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Transfer
Special edition
ISSN 1013-6452
Contents
Executive summary 3
Introduction 4
Updating
Updating the concept of innovation: the
multidimensional nature of the innovation
phenomenon and the implications for policy
5
Europe’s approach
The field of action of innovation policy 8
to innovation
Current challenges for EU innovation policy 10 Europe’s enterprises are the foundation of our economic prosperity, so we need to
create the conditions in which firms can prosper. In the three years since Europe’s
A coordinated framework for innovation policy 13 leaders set out the Lisbon strategy, we have made good progress in improving the
in the EU context business environment but to achieve the target we need to move up a gear. And
as our competitors aim for their own targets, we have to work hard just to main-
New directions for European innovation policy 16 tain our position. Of course we have never believed it would be easy to reach the
development
Lisbon goal, as the resistance to the many structural reforms needed confirms.
Recent events, too, have shown how vulnerable our economy is to global condi-
Conclusions 20 tions outside our control.
Printed in Belgium
This special edition of Innovation and Technology Transfer presents the complete text
of the Commission’s March 2003 Communication on Innovation policy.
Innovation policy: updating the Union’s approach in the context of the Lisbon strategy
COM(2003) 112 final – 11 March 2003
Executive
summary
Innovation is a cornerstone of the “Lis- innovation and to analyse the conse-
bon strategy” launched by the European quences for the design of innovation pol-
Council in March 2000, and emphasised icy and for the different means by which
by subsequent European Councils, in par- innovation policy is put into action, so
ticular at Barcelona in 2002. that they are not hampered by a view of
innovation which is too restrictive.
The present Communication on innov-
ation policy, together with the Communi- This analysis is complemented by exam-
cation on industrial policy in an enlarged ination of the current challenges that are,
Europe and the Green Paper on entrepre- to different degrees, specific to the EU,
neurship, form a coherent framework for recognising that structures, problems and
the development of an enterprise policy opportunities relating to innovation are
that fosters competitiveness of com- not necessarily the same in all the world’s
panies and contributes to the growth of major economic areas. Factors considered
Improving innovation performance
Europe’s economy. include the persistently inadequate per-
is critical to achieving the targets
formance of the Union, the implications set at the Lisbon European Council.
It also constitutes a timely contribution
of enlargement, demographic trends, and
to the Spring European Council which
the large size of the public sector in EU
was held on 20-21 March 2003.
economies.
While recognising that research is a
While innovation policy takes place action with other policy areas. Innovation
major contributor to innovation, and the
mostly at the national and regional levels, policy must often be implemented via
importance of the recent Communica-
the Member States and the Commission other policies, and the Communication
tion “More research for Europe, towards
need to intensify their cooperation for the suggests, inter alia, better coordination
3% of GDP”, the Communication high-
strengthening of innovation in the EU, and a proactive follow-up by the Com-
lights that there are many other forms of
including coordination and assessment mission and Member States.
innovation.
mechanisms for mutual learning, as well
The conclusion provides a summary of
Innovation can be incremental or radical, as for taking stock of progress achieved.
the main measures proposed to be exe-
it can result from technology transfer or The Communication makes concrete pro-
cuted by the Member States, the Commis-
through the development of new busi- posals on how to turn European diversity
sion and in cooperation between both.
ness concepts, it can be technological, into a strength.
organisational or presentational.
The Communication also suggests several
The object of the Communication is new directions for EU innovation policy
firstly to describe the diverse routes to development and, in particular, inter-
Introduction
Achieving an innovation performance ance by several countries in addition to The Union must ask questions such as
that makes the European Union a world the United States and Japan. why progress in matching the innovation
reference for innovation represents an performance of the world leaders is prov-
With three years already passed of the ten
enormous opportunity that can translate ing so slow, are European framework con-
set by the Lisbon timetable, the Union
into raised living standards over the com- ditions hindering the conversion of skills
must review its attitudes and approaches
ing years. Progress towards such a more and knowledge into innovation, and is
to innovation.
innovative European economy is how- the process of innovation in the European
ever proving tentative and fragile. R&D is an essential factor for long-term context properly understood. It must
growth and European prosperity. The investigate whether there are actions that
Enhancing innovation is a cornerstone of
Union’s relatively low expenditure on could be taken at European level that
the strategy to meet the target agreed by
R&D explains part of Europe’s innovation would have a major leverage effect on the
the European Council in Lisbon in March
weakness, and has recently been ad- Union’s innovation performance. It must
2000 of the Union becoming the most
dressed by the Communication More identify effective responses, and imple-
competitive and dynamic knowledge-
research for Europe. Towards 3% of GDP (5). ment them.
based economy by the end of the decade.
