How to better streamline and use

synergies amongst EU
instruments supporting
innovation

May 2009
The present report was prepared by
Alasdair Reid, Technopolis Group

Acknowledgements:
Comments on a draft of this report by Bart Kamp of Innova Europe are gratefully
acknowledged.

Disclaimer:
The views expressed in this report are those of the authors and do not necessarily reflect the
opinion or position of the European Commission and in no way commit the institution.
Table of Contents

Executive Summary .................................................................................................................. i

1 Introduction.......................................................................................................................1

2 Conceptualising innovation support..................................................................................3

3 Mapping of Community initiatives supporting innovation..................................................7

4 The case for mutual policy learning and networking ......................................................15

5 Improving the effectiveness of innovation support at EU level .......................................21

6 Conclusions ....................................................................................................................26
Executive Summary
This report provides a synthesis of and commentary on the presentations given and
discussions held during a PRO INNO Europe® INNO-Learning Platform workshop held in
Glasgow, Scotland in March 2009. The workshop aimed to engage experts from all levels
(European, national and regional) in a debate on how to better streamline the operations of
Community (European level) instruments of innovation support. The workshop built on a
series of reports and initiatives undertaken from 2007 on the topic of synergies between the
three main Community instruments (the Competitiveness and Innovation Programme or CIP,
the Structural Funds or SF and the Seventh Research Framework Programme or FP7) and
provided an opportunity to present ongoing work on the mapping of such instruments in
favour of innovation and innovation in services, as well as a discussion on tools developed to
test whether proposed Community instruments are in line with the subsidiarity principle and
are likely to lead to an impact (effectiveness test).Finally, the workshop was a
complementary action to a consultation launched by the Directorate-General for Enterprise
and Industry (DG ENTR) on making public support for innovation more effective.

As outlined in the first of three sessions of the workshop, innovation support is an evolving
and increasingly broad-ranging concept. If innovation policy is defined broadly as a public
action to support innovation processes and capacities in enterprises, then innovation support
instruments can encapsulate many different types of intervention, from more classic direct
financial support to the provision of various types of services. It can be targeted (to a cluster,
sector, etc.) or generic, and can be aimed either at single actors or entire systems. A
stronger emphasis on demand side instruments aimed at speeding up the diffusion of
innovation and the demand for new products and services was recommended as a
particularly important, but complex issue Equally, innovation support measures need to take
account of the diversity of innovation systems and challenges across the European Union
(EU-27) and, hence, when designing European level instruments, the need for some form of
'variable geometry' in implementation allowing stakeholders to adapt support to their specific
circumstances is required.

In this context, the mapping of existing Community innovation instruments, discussed during
the second session, underlined that the three main instruments (CIP, FP7 and the SF), while
all contributing to the Lisbon Agenda, operate on different levels (the SF being implemented
regionally/nationally) and through diverse mechanisms (operational programmes at regional
level to specific pilot calls at EU level, etc.). Hence, while a 'demand-driven' view of potential
synergies between the instruments can be formulated, in practice, much depends on the
strategies of the regional and national stakeholders bidding in EU level programmes (CIP,
FP7) and the way they use such funds to complement regional and national innovation
policies (including those co-financed by the SF). Since 2007, the opportunities for synergies
have increased and the Commission services have taken steps (e.g. INTERREG IVC Fast-
Track projects) to jointly manage interregional and other initiatives funded at EU level.

A mapping of EU instruments in the field of service innovation suggests that there is a

complex web of programmes at EU level that can potentially be of interest to service sector
firms and those involved more broadly in service innovation. A significant element of EU
support for the service sector can be found in information and communication technology or
ICT-related policies. However, direct support for service innovation at EU level remains
relatively novel and limited in scale and there remains a need for improved coordination and
common approaches to key concepts in this emerging field.

Mutual policy learning and networking of national and regional stakeholders is one area
where Community-level instruments have given increased emphasis in recent years. A

i
mapping of Community-funded mutual learning projects (from CIP, FP7 and INTERREG
initiatives, as well as Eureka) in the field of innovation support, identified 83 projects of
varying scale (geographically and financially) in a number of themes (clusters, ICT, eco-
innovation, services) relevant to the Europe INNOVA initiative. While the immediate risk of
duplication appears limited and some thematic overlap possibly beneficial as it allows testing
of different approaches, the need for improved coordination and transparency of information
on what was being funded was called for.

In the third session of the workshop, two new tools developed by DG ENTR with the support
of the PRO INNO Europe® INNO-Learning Platform were outlined and their practical
application to the case of the European Cluster Observatory was assessed. The subsidiarity
and effectiveness tests can be used to assess the adequacy of EU-level policy intervention
at both an ex ante (policy-design) and ongoing / ex post stage (to assist in defining an exit
strategy). The 'common denominators' from the pilot tests are that the legitimacy and
subsidiarity principles are generally respected so that projects are correctly supported at EU
level. However, on the effectiveness tests, the results are more mixed. Positive elements
include the following: most projects succeed in creating critical mass and 'agglomeration'
advantages for stakeholders via a European approach; the projects contribute to
transnational learning and exchange; and have a large outreach for diffusion of information
and counselling.

