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EURO-CASE

INNOVATION
PLATFORM REPORT
BARRIERS TO
INNOVATION
AND SCALE-UP OF
INNOVATIVE SMEs
Publisher: Euro-CASE, 2017
Grand Palais des Champs-Élysées | Porte C
Avenue Franklin D. Roosevelt
75008 Paris, France

T. +33 1 53 59 53 40
mail@euro-case.org
www.euro-case.org
Contents

Executive Summary............................................................................................................. 5

Introduction......................................................................................................................... 9
Approach and guiding question......................................................................................... 10

Defining the challenge for scaling up of SMEs in EU..........................................................13

Barriers to Innovation and Scale up – Results of our Survey.............................................. 17

Deep dives / Case studies.................................................................................................... 21
Summary deep dive Energy................................................................................................ 21
Summary deep dive Industrialization................................................................................. 22
Summary deep dive Digital................................................................................................ 23
Analysis of deep dives........................................................................................................ 24

Recommendations..............................................................................................................25

A new role for the European Academies?........................................................................... 29

References.......................................................................................................................... 31

Additional literature.......................................................................................................... 32

Footnotes............................................................................................................................33

Annex................................................................................................................................ 34
Annex 1: Question in the Euro-CASE Questionnaire.......................................................... 34
Annex 2: Members of the Euro-CASE Innovation Platform..................................................35
Executive Summary

European innovation policy is organized in the grow outside Europe. Another facet concerns
context of the Innovation Union, one of the the question of more modest forms of firm
seven flagship initiatives of the Europe 2020 growth that seems to be more prominent in Eu-
strategy for smart, sustainable and inclusive rope. The question is thus: how to create con-
growth. Despite these and other (national) ap- ditions for companies that allow them to sur-
proaches, there are still several challenges, first vive and ultimately increase job growth? This
and foremost regarding the transformation of has less to do with cutting-edge technological
research results into marketable products as well innovation (which is only one factor to achieve
as for scaling up innovative start-ups. There is these goals) but more with embracing change,
also a growing concern as to why Europe has entrepreneurial spirit, etc. The success of many
not achieved its full potential in producing dis- of the fast-growing companies is not only based
ruptive technological and social innovations. on technical innovation but more often than not
Europe with its well-educated workforce and marketing or organizational innovation. In ei-
world class research (public and private) should ther case: marketing and managerial competen-
be able to produce much more jobs through ap- cies are key when scaling-up.
plying innovation and new technologies. Apart from a lack of finance, the main bar-
The Euro-CASE Innovation Platform aims riers to innovation across the EU seem to be
to contribute to the ongoing discussion about stiff regulation, risk aversion and poor interac-
remo­v ing the barriers in national innovation tion between research and industry. Barriers
systems that inhibit the scaling-up of innova- in commercializing excellent research results
tive SMEs in Europe. The report is dealing with include that 1) publishing is valued a lot higher
two interrelated subjects: first the barriers to than business activities in public research or-
inno­vation, and secondly and more importantly, ganizations, 2) entrepreneurs and academicians
with the factors which are inhibiting faster scale operate in silos with hardly any interactions and
up of enterprises, i.e. factors which concern the 3) regulatory aspects such as limiting IP regula-
whole national innovation system. This report tions and stiff employment rules. The main fac-
is based on the results from the first phase of tors inhibiting faster scale-up, according to the
the Platform1 (2012–2015), and is complemented survey, were a lack of funding (also considering
with interviews and hearings with stakeholders the small pool of venture capitalists in Europe),
from Brussels alongside a European-wide sur- market limitations (there is no real EU market)
vey among Academy Fellows and contacts. The and the lack of managerial and entrepreneurial
findings of the survey were discussed and vali- skills. In many areas (especially in those without
dated in a stakeholder workshop in Brussels in clear links to basic research) the uncertainty of
December 2016. Additionally, the findings were demand due to unclear signals from private and
tested through a series of deep dives (case stud- public actors also poses a strong challenge. Lit-
ies) around Energy, Industrialization and Digi- tle risk taking and low flexibility of public and
tization. private demanders contribute to this challenge.
The discussion about scaling up has several In this spirit, the Euro-CASE Innovation plat-
facets. Apparently “unicorns” and technologi- form puts forward the following recommenda-
cal leading companies seem to find it easier to tions.
To the European Commission: promoted following e.g. see the Manufacturing
extension partnership (MEP) in the US.
• The European Commission should continue
its efforts to create a true European Single • Consider supporting cross-country marketing
Market. While new ICT technologies may initiatives to increase market knowledge and
yield national boundaries obsolete, there is a ease entry within Europe and expanding the
growing need for allowing these technologies Enterprise Europe Network. Credit support /
to mature. Regulation needs to be used more cheap insurance could assist when companies
as a tool for growth. Business needs a unified are concerned about expanding international
and well-functioning internal market to scale sales.
up their operations in Europe. Therefore,
open borders for economic activities are To the EU member States
required and a removal of bureaucratic and
legal obstacles to expand in all Europe should • Across Europe there is a growing need for more
be encouraged. room for experimentation (“sandboxing”).
This concerns policies as well as business ideas.
• The European Commission should rigorously The Commission as well as the Member States
follow its proposal for Smart Regulation and and regions should create spaces where policy
consider any additional proposals if they are makers and entrepreneurs in conjunction can
smart and viably support European SMEs (SMEs try out new and innovative solutions. There are
tests). The precautionary principle should be plenty of ideas that just need room to flourish. A
accompanied by the innovation principle. New culture of innovation and a bold pro-innovation
public policies should be smart for growth. stance in public administrations is required.

• Public actors on all levels should provide more • A fresh re-thinking of a European Small
accurate information to SMEs where to obtain Business Act (ESBA) could be very valuable.
the right kind of funding. The conveyance of This could include risk taking and risk sharing
venture capital needs to be done by professional components. Together with the modern
institutions. The existing European repositories approaches of innovation procurement by
should be complemented by an easy to use public administrations, an ESBA could turn into
tool for finance and data analysis on scale- a powerful engine of SME growth.
ups in the EU. An online platform that allows
sharing information on “what works” should be • Favorable ecosystems are more easily created
considered. It is important to recall that private on a regional level because it is easier to
money is key. The European Union should bring the relevant stakeholders together.
support Member States to alter their fiscal For ecosystem development it is key to
regulations in order to encourage angel investors first join the enthusiastic stakeholders. The
in start-ups and scale-ups. voluntary engagement of enthusiasts and their
subsequent commitment to continue shaping
• Innovation is not a goal per se, scaling up the ecosystem can then be complemented by a
business by innovation is the issue. EU and more official role of governments in providing
European countries might speak more of scaling infrastructure, incentives and smart regulations.
up than of innovation. All the fields of the
business are important: sales, marketing, finance, • Increase the talent and skill pool across
etc. Europe must facilitate the development the EU. Despite efforts from the European
of big companies in “soft business”, or based Commission in crafting a “Coalition for
on non-technological innovations. Also, more Skills” the issue remains largely in hands of
general support and business advice in scaling up the Member States. With regard to scaling
and implementing novel technologies should be up, skills are massively needed in the areas

