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Companies' growth in the EU: What is research and innovation policy's role?

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  • Pietro Moncada-Paterno-Castello

    ()
    (JRC-IPTS)

Abstract

One of the main objectives of the new European research and innovation policy agenda is to favour the positive demographics (creation and growth) of EU companies operating in new/knowledge-intensive industries, especially Small and Medium Enterprises (SMEs). These companies play an important role in shaping the dynamism of the economy’s sectoral composition, favouring the transition towards more knowledge-intensive activities (smart growth) and in contributing to the overall economic growth objectives and more and better jobs. But which kind of companies should be helped by policy? And how? This paper presents a literature review on the economics of research, innovation and competitiveness, focusing on the evidence available regarding the determinants for new and existing company creation and growth and the role played by Research, Development (R&D) and innovation. Furthermore, based on this, it draws a number of policy implications to design future research and innovation support instruments targeting innovative company growth in Europe. The result of this work indicates that: a) EU needs support policies to foster R&D investment in some specific typology of innovative companies and only where there are market failures and clear high social returns; b) the establishment of any targeted support instruments should take into account an integrated set of criteria including: firms' age and size, the sectors where firms operate, the involved risks in and potential for their innovative and commercial activities, the country/techno-economic environment, and the degree of internationalisation; c) to be successful, no matter the new targeted policies and supporting instruments, they should be designed using policy experimentation and its results should be regularly measured and evaluated using appropriate indicators and analyses.

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Bibliographic Info

Paper provided by Institute of Prospective Technological Studies, Joint Research Centre in its series JRC-IPTS Working Papers on Corporate R&D and Innovation with number 2011-03.

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Length: 28 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:ipt:wpaper:201103

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Keywords: Firm demographics and growth; Small and Medium Enterprises; economic dynamics; corporate research and innovation; EU competitiveness; EU policy.;

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References

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  1. Alex Coad & Werner Hölzl, 2010. "Firm growth: empirical analysis," Papers on Economics and Evolution 2010-02, Max Planck Institute of Economics, Evolutionary Economics Group.
  2. Roy Thurik & Isabel Grilo, 2005. "Determinants of entrepreneurial engagement levels in Europe and the US," Papers on Entrepreneurship, Growth and Public Policy 2005-25, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  3. John C. Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010. "Who Creates Jobs? Small vs. Large vs. Young," NBER Working Papers 16300, National Bureau of Economic Research, Inc.
  4. Rachel Griffith & Stephen Redding & John Van Reenen, 2000. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," CEP Discussion Papers dp0458, Centre for Economic Performance, LSE.
  5. Meza, Sergio & Tombak, Mihkel, 2009. "Endogenous location leadership," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 687-707, November.
  6. Reinhilde Veugelers & Michele Cincera, 2010. "Young leading innovators and EUÂ?s R&D intensity gap," Policy Contributions 437, Bruegel.
  7. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
  8. Pietro Moncada-Paternò-Castello & Constantin Ciupagea & Keith Smith & Alexander Tübke & Mike Tubbs, 2009. "Does Europe perform too little corporate R&D? A comparison of EU and non-EU corporate R&D performance," JRC-IPTS Working Papers on Corporate R&D and Innovation 2009-11, Institute of Prospective Technological Studies, Joint Research Centre.
  9. Breschi, Stefano & Malerba, Franco & Orsenigo, Luigi, 2000. "Technological Regimes and Schumpeterian Patterns of Innovation," Economic Journal, Royal Economic Society, vol. 110(463), pages 388-410, April.
  10. Erik Stam & Karl Wennberg, 2009. "The role of R&D in new firm growth," Jena Economic Research Papers 2009-004, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  11. Moncada-Paternò-Castello, Pietro & Vivarelli, Marco & Voigt, Peter, 2011. "Drivers and Impacts in the Globalization of Corporate R&D: An Introduction Based on the European Experience," IZA Discussion Papers 5582, Institute for the Study of Labor (IZA).
  12. Raquel Ortega-Argilés & Lesley Potters & Peter Voigt, 2009. "R&D-intensive SMEs in Europe:What do we know about them?," JRC-IPTS Working Papers on Corporate R&D and Innovation 2009-15, Institute of Prospective Technological Studies, Joint Research Centre.
  13. Raquel Ortega-Argilés & Marco Vivarelli & Peter Voigt, 2009. "R&D in SMEs: a paradox?," Small Business Economics, Springer, vol. 33(1), pages 3-11, June.
  14. Cédric Schneider & Reinhilde Veugelers, 2010. "On young highly innovative companies: why they matter and how (not) to policy support them," Industrial and Corporate Change, Oxford University Press, vol. 19(4), pages 969-1007, August.
  15. George Symeonidis, 1996. "Innovation, Firm Size and Market Structure: Schumpeterian Hypotheses and Some New Themes," OECD Economics Department Working Papers 161, OECD Publishing.
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