Assistant professor of Marketing at the Olin Business school, Washington University in St louis. 1 1 Introduction Activity consumption is a significant component of the U s. economy,
A Dynamic Structural Analysis of Demand in a Reward Program, Quantitative Marketing and Economics, 2008, Vol. 6, Issue 2, pp. 109-137.14.
and Veblen Effects in the Theory of Consumers'Demand, Quarterly Journal of Economics, 64 (May),
Scientific Papers (www. scientificpapers. org) Journal of Knowledge management, Economics and Information technology 409 Special Issue December 2013 The Impact of Innovation in Romanian Small and Medium-Sized
Enterprises on Economic growth Development Author: Oncioiu Ionica, Titu Maiorescu University Bucharest, ionicaoncoiu@yahoo. ro, Romania Small firms are big business in the aid of economic development.
When the SMES competitive advantage is based on knowledge as is the case of the knowledge economy,
innovation and creativity become a decisive factor in the economic activity because knowledge tends to be developed in the actual contexts.
At the same time, much less is written about the majority of small and micro size firms that constitute the core of the economy.
as in all transition economy, play an important role in the economic growth development and are recognized increasingly as having a permanent role as a seedbed for future growth.
enterprise The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 410 Special Issue December 2013 Introduction Given the importance of SMES in their world
, economies everywhere are given special attention. Hence the concern for their delineation as appropriate, with the intention to create conditions for broader and more effective participation in economic activities in or involved.
The substance of this upgrade though is situated in a great range of differences from country to country or integration groups,
perpetuation and rise or fall of SMES in the economy of any country is their contribution to creating new value,
SMES form a big and vital part of the modern economy. The second argument is more qualitative:
or estimates of the market new business The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 411 Special Issue December 2013 concept.
All countries statistics result that SMES dominate in economy, representing over 99%of the total of companies,
because they provide an opportunity to succeed relatively much The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 412 Special Issue December 2013 higher.
In a Romanian economy located yet in a consolidation process and of getting stronger of SMES sector,
Is it possible to measure The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 413 Special Issue December 2013 the innovation in a transition economy,
with which to explain the The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 414 Special Issue December 2013 reasons of the emergence of companies in specialized exchange economy
the so-called gazelles that believed to be responsible for the bulk of new job creation, technology progress, and economic growth.
At the same time, most small businesses that constitute the core of the economy do not innovate. Most SME innovations are marginal improvements of already existing products,
Damanpour and Wischnevsky 2006, The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 415 Special Issue December 2013 Lankhuizen and Woolthuis 2003
Today, the view which is taken as a current guideline is that the most important way of supporting Romanian small and medium enterprises is to encourage the business environment and the general development of the economy.
in Romania there was created a vicious circle where the state is ensuring the minimum financial resources for stimulation of knowledge-based economy
and observe three The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 416 Special Issue December 2013 maxims of scientific method:
They will be the pivotal element in developing a typology classifying an innovation of Romanian SMES in strategies of development economic activity.
%15,56%15,56%The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 417 Special Issue December 2013 4 Pattern notpattern not Pattern
Another important aspect is the fact that these generate in a big proportion technical innovations that are economy applicable.
The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 418 Special Issue December 2013 Thus,
This should stimulate the concentration of domestic private capital to help boost the sector's role the Romanian economy.
as we will have winners of The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 419 Special Issue December 2013 the crisis,
The results also suggest that for Romania the small and medium businesses represent the engine of the economic growth
but also bring The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 420 Special Issue December 2013 more economic growth, employment,
International Journal of Industrial Organization, 28: 191 202,2010. 5 Golodner, A m.,Antitrust, Innovation, Entrepreneurship and Small Business, Small Business Economics Vol. 16 No.
The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 421 Special Issue December 2013 11 Soete, Luc a o.,Eindrapport van
The Impact of Innovation in Romanian Small and Medium-Sized Enterprises on Economic growth Development 422 Special Issue December 2013 26 www. cnipmmr. ro;
and the economies in which the family SME operates. High levels of performance can facilitate firm growth and subsequent profit performance,
and economic development and in general concludes that the more educated the citizens the more entrepreneurial they tend to be and thus more rapid economic growth (Florida 2002).
Further, knowledge has been tied to the development in the number of SMES in economies (Petrakis and Kostis 2012.
Such conditions aided in the establishment of economic systems supportive of innovative capacity and knowledge-based competencies,
makes a significant contribution to the US economy through the payment of taxes or the use of American products, materials, or labor;
Large shareholders and firm performance an empirical examination of founding-family ownership. Journal of Corporate Finance, 14,431 445.