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of management, entrepreneurship and • Fellows could engage in local discussion
leadership. Member States should be more and enrich the local discussion with EU
open in allowing school curricula to include best practices, raise general awareness and
these topics. Despite important changes over promote positive effects of regulation. National
the last couple of years, the education system Academies should also better understand local
should reflect current and future needs of a situations, feed info into Euro-CASE and enrich
dynamically changing environment, develop an the local discussion with EU best practices. They
entrepreneurial mind at early stage at school, could also promote a “growth test” of policies
and support the idea that innovation and and promote positive effects of regulation.
business creation are essential for the future. Euro-CASE could do a quality check of received
information and disseminate best practices to
• Public and private procurement should Academies.
be geared towards innovative scale-ups.
In addition to efforts supporting public • Promote the notion of “smart” money,
procurement, corporate engagement in buying which means that both Corporates as well as
from innovative SMEs should be encouraged individuals within the Academies should engage
to support them scaling up their operations. actively in the start-up/scale-up arena, by
In order to spur public procurement, providing personal coaching, access to networks,
governments should think of establishing a complemented by some investment.
department (or departments) that advises
others on the quality of innovative solutions.
This might reduce the risks involved in public
(and private) procurement of innovation
solutions as it allows for risk sharing. A similar
thought is to consider an insurance for large
companies using new innovations by SMEs.

To the European Academies

• Support an entrepreneurial culture: Successful
entrepreneurs might have failed before. Their
expertise in starting and scaling a business is
highly valuable regardless and they need to
be encouraged and incentivized to re-invest
(“second chance” incentives). Also, twice as
many successful entrepreneurs are over 50 as
under 25. It seems important to harness to the
potential of the 50+ age group in light of the lack
of managerial and entrepreneurial skills.

• Limited financing opportunities are only one
side of the story. Equally important is the limited
mentoring and coaching of SMEs who are not
necessarily aware of the whole spectrum of
support instruments. This primarily concerns
SMEs in traditional industries. Academies could
act as facilitators and match makers and also
advise government about overcoming the
challenges for growing companies.

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8
Introduction

European innovation policy is organized in the
Gazelles & Unicorns
context of the Innovation Union, one of the
seven flagship initiatives of the Europe 2020
Gazelles are the subset of high-growth enterprises
strategy for smart, sustainable and inclusive
which are up to five years old with an average
growth. The Innovation Union aims to make
annual growth greater than 20% per annum, over a
Europe into a world-class science performer; to
three-year period, should be considered as gazelles
remove obstacles to innovation and to alter the
(Eurostat/OECD 2007)
way public and private sectors work together.
Horizon 2020 provides the financial means to The term “unicorn” means to denote the arbitrary
reach these goals and to support “Excellent Sci- valuation of US$1 billion in capital from private
ence”, “Industrial Leadership” and “Societal investors.
Challenges”.
Despite these and other (national) approaches,
there are still several challenges. These challeng-
es concern both the generation of social inno- vour private funding in general. However, what
vation and disruptive technologies but also the seems to be lacking is a dedicated approach to
transformation of research results into market- scaling up. Scaling up means first and foremost
able products. There is growing concern why having access to a large market. The EU market
excellent European research is not transformed remains fragmented in contrast to other large
into successful products on the market and why national markets like the US or China. Even
Europe has not produced disruptive technologi- though large advances have been made in the
cal and social innovations like, for example, the EU in creating a single market and the internet
US. Companies such as Apple, Google or AirBnB helping to reduce the distance between producer
in the US or Alibaba in China seem to find it eas- and consumers, regulatory barriers make it es-
ier to bring their business models and technolo- pecially difficult in the EU for SMEs to scale-up.
gies to the market and tend to grow a lot faster Since creating a single market is an important
than in Europe. So called unicorns and gazelles but rather long-term goal, being proactive in ex-
have challenged traditional companies and or- port is key for scaling up operations. Countries
ganizational models and have created new mar- like Israel and Korea could serve as examples in
kets in a comparatively short time frame. These this regard.
companies develop their own markets and not Commissioner for Research, Innovation and
being part of this development might prejudice Science, Carlos Moedas, has put forward his
Europe’s long-term growth. approach for European Innovation that should
In the last couple of years, several important be based on openness (open innovation, open
initiatives have been launched in a number of science, open to the world). Over the course of
countries (e.g. UK, France, Germany, Spain) and the last year, the idea of creating a European In-
in the EU (e.g. EIT) that aim to overcome barriers novation Council (EIC) was formulated in order
to innovation and to bring public and private to act as a kind of coordinating body that could
researchers together to overcome silos and to fa- manage the multitude of innovation support

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mechanisms scattered throughout the Commis- tiveness when it embraces technological change
sion. A call for ideas for creating the EIC yielded and innovation. In the past we have witnessed
an enormous response from stakeholders (more this change occurring in the US and it appears
than 1000 responses and 200 position papers) that European businesses are following the de-
and showed some consensus that weak venture velopments elsewhere in the world slower and
capital markets and low opportunities for scal- sometimes too slow.
ing up continue to hamper European businesses. However, to be certain: Europe is still one of
While these strategic approaches by the Direc- the most competitive regions in the world; home
torate-General for Research and Innovation (DG to world class research facilities, a well-educat-
RTD) might certainly go in the right (conceptual) ed work force and political stability. Despite its
direction, it remains unclear, what exactly has fragmented market, Europe’s variety of cultures,
to be improved in the European ecosystem for languages and different approaches to economic
innovation and what political level (regional, na- and societal challenges creates a diversity which
tional, European) has to act and how. An analy- is unparalleled in the world. While this may be
sis of the European ecosystem for SMEs is surely difficult for politics on the European and on the
beyond the scope of this report, but the ques- national level it’s this diversity that will be the
tion to both policy makers and academicians basis of Europe’s future growth. This is also
alike remains. Last but not least, this issue is why the Euro-CASE Innovation Platform calls
of outmost importance with respect to the com- for a more positive view of Europe that the Fel-
petitiveness of the EU vis-à-vis its competitors lows of the platform and their host academies
abroad. Europe will only maintain its competi- will gladly promote.

APPROACH AND GUIDING QUESTION

The Euro-CASE Innovation Platform aims to survey among Academy Fellows and contacts.
contribute to the ongoing discussion about re- This step allowed for gathering the knowledge
moving the barriers to innovation for European and expertise of outstanding academics and
businesses. The focus is on SMEs, innovative or business representatives, both of which consti-
not, that want to grow and expand their activi- tute Fellows of Academies of Engineering and
ties but don’t find the necessary conditions to do Technology. As a result, it was possible to have
so. In view of the above outlined challenges and Euro-CASE member academies actively engage in
developments elsewhere in the world the Euro- their respective local ecosystems and to provide
CASE Innovation Platform has decided to focus answers to the guiding question. The Platform
its activities on the question: opted for a national approach in order to gain
first-hand “information from the ground” and
• What are the barriers in the national inno- also to take into account the fact that there are
vation systems that inhibit the scaling-up of significant differences between the Member
innovative SMEs in Europe? What are the actual States in terms of competitiveness and funding
challenges in the Member States and what can opportunities which, consequently, leads to dif-
the EU and the national governments do to ferent barriers.
improve the conditions for scale up of start-ups? While the Engineering Academies provide a
bottom-up approach and knowledge from the
This report is based on the results from the first ground, a continuous dialogue with the Com-
phase of the Platform (2012–2015), and is com- mission was targeted. The goal was to work
plemented with interviews and hearings with closer and co-create the report to make sure the
stakeholders from Brussels and a European-wide recommendations of the Platform are timely and

