Transcript The importance of small firms in regional development

Empowering small firm
participation in innovation
Dr Lynn Martin, Director of
Entrepreneurship and Innovation
University of Central England, UK
[email protected].
European perspectives
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The European Council defined its objectives in terms of
employment, economic reform and social cohesion
(Lisbon, 2001)
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“to become the most competitive and dynamic knowledge-based
economy in the world, capable of sustainable economic growth
with more and better jobs and greater social cohesion”
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“to create some 15 million new jobs by 2010”
But Europe needs to improve, as it is still outperformed
by the USA, by Japan etc in aspects of innovation (EIS,
2005)
The Challenge?
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To deliver increasing levels of successful innovation in process,
processes and services, to gain and maintain competitive advantage.
Themes
 International comparisons
 Regional empowerment
 Globally – ideas to copy!?
Key aspects
 Hard and soft factors – finance and technology; enterprise culture;
business culture and internationalisation
 Sharing lessons across regions,
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cross-regional networks in new industries or
reinventing existing industries.
university-industry links to support SME innovation and growth
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Recognition of small firm realities
Different types of intervention
International comparisons
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Developed economies - 6 countries, the USA, Japan, Germany, the UK, France
and Switzerland where 86% of the top 1000 Global companies are located (EIS,
2005).
Japan - economically well-developed, technologically competitive G7 and OECD
member, with a strongly centralised and active innovation policy..
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Korea, Taiwan and Singapore - 3 Asia ‘tigers’, rapid GDP growth in the last 30
years due to strong FDI, R&D joint ventures and US co-operation
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China and India, large populations and landmass, rapid, uneven growth.
Predicted to be dominant economies by 2050; a challenge for co-operation in hightech and a threat for EU and USA – outsourcing
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Thailand and Malaysia fast GDP growth starting from a low base; combination of
technologically modern and traditional industries. Indonesia is less advanced in
development. All 3 now pursuing or introducing systematic innovation policies.
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SMEs, Small scale industries -, what are small firms?
(Tekes, 2005’ EIS, 2005)
Summary of learning points
from international reports
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The right external environment positively affects the level of
entrepreneurship but regional need is a key aspect in this process
Tackling issues connected to finance, innovation and enterprise
diversity are key factors in growth
The development of future regional innovation depends upon
linkage, networking and the deployment of higher education.
Practical measures
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Build on key examples, a national network of intermediate institutes with
a common identity, methodology and targeting, but with regional
variations for local circumstances.
National database to allow manufacturers to locate providers of
technological expertise and capability.
Focus on de-regulation and simplification of bureaucracy
Small firm realities
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Small firms are not homogeneous
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One size does NOT fit all
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Finance
Technology
Innovation
Definition
Small firms owner managers have key needs but may
need help to recognise these
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Managerial capacity e..g, marketing as a barrier to ICT use
Internationalisation
How to engage with the research base
Resourcing start up, innovation, growth and exit
Regional empowerment 1
Use of finance
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Information asymmetry and moral hazard
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“difficulties on the part of eth lender in understanding the
sector, the nature of the assets or the collateral offered by the
potential borrower”
“resulting actions on the part of the borrower which do not
comply with lender's agreement based on lack of
understanding “
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High technology and creative sectors
Different financial instruments
Micro- enterprises / socio-economic and ethnic enterprise
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Sharia law and borrowing at interest
– Afro-Caribbean businesses and a cultural shift
Use of finance
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West Midlands
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600 different types of funding, over 760 banks and financial
institutions based in the West Midlands.
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first region to launch Regional Venture Capital funds, with a combined
value of over £20 million; new Creative Advantage - £9m for creative
sector business; Accelerate 10m per annum automotive sector
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regional schemes to stimulate innovation and collaboration such as
Innovation Networks;
Nationally
– High street banks actions to change
 Scorecards
 Links to support new Muslim business
 Targeting of under-represented areas, via a package of funding
icnudling SFLG scheme.
Regional empowerment 2
University-industry interaction
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Knowledge / Technology transfer
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Contact Hard and soft interventions
Developing human capacity
International links
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Asia Links : IMTT Innovation Management and
Technology Transfer 30-month project to develop a
new international masters in innovation and human
resources in each partner institution.
Links to China, India and Poland
Links with regional India-Pakistan Trade Unit (EU
Asia Invest) www.
Valuing departees – Taiwan and S Korean
examples
Key questions
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What does innovation mean in each place?
How does technology transfer occur?
Are there good examples of how to work together to innovate
or share technology?
What is the small firm base?
Key actions
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Cultural, entrepreneurial, innovative
Developing ways to work together
Challenging assumptions
Business-university interaction
Being ready to change to copy good ideas
Questions for regional authorities –
supporting the context for innovation
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Enterprise and innovation aspects
– Who does research with whom?
– Do small firms link with others / the research
base?
– What is the regional tradition re self employment,
enterprise, technology innovation and enterprise?
– Convergence or uniqueness?
Internal and external assets
– What is the regional brand or image?
– What does the regional knowledge base look like?
– Which linkages / networks are seen as assets
across region and outside the region?
– How does the region retain its departing assets
, e.g, graduates
Questions for universities
and small firms
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Universities
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Do we understand how to provide hard and soft
interactions with small firms?
Do we recognise our own need to learn and to
change?
Can we communicate new knowledge
effectively?
Small firms
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How do we access key resources to help us to
respond to change and to innovate?
How do e communicate effectively with
resource providers?