) Family businesses contribution to the U s. economy: a closer look. Family business Review, 16 (3), 211 219.
) Information technology and the U s. economy. The American Economic Review, 91 (1), 1 32. Katz, N,
Small Business Economics, 38 (1), 85 101. Kirzner, I. 1979. Perception, opportunity, and profit. Chicago:
Small Business Economics, 6 (5), 327 347. Nordqvist, M. 2012. Understanding strategy processes in family firms:
Journal of the Knowledge Economy, 1 20. doi: 10.1007/s13132-012-0115-6. Porter, ME.
economic growth, men, women, and minorities. Westport: Quorom Books. Rigby, D, & Zook, C. 2002). Open-market innovation.
) A stakeholder perspective on family firm performance. Family business Review, 21,203 216. Zhou, KZ, & Wu, F. 2010).
Setting the adequate conditions for achieving a competitive position in the knowledge economy is far from a simple process.
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,
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.
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,
Especially in peripheral economies in Europe, but not exclusively, corruption can be regarded as one of the main barriers to innovation.
Bell Journal of Economics, 10:92 116. Griliches, Z. 1990) Patent statistics as economic indicators: a survey.
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
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.
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 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,
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
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.
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
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,
Eastern European Economics, 33,38-75. Brown, J. D.,Earle, J. S. & Lup, D. 2005.
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 Business Economics, 41,537-562. Uzkurt, C.,Kumar, R.,Kimzan, H. S. & Sert, H. 2012.
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:
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.
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
together with industry and other stakeholders, can maximise the use of EU Structural Funds for research
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;
active promotion and publication of Research and Innovation Strategies for Smart Specialisation (RIS3) to motivate participation of key stakeholders;
better alignment of timelines for the different stakeholders (universities, regional authorities and other external actors;
and to prepare for a conference to disseminate the results of the workshop among university leaders, policy makers and other stakeholders.
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.
There was a general consensus about the importance to include all relevant stakeholders in the definition and implementation of an RIS3 strategy.
Regional Development Commission of Algarve Miguel Angel Aguirre Spain Andalusia Adviser, Andalusian Regional Government, Ministry for the Economy, Innovation, Science and Employment Annex 1:
Leader, Smart Specialisation Platform, JRC-IPTS Dimitri Kyriakou Spain EC Senior Economist, JRC-IPTS John Edwards Spain EC Researcher, JRC
The results of EUA's work are made available to members and stakeholders through conferences seminars, website and publications
social innovation 100 7. Conclusions and recommendations 108 5 1. Introduction The financial and economic crisis makes creativity
it has suffered the worst financial and economic crisis in decades with unemployment set to rise to double digit figures by 2010.
and economic crisis makes social innovation more important than ever, both as a component of economic strategies to build Europe's relative position in growing fields such as healthcare and environmental services,
entrepreneurship and the knowledge-based economy, the new strategy for Europe, Europe 2020, must have social innovation at its centre,
A focus on social innovation in Europe's new strategy would also reinvigorate Europe's leadership building a society not just an economy-for the 21st century.
(and in the case of ageing and chronic disease private budgets too) and hamper Europe's competitiveness and economic growth in the long term.
Economic growth-restarting economic growth and ensuring long-term sustainability and competitiveness for the future. In 2009, GDP fell by roughly 4%for both the EU and the Euro zone.
and economic crisis together with these social challenges forms the backdrop to current discussions about building on the achievements of the Lisbon Strategy and developing a new strategy for Europe Europe 2020.
The Lisbon Strategy played an important role in stimulating economic growth and creating jobs across Europe.
However, the focus on developing the most competitive knowledge based economy in the world, with its concomitant focus on innovation through R&d has proved inadequate to tackling the social and environmental challenges facing Europe today.
instead, the recovery must be used as a way to align the best aspects of Europe's social model with a rapidly transforming economy.
and technology to how an innovative mind-set can trigger broader systemic changes in society and the economy.