10
useful for the Commission. The findings of the EU Member States. It addresses the need from
survey were discussed and validated in a stake- Brussels-based institutions to better connect
holder workshop in Brussels in December 2016. with bottom-up initiatives and understand bar-
Additionally, the findings were tested through a riers for innovation in the Member States. Thus,
series of deep dives (case studies) around Energy, the platform offers science-based policy advice
Industrialization and Digitization that were con- by independent National Academies of Science
ducted by individual Euro-CASE member acad- and Technology and concrete balanced recom-
emies The main rationale for the deep dives is mendations by academicians and business rep-
the assumption that the generic barriers to in- resentatives.
novation and scale up have different effects in
different sectors.
This approach allowed the Euro-CASE Innova-
tion Platform to gain information on barriers
to the scaling up of innovative start-ups from

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12
Defining the challenge for
scaling up of SMEs in EU

It is well-known that innovation is a complex
Innovation
process involving several actors and policies on
various political levels. However, it seems that
The Euro-CASE Innovation Platform follows the
our advanced societies are having difficulties
definition of the OECD according to which an
making a robust policy for a complex innova-
innovation is the implementation of a new or
tion system. “In the century of complex systems,
significantly improved product (good or service),
competitive advantage will accrue to communi-
or process, a new marketing method, or a new
ties and jurisdictions able to adapt to unpredict-
organisational method in business practices,
able developments. Mechanistic, predict-and-
workplace organisation or external relations.
control logic will systematically fail in a complex
There are varying degrees of novelty (new to
system: it will omit new actors, fail to account
the firm, new to the market, new to the world)
for feedback loops and overestimate linear re-
(OECD 2005).
turns to effort.” (Madelin & Ringrose 2016).
More often than not the linear model of in-
novation is used to highlight the importance of
basic research. It is doubtful that there is an au- Scale-ups
tomatic translation from research to innovation
for which the Euro-CASE Innovation Platform Scale-ups (or high-growth enterprises) are
considers basic and applied research as equally enterprises with average annualised growth in
important sides of the same coin. employees (or in turnover) greater than 20 per
Innovation is more than just science and tech- cent a year over a three-year period, and with
nology. Today social, demand-driven or sustain- 10 or more employees at the beginning of the
ability innovation matter more than ever given observation period (Couto 2014).
the societal challenges we face.
It is important to recognise the systemic na-
ture of such innovation processes and carefully The discussion about scaling up has several
analyse the specific interactions between actors: facets. The above cited examples of unicorns
public and private scientists, academic institu- and technological leading companies that seem
tions and innovation funding agencies, invest- to find it easier to emerge outside of Europe are
ment funds etc. All these are specific interactions only one. Another facet concerns the question
in a given eco-system, with various scales of in- of more modest forms of firm growth. It is this
teraction: local, regional, national, European. question that is probably more troubling for
European and national initiatives should, there- Europe currently, the question of how to cre-
fore, be more focused on a systemic analysis of ate conditions for companies that allow them to
the eco-systems concerning scaling up, with the survive and ultimately increase job growth. This
EU market as a starting ground and goal. has less to do with cutting-edge technological

13
innovation (which is only one factor to achieve 2. How do we help those companies to grow
these goals) but more with embracing change, that already have tested the market? The
entrepreneurial spirit, and risk taking. The suc- innovation is out there, but the company does
cess of many of the large companies is not based not grow for reasons external or internal to
on technical innovation but marketing or organ- the company
izational innovation. Marketing and managerial
competencies are key when scaling-up. For the first group there is a strong need for high
The questions of scaling up primarily con- risk innovation funding - not science or technol-
cerns established models, innovative products/ ogy but innovation. Here funding in a competi-
services and an early market. There are two tive approach will need to be closer to the mar-
questions: ket, but daring to fail with public money. This
could be the remit of the proposed EIC.
1. How to support high risk, high promise ideas For the second group a very different kind of
before a market is fully established? support is needed. Here it’s much more about

Figure 1: Real Labour productivity in 28 EU countries, in 1000€/ employee
Source: SATW 2017 (based on Eurostat data, chain linked volumes 2010 = 100)

120
2005
100 2010

80 2015

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The National Institute of Standards and Technology’s Manufacturing Extension Partnership (MEP)

The National Institute of Standards and Technology’s Manufacturing Extension Partnership (MEP) is a
nationwide system of centers aiming to transform manufacturers to compete globally, supporting greater supply
chain integration, and providing access to technology for improved productivity. The network provides a variety
of services, from innovation strategies to process improvements to advanced manufacturing.

14
Figure 2: Gross value added per employee per sector in selected EU countries, in EUR
Source: SATW 2017 (based on Eurostat data)

160000
Industry Distribution, trade, accomodation Professional and
140000 scientific support
Construction Information and communication
120000

100000

80000

60000

40000

20000

0
DE CZ ES FR NL PL FINL SE UK CH

diffusion of modern technologies, strengthening lected EU countries. There are notable differ-
the absorption capacity of firms, complementary ences across countries but, as a general rule,
services/ infrastructure, management support industry and communication (sectors that the
advisory services, etc. This could be done by a engineering academies represent) are very high
more decentral structure of centers that are close contributors.
to the companies. The Manufacturing Exten- However, even though the importance of in-
sion Partnership (MEP) from the US could be an dustry and manufacturing cannot be neglected
example in this regard. 2 companies in this sector seem to find it difficult
The importance of the industrial sector can- to grow. There are more high growth companies
not be overstated. Manufacturing provides in ICT and services sectors as Figure 3 clearly
about 20% of all jobs in Europe and generates shows.
an estimated turnover of about €7 000 billion The European Commission recognized this
in 25 industrial sectors and over 2 million com- with its 2014 Communication “For a European
panies (European Commission 2017). The mod- Industrial Renaissance” (European Commis-
ernization of this sector is of crucial importance sion 2014) in which a policy mix for strength-
for exploiting future growth opportunities. It is ening the European manufacturing sector was
one of the key challenges for European compa- outlined. European Structural and Investment
nies in traditional sectors to embrace what has Funds (ESIF) of at least 100 billion would be
been coined the next technological revolution: made available in the multiannual financial
Cyber-physical systems/ Industry 4.0, digitiza- framework 2014–2020 to finance investment in
tion, advanced manufacturing. This is also high- innovation, in line with industrial policy priori-
ly important for European growth since jobs in ties. ESIF will be guided by the concept of ‘Smart
these areas show above average productivity as Specialisation’ and include venture capital sup-
Figure 1 clearly shows. port to 140,000 start-ups and scale–ups. EFSI
Industry and ICT related jobs show a higher agreements already target 377,000 SMEs, includ-
value added than jobs in other areas. Therefore, ing start-ups (European Commission 2016).
investments in these areas and the support for The EU has a number of initiatives at its dis-
digitization and (re-)industrialisation in the EU posal that aim to contribute to job creation and
are important. Figure 2 shows the gross value growth such as the European Fund for Strategic
added per employee in different sectors in se- Investments (EFSI), the Single Market Strategy,