Yet the Commission’s 2003 Spring Important though research is as the This Communication initiates such an
Report(1), which assesses progress towards source of invention, innovation encom- assessment, as a start to the process of
the Lisbon goal, stresses that much passes more than the successful applica- updating the basis for European innov-
remains to be done, particularly in the tion of research results. The evolution of ation policy and giving a new impetus to
area of knowledge and innovation sig- the innovation concept – from the linear the drive for innovation to help realise
nalled as the central priority for the com- model having R&D as the starting point the Lisbon objectives. This must be
ing year in taking the Lisbon strategy to the systemic model in which innov- founded on a renewed political willing-
forward. ation arises from complex interactions ness by Member States to tackle the
obstacles to a more innovative Europe, a
willingness which Member States re-
cently showed in reaching a common
The Union must recognise the full scope political approach on the Community
of the innovation phenomenon. patent at the Competitiveness Council of
3 March 2003.
This finding is also reflected in the Com- between individuals, organisations and
mission’s 2002 innovation scoreboard(2), their operating environment – demon-
which shows that the innovation perform- strates that innovation policies must
ance of the Union remains low in com- extend their focus beyond the link with
parison with the United States and Japan. research.
Insufficient innovative activity has already The design of public policy to encourage
been cited by the Commission as a key fac- and support a larger, more effective and
tor behind Europe’s underperformance in more successful population of innovative
productivity growth(3). The positive trends enterprises, including SMEs, is at present
revealed by the scoreboard are welcome based on a perception of innovation that
but not sufficient to allow us to be confi- remains rather narrow. (1) COM(2003) 5.
dent of attaining the Lisbon target within (2) SEC(2002) 1349. The European innovation scoreboard
The Union must recognise the full scope of has been published annually by the Commission since the
the planned timetable. Lisbon European Council.
the innovation phenomenon. In order to
(3) Productivity: The Key to Competitiveness of Euro-
A similar picture emerges from the Global identify whether, and how, public policy pean Economies and Enterprises, COM(2002) 262.
Competitiveness Report(4). With a wider should address weaknesses in the innov- (4) Global Competitiveness Report 2002-2003, World
Economic Forum.
coverage of non-European countries than ation system in Europe it must develop a
(5) COM(2002) 499. See also The 2002 Broad Economic
the scoreboard, it shows most EU Member better understanding of the mechanisms Policy Guidelines, European Economy No 4, Office for
States outpaced in innovation perform- of innovation in the European context. Official Publications of the EC, 2002.
– It may be in the form of an invention. Policy-making needs to be informed by a fuller view of innovation needs, focused on enterprises.
Exploitation of invention arising out of
the research laboratory is an important,
and much studied, route to innovation.
Research is a major contributor to innov- series of small steps – incremental innov-
ation, generating a flow of technical ation – as enterprises find ways to update
ideas and continually renewing the their products and processes. Entrepre-
(6) Some of the issues examined in this and subsequent
pool of technical skills. neurs are impelled to innovate as a sections are considered in more detail in the Commission
means to react to an innovative com- publication Future directions of innovation policy in
– An enterprise may innovate by taking Europe. Proceedings of the Innovation Policy Work-
petitor, using their creativity to attempt shop held in Brussels on 11 July 2002, Innovation
an idea from another business sector
to outdo the competition. papers No 31, 2003.
and adapting it for use in its own pro- (7) See COM(1995) 688, which also presents a more
duction processes or market. Examples – The search for new, untapped, market detailed definition: “Innovation is the renewal and enlarge-
ment of the range of products and services and the associ-
are the use in the automobile industry space is another driving force. This may ated markets; the establishment of new methods of produc-
of high performance materials origin- rely on technological innovation, or on tion, supply and distribution; the introduction of changes
in management, work organization, and the working
ally developed for aerospace applica- reconfiguring existing products and ser- conditions and skills of the workforce.” These definitions
tions, or the spread of computer-aided vices so as to present a radical change continue to be a valid basis for our approach to innovation
policy, and are consistent with the Lisbon European
design into the textile and garment that will be perceived by customers as Council’s perception of the importance of innovation to
industries. Innovation may proceed as a offering more or better value (“value competitiveness.