In conclusion, optimising policy design and delivery of European level innovation support
instruments is a process that requires:
(a) a common and shared conceptual understanding of the scope of the policy field
and types of instruments concerned by innovation support;
(b) appropriate tools and methods available to ensure efficient management of the
entire policy cycle (from priority setting through project selection to evaluation);
(c) open and pro-active (pre-emptive) communication between the stakeholders
concerned (both vertically between EU-national-regional/local levels and horizontally
between different directorates-general, ministries, etc.) to avoid overlaps, gaps and
duplication of effort.

Given the cross-cutting and multi-level nature of innovation support, these requirements are
all the more important since initiatives influencing innovation performance of enterprises may
be launched by various departments or ministries. The workshop enabled an exchange of
views on these three topics, as well as a presentation of tools developed with the specific
purpose of mapping 'what exists' or improving priority setting and project development for
future EU-level initiatives. The workshop was more focused on possible options for improving
future innovation support instruments in the EU than attempting to embark on an 'appraisal'
of the existing instruments, or a critique of past strategic choices on the existing programmes
and schemes. The latter debate would require a much more wide-ranging mapping and 'ex-
post' evaluation exercise to be carried out.

In conclusion, the process of designing European-level innovation support instruments needs

to begin from an identification of those areas where the 'market' or 'system' failure is most
effectively tackled by a Community-level action (e.g. creating a European-level venture
capital market) and assists in 'pushing the boundaries' of what is done nationally and
regionally (a 'policy-laboratory' function through mutual learning, etc.).

ii
1 Introduction

This report is based on the presentations and discussions held at a workshop organised by the
Directorate-General for Enterprise and Industry (Innovation Policy, Support for innovation unit,
hereafter DG ENTR) in Glasgow, Scotland on 3 and 4 March 2009. The workshop was hosted by
Scottish Enterprise (SE) and brought together experts from a number of EU-27 countries and
regions, and officials from the European Commission.
Innovation support, a policy instrument designed to support the process of innovation ( 1), can be
provided at regional, national and European levels in line with the EU Treaty definition of
innovation as a shared competence. Across the EU-27 Member States, the INNO-Policy
TrendChart currently identifies more than 820 national ( 2) innovation support measures, including
measures supporting technology transfer, incubation, access to finance, etc. Equally, at European
level, there are a number of major instruments such as the Competitiveness and Innovation
Programme (CIP) and the Seventh Research Framework Programme (FP7) providing direct
funding to enterprises, innovation intermediaries and academic/not-for-profit/public research
performers on a competitive basis. Finally, the EU Structural Funds (SF) provide Community co-
funding for national or regional measures through National Strategic Reference Frameworks and
operational programmes.
As Christophe Guichard of DG ENTR of the European Commission pointed out in his introductory
words, there is a potential risk of overlaps between support mechanisms, duplication and waste of
taxpayers' resources. Eliminating overlaps between different measures and achieving better
complementarities between various EU instruments as well as between EU, national and regional
initiatives are necessary steps towards more effective innovation support in Europe. However,
working towards coherence between major EU initiatives is a complex task, as it requires a
coordinated approach involving different Commission services as well as national and regional
authorities.

Scottish Enterprise: building innovative companies with a portfolio of innovation support

SE is an agency of the Scottish Government with a mission to support economic development in

lowland Scotland. It has an annual expenditure of around GBP 300 million (approximately EUR 353
million) and around 1 000 staff. It is responsible for enterprise support, innovation and inward
investment. SE has recently developed a 'new focus on innovation' leading to a widening of its
campaign on business innovation (away from R&D and 'high-tech') and a consolidation of its
successful research commercialisation activities to introduce a stronger 'line of sight' to market
exploitation. There is increasing emphasis on 'company building' (increasing the scale and magnitude
of existing Scottish firms) and less emphasis on physical infrastructure than in the past.

SE actively works to optimise the inflow of funds from European level (SF programmes, CIP, FP7) in
support of its own innovation instruments and those of other Scottish agencies. As an example, the
Enterprise Europe Network (EEN, co-financed by the CIP) is fully integrated in the business support
service activities of SE, offering seamless service provision to Scottish companies seeking partners
for business or innovation projects in other EU Member States.

1
See the forthcoming (2009) Commission Staff Working Paper on 'Making public support for innovation in
the EU more effective for a discussion of the types of innovation support'.
2
The TrendChart database currently includes only national measures; however, for some Federal countries,
notably Belgium, the database includes also regional measures. Moreover, in the Member States covered
by the Convergence Objective of the EU SF, the relevant main national operational programmes (operating
in all regions) are fully covered.

