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Projection of R&D-intensive enterprise growth to the year 2020: Implications for EU policy?

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  • Pietro Moncada-Paternò-Castello

    ()
    (JRC-IPTS)

  • Peter Voigt

    ()
    (JRC-IPTS)

Abstract

The paper investigates how sector composition and the magnitude of R&D investment in the EU may differ in 2020 in comparison to the past, if a selection of top R&D-investing SMEs were assumed to be on a fast growth track while the top R&D-investing large-scale companies continue to grow as before. The background of this research objective is the emerging focus on SMEs – and in particular the fast-growing among them – with regard to the "Europe 2020" policy strategy. The study relies on the sample of top R&D-investing firms as given by the latest available "EU Industrial R&D Investment Scoreboard" editions, building there from an unbalanced panel. Scenarios were developed by distinguishing SMEs' assumed growth paths vs. that of large scale companies. A linear prediction model has been used to calculate the scenario simulations. Overall, the study indicates that if one expects the (R&D-intensive) small firms to be a driving force for a substantial structural change in the EU economy, from being driven by medium-tech sectors towards a high-tech based economy, it requires either a significant longer-term horizon of the assumed fast growth track than the simulated 10 years, or small firms' growth figures which even exceed the assumed annual 30% (as in the most optimistic scenario). Neither case appears to be particularly realistic. Hence, we need more top R&D investors in Europe to further intensify their engagement in R&D (increasing volume and R&D intensity) as well as numerous small firms that start and/or significantly increase their existing R&D activities and thus seek to become large firms and (global) leading R&D investors. Accordingly, a broad R&D and innovation (policy) strategy is needed with policy interventions which also target well all these options; i.e. stimulating firm growth and R&D and innovation-intensity across firm-sized classes.

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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 2012-01.

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Length: 32 pages
Date of creation: Jan 2012
Date of revision:
Handle: RePEc:ipt:wpaper:201201

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Keywords: SME; company growth; industrial dynamics; structural change; R&D/ innovation policy; Barcelona target; Europe 2020;

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References

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  1. Reinhilde Veugelers & Michele Cincera, 2010. "Young leading innovators and EUÂ?s R&D intensity gap," Policy Contributions 437, Bruegel.
  2. Alex Coad & Werner Hölzl, 2010. "Firm Growth: Empirical Analysis," WIFO Working Papers 361, WIFO.
  3. Francesco Bogliacino, 2010. "Innovation and Employment: A firm level analysis with European R&D Scoreboard data," JRC-IPTS Working Papers on Corporate R&D and Innovation 2010-08, Institute of Prospective Technological Studies, Joint Research Centre.
  4. Ricardo J. Caballero & Mohamad L. Hammour, 2001. "Creative Destruction and Development : Institutions, Crises and Restructuring," DELTA Working Papers 2001-04, DELTA (Ecole normale supérieure).
  5. 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.
  6. Van Reenen, John, 1997. "Why has Britain had slower R&D growth?," Research Policy, Elsevier, vol. 26(4-5), pages 493-507, December.
  7. Azele Mathieu & Bruno Van Pottelsberghe, 2008. "A note on the drivers of R&D intensity," Working Papers CEB 08-002.RS, ULB -- Universite Libre de Bruxelles.
  8. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131.
  9. Alfred Spielkamp & Christian Rammer, 2006. "R&D - Strategic elements for innovation and market success," Management & Marketing, Economic Publishing House, vol. 1(4), Winter.
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Cited by:
  1. Daria Ciriaci & Pietro Moncada-Paterno-Castello & Peter Voigt, 2012. "Does size or age of innovative firms affect their growth persistence? Evidence from a panel of innovative Spanish firms," JRC-IPTS Working Papers JRC74052, Institute for Prospective and Technological Studies, Joint Research Centre, revised Sep 2012.

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