investment which are pertinent to your territory. The Digital Agenda for Europe can be taken as a model.

The S3 platform, in combination with relevant Commission Services can provide specific assistance to regions which identify ICT as one of its main policy objectives for the 2014-2020 period.

, public services, e-education, e-inclusion, e-skills, entrepreneurship, digital literacy, econtent, creativity, culture, living labs, smart buildings and neighbourhoods, smart cities

to establish accelerators and mentoring facilities for start-ups; to support web entrepreneur camps, good practices exchange, peer review, studies,

to set up innovative investment models; to exploit pre-commercial procurement and other related innovative procurement activities including reinforcing cross border

Plan for high speed Internet Infrastructure (Next Generation Networks) The Guide to Broadband Investment, presenting the various models for management authorities wishing to invest in high speed infrastructure,

Provided that these investments respect the relevant regulation (telecom framework, State aid guidelines, etc. they can benefit from a wide range of EU funding instruments from the Connecting Europe Facility (CEF) and from cohesion (in less developed regions) or rural development policies.

The EBP provides assistance to regions to work through the different stages of the Guide to Broadband Investment as well as specific assistance through a range of training modules, workshops and training events.

The EBP will also continue to work on the guide on broadband investment models with the provision of additional models

the S3 platform will also develop services dedicated to broadband roll out. Regions are reminded to closely coordinate their plans with the actions included in the national plans for high speed internet (national broadband plans) with a view to exploiting synergies

goods and service innovation throughout the economy and are of systemic relevance. They are multidisciplinary,

of the investment priorities of the European Regional Development Fund (ERDF) as a relevant investment for the smart growth of regions. 94 KETS are seen as the route to new and better products and processes,

capable of generating economic growth and employment and strengthening the competitiveness of the EU economy. They bear enormous market potential.

which will open up great opportunities for regions. Regions should indeed analyse those opportunities, either as an emerging sector,

or as a means to modernise traditional sectors. Barriers and challenges 93 (COM (2009) 512) 94 See Article 5 (1)( c) ERDF:'

Who are the main actors and potential customers of these activities? Is there a business case in terms of market exploitation?

which will provide information on the supply and demand of KETS in the EU and third countries.

This mechanism will provide EUWIDE and international market data on the demand and supply of KETS,

In addition, the Commission plans to cooperate more closely with the European Investment Bank in order to provide loan guarantees to productive investments.

Overall a coherent financial framework will be put in place in order to support all development and innovation stages of KET-related processes. 95 http://www. observatorynano. eu/project/96 http://www. proinno-europe. eu/page/regional-innovation-scoreboard

the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No. 1083/2006.89 References Policy Recommendations of the High-level Expert Group on KETS (2011). 98 Commission Communication

investments in cultural and creative industries (CCIS) already have a significant impact on smart, sustainable and inclusive growth.

are vital for the emergence of new economic activities and the creation of new and sustainable job opportunities101;

and diversification in many industrial zones and rural areas with the potential to rejuvenate economies, stimulate innovation and contribute to growth;

have potential in generating social demand, engaging the public and addressing social concerns in rapidly growing markets,

research, education and can increase the attractiveness of regions in terms of human resources and 98 http://ec. europa. eu/enterprise/sectors/ict/key technologies/kets high level group en. htm 99 http://ec. europa

. eu/enterprise/sectors/ict/files/communication key enabling technologies sec125 7 en. pdf 100 http://ec. europa. eu/research/horizon2020/pdf/proposals/com (2011) 811 final

See also the emphasis on the creative industries in the European Competitiveness Report 2010, Commission staff working document, COM (2010) 614.90 investments.

offering great opportunities for the sectors but making it necessary for them to develop new skills,

and distribution methods and adapt their business models accordingly. European cultural and creative sectors are fragmented furthermore inherently along national and linguistic lines

and outside the EU and can lead to missed business opportunities. Moreover, cultural and creative sectors face difficulties in accessing the resources they need to finance their activities

the prototype profile of their activities, their lack of investment-readiness, as well as the insufficient investorreadiness of financial institutions to support them.