>>>
© Airbus, 2003
The new business model of the low-cost airlines is an example of organisational innovation creating new market space.
innovation”). The “reinvention” of the the challenge by themselves becoming reflects the recognition that new ways of
wristwatch as a low-cost fashion acces- more innovative. Encouraging the emer- organising work in areas such as work-
sory is an example of this form of in- gence of new firms is a strong force for force management (such as positive
novation that was not technologically innovation in many sectors. action to involve all employees in order
demanding. to make work organisation a collective
While research is a major contributor to
resource for innovation), distribution,
– It may be through the introduction of a innovation, if there is no entrepreneurial
finance, manufacturing, etc. can have a
comprehensively new approach to a action there is no value creation. It is the
positive influence on competitiveness.
business, such as the new business enterprise that organises the creation of
This term may also include business model
models of on-line retailers, with the value. With the shortening of product
innovation. Presentational innovation is
objective of creating new market space, cycles, enterprises face the need for more
beginning to be used as a comprehensive
or increasing profitability in an existing capital-intensive investment and must
term to cover innovation in areas such as
market. put more emphasis on the ability to react
design and marketing.
quickly. For enterprises, innovation is a
Competition through innovation appears
crucial means to create competitive
to be as important as price competition as The speed and efficiency of the diffusion
advantage and superior customer value.
a reaction by enterprises to market pres- of innovation through the economy is
Except for certain types of technology-
sures. In many business sectors, an enter- critical to productivity and economic
based enterprises, the focus is not on
prise that allows itself to lag behind in the growth. It can be pictured as a cascade
technological aspects of new product
race to generate new or improved goods process. Through the forces of competi-
development, but on innovative ways to
and services, and better ways to produce tion and imitation, an initial innovation
improve their position in the market.
or run them, is putting its future on the is developed and improved so that the
line. In such fast-moving sectors it is the Thus, in addition to the term technological impact on the economy is many times
new enterprises with growth potential innovation, covering innovation derived greater than that brought about by the
that are often the most innovative, for- from research, further classifications may first application of the innovation. The
cing established enterprises to respond to be identified. Organisational innovation process requires the constant reallocation
of resources to activities that lead to more as to offer an understanding of other value-added and business model innov-
efficiency or greater economic value, so forms of innovation to complement our ation are as relevant to the slow pace of
that the occupational and geographical knowledge of technological innovation. progress towards the Lisbon goals as is
mobility of the workforce is an important the evidently low level of R&D spending.
These models also colour measurements
factor for innovation.
of the innovation process and innovation Enterprises must become better at adapt-
Leaders in technology development are performance, which are usually biased ing to and taking advantage of change,
not necessarily leaders in technology towards indicators of technological inno- regularly renewing and redirecting their
adoption. The most important economic vation. Capacities and performance in activities, and showing a stronger entre-
contribution does not necessarily come non-technological forms of innovation, preneurial orientation.
from the “early adopter” but from the and market factors, are at present less well
The Union must recognise the full scope
“fast follower” who adopts the innov- captured by innovation statistics, and less
of the innovation phenomenon and
ative design that captures the inter- subject to analysis, than innovation
develop a better knowledge of how it
national market. linked to research. This may partly ex-
works in the European environment in
plain why some countries’ data showing
order to put public policy on a firm foun-
excellent innovation performance are
dation.
2.2. Implications for policy not matched by equally visible evidence
of strong economic growth.
These considerations demonstrate the
(8) Managing national innovation systems, OECD, 1999.
diversity of innovation and the resulting It is eminently conceivable that weak-
(9) See the Commission’s Communication More research
difficulty in modelling the processes by nesses in organisational, presentational, for Europe. Towards 3% of GDP, COM(2002) 499.
which innovation happens.
training.
Because innovation is
everywhere, it is nowhere: that is the
main obstacle to effective policy.
There are three main “dimensions” to the policies impacting on sector. Some sectors, however, such as information and com-
these components of the innovation terrain. They also figure as munication technologies, the textile industry and bio-
factors to be taken into consideration in the debate on indus- technology, have highly specific characteristics and therefore
trial policy in an enlarged Europe(12). Policies to foster innov- face specific issues that may require a policy response.
ation and entrepreneurship share common ground with indus-
Thirdly, interaction with other policy areas: innovation policy
trial policy and, if successful, generate the constant renewal
must often be implemented via other policies, to take account
that enables industry to outperform in growth and competi-
of the diversity of factors influencing innovation by enter-
tiveness.
prises. Innovation concepts must be increasingly embedded in
Firstly, the “policy governance” dimension: policy influencing many policy areas(13).
the innovation capabilities and behaviour of enterprises may be
set at local, regional, national, EU or even global level. Coher-
ence and complementarity between the different levels is
clearly essential.