and involves many stakeholders across the different sectors, and a new kind of innovation which is pull-through rather than push through
The Stern Review on the Economics of Climate Change brought to the fore the costs of inaction on global warming. xix Stern concluded that the cost of stabilising greenhouse gas emissions at 500-550ppm would be approximately 1
many forecasters expect that the green economy will bring with it millions of new jobs. xxi Estimates for Europe suggest that 1m jobs could be created from a 20%cut in present energy consumption. xxii In the US,
The Alliance argues that an investment of $300 billion (€212 billion) would add more than 3. 3 million jobs to the economy,
they threaten to constrain economic growth across Europe in the decades to come. But, they also promise to be significant growth sectors,
it needs to focus on restarting economic growth, whilst tackling the Grand Challenges and laying the foundations for a sustainable, social market economy.
and tackling social challenges must go hand in hand for sustainable economic growth in Europe. This is recognised in the new European strategy, EU 2020,
connected and greener economy 'and‘creating value by basing growth on knowledge'.'This is certainly a clear step towards building a smarter, greener Europe.
Much of the literature on social innovation draws from economics (especially around public finance; management studies (especially in the US;
empower communities and transition to a low carbon economy and there are many organisations and individuals engaged in the development and use of social innovation across Europe.
consumption and distribution and generate further ideas and innovations (like the move to a low carbon economy or the creation of a preventative system of criminal justice).
They are driven not by the need to maximise profit for shareholders and owners. There is currently no universally accepted definition of social enterprise.
and can deal with new relationships with stakeholders and territories.‘‘Social innovation'seeks new answers to social problems by:
(which arguably has created more value for society than even the value that has accrued to shareholders and founders).
Schumpeterian economics provided a frame in which a critical role is played by individual entrepreneurs engaged in risk and innovation.
however well designed, may appear quite inefficient compared to the subtle interdependencies of a real social or economic system.
will have built up their own logic like the military bases in the old Soviet union that propped up local economies,
When systemic change does happen-for example the rise of welfare states fifty years ago, the shift to a more knowledge based economy in the last decades of the 20th century,
or the shift to a low carbon economy in the early 21st century-the opportunities for social innovation greatly increase.
such as the efficiencies that flow into the economy from better public health or low carbon technologies. xlviii This is one of the reasons why big changes are followed often by a honeymoon period.
There are however some proxy measures such as the size and scope of the non profit sector and the social economy
because much of the work of non profit organisations and the social economy does not necessarily fall under the rubric of social innovation-many non profits
and social economy firms are not innovative although they do deliver benefits to the communities they serve.
if the civil society sector in these countries were a separate national economy, its expenditures would make it the seventh largest economy in the world, ahead of Italy and Spain and just behind France and the UK. lvii In these 35 countries, the sector employed 39.5 million full time equivalent workers
which means that civil society employs, on average, 10 times more people than the utilities and textile industries in these countries,
what has been observed in the economy as a whole. The social economy in Europe is a comparable economic force-it employs over 11 million people
equivalent to about 6%of the working population of the EU. In the accession member states, 4. 2%of the wage earning population is employed in the social economy.
This is a lower percentage than the average in the older member states (7. 0%)and in countries such as The netherlands (10.7),
%Ireland (10.6%)or France (8. 7%).One of the most rapid growth areas within the social economy over the last decade has been in the growth of social enterprises.
with small and medium social enterprises contributing £24 billion Gross Value Added to the UK economy. lx In
the grant economy and the household-because there are clear and distinct trends in each sector. 36 Public sector As we mention earlier,
Collaboration with users, front line staff and other stakeholders, and partnerships with organisations from the private, public and third sectors. 38 User Led design processes enable both potential end users and existing front line staff, among other specialists,
The approach is multidisciplinary Participle's team includes designers, social anthropologists, researchers, policy analysts, economists and others.
and organisational mechanisms that rely, inter alia, on the forceful and broader representation of the interests of stakeholders, on a participatory and democratic governance system,
and‘its principles and independence are guaranteed through a special shareholding trust which protects the social and environmental aims of the bank'.
Civil society and the grant economy Civil society and the grant economy are rich sources of social innovation through campaigns
advocacy and service provision, non-governmental organisations and associations are often the pioneers of new approaches to tackling social needs. 1 1 We describe this as the grant economy
Given the variety and breadth of the grant economy, all we can do here is provide a very brief snapshot.
The Calouste Gulbenkian Foundation, in collaboration with the municipality, local schools, churches and other stakeholders in the community have worked in Casal da Boba
A recent evaluation by the New Economics Foundation (NEF) concluded that the SSE's learning programme has been highly successful:
The One Foundation also provides a range of nonfinancial tailored support. 58 The household The informal household economy individuals
and develop their own innovations. 59 Within the household economy, there are a number of emergent trends.
and money is one of the defining features of this economy. In recent years, the growth of alternative currencies
time credits and vouchers have been one attempt at including elements of the household economy into the mainstream economy by valorising voluntary labour.
has set up an alternative currency to promote the creation of a‘solidarity economy','tackle social exclusion and valorise work (mostly care in the home)
and many stakeholders will be involved in the running of the business. The car has also been designed to be recycled.