15
Figure 3: Share of high growth companies per sector
Source: SATW 2017 (based on Eurostat data)

J – Information and communication

N – Administrative and support service activities

M – Professional, scientific and technical activities

H – Transportation and storage

E – Water supply; sewerage, waste management and remediation activities

C – Manufacturing

G – Wholesale and retail trade; repair of motor vehicles and motorcycles

F – Construction

D – Electricity, gas, steam and air conditioning supply

L – Real estate activities

I – Accommodation and food service activities

B – Mining and quarrying
0 5 10 15

the Digital Single Market and the Capital Mar- Euro-CASE welcomes all the initiatives by the
kets Union. The main challenge in Europe, in European Commission as laid out in the “Start-
this regard, is that too few European start-ups up and Scale-up Initiative” (European Commis-
survive beyond the critical phase of 3 years and sion 2016). Especially the call for removing reg-
even fewer grow into larger firms. If the share ulatory barriers, continue working on creating
of scale-ups would match that of the US there an actual single market and collaborating with
could be up to 1 million new jobs created and the private sector in important initiatives like
up to €2 000 billion added to GDP in the EU over the proposal to create a pan-European Venture
the next 20 years, according to estimates by the Capital Fund of Funds to overcome the frag-
European Commission (European Commission mented European Venture Capital (VC) market
2016). and the Startup Europe initiative to create an
The Single Market is still too fragmented ecosystem for Entrepreneurs in Europe.
which limits the potential for start-ups and
scale-ups to grow. Start - ups are particularly
concerned about tax and the burden to comply
with 28 different tax regimes.
Across the EU, the regulatory and administra-
tive barriers obviously discourage SMEs from
innovating and scaling up. Instead SMEs may
choose to start global in countries with more
growth potential, larger markets and less bu-
reaucracy which, in turn, leads to job losses in
the EU (European Commission 2016).

16
Barriers to Innovation and Scale
up – Results of our Survey

The Euro-CASE innovation platform conducted In many countries, there is an almost general
a survey in late 2016 among its members to get aversion on risk. Failure is considered not as a
a clearer picture of what barriers to scaling up learning experience, but as a (personal) fault. In
are perceived in the individual Member States turn, risk taking is not recognized in society. A
(see Annex 1). The questionnaire was distrib- reason for this could be seen in the broad lack of
uted to all 14 Member Academies of the Euro- entrepreneurial curricula in schools. Risk tak-
CASE Innovation Platform.3 The majority of the ing and innovativeness is also not recognized in
responses came from universities and research the public sphere as, for example, low bidding
organizations (55%), 35% came from business companies often win rather than high bidding
(large corporate and SMEs almost equally repre- rivals with more innovative proposals in public
sented) and 10% from financial institutions and procurement calls.
the public sector. Inevitably, there is a slight bias However, even though risk aversion is real,
of overreporting science and transfer related there is also a visible change happening in the
challenges. The results were reviewed and vali- EU. Start-ups are becoming more and more com-
dated in an expert workshop in Brussels with mon as economies are becoming more and more
representatives of the European Commission open. This has led to the development of several
and other stakeholders. favorable start-up ecosystems have developed
such as Berlin, Cambridge, Helsinki, Barce-
Main barriers to innovation lona, Paris and several others. However, Euro-
Apart from a lack of finance the main barriers CASE firmly believes that more efforts should be
to innovation across the EU seem to be undertaken to create a more favorable business
environment to harvest the creativity of young
• stiff regulation entrepreneurs across the EU.
• strong aversion to risk
• poor interaction between research and Barriers in commercializing
industry, and excellent research results
• not enough attention to define/imagine Europe is an excellent place for creative and
new business model and new organization excellent research. However, it suffers from
the fact that little of this results in marketable
There are still too many regulations and bureau- products (European Paradox). With a view on
cratic administrative approaches in setting up scaling up this barrier addresses the generation
an innovative company in several countries. Ap- of an innovation (based on publicly funded re-
parently, there is little room for experimentation search activities) and its initial insertion into the
in both the public as well as private sector with market. This is an important barrier especially
new business models, new technologies or more in countries with less developed innovation sys-
flexible approaches to policy. tems and a stronger reliance on public research

17
activities. The survey yielded the following rea- Main factors inhibiting faster scale-up
sons for this situation: According to the survey, the main factors inhib-
iting faster scale-up of SMEs were:
• Publishing is valued a lot higher than business
activities • lack of funding, also in light of the small pool of
• Entrepreneurs and academicians operate in silos venture capitalists in Europe
with hardly any interactions • market limitations (there is no real EU Market)
• Regulatory aspects such as limiting IP regulations, and regional orientation of start-up founders and
stiff employment rules, etc. investors
• lack of managerial and entrepreneurial skills
In many countries, the traditional approach to • not enough ambition
evaluate professors according to their publica- • not enough speed
tion list still prevails. There are certainly huge
differences between the EU Member States in Funding appears to be the major problem, still.
this regard but especially in countries ranking However, the situation is very diverse across
in the lower half of the EU Innovation Score- countries as well as across sectors (see also JRC
board4 transforming inventions into innova- 2016). While it is possible to argue that there is
tions is not well rewarded in a public research always funding for brilliant ideas, there seems
career. Business activities of professors or the to be more a lack of knowledge of information
creation of spin-offs by staff members are hardly about where to obtain the right kind and right
ever recognized, in some cases even prohibited. amount of funding. While seed funding for
This seriously limits the transfer of most current start-ups seems to be widely available (typically
knowledge to the market. Despite the fact that ≤ 2M€), the lack of venture capital becomes
this is a well-known fact and that there are sev- problematic mainly in the second stage of start-
eral valuable ideas5 to counter this situation it is up development (typically 2–20M€). Big tickets
taking a long time to mobilize this potential and are very difficult to obtain.
to put the “third mission” of universities into a Sectorial differences are visible as technology
more positive light. intensive businesses such as IT services, Biotech,
Technology transfer offices (TTOs) do have pharmaceuticals etc. obtain venture capital
capabilities, but their operations could be pro- easier than traditional sectors. This has seri-
fessionalized. There are several answers that ous negative consequences on SMEs operating
suggest that universities are protectively keep- in traditional sectors aiming at scaling up their
ing and only very slowly commercializing the operations and may even have negative effects in
results. This leads to a situation that companies the longer term when considering their need for
are buying old technologies from universities capital in view of restructuring their activities to
which is not favorable neither for the business a more digital economy (industry 4.0, advanced
(as it uses “old” technologies) nor for the uni- manufacturing, etc.).
versity (which could have developed the tech- In contrast to European start-ups, their US
nology further). Public research should thus counterparts have the chance to attract a large
be more market-oriented. In all cases, private- and homogeneous market, compared with the
public Intellectual Property Rights are diffi- very heterogeneous EU market. A real and uni-
cult to negotiate and contracts often contain fied European market could help to “think big”
conditions which are unfavorable for compa- and be a driver for innovation and scaling up.
nies which have to bear an important cost of Unfortunately, many reasons prevent this mar-
product development, from research to market. ket from being a perfect single market: cultural,
Public sector procurement could also be geared administrative, legal, regulatory, behavioral and
more towards cooperative arrangements of re- linguistic gaps. To a large degree, the few peo-
search organizations and business to support ple eager to grow tend to consider in this order:
interaction. (i) the national domestic market and (ii) the US