Current challenges
for EU innovation policy
The scope of the innovation phenom- Lisbon strategy. The EU will have to work features of Europe’s innovation profile.
enon and the ubiquitous nature of inno- hard just to retain its present relative Both the 2001 and 2002 scoreboards(15)
vation policy are not the only challenges position. To attain the Lisbon goal of (16) show that for many innovation indi-
faced by European innovation policy. being the most competitive requires us to cators the leading countries of the Union
The economic, social and political con- step up a gear. are ahead of the United States and
text poses equally significant challenges Japan(17). Both scoreboards also demon-
Above all, the resistance to structural
for policy makers. The Union’s structures, strate the wide variety of innovation
change that is frequently encountered in
problems and opportunities relating to
Europe must be overcome when it stands
innovation are not necessarily the same
as an obstacle to innovation, especially (14) See the Commission’s Spring Report 2003
as those encountered in other major eco-
when change is resisted merely because it (COM(2003) 5) which identifies key priorities for the next
nomic areas of the world. 12 months within the decade-long Lisbon strategy. Many
challenges existing procedures that people of these focus on completing the process of structural
have become accustomed to(14). reforms of labour, capital, goods and service markets and
improving the regulatory climate for business.
The innovation performance of Member (15) SEC(2002) 1349.
4.1. Inadequate performance
States, Candidate Countries and certain (16) SEC(2001) 1414.
The dominant challenge is the inade- other European States, and of the Union (17) It must be borne in mind, however, that the European
innovation scoreboard focuses on high technology innova-
quate innovation performance of the as a whole, is measured by the Commis- tion. Although it includes indicators for the diffusion of
Union as a whole. sion’s European innovation scoreboard. innovation, these are not fully adequate to capture innov-
ation through the purchase of advanced manufacturing tech-
It demonstrates the weaknesses in the nology or the development of new methods of production
Many states that compete strongly with and delivery, as occurs in sectors characterised as “low” or
Union’s position relative to the United
the Union in global markets are imple- “medium-low” technology (see SEC(2002) 1349). A further
States and Japan. challenge for the Union, therefore, is to develop an innov-
menting strategies to boost innovation ation scoreboard with a more satisfactory coverage of inno-
that have much in common with the There are nonetheless some encouraging vation in all its forms.
4.2. Enlargement
Enlargement will significantly change Member States will need to improve their performance if the enlarged EU is to become
the Union’s innovation profile. The avail- the world’s leading economy.
4.3. Skills shortages addressed to continually update skills for innovation must make themselves
and knowledge and to ensure good co- attractive not only to companies but
Real wealth – in terms of economic per-
operation between staff of different ages, also to talented individuals(19). This
formance, industrial competitiveness and
drawing the benefits of the skills of the means welcoming innovative newcomers,
employment – comes not from the pro-
various generations. Social partners at all including foreign-born workers who
duction of material goods alone, but from
levels should work towards a framework often bring in new ideas and a new
the production, transformation and
which facilitates the modernisation of spirit of enterprise. Plenty of jobs must
exploitation of knowledge. Especially in
work organisation in a way which con- be available: many talented people will
the context of the increasing role played
tributes to developing the skills of all age not move to a new city without reason-
by the service sector in economic activity,
groups and to prolonging the contribu- able assurance of finding another job
knowledge is of fundamental and stra-
tion of older workers to economic activity. there when the first job ends or when
tegic importance for innovation.
they want to move on. Cities must also
The skills of their staff are fundamental to offer a variety of lifestyles to attract and
enterprises’ capacity to obtain knowledge retain innovative talent.
4.4. Specific features of
and to use it to innovate. Shortages arise
the Union’s economic and – European diversity brings with it differ-
within the Union of certain specific skills
social setting ent aspirations and attitudes to innov-
relevant to the innovation process.
ation that have to be respected. Attitudes
Examples are to be found in the period- Several further specific features of the
are especially likely to be nuanced
ically recurring mismatches between European Union have an important bear-
when innovative developments have a
labour supply and demand for specialist ing on innovation policy development,
social impact. The full and genuine
skills in information and communication for instance:
participation of all stakeholders in the
technologies, or, among venture capital
– The large size of the public sector in innovation process, including the pub-
operators, for the ever-changing specific
Member State economies means it lic at large, needs to be ensured.
skills needed to assess and manage invest-
should be heavily involved in the cam-
ments in innovative enterprises in new In brief, the challenge is to develop a
paign to boost innovation. As a major
technological fields. specifically European approach to innov-
user of products and services that enter-
ation policy that will constitute a path to
Innovation also requires the widespread prises provide, the public sector is in a
improved economic growth.
