Projection of R&D-intensive enterprise growth to the year 2020: Implications for EU policy?
AbstractThe 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 InfoPaper provided by Institute of Prospective Technological Studies in its series JRC-IPTS Working Papers on Corporate R&D and Innovation with number 2012-01.
Length: 32 pages
Date of creation: Jan 2012
Date of revision:
SME; company growth; industrial dynamics; structural change; R&D/ innovation policy; Barcelona target; Europe 2020;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Government Policy; Regulatory Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-29 (All new papers)
- NEP-CWA-2012-05-29 (Central & Western Asia)
- NEP-ENT-2012-05-29 (Entrepreneurship)
- NEP-EUR-2012-05-29 (Microeconomic European Issues)
- NEP-INO-2012-05-29 (Innovation)
- NEP-KNM-2012-05-29 (Knowledge Management & Knowledge Economy)
- NEP-SBM-2012-05-29 (Small Business Management)
- NEP-TID-2012-05-29 (Technology & Industrial Dynamics)
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