18
market and (iii) the Chinese market rather than ing for having 1B€ in my pocket tomorrow”).
the European market. Twice as many successful entrepreneurs are
The lack of managerial and entrepreneurial over 50 as under 25 (Harvard Business Review,
skills remains a strong barrier for scaling up in June 27, 2013). Therefore, with regard to over-
Europe. According to the survey, most entrepre- coming the lack of managerial and entrepre-
neurs have a strong technical perspective and neurial skills, it seems important to harness to
only little commercial, marketing, financial or the potential of the 50+ age group. While it’s
management competencies. The lack of skills is probably the younger generation that starts up
also reported in other pertinent studies (Couto bold and tech-driven businesses the working
2014). This barrier goes hand in hand with an experience of the 50+ is still highly valuable.
often reported “lack of ambition”. There are To dwell on the experiences of the 50+ seems
several reports for selling promising start-ups at especially vital for the group of companies that
an early stage to a large national or international already have an innovation and have tested the
company as opposed to continued growth (“I’d market but find it difficult to grow.
rather have 10M€ in my pocket today than aim-

19
20
Deep dives / Case studies

While some of the above-mentioned barriers in different sectors. The deep dives were con-
are generic in nature (i.e. they affect companies ducted by the Polish Academy of Sciences (PAS)
similarly) there are differences across sectors. for Energy, the Royal Spanish Academy for En-
Therefore, the platform conducted case studies gineering (RAIng) for Industrialization, and the
(“deep dives”) that provide the opportunity to UK Royal Academy of Engineering (RAEng) for
highlight the specifics of a certain sector. The Digital. They reflect the generic barriers men-
underlying assumption of the case studies is the tioned above and address the peculiarities of
reasoning that innovation occurs differently each sector.

SUMMARY DEEP DIVE ENERGY

Regulation This creates additional barriers at the local level.
On the energy market, the relevant legislation The European Commission has started work on
and regulations are of particular importance. linking energy systems of individual countries.
This is related to the system operation on sev- The barriers stemming from the existing regula-
eral levels, each of them is strictly regulated. Na- tions are the factors which seriously limit mar-
tional regulations often differ from EU regula- ket access for new products and relatively small
tions. This is the result of different energy policy companies.
objectives at national levels. The energy market
and, in general, the energy sector is very suscep- Risk aversion
tible to political influence, particularly in terms There is a relatively high level of trust in the en-
of access to fuels. ergy sector, i.e. many entrepreneurs are keen to
From the point of view of the market regu- make investments. The energy sector has a large
lation, the issues of opening up the whole EU potential of possible profits in the event of a suc-
internal market and eliminating the so-called cessful investment. Risk aversion seems to be
“energy islands” are the most important. From a more common in a group of operators and end
macroeconomic point of view, such an approach users (end investors) of proposed solutions. This
enables the transmission of large amounts of en- risk is related to operational problems in manag-
ergy through national energy systems and can ing a heavily distributed grid and end investors
also contribute to an enhanced energy security facing difficulties in the inclusion of new energy
of individual countries. There are certain limi- sources in a grid due to problems in managing
tations in each energy system in which energy heavily distributed systems. The problem in
is transmitted between its various energy sub- managing distributed systems is typical for this
systems. type of systems and occurs in each EU country.
Restrictions have to be imposed on subsys- The unwillingness to take risks associated with
tems using new energy sources due to the need the system functioning causes the reluctance
of monitoring their operation so as to maintain of operators to incorporate new small energy
reliability and safety of the entire energy system. sources into this system.

21
Poor interaction between ties is present in the whole (broadly understood)
research and industry R&D sector and for all thematic issues, energy
This depends on many factors and conditions that issues are not an exception at all. Many people
exist in the energy sector. In this sector, because of from scientific communities think that these dif-
the size of the enterprises, many large entities have ferent priorities affect the so-called “European
their own research and development centres (both Paradox”, resulting in a lower number of imple-
in the group of operators and manufacturers of mentations of new technologies in Europe than
energy devices). Additionally, there is a group of in the USA, taking into account the financial re-
smaller producers benefiting from cooperation sources that are involved in the research.
with research entities, often based on support
from national or regional funds. Therefore, it is Factors inhibiting faster scale-up of SMEs
difficult to make clear assessments of the interac- With respect to the issues related to power engi-
tion between science and industry in this field. neering, problems with the growth of SMEs are
present both in the area of generation and sup-
European Paradox ply of electricity. The reasons for this situation
For scientific communities, scientific publications are the same as for other industries (stiff regula-
and scientific effects in general are important, es- tion, market limitations, and managerial skills).
pecially those which have an impact on the sci- An interesting issue is a connection of problems
entific career. On the other hand, publishing the with the growth of SMEs with problems in gain-
results of research is not acceptable for virtually ing access to the market (the cost of this process,
all research results that are to be used for com- e.g. certification costs). Very often, it is a lack of
mercial purposes. This difference in the priori- capital that holds back development.

SUMMARY DEEP DIVE INDUSTRIALIZATION

The digital revolution will enable connectivity, in next decades with consequences on labour
automation, robotization and virtual simulation market composition and employment rates. To
levels with the potential to change the whole pro- adapt industries to this scenario will require a
ductive fabric. The technologies that are contrib- huge public and private effort.
uting to the extensive introduction of digital revo- Developments in connectivity, automation
lution into the productive fabric will foster the and robotics and, in particular, the combined
creation of an integrated space of value creation. advances of the Internet of things (IOT), artificial
Intelligence, virtual reality and cooperatives ro-
An advanced production bots will transform the processes and the indus-
base is a high priority trial value chains. Boosted by the digital revolu-
The main conclusion, for the consideration tion, the cyber domain will continue to enlarge
of policy makers, is that keeping an advanced in comparison with the physical domain. Most
production base able to compete in the global innovation processes and competition will take
markets in 2030 and provide a high level of em- place on in the growing convergence domain.
ployment and quality jobs, must remain a high Job opportunities will also migrate from the
priority as the cornerstone of the welfare state physical domain to the cyber and convergence
and political stability. Without a strong indus- domains. It is worth stressing that jobs in the cy-
trial base the future of Europe will be compro- ber and convergence domains will require new
mised. The anatomy and composition of the different skills and that the software and hard-
production fabric –the Integrated Spaces of Val- ware infrastructure of most of the SMEs operat-
ue Creation- will experience profound changes ing in the physical domain will become obsolete.

22
Towards integrated spaces for value creation attempt to optimise the benefits and mitigate the
Technology is enabling a rich integrated fabric of downturns (European Commission, 2016). Such
companies, public and private knowledge generat- market and system failure approaches are more
ing nodes, all increasingly connected by different useful for dealing with a steady state situation in
nets. The level of connectivity and interdepend- which public policy intervene to correct a stag-
ency among the different actors requires a holistic nant market, but not to dynamically create and
view and new tools of analysis. The development shape new trajectories (Mazzucato, 2016). In or-
of integrated spaces for production and value cre- der to harness the disruptive potential of platform
ation across Europe requires broad collaboration economy for societal transformation and direct
within (between incumbents and new-comers) such developments towards societally beneficial
and across different sectors (digitalisation, etc.) as pathways, these need to become an integral part
well as over the private and public domains (PPPs, of governance rationales.
co-regulation, etc.). Much of such reorganisation The policies struggle especially with platform
can be seen around digital platforms. ecosystems6 that share common schemata be-
tween stakeholders and entail emerging properties
Focus on transformation: and resilience. They require policy approaches that
embrace creative destruction also align with, and adapt to, complexity rather
Despite the transformative potential of platform than reduce it because in complex systems un-
ecosystems, current policies addressing platforms wanted impacts of policy measures tend to be the
within the market and system failure paradigms rule rather than exception (see, e.g. Bauer 2014).