However, in many regions, cultural and creative sectors constitute a major asset for the economy and building on this asset should be considered in national/regional research and innovation strategies for smart specialisation.

i e. via the development of a creative environment that promotes traditional cultural assets (cultural heritage, touristic destinations,

dynamic cultural institutions and services), stimulates the development of creative businesses, and supports spill over effects into the local existing industries and fuel development.

Member States and regions are invited to finance their cultural and creative industries through investment priorities103 closely linked to the objectives of the EU 2020 Strategy. 102 In particular in the 2010 Commission Communication'Regional policy contributing to smart growth':

''Promoting clusters','Developing ICT products and services,;''Promoting entrepreneurship, ''Developing new business models for SMES','Improving the urban environment','Developing Business incubators,'Supporting the physical and economic regeneration of urban and rural areas and communities,

'etc. 91 A group of experts from Member States currently working on the'strategic use of EU support programmes,

including structural funds, to foster the potential of culture for local and regional development and the spill over effects of CCIS on the wider economy,

'will provide in early 2012 a policy handbook identifying good practices in this field that might prove very useful for managing authorities, regional authorities and cultural sector operators.

In this respect, the Europe Enterprise Network could provide assistance in organising matching events or assist in coordinative actions106;

104 http://creativebusiness. org/themes/magazeen/favicon. ico 105 European Cluster Observatory, www. clusterobservatory. eu 106 Enterprise Europe Network, www

. enterprise-europe-network. ec. europa. eu 92 Perform benchmarking activities to better understand the positioning of the region in the sector of CCIS in comparison to other EU regions.

Strategic and inclusive approach to investments and the use of financial resources: Streamline regional, national and EU funding support to cover the different needs of the cultural and creative sectors.

Develop innovative financial instruments such as equity funds or guarantee funds to co-finance investments in the cultural and creative sectors,

in conjunction with the financial instrument that is proposed under the Creative Europe framework programme108 as a way to give leverage to private investment in this field;

Promote investments in the protection, promotion and development of cultural heritage. 109 Other investments could include:

the development and use of new information technologies (for example to promote the digitisation of cultural heritage), strengthening of entrepreneurship in CCIS,

the support to urban regeneration in which the cultural component (notably cultural infrastructure) traditionally plays a key role,

when programme is adopted on 23.november 108 Innovative financial instruments for CCIS are tested also under the European Creative Industries Alliance. 109 Included under the Cohesion policy as part of the thematic objective for protecting the environment.

applications and services, the support to new business models for CCI SMES, etc. Balance between hard (structures/infrastructures:

creative hubs and clusters, networks, incubators and connected infrastructures) and soft (human capital addressing skills and training issues) investment should equally be encouraged. 94 Internationalisation Why should internationalisation be part of smart specialisation?

The world is flat and all elements of an enterprise value chain can be located anywhere in the world through FDI or outsourcing;

Today, even high added-value elements of the enterprise value chain (i e. R&d&i, support services, access to finance, design) can be produced outside OECD countries.

Regions have thus to benchmark themselves with any other regions to assess where the real

or believed competitive advantages are challenged in order to permanently increase their values; Internationalisation is becoming a more and more sophisticated context.

whether the smart specialisation strategy is able to resist global competition or take advantage of global competition opportunities (often niche markets).

Many reports are showing that lots of SMES do not use the full potential of either the internal or the external market.

According to a Finnish survey entitled'International R&d in high growth SMES Implications to innovation policy',110 public authorities can help the internationalisation process of technological companies by supplying them with support services

knowledge of international market and technology demand, strategy development for international R&d activities, identification and selection of partners, identification, selection and acquisition of technology, skilled personnel, funding

Figure 8-Matrix of business functions and international services Business International functions services Research Joint research Access to equipment Establishment (FDI) Innovation Joint

96 Small Business, Big World A New Partnership To Help SMES Seize Global Opportunities, November 2011111;

Opportunities for the Internationalisation of SMES, August 2011; The EEN Network can help SMES find sustainable partners to implement their internationalisation strategies;

For the 2014-2020 programming period, the European commission has proposed establishing a Programme for the Competitiveness of Enterprises and Small and Medium-sized enterprises (COSME.

and globally. 112 111 http://ec. europa. eu/enterprise/policies/sme/market-access/files/com 2011 0702 f en. pdf 112 http://ec. europa. eu/cip/files/cosme

For more than ten years, the EU budget has been using financial instruments such as loans, guarantees and equity investment for SMES.