1
In this context, the overall objective of the workshop was to engage the invited experts in a
discussion with the Commission's services on how to better streamline the operations of
Community innovation instruments to avoid overlaps and to optimise synergies between them.
This issue was first examined in 2007 by a report to the European Parliament's Committee on
Industry, Research and Energy (ITRE) ( 3) and a report by the Scientific and Technical Research Committee
of the European Union (CREST) ( 4), and was further explored in a 2008 study of the INNO-Learning
Platform ( 5). Further to these initial reports, the Commission services developed a Practical Guide
to EU funding opportunities for research and innovation.
The working hypothesis for the discussions was that 'an increased strategic coordination in the
design of support programmes would generate more synergy effects'. In addition, it was
suggested that the policy makers responsible for programming at different levels should
acknowledge that the behaviour of 'clients' of the initiatives is decisive for synergetic use of the
policy measures. Therefore, there is a need to take account of the practical experience of different
groups of users with respect to combining different sources of funding. Such analysis should
distinguish between situations where combining public funds from different sources (funding
organisations and levels of government) may create demonstrable value added, as well as the
cases where a multiplication of public funding sources may lead to grant dependency. At the heart
of policy design for innovation support should be the aim to develop better delivery mechanisms
fitting the needs of companies.

The workshop was a complementary action to the public consultation ( 6) launched by the DG
ENTR in the first quarter of 2009 on how to improve public innovation support instruments with the
aim of better designing future EU innovation support actions. The workshop was organised around
three specific topics, as explained below.
(i) Beginning from a definition of the concept of 'innovation support', a mapping of the various
Community initiatives considered as 'innovation support' was debated.
(ii) Secondly, the potential risk of overlaps between the Community initiatives and options to
reinforce synergies were explored, notably in the fields of policy learning and networking.
(iii) Thirdly, the results of a pilot application of 'subsidiarity and effectiveness' tests, which
amongst other objectives aim to avoid redundancy when designing future EU innovation
support actions, were presented and discussed.

The structure of this report mirrors the set-up of the workshop, presenting for each topic:
(a) the key issues or questions for each topic,
(b) the main findings of each session, and
(c) the relevant policy conclusions and options identified.

The report is based essentially on the background materials and presentations made at the
workshop; however, use is made of other relevant studies or literature where applicable.

3
Reid A. et al. (2007), Synergies between the EU 7th Research Framework Programme, the
Competitiveness and Innovation Framework Programme and the Structural Funds, report to the European
Parliament’s ITRE committee.
4
CREST Guidelines: Coordinating the research Framework Programme and the Structural Funds to support
Research and Development (May 2007).
5
See Reid A. (2008), PRO-INNO Learning Platform Mini-study n°5: complementarities between EU
instruments online.
6
See http://ec.europa.eu/enterprise/newsroom/cf/itemlongdetail.cfm?item_id=2490&lang=en online.

2
2 Conceptualising innovation support
The first session of the workshop considered the scope and forms of innovation support. In the
opening presentation, Jakob Edler (Manchester Institute of Innovation Research, University of
Manchester) set out a series of questions based on a recent PRO INNO Europe® mini-study ( 7).
He considered in particular the scope of innovation policy and the types of support measures, and
then presented a view on three emerging challenges for the design and implementation of
innovation support measures.

Professor Edler argued that, in a simplified context, innovation policy can be viewed from at least
two opposing rationales: a limited scope based on 'neo-classical' economics and market failure
arguments where 'innovation policy is all about framework conditions'; or a more up-to-date and
widely accepted approach where system failures impede an optimal functioning of national,
regional or sectoral 'innovation systems'. System failures can include inadequate capabilities
(financial, human resource, technological, etc.) and weak incentives to overcome them can lead to
insufficient interactions (learning and cooperation) between 'actors' (enterprises, financial sector,
public sector, researchers, etc.). The latter view leads to a 'multiplication of policy functions and a
different understanding of the limits of innovation policy'.

Professor Edler suggested that a general definition of innovation policy is 'all deliberate and
systematic action by politicians, public policy makers and administrators':
(a) to support and improve the generation, market introduction / usage and diffusion of novel
processes, products and services;
(b) to support the innovation systems' activities (and cure system/market failures);
(c) with the ultimate aim to improve economic competitiveness of firms and economic
performance.
When considering the scope and boundaries of innovation policy, there is a need to take account
of 'overlaps' with Science (Research) Policy (SP), with the latter focused on scientific knowledge
production, whether selective (targeted) or non-targeted. Professor Edler argued that 'Technology
Policy' (TP) should be considered as part innovation policy, with TP focused on specific (sectoral)
technological knowledge and the commercialisation and diffusion of such technologies.
The breadth and complexity of innovation policy and its relationship with SP and TP can be
considered by the forms of support to 'activities' of innovation systems (Edquist, 2005):
(a) new knowledge (SP; however, some new knowledge is generated without formal research
in interaction with knowledge producers and is closer to IP/TP);
(b) competence building in the labour force to be used in research and development (R&D)
and innovation (partly IP);
(c) formation of product markets (indirectly, IP/TP, regulations, standards)
(d) articulation of quality requirements (indirectly, regulations, standards);
(e) creating/changing organisations to develop new opportunities (e.g. entrepreneurship), (IP);
(f) networking (across the innovation system and with 'external' actors), (IP, but blurred
boundaries for SP);
(g) creating/changing institutions (laws, general regulations etc.), (IP, but only if geared
towards innovation or if innovation will be affected);
(h) incubating (IP; sometimes SP);
(i) financing of innovation processes (IP, but borderline to SP for R&D);
(j) consultancy services of relevance to innovation (technology transfer, commercial
information, legal service, etc.), (IP).

