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

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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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  • Pietro Moncada-Paternò-Castello & Peter Voigt, 2012. "Projection of R&D-intensive enterprise growth to the year 2020: Implications for EU policy?," JRC Working Papers on Corporate R&D and Innovation 2012-01, Joint Research Centre.
    • Handle: RePEc:ipt:wpaper:201201
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    1. Daria Ciriaci & Pietro Moncada-Paternò-Castello & Peter Voigt, 2016. "Innovation and job creation: a sustainable relation?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 189-213, August.
    2. 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 Research Reports JRC74052, Joint Research Centre.

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    More about this item

    Keywords

    SME; company growth; industrial dynamics; structural change; R&D/ innovation policy; Barcelona target; Europe 2020;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • 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, Spatial Production Analysis, and Firm Location - - - Government Policy

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