Its mission is to create systemic change by promoting stable and balanced development in Finland, the qualitative and quantitative growth of its economy and its international 70 competitiveness and co-operation.
and support changes in the Estonian economy through foresight projects and venture capital investments. The fund focuses on initiatives with international potential.
The four projects, Industry Engines, EST IT, Service Economy, and Growth Vision are all foresights for the year 2018
and able to engage a wide range of stakeholders in the design, development and evaluation of social innovation.
and stakeholders such as senior managers or elected councillors, in setting out what is required from a service
and Economics and the Internet of the Future. Workshops will be run to enhance co-creation of ideas
and France's Société coopérative d'intérêt collective (cooperative society of collective interest), a new type of multi-stakeholder cooperative structure introduced in France in 1982,
The field is developing fast in the UK where there are an estimated 62,000 social enterprises with small and medium social enterprises contributing £24 billion GVA (Gross Value Added) to the UK economy. cxvi
Moreover, while public procurement can stimulate innovation and boost the economy, it can also help governments achieve twin objectives of reducing costs
Civil society and the grant economy have long been rich sources of social innovation, but they are placed not well to develop rigorous methods for innovation, lack R&d capacity,
Similarly, the informal household economy plays a critical role in developing social innovations but it remains fragmented,
as well as for evaluations-Finance for embedding successful models-Finance for growth Social economy firms remain heavily dependent on grant financing,
incubate, launch and operate social economy firms at a small scale. cxxiiicxxiv But, while grant funding is valuable in the prototyping
A common problem faced by social economy firms is an inability to secure growth capital (also known as expansion capital) in general,
Specialist academies linked to social economy initiatives, such as the University of Mondragon in Spain, and the University of Gastronomic Science in Bra and Colorno in Northern Italy,
and skills formation strategies within the grant economy in particular and identify a lack of training
and an unstructured NGO-government relationship. cxxxiv Some programmes are currently serving to develop skills within the grant economy on both national and European-wide level.
include (1) a measure of the amount of investment in innovation in the UK economy,
and the effect that this has on economic growth and productivity, (2) a tool to understand innovation at the firm level that captures‘hidden innovation
clv Equally common are methods (drawing on economics) which seek to monetise social value by asking people what they would pay for a service or outcome(‘stated preference methods').
'clvii clvi Another set of methods coming from economics focus on the choices people have made actually in related fields(‘revealed preference'.
such as Finland's methods for assessing social enterprises. clviiithe burgeoning field of environmental economics has spawned methods for measuring everything from wetlands to emissions,
and economists to develop better indicators of social progress and well-being, bearing fruit in the Stiglitz Commission's work for President Sarkozy in France
Second, and longer term, developing some economy and society wide measures for both the generation
and ideas and solutions can be put forward by citizens and stakeholders across Europe. This could be based on,
and those involved in social innovation from businesses, the public sector and the grant economy. It is not that a range of tools isn't available;
not just for return on investments and all sectors of the economy should be drivers for innovation.
http://ec. europa. eu/commission barroso/president/pdf/press 20090903 en. pdf Accessed on 3 december 2009. ii European commission (2009),‘European Economic Forecast'European Economy 10
Nicholas Stern (2007) The Economics of Climate Change: The Stern Review, London: HM Treasury. Available at:
http://www. eurofound. europa. eu/pubdocs/2009/82/en/1/EF0982EN. pdf Accessed on 11 december 2009. xixn Stern (2007) The Economics of Climate Change:
'(and in economics to offer a synthetic theory of growth). However, all theories of this kind are based on a simple error:
Even within economics, overarching theories of change and growth have not fared well compared to more modest theories focused on such things as the dynamics of labour markets or monetary policy.
New york. xlviii Economists generally emphasise allocative efficiency. But other kinds of efficiency can be just as important for long-term growth.
Crisis and the new Social Economy, Provocation 09, London: NESTA. lxii Jocelyne Bourgon, The Future of Public Administration:
Innovation Camp at http://www. sicamp. org/lxxxiv School for Social Entrepreneurs at http://www. sse. org. uk lxxxv New Economics Foundation,‘School
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