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

• Lack of cooperation between businesses, research institutions and state agencies, and lack of crossborderSME partnershipsIn recent years, researchers and policymakers are increasingly recognizing that innovative SMEs arethe foundation of a strong national innovation system and a principal driver of competitiveness andgrowth. In addition, and perhaps more importantly, there is a growing understanding that networksand linkages – sometimes referred to as clustering – between SMEs but also between SMEs and LSEs,between SMEs and universities and research institutions, and between SMEs and the public sector,are important, and often crucial for enabling the development of innovative and internationallycompetitive SMEs. 28 Although many of the B4 countries have the basic components needed todevelop SMEs, they all (except for Poland) lack the size and scale to compete independently. In orderto succeed, the individual actors need to cooperate more closely, and seek networking partners beyondnational borders.• Low national investment in R&DR&D investment is viewed as the best proxy for innovation, as it indicates the level of potentialfuture output in terms of new products and processes. As shown in Chapter 1, the B4 have a muchlower average investment in R&D (as a % of GDP) than Member Countries in the EU, and arethus considered as having a lower innovative potential. Policymakers in the B4 understand that thisis a key challenge and have prioritised action in this area in their National Innovation Programmes- with goals of increasing the national level of R&D investment. It is not sufficient, however, simplyto increase the level of public investment in R&D. An increase is needed from both the public andprivate sectors. As shown in Chapter 3, the private sector’s investment in R&D is low in the B4,both in terms of its percentage of GDP and in terms of its share of total national expenditure onR&D (ranging between 20-30%, compared to approximately 55% in the EU-15). To address thisspecific challenge, the B4 governments must identify the barriers hindering private sector investmentin R&D, and find ways to “turn the tide”. Specifically, policymakers should consider dismantlingexisting disincentives to R&D investment (e.g. fiscal measures such as taxes on R&D expenditures),and possibly establishing appropriate incentives/fiscal measures to increasing private sector investment(and collaboration between the public and private sectors) in R&D.• Entrepreneurship not seen as a key competenceMany of the B4 countries still treat entrepreneurship as a topic for vocational education, rather thana key component of the basic education curriculum. More efforts need to be made to promote anentrepreneurial culture.• Fragmentation and poor availability of business information and business servicesAll of the B4 countries have initiated a number of activities to support businesses (businessdevelopment and innovation centers, advisory and information offices, business incubators andtechnology parks). However, the general view from SMEs is that there is still a need for strengthenedskills in international market entry, marketing and promotion.• Insufficient access to new technologyEven though internet penetration, telephone and cellular access have increased significantly in all B4countries over the past years, there is still a gap in access to new technology when compared with28For a more in-depth discussion of the importance of clusters and clustering in this context, see, for example, Andersson et.al. (2004c).86