Enterprises’ Growth Potential in the European Union: Implications for Research and Innovation Policy

One of the main objectives of the new European research and innovation policy agenda is to favour the positive demographics (creation and growth) of EU companies operating in new/knowledge-intensive industries, especially Small and Medium Enterprises (SMEs). These companies play an important role in shaping the dynamism of the economy’s sectoral composition, favouring the transition towards more knowledge-intensive activities and in contributing to the overall economic growth objectives and more and better jobs. But which kind of companies should be helped by policy? And how? This paper presents a literature review on the economics of research, innovation and competitiveness, focusing on the determinants for company creation and growth and the role played by Research, Development (R&D) and innovation. It also implements a tentative simulation exercise aimed at figure out what the possible contribution of high-growth enterprises (HGEs) to EU job creation could be in the year 2020. Furthermore, it draws a number of policy implications to design future research and innovation support instruments targeting innovative company growth in Europe. The result of this work indicates that: a) EU needs, together with horizontal policy that address the framework conditions, to put in place policies to foster R&D investment in some specific typology of innovative companies and only where there are market failures and clear high social returns; b) the establishment of any targeted support instruments should take into account an integrated set of criteria including: firms' age and size, the sectors where firms operate, the involved risks in and potential for their innovative and commercial activities, the country/techno-economic environment, and the degree of internationalisation; c) to be successful, no matter the new targeted policies and supporting instruments, they should be designed using policy experimentation and its results should be regularly measured and evaluated using appropriate indicators and analyses.

MONCADA PATERNO' CASTELLO Pietro;  CINCERA Michele; 

2013-04-16

Institute of Chartered Financial Analysts of India (ICFAI) University Press

JRC75276

0973-2659,   

https://publications.jrc.ec.europa.eu/repository/handle/JRC75276,