acquisition of more general skills. Entre- strong position to encourage innov-
preneurship skills must become more ation among enterprises.
common than at present, as must the
Public authorities, as providers of ad-
skills to thrive in new and changing work
visory and support services, and as im-
situations.
plementers of regulatory and adminis-
Demographic trends in Europe mean that trative rules, have many interfaces with
enterprises will tend to have proportion- innovating enterprises. Well-designed
ally more older staff. In most Member services, operated in an efficient man-
States, the working age population (15-64 ner, contribute to a good climate for
years) will stop increasing before 2012. innovation, as does timely and efficient
implementation of rules.
This trend will have to be taken into
account in work organisation and in – Most Europeans live in metropolitan
human resources policies. The organisa- areas. In regenerating our cities, we
tion of work must provide opportunities should build on their capacities in the
adapted to the last phase of working life provision of knowledge, skills, a highly
encompassing flexible working time ar- qualified work force and geographical (19) Competing in the Age of Talent: Quality of Place
and the New Economy. R. Florida. A report prepared for
rangements and participation in training, links to turn them into foci of innov-
the R.K.Mellon Foundation, Heinz Endowments, and
for example. Methods will have to be ation. Cities aspiring to become centres Sustainable Pittsburgh, 2000.
A coordinated framework
for innovation policy in
the EU context
© Council of the EU
Working together in the Competitiveness Council, Member States should be better able to coordinate policies which have an impact on innovation.
coordinated across all government tiveness, Employment and Sustainable – Efforts at Member State and EU-level
departments with areas of responsibil- Development, offering even broader must be supported by upgrading of
ity having a bearing on the conditions scope for a systemic basis to design of knowledge on innovation, innovation
for innovation. Coordination should innovation policy. systems and innovation performance,
take place at a high political level, to through improved statistics on innov-
– EU institutions and Member States must
ensure the maximum commitment ation and through analysis. For example,
together ensure that mechanisms are in
from the departments involved, and data collection and analysis should take
place for “vertical” coordination, so that
will require administrative support account of the different routes to innov-
policies interlock at EU, national and
from a “light” central structure. ation and the importance of diffusion.
regional levels. Member State preroga-
Member States should consider setting
– Systemic policy-making is also the main tives in building their own national
targets for some indicators as a means
challenge at EU level. In the Council of innovation systems must be preserved.
to help mark progress towards achieve-
ment of specific national objectives.
This work should lead to a better under- marking and exchange of good practice tion of the most effective methodologies
standing of the main factors influencing in innovation policy(22), and on the for innovation promotion among the
the performance of national innovation Group of Senior Officials from Member many public-supported measures in
systems in Europe, and identification of and Associate States that assists the place within Member States.
actions with a major leverage effect on Commission in these activities.
– Also included will be the establishment
these factors that could appropriately be
– Within this mutual learning process, of a platform for exchange of informa-
put in hand at European level.
a pilot initiative will be launched to tion and experience specifically focused
This framework must be backed by a facilitate smooth convergence towards on the innovation profile of Candidate
number of supporting measures: excellence in the design and implemen- Countries, to support them in rapidly
tation of programmes, schemes and developing their frameworks for innov-
– Existing processes enabling Member
specialised support agencies for the pro- ation.
States to learn from each other’s experi-
motion of innovation.
ence in innovation policy development
and implementation will be strength- The pilot initiative will offer support for
(22) This framework, the Trend Chart on Innovation in
ened. An improved framework for the independent evaluations, on a volun- Europe, includes the collection, updating, analysis and
dissemination of innovation policies and performance at
mutual learning process will be built on tary basis, of such programmes, schemes
national and EU level. One component is the annual
the existing European forum for bench- and agencies with a view to identifica- European Innovation Scoreboard.
EU, national and regional innovation policies need to interlock, although national characteristics
must not be overridden.