In the area of structural funds, financial instruments have been set up to support enterprises, urban development, energy efficiency and renewable energies through revolving funds.

in order to deliver investments in projects which demonstrate appropriate repayment capacity in situations of market imperfection.

which will be ring-fenced for investments in line with the programmes concerned, for example, a guarantee facility is being launched to incentivise financial intermediaries to extend loans to SMES in the cultural and creative sectors (CCS) under the new Creative Europe Programme.

It also briefly describes the joint initiatives with the European Investment Bank (EIB), the European Investment Fund (EIF) and the Council of europe Development Bank (CEB) which promoted the implementation of financial instruments with resources provided to Member States through Regional Policy (European Regional Development Fund

) and the EU Rural Development Policy (European Agricultural Fund for Rural Development). EU level risk capital/equity instruments:

Innovative financial instruments form part of the Entrepreneurship and Innovation Programme (EIP), one of the three specific programmes under the CIP.

and growth of SMES in order to support the investments of such companies in innovation activities, including eco-innovation.

The 2020 European Fund for Energy, Climate Change and Infrastructure (the Marguerite Fund) is a pan-European equity fund for infrastructure investments in the transport, energy and renewable sectors.

The Fund was established as a regulated, specialised investment vehicle under Luxembourg law. The Commission, representing the EU,

but is involved not in the day-to-day management of the Fund or in individual investment decisions,

as this is the responsibility of the Management Board and Investment Committee of the Fund. 114 Policy DG in charge:

and innovation investments by sharing the underlying risks between the EU and the EIB. Together, the European commission and the EIB are 113 http://ec. europa. eu/enterprise/policies/finance/cip-financial-instruments/index en. htm 114 http://www. margueritefund. eu

/99 providing up to EUR 2 billion (up to EUR 1 billion each) to support loans or guarantees supporting the priorities of the Seventh Framework Programme for RTD (FP7).

and entities of all sizes and forms, including corporations, midcaps, small and mediumsized enterprises, special-purpose companies, public-private partnerships and joint ventures, research institutes, universities, science

and enterprises commercialising their results and services). A new RSFF facility to provide loans and leases to SMES and smaller midsized firms,

SMEG is operated by the European Investment Fund (EIF) on behalf of the Commission (representing the EU). 116 Policy DG in charge:

116 http://ec. europa. eu/enterprise/policies/finance/cip-financial-instruments/index en. htm 117 http://www. eib. org/attachments/press

which can be invested either in the form of equity, loans, guarantees or other forms of repayable investments in enterprises, mainly SMES, public private partnerships, urban development projects;

or in legal or natural persons carrying out specific investment activities in energy efficiency and renewable energies.

Joint European Resources for Micro to Medium Enterprises is an initiative of the European commission's Directorate General for Regional Policy (DG REGIO) developed together with the European Investment Fund

Joint European Support for Sustainable Investment in City Areas is a joint initiative of the European commission's Directorate General for Regional Policy (DG REGIO) developed in co-operation with the EIB and the CEB

guarantee funds and venture capital funds. These funds, the setting-up of which depends on the choice of the Member States

and food processing enterprises, rural nonagricultural micro-and tourism businesses, or in legal or natural persons carrying out specific investment activities in rural areas, in accordance with the relevant rural development programmes.

As in the case of the Cohesion policy, the EU rural development policy does not finance individual projects directly at EU level,

EIB Group's own resources The European Investment Bank is the long-term financing institution of the European union

and Convergence i e. supporting the economically less developed regions of Europe, implementing the knowledge-based economy,

and mediumsized enterprises (SMES), protecting and improving the environment and promoting sustainable communities, and supporting the establishment of a sustainable, competitive and secure energy supply.