7
See Mini-study n°1: Mapping of Innovation Support Measures online.

3
Turning to innovation support measures, Edler noted that there are various definitions of what
constitutes an innovation support measure. However, a well-enshrined definition used by the
INNO-Policy TrendChart initiative for close to a decade is:
(a) financial, human, institutional processes and information provision;
(b) using public funds benefiting enterprises.

Professor Edler considered that this definition focuses on the 'supply side' and financial flows to
firms. He noted that a recent variant (Reid & Peter, 2008) is broader in terms of beneficiaries
(linking organisations) and more explicit in terms of linkage measures and governance: 'public
action to support innovation processes and capacities in and between enterprises'. As Professor
Edler argued, a definition that takes into account wider framework conditions acknowledges that
these 'might be more important than just another subsidy'.

The need to define and delineate innovation policy and innovation support measures is not a
purely intellectual exercise, since different political choices about the legitimate scope of IP are
reflected in (national) innovation systems and administrative remits. Hence, the choice about the
definition of the scope of IP has different consequences for governance, such as the optimal forms
of coordination and administrative configuration (horizontal, vertical); on the policy mix (who is
responsible across and within 'domains'), and may hinder or facilitate communication and learning
in the innovation system.

Equally, the rationale for a policy intervention often differs between IP and SP even if the
measures look similar, leading to confusion in implementation, uptake and evaluation. Examples
are set out below.
(i) A competence centre (joint research-industry consortia) programme: the decision about the
purpose and the best mode of functioning differs if considered from a SP (knowledge
creation, researchers in lead role) or IP (product development/knowledge transfer,
researchers in supporting role to enterprises) viewpoint ( 8);
(ii) Open innovation with blurred boundaries between R&D and innovation, between in-house
and external, larger and smaller firms ( 9).

Such conceptual issues and trends in 'policy agendas' have led to different categorisations of
policy measures over the years. However, an overview of existing innovation support measures
shows that they are often broader (in terms of beneficiaries) and increasingly linked up with SP
and other policy domains (sustainable development, mobility, energy, etc.). A way of examining
types of innovation support measures is to examine possible dimensions, including:
(a) participants / beneficiaries: specific to target group(s) (e.g. SMEs) vs. open;
(b) directly directed towards behaviour and capabilities within organisations (firms) vs.
framework / infrastructure focused (indirect);
(c) financial (grant or tax credit) vs. other kinds of support (services, advice, training);
(d) targeted (sectoral, technological) vs. non-targeted;
(e) geared towards single actors vs. interaction (firm-research, inter-firm, clusters);
(f) supply (the innovator) versus demand (innovative user, user driven/led innovation);
(g) stage of innovation process: generation, transfer, diffusion (all).

8
See for instance the Mid-term evaluation report of the Estonian competence centre programme (Arnold et
al., 2008).
9
See for instance Public Policies for Open Innovation (Chesbrough et al., 2008).

4
Professor Edler concluded by outlining three further considerations for the future definition and
design of innovation support measures in Europe. First, he argued that the trend towards what he
termed the 'horizontalisation of innovation policy' (or that all policies have to incorporate
innovation) is being reinforced by the need to tackle the ‘grand challenges' (climate change,
ageing society, etc.) and by the current 'Credit Crunch'. In the context of such a major crisis,
innovation policy needs to be linked to such challenges and demonstrate that it is effectively using
public expenditure. In short, the question is whether the 'business competitiveness' argument is
still strong enough when competing for funds against other 'policy domains. As was argued in a
2008 PRO INNO Europe® INNO-Learning Platform mini-study, 'relatively little attention is still paid
to innovation policy efficiency, i.e. the effectiveness of the results achieved in return for the
investment made in implementing them. The debate is concentrating more on "what" should be
supported rather than on "why" and "how" ( 10).'

At an operational level, if innovation policy measures are much more than an alternative to a
traditional (sectoral) industrial policy, then the issue of who designs, implements and finances
which support instruments becomes more complex. The place and role of 'innovation policy
administrations' needs to be reconsidered in this 'horizontal' view.

A second key issue is developing innovation support measures targeting 'the demand side'
Demand-side innovation policy instruments can be defined as a set of public measures 'to induce
innovation and/or speed up the diffusion of innovation through increasing the demand for
innovation and/or define new functional requirement for products and services ( 11)'. Such a broad
definition of demand-based innovation policies implies twin rationales, namely to promote and
stimulate innovation and to increase the diffusion of innovation. The interest in demand side
innovation policies has fluctuated, but is again 'on the radar' in the EU innovation policy arena. A
recent INNO-Policy TrendChart policy brief ( 12) concluded that 'it is clear that debate on lead
market and demand-side policies is growing and is already well established in a number of the
EU's innovation leaders. Several countries also report that specific policies are already in place'.
Equally, the 2008 European Innovation Progress Report ( 13) noted that several of the more
'advanced' countries had adopted framework challenges of a relatively sophisticated nature,
including a focus on demand-driven issues such as innovative public procurement. The evidence
seems to suggest that a demand-side policy focus is deepening and is also becoming broader
across the EU-27.
However, Professor Edler warned that there were still problems: confusion about terms, concepts,
implementation; often no obvious linkages to existing supply support measures; and very few
indicators and a weak evidence base for the impact of demand-side interventions. To move
towards a more demand-driven innovation policy implies a whole set of policy challenges
(economic benefit vs. social benefit, governance/coordination, incentives and capabilities in
administrations, demand definition/articulation, etc.).
Thirdly, Professor Edler noted that there is a need for support measures that take account of the
diversity of 'innovation systems' and hence 'challenges' across Europe ( 14). Different EU-27