New directions
for European innovation
policy development
To complement this overall framework, example, are more likely to arise where ectly supporting innovative activities.
several new directions should be ad- there is sophisticated consumer demand Strengthening of the regional dimen-
dressed as routes towards improved innov- than to be the fruit of competition sion of innovation policy is examined
ation performance. merely on price. The effects of competi- further in section 6.4.
tion and cooperation on innovation are
– The development of an innovative
increasingly being recognised. Enter-
enterprise culture and competitive
prises that are effective innovators are
6.1. Interaction with other nations depends crucially on taxation
often those that participate in networks
policy areas to improve the policies that create an environment
with other organisations. The inter-
environment for innovative favourable to investment, innovation,
action between competition and innov-
enterprises business development and employ-
ation policy should aim at encouraging
ment. Taxation policies that contribute
The means to take the innovation imper- the flow of new knowledge, recognising
to achievement of these aims need to be
ative into account in other Community that some agreements between enter-
studied and replicated where possible.
policies will be further developed. Build- prises may be in the interest of promot-
ing on analysis to establish a better under- ing innovation and ultimately lead to – Enterprises may be encouraged to in-
standing of the interfaces with, for ex- greater competition(23). novate by offering them, in conformity
ample, competition, trade, employment, with competition rules, tax relief on
– Another key interface exists with the
regional and environmental policies, the expenditure on innovation. In compar-
Internal Market policy: a well function-
objective is to systematically consider and ison with direct financial support for
ing Internal Market, without barriers to
take account of the potential impact on innovation, the important characteris-
trading across borders, encourages com-
Europe’s innovation performance of leg- tic of fiscal incentives is that the busi-
petition in goods, services, capital and
islative and policy initiatives. ness sectors and geographic areas that
the mobility of people. This increased
benefit are in effect decided by market
Awareness and understanding of the rela- competition in turn promotes innov-
forces, since it is enterprises themselves
tionships that come into play at the vari- ation in all its dimensions, both in the
who opt to make the expenditure that
ous policy interfaces is essential. As ex- private and public sector, regarding
qualifies for the tax relief. Direct finan-
amples of the diversity of issues that will aspects as diverse as advertising, indus-
cial support, on the other hand, is more
need to be considered: trial organisation and management,
suited to the targeting by government
training, customer services, etc.
– Competition policy is clearly important of specific sectors and objectives. Often
as competition is one of the main drivers – Regional policy is an important route
of innovation. From the perspective of for encouraging innovation. The Euro-
(23) See, for example, the Block exemption Regulation (EC)
innovation policy it is important to pean Regional Development Fund con- No 2659/2000 for R&D agreements (OJ L304 5.12.2000,
p.7) and the Guidelines on the applicability of Article 81 of
distinguish the different forms competi- tributes to innovation by funding many
the EC Treaty to horizontal cooperation agreements (OJ C3
tion can take. Innovative products, for innovative activities or projects indir- 6.1.2001, p.3).
both methods will be used, the precise port of innovation that are not in con- markets for products and processes. Pro-
mix depending on national objectives, tradiction to the open competitive active and innovative environmental
conditions and industrial structure. environment that incites enterprises to policies have been introduced at the
innovate. national level (leading, for example, to
So far, fiscal policies in support of innov-
the dynamic growth of wind energy
ation concentrate mainly on tax relief – Rigidities of the labour market continue
industries in Spain and Germany). As
for expenditure on R&D. Spain is an to be an important barrier to innovation
European businesses are increasingly
interesting exception, where tax incen- in Europe, making employment policy
taking responsibility for their environ-
tives apply not only to R&D but also to another area with a strong influence on
mental impacts, European environ-
expenditure on technological innov- the capacity for innovation. Some Mem-
mental policy is also gradually moving
ation. In the Netherlands it is the human ber States have already shown creativity
away from “command and control” to
resources for R&D which are targeted, and success in linking innovation to the
an approach which gives more freedom
by way of tax relief for the wage costs of creation of jobs. Organisational and
to innovators (for example, the “inte-
R&D personnel. shop-floor innovation, aiming at “high
grated product cycle” policy(28)).
trust, high performance workplaces”(24)
The use of fiscal policy to boost compon-
as a means to fully reap the productivity – The use of open standards in different
ents of national innovation systems in
benefits of new technologies, require business areas reduces costs, simplifies
addition to R&D may be further ex-
industrial dialogue built on existing processes and is a key factor in dissem-
plored. In order to design a cost-effect-
good practice or the development of ination of technical, managerial and
ive system of fiscal incentives, it may be
new methods. Well-functioning labour organisational innovations in areas
necessary to identify the key compon-
markets should provide adequate incen- such as product development, manu-
ents which need to be supported and
tives and flexibility for both firms and facturing, marketing, etc. Innovation
define them in precise and operational
employees to take advantage of oppor- may be aided by standards that are per-
terms. Furthermore, more information
tunities for innovation. formance-based rather than prescrip-
is required on the effectiveness of fiscal
tive, in the environmental sector for
measures, to allow Member States to Improved occupational and geographic
example. The interface to standardisa-
fine-tune their measures, maximising mobility help to make the labour mar-
tion policy must be strengthened in
expected benefits against the cost in ket more flexible. The Commission’s
order to address future challenges, such
terms of foregone tax revenues. Action Plan on Skills and Mobility(25)
as the dissemination of information
and its reform of the EURES system on
– When tax relief is given selectively it is and communication technologies in
the Europe-wide exchange of job vacan-
of course a form of state aid, and one of traditional industrial sectors.