The EIB has two main financing facilities: Individual loans: provided to viable and sound projects

credit lines to banks and financial institutions to help them to provide finance to small and medium-sized enterprises with eligible investment programmes

The European Investment Fund provides financial intermediaries an integrated risk finance product range of SME finance initiatives,

For the 2014-2020 programming period, the European commission has proposed the establishment of a Programme for the Competitiveness of Enterprises and Small and Medium-sized enterprises (COSME.

and regions consist mainly in providing support in the form of finance, infrastructure or services for R&d or other activities and capacities that aim to produce innovations.

The introduction of these innovative products or services into the market is, however, a problem that is barely addressed,

Yet, customers are what innovative firms need most in order to be successful. Lead customers provide credibility for innovative products,

and are vital for validating and further improving innovations. Having customers is also a major incentive for private investors to support innovative firms.

A comprehensive innovation support strategy thus needs to include support for identifying potential customers or fostering market opportunities (e g. by stimulating private or public demand for eco-innovations).

Starting with demand issues provides more chances for successful innovation than starting with R&d grants,

as it allows the design of the innovation process to more precisely match the market opportunity

and to obtain faster market take-up of the innovation. Some of the most successful innovation support schemes such as the US Small Business Innovation Research scheme (SBIR) 125 take public sector demand for innovative, affordable and high-quality solutions as a starting point.

They then either procure R&d services to develop innovative solutions with pre-commercial public procurement,

126 or directly engage a public procurement of innovation127 if the necessary technologies/solutions are available but not yet in the market.

The US public sector procurement of R&d&i is therefore about 20 times bigger than in the EU,

and the firms benefiting from this seem to have an exceptionally good access to private venture capital for their further growth.

Also in Europe public procurement holds an enormous so far largely unused potential for providing demand pull for innovation and market opportunities for innovative firms,

. europa. eu/enterprise/policies/innovation/policy/lead-market-initiative/publicproc en. htm 128 http://ec. europa. eu/internal market/publicprocurement/docs/indicators2009 en. pdf 104

), Higher impact of innovation investments thanks to a comprehensive strategy that combines R&d investments (e g. in eco-innovation) with purchasing innovations (e g. of energy efficient and low carbon buildings or transport),

Higher mobilisation effect on private investors/venture capital, thanks to the faster market access and return-on-investment for innovative firms.

Barriers and challenges The main reasons why still too few public procurers in the EU buy innovations and why the procurement of innovation is used still hardly as an innovation support tool are:

In general, individual procurements are mostly too small for companies to make investments in innovations worthwhile.

for example, the administrations in charge of health and care services, environment, mobility, energy, housing, waste and water management do not perceive themselves as having any role to play regarding support for innovative firms.

129 http://ec. europa. eu/enterprise/policies/sme/business-environment/public-procurement/105 The ERDF permits the strategic combination of investments in R&d&i capacitybuilding with demand

as the partnership contracts and strategic reference frameworks include different strands of administration (e g. environment, transport, industry,

Enterprise Europe Network141) and other bodies that can assist in developing demanding specifications; To invite and guide procurers to join forces with others,

To financially support the procurement of innovative solutions (goods & services), through targeted and limited grants to contracting authorities.

id=7633 137 http://www. enprotex. eu 138 http://ec. europa. eu/enterprise/policies/innovation/policy/public-procurement/index en. htm

. eu/inno-grips-ii/article/fostering-innovation-through-public-141 http://www. enterprise-europe-network. ec. europa. eu/index en. htm 142 https

http://cordis. europa. eu/fp7/ict/pcp/home en. html 147 http://ec. europa. eu/environment/gpp/index en. htm 107 The Enterprise

/lang=en 155 http://www. london. gov. uk/rp/156 http://ec. europa. eu/enterprise/policies/innovation/policy/lead-market-initiative/pp

-conf2 en. htm 157 http://ec. europa. eu/enterprise/policies/innovation/policy/public-procurement/index en. htm 108 Green growth Why should green growth

and greener economy to boost its competitiveness and be able to sustain its growth. This is why sustainable growth is one of the priorities of Europe 2020,

which stresses the need for a transition to a green, low-carbon, resource-efficient economy as a new paradigm for sustainable growth.