10
See Cunningham et al. (2008) Pro-Inno Learning Platform, Mini-study n°1: Mapping of innovation support measures
online.
11
Edler, J. (2009) Theme 5: demand policies for innovation in EU CEE countries. Paper presented at the workshop
Innovation for Competitiveness INCOM Prague / 22-23 January 2009.
12
Demand-side Innovation Policies, INNO-Policy TrendChart Policy Brief No 1 (2009), Paul Cunningham, Manchester
Institute of Innovation Research, University of Manchester, February 2009.
13
The European Innovation Progress Report 2008 can be downloaded from http://www.proinno-
europe.eu/admin/uploaded_documents/EIRP2008_Final_merged.pdf online.
14
See, for instance, the papers presented at the Czech EU Presidency INCOM Conference on Innovation,
Research and Development, January 2009 available at http://www.eu2009.cz/event/1/188/ online.

5
countries are at different levels of development and hence have varying levels of sophistication,
need and possibilities in terms of policy intervention. He noted that there was a need for some shift
in focus, or more weight on:
(a) technology transfer (from abroad): linking innovation policy and FDI policy;
(b) non-technological innovation and innovation management and ‘culture’ (risk taking,
entrepreneurship, etc.);
(c) education and learning at all levels;
(d) Using the SF to support modernisation and uptake of new technology rather than just
‘high-tech'.

He also raised another issue: Were enterprises not 'overburdened with measures and money?'.
He emphasised the need for support for administrative learning and capability building to ensure
that the support measures proposed are tailored to enterprise needs.

In conclusion, Professor Edler argued that it is important that the innovation ‘policy mix' takes
stock of and, if needed, supports all system activities in specific national and regional (SF)
contexts. Moreover, the definition and delineation of policy and measures must be flexible and
take account of national governance arrangements, which are not uniform.

The opening presentation by Professor Jakob Edler touched upon the variety and breadth of
innovation support initiatives across Europe at different levels (Community, national and regional).
As such, it served as a stepping-stone to focus in more detail on the variety, scope and breadth of
initiatives at the Community level, which was the main focus of the workshop. The following
section deals more in-depth with the landscape of Community-level innovation support.

6
3 Mapping of Community initiatives supporting innovation
Following on from the discussion of the forms and rationale for innovation support in general (at
EU, national, regional levels), the next two presentations then concentrated on the current
Community initiatives supporting innovation. For this, the following working definition of a
Community-level innovation support measure was proposed: 'an action aimed at improving or
facilitating innovation processes and capacities in enterprises, primarily [small to medium-sized
enterprises or] SMEs, either provided at Community level or triggered through Community
instruments.'

Alasdair Reid (Technopolis Group) presented the main conclusions of the EP-ITRE study (2007)
and, in particular, the PRO INNO Europe® / INNO-Learning Platform Mini-study n°5 (2008) as a
basis for a discussion on the mapping of EU-level initiatives for innovation support and challenges
for better synergies. The latter study addressed two questions.
(i) How can Community instruments best complement one another in developing innovation
support mechanisms and which bridges can be built to achieve optimal synergies amongst
them?
(ii) How to improve the efficiency of the European mechanisms in support of innovation?

Figure 1. Financial scale of three main EU instruments

The main EU level instruments

supporting innovation directly or 'Innovation' investment (billion Euros)
indirectly during the current financial
period from 2007 to 2013 are as
90
follows.
80
Research Framework Programme (FP7)
70
(i) Complements national
research programmes. 60
Activities funded must have a 50
'European value added'. 40
(ii) Transnational projects selected
30
by excellence, funded 'directly
from Brussels' open to a large 20
range of types of 10
organisations. 0
(iii) Increasing shift to 'joint-
programming' and instruments
2007-13
fostering the creation of the
European Research Area FP7 CIP SF
(ERA).
Competitiveness and Innovation
Framework Programme (CIP)
(i) Financing of innovative SMEs through venture and seed funds, as well as loan
guarantees managed by the European Investment Fund (EIF).
(ii) Networking and pilot actions (direct beneficiaries: public bodies and intermediaries).
(iii) Business and innovation support services are delivered through a network of regional
centres (EEN).
(iv) Limited direct financial support to enterprises (grants for eco-innovation market
replication projects).