cies(26) are designed to make the Euro-
the tasks under European competition
pean labour markets more accessible – The objective of a Community Patent
policy is to monitor state aids since the
and to help tackle skills shortages. that is simple, cheap and reliable has
European Community Treaty prohibits
proved difficult to attain, but has
aid that distorts intra-Community com- – The capacity of the United States to
>>>
petition. Certain aid, however, may be attract highly competent students,
allowed, for example if it pursues workers and researchers has a direct and
objectives of common interest without positive impact on its innovation poten-
distorting competition to an extent tial. The brain drain that Europe experi-
incompatible with that interest. On this ences may negatively affect its innov-
basis the Commission has issued guide- ation capacity. The objective set by the
lines that allow state aid schemes in Barcelona European Council to make (24) For example, by organising the workforce into self-
managed, autonomous work groups.
areas including support for research and Europe’s education and training systems
(25) COM(2002) 72.
development and the provision of risk a world quality reference by 2010
(26) Commission Decision 2003/8/EC of 23 December
capital, and block exemption regula- addresses this issue among others(27). 2002 (OJ L5 10.1.2003, p.16).
tions allowing aid for SMEs, and (27) The Commission’s proposal for an “Erasmus World”
– Europe is recognised as the global leader programme (COM(2002) 401) is also a step towards mak-
employment and training. ing Europe more attractive for students and researchers. So
in environmental policy. Fulfilling its
are measures under the “Human Resources and Mobility”
State aid is an example of an area of environmental commitments requires heading of the Sixth RTD Framework Programme, includ-
competition policy where Member huge innovation efforts. The sustain- ing support for the professional reintegration of highly
qualified European researchers returning to Europe after a
States and the Commission must be ability challenge creates not only new spell working elsewhere.
alert to the scope for measures in sup- innovation pressures but also new (28) COM(2001) 68.
Furthermore, as many “traditional” pol- competitive public procurement can be a els, to take account of regions’ specific
icy areas have an influence on the climate powerful instrument to push innovation. strengths, weaknesses and ambitions. This
shaping the innovation behaviour of To develop its role as a source of innova- trend brings with it the risk that regions
firms, public administrations will often tion, the public sector could promote design and implement their strategies in
be obliged to arbitrate between conflict- new types of services and the use of e- isolation, failing to take advantage of
ing interests. A good understanding is government, e-health, e-education, etc.(31) experience gained elsewhere and not seiz-
required of the innovation process and of ing opportunities to benefit from trans-
the policy trade-offs that may have to be regional or transnational networks.
made.
6.4. Strengthen the regional Regional authorities must be sensitised to
dimension of innovation the increasing importance of regional pol-
The public sector plays an important role
policy icies for promoting innovation. When
in all European countries. It can be a
designing and implementing regional
source of innovation, and is certainly an Measures to improve the climate for enter-
>>>
important consumer of innovative prod- prises to innovate are increasingly being
ucts and services. Efficient, open and devised and implemented at regional lev- (31) See the eEurope 2005 action plan: COM(2002) 263.
The Italian “industrial districts” illustrate how regions special- industries. This success is complemented by the construction of
ising in specific sectors and dominated by small firms are able textile machinery, which is also highly export-oriented.
to grow rapidly and develop global leadership in their sector(32).
Italian “industrial districts” demonstrate how global leadership
Industrial districts are characterised by high productivity and
can be achieved by close interaction and sector-specific patterns
specialisation in complementary phases of production,
mixing cooperation with competition (“co-opetition”) among
founded on the presence of subcontractors, component sup-
SMEs, and by a type of creativity that absorbs R&D inputs with-
pliers and fierce competition among them. Accumulation of
out entirely relying on them.
know-how is an important factor behind the lasting competi-
tiveness of such clusters.
innovation policies, regional authorities the innovative capacities are encouraged Innovation Relay Centres and the Forum
must fully take into account the distinct- to develop and create competitiveness at of Innovation Regions)(33).
iveness and the social and economic char- world level.
acteristics of the region. They must learn
Centres of learning are also important for
from what others are doing, but avoid sim-
their potential to act as nuclei for the for-
ple duplication – they must each develop
mation of clusters, building on spin-offs
their own specific route to improved innov-
from academic research and creating “hot
ation capacity, depending on their own
spots” for innovation.
unique set of circumstances.
