Promoting Innovation, Capabilities and Impact for SMEs in Traditional Industries Calls for Variety in Innovation Support

Innovation support measures in the EU have mostly been designed to support R&D for product innovation in R&D intensive sectors. In line with the policy target to increase business R&D expenditures, this dominant form of public support is mainly evaluated for inducing additional R&D input. Because SMEs in traditional industries innovate in another way, this paper takes a broader view by looking at a range of different interventions and different types of innovation, types of innovation capabilities and types of output. To promote the still considerable contribution to regional employment and competitiveness from SMEs in traditional manufacturing industries, a broad innovation (policy) mix seems more appropriate, than a narrow focus on product innovation. Data from a survey of over 300 SMEs from seven regions in Europe is analysed to explain differences in effects for a variety of intervention features. We find that improved capabilities for product-, process-, organisational-, and marketing-innovation matter for innovative sales. Product innovation (and support used for product innovation) is less likely to generate growth, than (support used for) process innovation. Also (support used for) marketing innovations and organisational innovations are of particular importance - together with internationalisation, design and cooperation. These results suggest that policy makers should promote variety in firms innovation efforts and capabilities, rather than steering them all towards the same.