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

General challengesBased on our own analysis, the working group meeting carried out in Riga in June 2003 (seeAppendices I-III), and the interviews we conducted (see Appendix V), we have identified four generalchallenges to policymaking:• The coordination, organisation and evaluation of policies.In recent years a number of strategies and policies aimed at strengthening innovation and promotingSME development have been implemented in the B4 countries. As a result, some countries arecurrently experiencing an overlap, fragmentation and even competition of policy measures andinstitutions claiming to be in charge of innovation and/or SME policy. In order to ensure efficient andeffective policymaking, there is a need for a horizontal, systemic approach to innovation and enterprisedevelopment. Governments should therefore continuously strive to ensure the coordination andimprove the organisation of innovation and SME policies. Furthermore, evaluation and monitoringshould be included as integral parts of innovation policy design.• Innovative, entrepreneurial, absorptive and managerial capacities in the private sector, academiaand the public sector.The knowledge economy puts new and high demands on the ability of all actors to adjust andrespond to changes in technology, organisational structures, nature and forms of innovation, businessstrategies and practices, ways of doing business, consumer patterns and demands, etc. A functioninginnovation system therefore requires that all actors, - private sector, academia and the public sector-, have the skills and organisational and institutional structures necessary to learn, absorb, adapt andinnovate. A common challenge to the private sector in all of the B4 countries appears to be the need tocapitalize on a very rich scientific and technical base, while gearing toward a more competitive marketeconomy and strengthening management and entrepreneurship competencies. This dual challenge isquite difficult to address, as the cultures of the research and commercial worlds are quite different.Particular areas in this context that should be addressed include venture capital (markets and policies),cluster policies, as well as human capital and entrepreneurship issues.A public sector capable of responding to the demands of the knowledge-based economy is thus a vitalbuilding block of a strong national innovation system. At the same time, innovation is considereda vital prerequisite for ensuring an effective and efficient public sector, the latter of which is acritical challenge for economies at all levels of economic development. 24 As pointed out in a reportprepared in the UK Cabinet Office, while innovation is sometimes considered an “optional luxury”or “added burden” in the public sector, it should instead be seen as a “core activity … to increase theresponsiveness of services to local and individual needs … and to keep up with public needs andexpectations” (Cabinet Office (2003), p.5).When it comes to the B4 countries, although there have been significant efforts to reform the publicadministration systems, there are still some remnants of authoritarian structures and, perhaps moreimportantly, ‘mindsets’, that were inherited from the socialist era. These structures and mindsets arenot conducive to public participation or stakeholder involvement in policymaking, which is one ofthe pillars of a functioning national innovation system (see, for example, Jacobs (2004)). The publicsector is one of the key actors in the national innovation system (see also box on triple helix model),and public administration reforms should seek to improve the structural ability of the public sector to24An interesting assessment and comparison of public sector efficiency in different countries can be found in Alfonso et.al (2003).83