The Commission will support the efforts
The development of clusters of excel- of regional authorities and other regional
lence, when there is a conjunction of fac- players in the innovation process in devis-
tors such as infrastructures, availability of ing and implementing innovation poli-
(33) The Sixth RTD Framework Programme provides many
skills and expertise, research and technol- cies that are of good quality and include opportunities to European regions in terms of networking,
exchanging good practice and developing new initiatives.
ogy centres, and enterprises with innov- European-level linkages. Support will be
As well as measures targeted at the regional level to
ation potential, is of paramount import- built on existing innovation support net- encourage a more innovation-friendly environment,
regional authorities can tap into the new instruments of
ance for innovation performance. Where works and other activities targeted at the
the Sixth Framework Programme (networks of excellence
these conditions exist it is important that regional level (such as the network of and integrated projects) and the ERA-NET scheme.
Conclusions
The productivity gap between the Union changes could be forced, in a less control- continuing importance of the innovation
and major economic areas such as the lable fashion, through lack of resources. issue and the potential contribution of a
United States may not at present have better understanding of the innovation
There are trade-offs to be made between
effects that are generally visible in terms process in the European context to the
the preservation of existing structures
of quality of life. This does not mean that performance of all Member States. >>>
and practices, and the penalties of a weak
we can afford to postpone addressing this
innovation performance. Europe must
growing challenge, which ultimately
find its own way to balance conflicting
reflects a weakness in Europe’s capacity
interests and priorities.
for innovation.
The Member States and the Commission
In the long term, European prosperity is at
should define a common framework, and
risk if the productivity gap continues to
a set of priorities and objectives, for both
increase. Lagging our major competitors
European and national innovation policy,
in this respect could reduce the capacity
respecting the characteristics of national
to offer the benefits required by the Euro-
innovation systems and the diversity
pean social model. A successful innov-
within the European Union. They should
ation policy could help to reduce the gap
build on the acquis communautaire (the
and contribute to increased national
Internal Market, the euro, etc.) and take
wealth. The resistance to change already
account of enlargement of the Union.
cited as an obstacle to innovation must be
considered in this light. If innovation The Commission therefore invites the
activity weakens and falls behind, then Council to alert Member States to the
– cooperate with the Commission by making information available on innovation policies and performance, produce
further data and indicators and stimulate national statistical offices in their efforts in collecting and providing com-
parable statistical data in the area of innovation,
– participate actively in the mutual learning process initiated by the Trend Chart on Innovation in Europe and in analy-
sis of the innovation phenomenon.
– build an improved framework for the mutual learning process in innovation policy on the basis of the present Trend
Chart on Innovation in Europe,
– cooperate with Member States in analysis of the innovation process, policies and performances,
– launch a pilot initiative offering independent evaluations (on a voluntary basis) of programmes, schemes and sup-
port agencies for the promotion of innovation,
– establish a platform for exchange of information and experience focused on Candidate Countries, to support them
in rapidly developing their framework for innovation, and extend the European innovation scoreboard to give the
same coverage to Candidate Countries as to the current Member States,
– report, every two years, on progress in strengthening innovation policy at national and EU level,
promoting training and awareness activities on policies and factors shaping the innovation performance of
firms,
promoting dissemination of good practices emanating from the public procurement authorities.
– strengthen existing processes, in the framework of the Trend Chart on Innovation in Europe, enabling Member States
to learn from each other’s experience in innovation policy development and implementation,
– intensify their cooperation and create a common framework for the strengthening of innovation in the EU, includ-
ing assessment mechanisms taking stock of the progress achieved.
Annex 1
Innobarometer 2002
Annex 2
Summary of current EU
activities to promote innovation
08 15 16
NB-AJ-03-S01-EN-C
– The Innovating Regions in Europe net- terms, their scope goes beyond fostering
work provides a mechanism to share the emergence of innovation, skills and
experience in developing innovation know-how from the European research
strategies, and thus is relevant both to effort. In view of the wide span of the innov-
firms’ operational environment and to ation phenomenon, approaches in support
framework conditions(41). of innovation must take account of forms
of innovation not dependent on research
– The network of Innovation Relay Centres,
or where research plays only a minor part
by offering firms a local starting point
in bringing about the economic and social
to help them develop transnational
benefits of innovation. http://www.innovating-regions.org/
technology cooperation and transfer,
assists firms in forming linkages with
other firms and organisations(42).
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