SUMMARY DEEP DIVE DIGITAL

The impact of digital technologies across all in- workforce required to convert data analytics
dustry is so pervasive and far-reaching that it is theory into genuine changes to business practice
imperfect to identify digital as a single sector, and performance. Furthermore, in both indus-
nevertheless the EU cannot afford not to develop try and research there is a paucity of knowledge
its leadership credentials in this area. of the basic techniques needed for good data
In January 2017 the UK government launched governance including data definition, data col-
a consultation to inform the development of a UK lection, curation and linkage as well as data pro-
Industrial Strategy. The consultation specifically tection and cyber-security issues. The required
identifies the UK’s scale-up challenge, acknowl- combination of skills is challenging, drawing on
edging that ‘Scaling up is not just a question of engineering, computer science, mathematics and
capital. It is also about having the leadership and statistics as well as specific sector knowledge.
management skills to make the right decisions Tackling this will require changes to be made
for a business.’ As part of the Royal Academy of to undergraduate and postgraduate education as
Engineering’s response to the consultation, “En- well as continuous professional development to
gineering an economy that works for all”, which reflect the new demands for multi-skilled indi-
it led on behalf of the 38 professional engineer- viduals and teams with data science skills.
ing organisations in the UK, an online survey A clear message from the engineering commu-
was completed by nearly 1,300 engineers. The nity to our consultation is that, for engineering
survey included a question about scale-up, and specifically, increasing the digital skills of the
the answers relating to the digital sector form workforce is essential. The ability of UK engi-
the basis of the information below neers to be confident and competent to a high
Of particular importance to scaling digital level in digital skills will be central to their com-
companies, most sectors lack the multi-skilled petitiveness in high-value manufacturing and

23
engineering across a range of sectors. In fact, the STEM subjects, including digital skills, is the ad-
digital economy is so pervasive that digital skills equate supply of specialist teachers in those sub-
are absolutely vital to the workforce, and the jects. In the UK, there are currently shortages of
report argues for digital skills to be added to the specialist teachers in all the key disciplines that
definition of basic skills. However, such skills lead to engineering skills. Of particular con-
training needs to start in schools. An essential cern in English secondary schools is that 44%
requirement of ensuring that young people have of computer science lessons are taught by non-
the basic skills and foundational knowledge in specialists.

ANALYSIS OF DEEP DIVES

Participants at the Innovation Platform work- ples discussed were access to finance as compa-
shop in London focussed on the barriers to nies’ progress along the investment spectrum
scale-up of digital SME’s, and came to the con- and limited access to skills training and to expe-
clusion that many of the barriers identified for rienced executives, particularly those with high
scaling up SME’s are common across the energy, quality leadership and management skills.
industrial and digital sectors. Particular exam- The results can be summarized as follows:

Generic barrier Energy Industrial Digital
Barriers to innovation
Regulation + = +
Risk aversion = + +
Poor interaction between research and industry = - -
European Paradox
Publishing > business =+ =+ -
Different worlds, silos = - -
“+” denotes that Regulatory aspects (IP regulations, = - =
generic barrier
appears to be more Factors inhibiting faster scale-up of SMEs
significant in this Lack of venture capital - = -
sector
Market limitations - + -
“=” denotes that
generic barrier ap- Lack Managerial and entrepreneurial skills - + +
pears to be equally
significant in this There seem to be several similarities between the industrial and digital sector which points out to the growing interde-
sector pendences of these two sectors. In contrast, the energy sector, being perceived as sector dominated by large companies,
seem to face fewer but apparently more significant barriers especially with regard to regulation. Interestingly companies
“-“ denotes that in the digital sector don’t seem to be limited to “traditional” barriers such as the fact that publishing activities are more
generic barrier valued than business activities in public research organizations. This points to the “can do” attitude of researchers and di-
appears to be less gital businesses. The energy and industry sectors still feel these barriers related to traditional forms of measuring research
significant in this output. According to the assessment industry is especially hampered by market limitations in the EU. Companies in the
sector energy and digital sectors are less hampered by these as they find it easier to expand their activities across borders.

24
Recommendations

It remains a challenge for European policy mak- to mature. Regulation needs to be used more
ers how to adapt European SMEs (which account as a tool for growth. Business needs a unified
for more than 90% of the European economic and well-functioning internal market to scale
activity) to the ongoing technological revolu- up their operations in Europe. Therefore, open
tion. This revolution is extremely challenging borders for economic activities are required and
for the countless mini and micro SMEs across a removal of bureaucratic and legal obstacles to
Europe. Their survivability largely depends on expand in all Europe should be encouraged.
their ability to adapt and on intelligent public
support to increase their size and scale up the • The European Commission should rigorously
structure and composition of the European pro- follow its proposal for Smart Regulation and
ductive fabric. consider any additional proposals if they are
Competitive advantages in future markets rest smart and viably support European SMEs (SMEs
on embracing new emerging technologies that tests). The precautionary principle should be
will change the productive landscape which re- accompanied by the innovation principle. New
quires a holistic approach across the whole of public policies should be smart for growth.
society. This requires not only an upgrading of
managerial skills but also a reconsideration of • Public actors on all levels should provide more
the education system to make the most effective accurate information to SMEs where to obtain
use of European research and development in- the right kind of funding. The conveyance of
stitutions with the aim of commercialising high venture capital needs to be done by professional
complex and value added products and services. institutions. The existing European repositories
In the light of the findings above it is obvi- should be complemented by an easy to use
ous that there are no simplistic solutions for tool for finance and data analysis on scale-
creating a more favorable environment for in- ups in the EU. An online platform that allows
novative European SMEs to scale up. Instead a sharing information on “what works” should be
policy mix of European, national and regional considered. It is important to recall that private
policies is required to create an ecosystem that money is key. The European Union should
is conducive to experimentation, trial and error support Member States to alter their fiscal
and innovation. In that spirit, the Euro-CASE In- regulations in order to encourage angel investors
novation platform puts forward the following in start-ups and scale-ups.
recommendations.
• Innovation is not a goal per se, scaling up
To the European Commission: business by innovation is the issue. EU and
European countries might speak more of scaling
• The European Commission should continue up than of innovation. All the fields of the
its efforts to create a true European Single business are important: sales, marketing, finance,
Market. While new ICT technologies may etc. Europe must facilitate the development
yield national boundaries obsolete, there is a of big companies in “soft business”, or based
growing need for allowing these technologies on non-technological innovations. Also, more

25
general support and business advice in scaling up States. With regard to scaling up, skills are
and implementing novel technologies should be massively needed in the areas of management,
promoted following e.g. see the Manufacturing entrepreneurship and leadership. Member
extension partnership (MEP) in the US. States should be more open in allowing school
curricula to include these topics. Despite
• Consider supporting cross-country marketing important changes over the last couple of years,
initiatives to increase market knowledge and the education system should reflect current
ease entry within Europe and expanding the and future needs of a dynamically changing
Enterprise Europe Network. Credit support / environment, develop an entrepreneurial
cheap insurance could assist when companies mind at early stage at school, and support the
are concerned about expanding international idea that innovation and business creation are
sales. essential for the future.

