The promotion of innovation in Slovenia through knowledge transfer from higher education institutions to SME's

This paper provides an audit of Slovenian initiatives for promoting innovation in small and medium-sized enterprises (SMEs) through knowledge transfer from Higher Education Institutions (HEIs). The first two sections set out a brief review of knowledge transfer and innovation performance in Slovenia, which shows that the country has managed to sustain a relatively high level of public expenditure on research and development. Slovenia has a relatively high proportion of employees and value-added in high technology manufacturing compared to the EU average. However, innovation among SMEs is relatively low compared to the average of EU member states. The next two sections review the research literature on knowledge transfer from HEIs to SMEs, and describe the Slovenian government's innovation policy framework and the extensive programme to promote knowledge transfer from HEIs to the business sector. The penultimate section presents an audit of knowledge transfer policies in Slovenia, which covers policies towards SME incubators, technology parks, technology centres, technology networks, industrial clusters, financial subsidies for high-technology SMEs, and the mobility programme for young researchers. The audit is based on documentary evidence and interviews carried out in April 2005, and presents case studies of an innovative university-based incubator and a successful industrial cluster in the automotive industry. The paper concludes that although some of the measures have achieved a degree of success, there are two key problems. The first problem is that knowledge transfer policies are weakened by the strong demarcation between pure and applied research in the HEI sector. Thus, although there is a degree of knowledge transfer from research institutes, there is little knowledge transfer from universities to the business sector. Universities mainly pursue pure research and there are few incentives for academics to commercialize their scientific activities. The second problem is that the knowledge transfer activities that do take place between the research institutes and businesses largely by-pass the SME sector, and are mainly geared towards large companies. Consequently, SMEs fail to benefit from the government's extensive programme to support innovation and knowledge transfer. It is not surprising therefore that Slovenia's SMEs have a relatively weak innovation performance. The final section sets out a set of policy recommendations which we believe are necessary to redress this imbalance and to improve the practice of knowledge transfer from HEIs to SMEs in Slovenia.