7
The Structural Funds (SF)
(a) Provide the largest EU budget potential for innovation: thanks to the Lisbon earmarking of
the SF for the period from 2007 to 2013, the operational programmes foresee the
investment of some EUR 86 billion (25% of the entire SF budget) in research, technology
transfer, ICT up-take, advanced business support services, human capital development for
innovation, etc.
(b) But they are implemented at national and/or regional levels, and hence operationally are
not linked to European innovation policy.

Other relevant instruments identified in the mini-study include: LIFE+, and the European Institute
for Innovation and Technology (EIT). Instruments such as EUREKA, not technically a EU
programme, but rather an inter-governmental one, are also complementary.

Mr Reid underlined that in financial terms, the three main instruments are difficult to compare since
they have significantly different (absolute) levels of funding available, delivered in different ways.
For instance, how much of the EUR 86 billion of SF in favour of research, technological
development and innovation (RTDI) will really be allocated to support innovation in enterprises.
Past experience suggests a significant share has gone into research and technological
development infrastructure (bricks and equipment). This can be justified, notably in less well-
developed regions, in a first phase of creating the necessary basis for supporting industrial
research and technology transfer, but it is far from sufficient to overcome 'network failures' or
institutional weaknesses in regional innovation systems. In the more advanced regions and in
those with previous investments in physical infrastructures, however, it is necessary to invest the
SF money in filling the infrastructures with life, providing services and financing real innovation
projects of enterprises. A concern shared by both the Commission services and experts is that
many regional authorities who want to move on from the infrastructure to the operational
innovation side lack the necessary know-how or tools. The Directorate-General for Regional Policy
(DG REGIO) has to this end sponsored a number of guides (e.g. a guidebook for the Spanish
regions on European Regional Development Fund (ERDF) co-funded Lisbon-type measures) and
has developed a database of case studies (linked to the Regio Stars contest as part of Regions for
Economic Change) in order to promote and share experience. The aim of such activities is to
minimise the risk of failure related to a lack of experience or management skills on the side of
otherwise motivated regional authorities.
Equally, the question can be raised about the share of FP7 that really goes to supporting
enterprises and particularly SMEs (given past well-recorded difficulties to attain the expected
participation of smaller firms). A reasonable estimate would be a figure of almost EUR 6 billion:
some EUR 1.3 billion is allocated to SME-specific measures in 'Research for the benefit of SMEs'
and some EUR 4.8 billion under the Cooperation programme (if the 15% target for SME
participation is met, at the time of writing, the figure is about 9%). Finally, the CIP budget is
relatively 'small'. But for instance, the EUR 1.1 billion support through the EIF should be able to
leverage significant funding from other public and private funders.
At the strategic level (i.e. based on the objectives stated in the regulations, guidelines and
programme documents), the three programmes contribute to Lisbon objectives, 'potentially'
addressing different phases of the innovation process.
(i) FP7: supports mainly transnational research cooperation, in particular research activities
between enterprises and public research organisations (with the exception of the European
Research Council's support for individual researchers' fundamental research),
technological development, researcher mobility, activities to mobilise the coordination and
pooling of national research investments (Art. 169 and joint programming), the leverage of
private funding through large Public-Private Partnerships (Joint Technology Initiatives).

8
 Some strengthening of regional focus (support to less-developed EU regions and research
system development).
(ii) CIP: focuses on innovation as a 'business process' and on new forms of innovation such
as eco-innovation, rather than being limited to technology-driven innovation, and has a
'role as a catalyser' more than as funder.
(iii) SF: should help regions to build up research and innovation capacity, enabling them to
take part in the ERA and implement more effective regional innovation policies.

Figure 2. A demand-driven view of synergies between the main European instruments

Enhanced
Anticipation Ensuring sufficient Improving competitiveness &
of demand infrastructure framework conditions sustainable development

Structural
CIP CIP
Funds FP7
Structural
FP7 Funds Structural
CIP
Funds
Structural
FP7
Funds

Support of lead markets, Financing of research Support to innovation

technology platforms infrastructure, financing & Funding of research & innovation
foresight studies, technology centres, advisory services, projects, introduction of
regional innovation training centres, entrepreneurship, eco-innovations, upgrading skills
strategies, exchange of mobility of skilled cluster development, & diffusing new technologies, etc.
good practice. people, increasing availability
ICT networks, etc. of risk capital.

Source: Reid (2008)

Mr Reid contrasted two different ways of considering the synergies and complementarities
between the three programmes: a 'linear' (research under the FP7 to economic development
through the SF) intervention logic or a more demand-driven approach where each programme can
contribute at different points in an 'innovation process'.

Turning the strategic links between the three programmes into operational complementarities is,
however, not always automatically a success. Many possibilities exist on paper, as shown below.
(i) FP7: Joint Technology Platforms as inspiration for regional technology road-maps,
SME-specific actions, regional research clusters, etc.
(ii) CIP: improving policy design in interlinked fields (innovation, information and
communication technology or ICT, intelligent energy, environment and eco-innovation);
financial instruments in synergy with European Investment Bank/ERDF, etc.
(iii) SF: regions can link into to transnational actions of other two programmes' policy
development and pilot actions. Specific regional actions to encourage
'internationalisation' of innovative SMEs.

