Competing in the Single Market - SMEs and ... - Erhvervsstyrelsen

Table 14: Barriers to Innovation for Enterprises in the EU without Innovation Activity(by sector and size class, 1998-2000, %)Enterpriseswithoutinnovationactivities(absolutefigures)INDUSTRYProportion of enterprises withoutinnovation activities indicatingspecified hampering factors (%)Enterpriseswithoutinnovationactivities(absolutefigures)SERVICESProportion of enterprises withoutinnovation activities indicatingspecified hampering factors (%)All Small Medium Large All Small Medium LargeEconomic factorsExcessive perceived risks 22406 15 16 11 9 12936 12 12 13 7Innovation costs too high 30241 20 21 15 13 17390 16 16 16 9Lack of appropriatesource of finance20008 13 14 10 7 12493 12 12 10 7Internal factorsOrganisational rigiditieswithin the enterpriseLack of qualifiedpersonnelLack of information ontechnologyLack of information onmarkets8103 5 6 5 5 5717 5 5 4 517858 12 12 10 5 9305 9 9 9 37863 5 6 3 1 4682 4 4 4 27491 5 5 3 1 3923 4 4 4 2Other factorsInsufficient flexibility ofregulations or standardsLack of customerresponsiveness to newgoods or services10504 7 7 5 3 9894 9 10 6 512294 8 9 6 8 8126 8 8 5 3Source: Eurostat (2004b)Similarly, the evaluation of innovation policy in six Candidate Countries commissioned andpublished by the European Commission in 2001, found that “… despite expectations that largeenterprises would be replaced by new innovation-oriented SMEs, large firms continue to undertakethe majority of innovation activities…” (European Commission 2001a). Overall, the data suggeststhat innovation activities in the Candidate Countries are even more concentrated in large firms thanin EEA countries, and that the primary barriers to innovation tend to be related to economic factors(see also Box 12 in Chapter 3).Whereas small companies are in most need of capital in order to innovate and grow, it is thelarge companies who have an easier time accessing capital: FDI is primarily geared towards largemultinationals; commercial banks are more likely to extend favorable credit terms to well-established,larger companies; venture capital is generally only available in later/growth stages rather than early/seed stages of investment. Smaller companies are left looking for alternative sources of expansion.One alternative that many countries are now considering as a method of strengthening/supportingsmaller companies and catalyzing innovation nationwide is the development of clusters. Clusters, andparticularly innovative clusters, can serve as an instrument for strengthening the innovative capacityand the competitiveness of SMEs:53