To the EU member States • Public and private procurement should be
geared towards innovative scale-ups. In addition
• Across Europe there is a growing need for more to efforts supporting public procurement,
room for experimentation (“sandboxing”). corporate engagement in buying from innovative
This concerns policies as well as business ideas. SMEs should be encouraged to support them
The Commission as well as the Member States scaling up their operations. In order to spur
and regions should create spaces where policy public procurement, governments should think
makers and entrepreneurs in conjunction can of establishing a department (or departments)
try out new and innovative solutions. There are that advises others on the quality of innovative
plenty of ideas that just need room to flourish. A solutions. This might reduce the risks involved in
culture of innovation and a bold pro-innovation public (and private) procurement of innovation
stance in public administrations is required. solutions as it allows for risk sharing. A similar
thought is to consider an insurance for large
• A fresh re-thinking of a European Small companies using new innovations by SMEs.
Business Act (ESBA) could be very valuable.
This could include risk taking and risk sharing To the European Academies
components. Together with the modern
approaches of innovation procurement by • Support an entrepreneurial culture: Successful
public administrations, an ESBA could turn into a entrepreneurs might have failed before. Their
powerful engine of SME growth. expertise in starting and scaling a business is
highly valuable regardless and they need to
• Favorable ecosystems are more easily created be encouraged and incentivized to re-invest
on a regional level because it is easier to (“second chance” incentives). Also, twice as
bring the relevant stakeholders together. For many successful entrepreneurs are over 50 as
ecosystem development it is key to first join under 25. It seems important to harness to the
the enthusiastic stakeholders. The voluntary potential of the 50+ age group in light of the lack
engagement of enthusiasts and their subsequent of managerial and entrepreneurial skills.
commitment to continue shaping the ecosystem
can then be complemented by a more official • Limited financing opportunities are only one
role of governments in providing infrastructure, side of the story. Equally important is the limited
incentives and smart regulations. mentoring and coaching of SMEs who are not
necessarily aware of the whole spectrum of
• Increase the talent and skill pool across support instruments. This primarily concerns
the EU. Despite efforts from the European SMEs in traditional industries. Academies could
Commission in crafting a “Coalition for Skills” act as facilitators and match makers and also
the issue remains largely in hands of the Member advise government about overcoming the

26
challenges for growing companies. complemented by some investment.

• Fellows could engage in local discussion The Euro-CASE Innovation Platform believes
and enrich the local discussion with EU that the issue is not just about creating jobs, but
best practices, raise general awareness and about creating better jobs.
promote positive effects of regulation. National
Academies should also better understand local
situations, feed info into Euro-CASE and enrich
the local discussion with EU best practices. They
could also promote a “growth test” of policies
and promote positive effects of regulation.
Euro-CASE could do a quality check of received
information and disseminate best practices to
Academies.

• Promote the notion of “smart” money,
which means that both Corporates as well as
individuals within the Academies should engage
actively in the start-up/scale-up arena, by
providing personal coaching, access to networks,

27
28
A new role for the
European Academies?

In the light of the current discussion on a more young, dynamic SMEs. The following table pro-
dynamic Europe that values entrepreneurship and vides preliminary suggestions for a new role of
encourages scaling-up of innovative SMEs, Euro- engineering academies in Europe.
CASE with its expertise in innovation and its Fel-
lows, coming from business and academia alike,
could drive European topics on the national level
more than in the past. Euro-CASE can not only pro- RAEng Enterprise Hub
vide science-based policy advice but could also act
as a forum for exchange of innovative policy ideas. The Royal Academy of Engineering’s Enterprise
Member Academies could gain insights in other Hub was established in 2013 and forms part of the
organizational models in EU member states and ac- Academy’s commitment to stimulate excellence and
quire additional knowledge (“learning from each promote creativity and innovation in engineering.
other”). This can be used to further stimulate the The Academy offers a number of grants aimed at
national dialogue on innovation and scaling up. identifying and supporting the next generation of
Engineering academies across Europe perform high potential entrepreneurs and prizes celebrating
different functions in their respective countries. success in innovation and entrepreneurship (e.g.
They are seen as providers of excellent science- SME Leaders programme, Launchpad Competition).
based policy advice to their respective governments The awards include provision of money-can’t-buy
and often perform several other functions in the bespoke support and one-to-one mentoring from its
national innovation system. There are, however, Fellowship, which comprises many of the country’s
excellent examples of what engineering academies most successful engineers from across academia and
can be in addition to this: forums for practical industry, including prominent entrepreneurs and
information for SMEs, match-makers in bringing business leaders. To date, over 100 Fellows have
young scientists and experienced entrepreneurs to- pledged their time to mentor Hub Members.
gether, act as source for information for ambitious The Enterprise Hub is supported by a network of
start-ups that look for information how to obtain partner organisations. Each partner brings a unique
funding to scale their operations. The Enterprise contribution, from financial support to time and
Hub of the Royal Academy of Engineering or expertise, benefiting from the extended network
YES!Delft (An initiative that helps entrepreneurs to and event opportunities that the Academy provides
build leading technology companies: https://www. in turn.
yesdelft.com ) are such examples.
The Innovation Platform encourages the Euro- The Royal Academy of Engineering opened the
CASE Member Academies to be more engaged in Taylor Centre – a physical home for the Enterprise
local activities and in supporting the local eco- Hub with meeting and networking facilities for its
systems. While it is certain that not all academies Members – in February 2017.
can follow this encouragement due to their cur- For more information see:
rent statutes, the platform nevertheless considers https://enterprisehub.raeng.org.uk/
this an important step in creating ecosystems for

29
Generic barriers What can Fellows do? What can Engineering Academies do? What can Euro-CASE do?

Main barriers to innovation

Stiff regulations Engage in local discussion and enrich the Engage in local discussion, understand local Quality check of received information
local discussion with EU best practices situation, feed info into Euro-CASE and enrich and disseminate best practices to
Raise general awareness the local discussion with EU best practices Academies
Promote positive effects of regulation Apply “growth test” of policies (growth institute) Act as interface between Academies
Raise general awareness and European Commission
Promote positive effects of regulation

Risk Aversion Active role of Fellows as mentors (smart Stress the role academies play in promoting Promote examples of entrepreneurs
money), so more people consider the entrepreneurship, encourage fellows to be active that have failed before leading
entrepreneurial track. as mentors and facilitate infrastructure: successful businesses (on website, in a
Fellows can lead by example and “switch RAEng: enterprise hub series of European conferences, etc.)
sides” Contribute to making young
Entrepreneurs teaching at schools successful start-up entrepreneurs role
models

Poor interaction Lead by example Promote measuring impact not only by articles Explicitly underline the notion
between research Fellows from industry could share their but also in terms of business activities of high quality research activities
and industry business experiences within the Academies Support creating more incentives for researchers in companies in the provision of
to become involved in business scientific advice to policy

European Paradox

Focus on publishing Join with other fellows to call for more Join examples from local eco-systems Share national examples of incentives
liberty to conduct business activities in local Call for more entrepreneurial liberty in Higher that value business activities as well as
ecosystems Education institutions publishing
Recommend new incentives that value business
activities as well as publishing

Regulatory aspects Help professionalise university technology Cooperate with national governments and Sharing best practices from EU
(IP regulations, transfer offices universities to identify regulations that could be countries on how to get academic
employment...) eased research results to the market faster