9
 (iv) The role of EIB/EIF in managing JEREMIE 15 (with SF and High-Growth and Innovative
SME Facility (GIF) from CIP: enhanced support for start-ups and micro-enterprises
(technical assistance, grants, loans, equity, venture capital (VC) and guarantees).

However, as the previous studies have underlined, beyond the general statements of 'intent to' in
operational texts, operational barriers such as these below hinder complementarities:
(a) time lags and delays;
(b) eligibility or targeting of different types of beneficiaries;
(c) bottom-up versus top-down strategies;
(d) formal and actual targeting of the programmes can diverge.

Mr Reid argued that a number of opportunities for synergies were still not totally exploited, such as
strengthening thematic complementarities (e.g. eco-innovation) or linking up lead-market initiatives
of CIP with JTI under FP7 or regional technology road mapping under the SF. Examples of where
programmes are working together include the support for research infrastructure under both SF
and FP7 (e.g. a 'Regions for Knowledge' under FP7 can be used to define investment needs to be
implemented under the SF). Another good example are the Fast Track projects under INTERREG
IV, where different DGs (Regional Policy, Research, Enterprises, Information society,
Environment, etc.) are stakeholders and share supervision of the projects.

He considered that a main gap was to be found in the EU support instruments related to measures
for those SMEs which are not the 'top technology pioneers' but could benefit from greater
integration in transregional networks/clusters. Despite efforts to adjust FP7 based on previous
rounds, the Framework Programme (FP) continues to address mainly technology pioneers
(approximately 3% of SMEs) and there remain difficulties for SMEs when taking part in FP
projects: large-scale budgets, more fundamental research, duration, and the complexity of the
application process. The efficiency of the CIP SME finance instruments (from loan guarantees to
equity finance) depends on their integration into regional policy. The SF give a strong focus on
support to SMEs and notably on financial engineering instruments (including capacity building) in
most operational programmes. Lessons from ERDF-funded VC projects suggest a need to
encourage 'investment climate' and the use of double-bottom-line approach. However, past
experience suggests that action to improve private equity finance can be undermined by a culture
of 'grant dependence' of enterprises in many regions.

The risk of overlapping of actions is essentially related to inter-regional networking/platforms

funded under all three programmes in the broad field of research and innovation policies and
notably in clusters. The call made in the previous studies for a wide-ranging (cross-DG) and in-
depth evaluation has not been followed up by the Commission services and there is little or no
evidence on the value added or longer-term effects on improving regional level policy development
or mutual learning, etc. of such instruments. Applying techniques such as social network analysis
of participants in the projects could identify nodes in networks and overlaps (repeat networks),
which if twinned with a case study of such networking behaviour, could help to identify those
projects which are adding value by building on past projects compared to those producing yet
another 'best practice' handbook (or alternatively, weed out 'project tourism' where networks are
adding little value to existing know-how).

Beyond publishing a 'practical guide'; how can the Commission influence the various stakeholders
of the programmes to maximise synergies? It should be remembered that most enterprises seek
support locally and the vast majority of support and funding is delivered through national/regional

15
http://www.eif.org/jeremie/

10
policies (co-financed to a greater or lesser extent by the SF). Specific actions to support SME
partnering and involvement in FP7 or the newly launched Eureka-Eurostars initiative are positive,
but another significant barrier may be the cost-benefit of funds from EU programmes versus the
administrative burden (confirmed by the evaluations of the Research Framework Programme or
the recent public consultation on innovation support of DG ENTR).

Secondly, it is possible to imagine a role for the EEN to complement the action of the FP7 National
Contact Points. However, the primary mission of EEN partners is not to act as 'funding brokers' for
SMEs. Moreover, as the SFs are delivered regionally and the CIP offers little direct funding to
enterprises (EU intervention through EIF is 'invisible' to SMEs receiving funding from regional
venture funds), there is less need to help enterprises 'through the Brussels maze' for these two
programmes.

Mr Reid suggested that the various studies on synergies and complementarities lead to two broad
conclusions about:
(a) bottom-up learning for better EU level programming: the need to analyse practical
experience of different group of users with respect to combining different (both EU and
national) sources of funding;
(b) more attention paid to subsidiarity: giving special attention to ensuring complementarities
between regional strategies and policies (most notably regional SF Operational
Programmes) and EU-level programmes (FP7 and CIP).

In terms of options to improve complementarities, he called for a) a streamlining of the instruments

funding inter-regional cooperation in favour of innovation; b) the creation of a European Innovation
Voucher to radically simplify the current administrative nightmare SMEs face in applying for EU-
level project funding; and c) an increase of funding at European level for pilot initiatives in
emerging fields of innovation support (compared to those already well supported by national
initiatives), notably in response to the 'grand challenges'.

Jorge Gallego (University of Alcaiá, Madrid) addressed the question of the needs and scope for
better coordination between the different Community instruments in support of innovation in
services. He touched on four key points in his presentation:
(a) the increasing role of services and services innovation in Community policies;
(b) the bias for manufacturing in innovation funding and the role of EU programmes;
(c) selected Commission initiatives and the role of services;
(d) comparative analysis of the needs and scope for better coordination.