Innovation is succeed essential to in decoupling growth from natural capital utilisation and is therefore the key to enabling sustainable and smart growth to go hand in hand.

This will result in an EU economy that is more competitive in a world of high energy prices and tough resource constraints and competition.

In this framework, public decisionmakers and stakeholders in Europe's regions and cities, which are responsible for designing,

but local and regional authorities are also usually responsible for implementing policies, programmes, legislation and public investments in key areas for sustainable growth and innovation such as energy, environment, transport, land-use, education

but it is critical in accelerating the transition towards a greener economy and getting the actors of innovation and environment working together.

Moreover regions have to reflect on how to benefit from the fast-emerging green eco-innovation sector.

In the current programming period, ensuring innovation for sustainable growth requires improved coordination between different operational and rural development programmes in the areas of innovation, competitiveness, environment and energy.

taking into account the impacts on the environment from design to delivery and end-of-life.

109 Commissioning a strategic analysis and approach on the region's own characteristics, assets, challenges and opportunities as regards its environment, natural assets, renewable energy potential and climate impacts in the studies

Increasing the support for new entrepreneurial firms that aim to deliver more radical eco-innovations and challenge existing firms and business models,

and services that are more environmentally-friendly; Enhancing international and interregional co-operation on innovation for sustainable growth.

Environment, climate change and energy are included specifically in the draft new regulatory package, covering all shared managed funds, through thematic objectives, investment priorities,

and also as a crosscutting principle. The proposed regulations include concrete ex-ante conditionality requesting MS to comply with EU's waste, water,

ERDF resources are earmarked for thematic priority‘supporting the shift towards a low-carbon economy in all sectors;

energy & climate challenges in cities 158 http://ec. europa. eu/environment/gpp/toolkit en. htm 159 http://ec. europa. eu/environment/emas/tools

and the less developed regions 6%.Rural development policy has also reinforced its contribution for the energy investments.

Eco-innovations The forthcoming EU Eco-Innovation Action Plan underscores that ecoinnovations are central to addressing the challenges of resource scarcity

Eco-innovations also create major opportunities for growth and jobs and increase European competitiveness within the global market,

In particular a closed-loop economy that aims to reduce in absolute terms, input, waste and the release of harmful substances along the value chain

This needs new business models, industrial symbiosis, product service systems, product design, full life cycle and cradle-to-cradle approaches.

Eco-innovation-putting the EU on the path to a resource and energy efficient economy, Study and briefing notes',

liaising with the areaspecific stakeholders in the field of energy, water and other natural resource management.

The aim is embed to eco-innovations from the outset in the design and development of the strategies and programmes for innovation and tap into its opportunities.

Nature Eventually, the challenges that regions face in terms of adaptation to climate change and the preservation and management of their natural assets ask for innovative approaches for regions to fully benefit from the underlying opportunities.

Second, a region's natural assets can be the very start of innovation activities and the development of new technologies or solutions, for instance in the case of renewable energy sources but also the expansion of the bio-economy.

as it can create new business opportunities, provide new perspectives to citizens, and help the modernisation of the public sector. It can also be a vehicle for making policies more responsive to social change

and support innovative social enterprises. Social innovations are innovations that are social in both their ends and their means.

services and models) that simultaneously meet social needs (more effectively than alternatives) and create new social relationships or collaborations.

They address a social demand or need (e g. elder care), contribute to addressing a societal challenge (ageing society) and,

new services) they contribute to reshaping society in the direction of participation, empowerment, co-creation and learning.

They also contribute positively to diminishing the innovation divide by involving end-users (including disadvantaged groups) and stakeholders into innovation processes

There is a risk of it being hampered by insufficient knowledge, limited support of grass roots, social enterprise and social entrepreneurship activities

For example, social enterprises may not have as easy an access to finance from banks as other enterprises.

But social innovation can create new business opportunities, e g. in growth sectors like health and education.