Main factors inhibiting faster scale-up of SMEs

Access to or lack of Fellows can provide guidance for young Academies could act as match maker Benchmarking study of European
funding entrepreneurs financing instruments
Sharing best practices

Market limitations Promote common market for new Same as EU level
(there is no real EU technologies,
Market) Support using regulation as a smart tool
(e.g. 3G standard)

Lack of managerial Identify disruptive technologies & feedback Promote maps/overviews of available and Bring the topic of “Reskilling” of over
and entrepreneurial into the education system, for example necessary skills and competencies 50s to the attention of policy makers
skills Blockchain Bring the topic of “Reskilling” of over 50s to the
Promote sharing - Fellows (or academies) attention of policy makers
providing space and training

Other topics

Leadership/ Active and practical engagement of fellows Mapping who is doing what; academies can Sharing best practices
mentorship provide some international support

Infrastructure Engage in local ecosystems, spur discussion Provide space as Academy =
and use facilities as spaces for bringing enterprise hub @ RAEng
enthusiastic people together Embrace an active role in local ecosystems

Technology Understanding life cycle (when technologies Share failures and promote learning from them Share failures and promote learning
become obsolete), transfer of government from them
to private sector.
References

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Coutu, S. (2014). The scale-up report on UK Mason, C. and Brown, R. (2014)
economic growth, London. Available at: http:// Entrepreneurial Ecosystems and Growth
www.scaleupreport.org Oriented Entrepreneurship.

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Additional literature

Bravo-Biosca, A. (2011). A look at business Kollmann, T., Stöckmann, C., Linstaedt, J.
growth and contraction in Europe. Nesta and Kensbock, J. (2015). European Startup
Working Paper 11/02. Available at: www. Monitor 2015. http://europeanstartupmonitor.
nesta.org.uk/wp11-02 com/fileadmin/presse/download/esm_2015.pdf

businesseurope, the European Risk Forum Lisbon Council, Nesta and Open Evidence,
and the European Round Table of Industrial- (2016). A Manifesto for Change and Empow-
ists. (2015). Better Framework for Innova- erment in the Digital Age. Available at: http://
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Principle. Available at: http://www.ert.eu/sites/ rope_Brochure.pdf
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32
Footnotes

1. Euro-CASE (2015): Euro-CASE policy paper 6. This holds true also with other types of
on European Innovation Policy, Paris. ecosystems, such as those of innovation
(Russell et al., 2011) and entrepreneurship
2. Source: https://www.nist.gov/sites/default/ (Mason and Brown, 2014).
files/documents/mep/MEP-PARTNERING-
IMPACTS-2013-2.pdf

3. The individual members were responsible
for distributing the questionnaire among
their respective networks. Academy fellows
and other experts were asked to provide
their assessment on 12 questions all dealing
with the generic barriers to innovation and
scale up. In total the survey was answered
by more than 120 individuals with a good
spread across Europe. Most answers came
from the Czech Republic, Finland, France,
the Netherlands, Slovenia and Spain,
respectively. The survey was conducted
electronically and was open for 4 weeks.

4. http://ec.europa.eu/growth/industry/inno-
vation/facts-figures/scoreboards_en

5. Euro-CASE suggested that governments
should promote a cultural norm within
university technology transfer offices for
a 2% ‘golden share’, whereby universities
defer immediate payment for the intellec-
tual property invested in spin-out compa-
nies, in favour of 2% of proceeds when the
company owner exits. Also, governments
should encourage the adoption of ‘Easy IP’
schemes, where the university can grant to
spin-offs the free use of a new technology
developed within the university.

33
Annex
ANNEX 1: QUESTION IN THE EURO-CASE QUESTIONNAIRE

1. The lack of funding is only one among many a On the European level
barriers to innovation. Based on your expert b On the national level
knowledge, what are the top three barriers to c On the regional level
innovation in your country apart from a lack of
finance? 8. How would you assess the importance of the
following EU approaches? Are these viable
2. Based on your expertise, what are the three instruments to support innovation and scaling-
main reasons for the fact that only little of the up? If not, how do these instruments need to
excellent research produced is translated into be modified?
marketable products (European Paradox)?
a SME instrument (https://ec.europa.eu/
3. More start-ups from academia (universities or programmes/horizon2020/en/h2020-section/
public research organizations) could become sme-instrument)
innovative start-ups due to their science- b FTI pilot (https://ec.europa.eu/programmes/
based business models. What are the main horizon2020/en/h2020-section/fast-track-
barriers (max. 3) in your ecosystem that inhibit innovation-pilot)
the formation of more academic start-ups? c Prizes (https://ec.europa.eu/research/
horizonprize/index.cfm)
4. There are several examples outside the EU,
especially in Silicon Valley, where innovative 9. From your perspective, is your country doing
start-ups grew very fast after founding enough in terms of innovation-oriented
(“gazelles”, “unicorns” (start-up company procurement? If not, what are the barriers to
valued at over $1 billion)). What are the main implement innovation-oriented procurement?
factors inhibiting faster scale-up of SMEs in
your country? 10. The EU disposes of a wide array of funding
mechanisms. What should the EU add to
5. How would you rate the availability of venture its portfolio to accelerate innovation across
capital in your country in general on a scale Europe?
of 1 (very low availability) to 10 (very high
availability)? 11. In view of a growing importance of digitizing
European industries (Industry 4.0, Advanced
6. Based on your personal opinion, how would Manufacturing, etc.) what role should national
you rate the willingness of companies to invest governments play?
in scaling up production on a scale 1 (very low
willingness) to 10 (very high willingness)? 12. Room for ideas outside the box. What should
European and/or nation al policy makers do to
7. What would you suggest to be appropriate support the scaling-up of innovative SMEs?
policies and/or instruments to support
innovation and scaling-up?

34
ANNEX 2: MEMBERS OF THE EURO-CASE INNOVATION PLATFORM

Surname Name Position Academy Country
Breidne Magnus Vice President Royal Swedish Academy of Engineering Sweden
Sciences
Brevard Christian Fellow National Academy of Technologies of France
France
Carlstedt Johan Project Director Royal Swedish Academy of Engineering Sweden
Innovation for Growth Sciences
Caristan Yves General Secretary Euro-CASE/National Academy of France
Technologies of France
De Koning Kees Fellow Netherlands Academy of Technology and Netherlands
Innovation
Frackowiak Elzbieta Fellow Polish Academy of Sciences Poland
Hämäläi- Jari Fellow Swedish Technical Science Academy in Finland
nen Finland
Haugland Anders Fellow Norwegian Academy of Technological Norway
Sciences
Hügli Rolf General Secretary Swiss Academy of Engineering Sciences Switzerland
Janosec Jiri Fellow Engineering Academy of the Czech Czech Republic
Republic
Lackowski Marcin Fellow Polish Academy of Sciences Poland
Nilsson Björn O. President Royal Swedish Academy of Engineering Sweden
Sciences
Pleško Mark Fellow Slovenian Academy of Engineering Slovenia
Ritchie Ian Fellow Royal Academy of Engineering UK
Sanjurjo Jul José Manuel Fellow Royal Academy of Engineering of Spain Spain
Sanz Germain Fellow National Academy of Technologies of France
France
Stehnken Thomas Scientific Officer National Academy of Science and Germany
(Platform Coordinator) Engineering
van Ee Bertrand President Netherlands Academy of Technology and Netherlands
(Platform Chair) Innovation

35
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