It can also play an important role in the modernisation and transformation of the public sector and public services, through cooperation with social enterprises, NGOS and civil society,

It is important to link business, the public sector, the social economy and civil society. To make an impact,

incubation facilities can be provided for social enterprises and citizens'initiatives as well as measures to stimulate the development

and scaling-up of social enterprises aiming at the creation of social value. Public sector is central in the delivery of many services of social and economic value.

In this regard, it has a pivotal role in answering (together with private stakeholders and the civil society) today's major societal challenges such as demographic ageing, increased demand for healthcare services, risk

of poverty and social exclusion, the need for better and more transparent governance, and a more sustainable resource management.

new or improved services (e g. healthcare at home), organisational innovation, system innovation (e g. new patterns of co-operation and interaction) and conceptual innovation (e g. a change in the outlook of actors.

This can lead to increased efficiency and the delivery of new and better quality services that respond not only to the users'evolving needs

innovation enterprises. In this respect the European commission has launched the JASMINE scheme. JASMINE, the Joint Action to Support Micro-finance Institutions in Europe.

to expand and become sustainable. 166 The European Social Fund (ESF) has made significant investments in social innovations,

and networking of local stakeholders to implementing active labour market policies. For the next programming period social innovation is treated in a horizontal way in the ESF regulation.

as part of a'Responsible Business package',including also a communication on CSR and directives on accounting and transparency. 168 The aim of the SBI is to make access to the market

and to finance easier for social enterprises. Co-initiators of the SBI are DG Enterprise and DG Employment, Social affairs and Inclusion.

Early December, the Commission proposed the Regulation on European Social Entrepreneurship Funds. 169 DG Enterprise has mobilised CIP funds for social innovation.

CIP funds will create a social innovation prize, exploit the development of incubators for social enterprises,

and organise a conference on workplace innovation in cooperation with the Flemish government. They are also coordinating the Social Innovation Europe Initiative,

SBI texts (communication+working document+FAQ: http://ec. europa. eu/internal market/social business/index en. htm 169 http://ec. europa. eu/internal market/investment/docs/social investment/20111207proposal en. pdf 170

www. socialinnovationeurope. eu 115 The Seventh Framework Programme FP7 has launched various calls for proposal related to social innovation under the'Social sciences and humanities'strand.

GUIDANCE FOR EXPERT ASSESSMENT 1. Is the strategy based on appropriate stakeholder involvement? How does it support the entrepreneurial discovery process of testing possible new areas?

1. 1 Has the strategy been developed through a broadly-based process of direct stakeholder involvement,

including mainly regional government/regional agencies, entrepreneurs, knowledge providers but also other/new stakeholders with the potential for innovative contributions, through measures such as surveys, consultations, dedicated working groups, workshops, etc.?

1. 4 Is the priority-setting in the strategy based on an identification of market opportunities/economic potential informed by an entrepreneurial search/discovery process,

and test specific entrepreneurial opportunities? 172 2. Is the strategy evidence-based? How have areas of strength

and identify opportunities for the region to expand/into new domains. 117 3. Does the strategy set innovation and knowledge-based development priorities?

cross-clustering and the identification of innovation opportunities at the interface between different disciplines/industries/clusters?

entrepreneurship and the innovation capabilities of SMES, for instance by facilitating the diffusion and adoption of technologies, incl.

174 the improvement of demand-side conditions and, in particular, public procurement as a driver for innovation?

Are there sector-specific support services/schemes foreseen? 4. 4 Does the document outline measures to stimulate private R&d&i investments, for instance through public-private partnerships?

Does it demonstrate/aim at financial commitment of the private sector with the strategy? 4. 5. Does the strategy identify budgetary sources,

nanotechnology, micro-nanoelectronics, advanced materials, photonics, industrial biotechnology and advanced manufacturing systems. 118 4. 6 Does it include a sufficiently balanced mix of soft innovation support services

Does it foresee an appropriate mix of grants, loans and financial engineering (venture capital? 5. Is the strategy outward looking

7. 3 How is the strategy to be communicated to stakeholders and the general public? What are the mechanisms for ensuring support for the strategy from critical groups and the active participation of such groups in its implementation?

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