Concerning the increasing role of services and service innovation in Community policies, Mr
Gallego argued that before 2000, the presence of services in EU, as well as national programmes
and policies was, to a large extent, marginal. During the period between 2000 and 2003, the
inclusion of services was very much linked to the fact that the Lisbon strategy shifted policy
attention onto EU competitiveness and further developments for an Internal Market for services.
Moreover, interlinkages between manufacturing and service sectors started to be pointed out in
policy documents (e.g. the European Economic and Social Committee Opinion approved in
September of 2006). Mr Gallego argued that service sector enterprises also made efforts, in a
bottom-up way, to be included in different EU research and ICT-related programmes, even when
such programmes were not specifically addressed to services.

11
Figure 3. Innovative manufacturing and services companies using public funding (%)

25,00
Manufacturing

20,00 Services

15,00

10,00

5,00

0,00
Public funding Funding from local Funding from Funding from EU Funding from EU
and regional central government FP’s 5th or 6th RTD
authorities

Source: Gallego, presentation to workshop, based on CIS4, Eurostat

Hence, there has been an evolution in policy agenda, from a limited understanding of the service
innovation concept in the 1980s and 1990s, to the currently wider-ranging effort to develop policy
adapted to services innovation, a horizontal dimension boosting innovation in all economic
sectors. Nevertheless, survey data (from the CIS) suggests that service sector firms continue to
receive less public support (see diagram).
Hence, Mr Gallego argued that there remains a bias towards manufacturing in national innovation
funding and in the role played by EU programmes.

12
Figure 4. Selected Commission initiatives and the role of services
Source: Gallego, presentation to workshop

Mr Gallego went on to present the preliminary results of a forthcoming PRO INNO Europe® mini-
study on the mapping of EU innovation support instruments for services. Figure 4 is an illustration
of the complex web of programmes that, to a greater or smaller extent, support services
innovation. Services innovation has started to be included in programmes in a direct or indirect
way, although the number and budgetary scale of services-oriented specific programmes is still
limited (with the exception of ICT-related services innovation policies). Equally, services may have
a particular role to play in horizontal and non-sectoral specific initiatives. He pointed out that a
wider comprehension of services in EU policies would require more ex post evaluation and
assessment of the current initiatives than had been possible under the mini-study.

In conclusion, Mr Gallego argued that there is a need to improve coordination of policies or

initiatives addressed to services innovation. This need arises from their relative novelty, the limited
weight of services and the lack of information (limited indicators and statistics, little known about
impact of current initiatives) about services innovation. Equally, different public services adopt
different concepts about service innovation (some adopting a broad horizontal definition where
service innovation is a driver of change in all sectors of the economy, others restricting service
innovation support to 'service sector' firms). Equally, the progress of Member States in developing
support for services innovation is variable and this also raises questions about synergies with EU
initiatives.

13
Figure 5. Comparative analysis of the needs and scope for better coordination

Source: Gallego, presentation to workshop

Both the presentations of Mr Reid and Mr Gallego stressed the need and space for adjustments,
fine-tuning and streamlining of innovation support on behalf of policy makers, notable at EU level.
However, a better use of innovation support is also a responsibility on behalf of the final
beneficiaries of such support, be they SMEs or (national and regional) intermediaries. The next
session started off with a presentation on precisely this topic: how mutual learning on behalf of
innovation support subjects / stakeholders can contribute to optimising innovation support and
making it more effective.

14
4 The case for mutual policy learning and networking

The second session of the workshop focused on the topic of how to develop improved results from
mutual learning and networking-type actions supported at EU level. In this respect, it picked up on
one of the conclusions of the first session concerning the need for a greater understanding of the
value added of inter-regional and cross-national cooperation networks and projects in the field of
innovation policy.

Koen de Pater (SenterNovem) addressed the topic of the rationale for mutual policy learning and
networking in support of innovation at Community level. He illustrated the complexity of the
possible interactions in a graphical example at the three levels of funding for innovation (EU,
national and regional), with each level's specific programmes, interlinked to each other and often
targeting the same actors, but with different stimuli.

Figure 6. Dynamics of participation in EU instruments

CIP
FP EU SFs EIB

Qualification to JTIs SMEs,

participate
Eurostars
starters,
education ,
nat EFRO entrepre-
Member State neurship ,
research,
Qualification to networking ,
participate
peaks EFDF
financing etc.

region

Source: De Pater, presentation to workshop

He then went on to outline three factors needed for success in promoting mutual learning and
networking on innovation policies.

(i) Parallel goals and simple interface. For Mr De Pater, the good news is that the various
programmes work in the same direction (innovation, entrepreneurship, cooperation,
transparency, etc.). However, modalities and conditions differ, and there are a multitude of
windows, calls, and support organisations. Hence, he noted that there was a permanent
struggle for simplification (organisations, legal aspects, accountancy, e-interfaces, etc.).
(ii) Comprehensive agendas based on challenges. Regional stakeholders need to start by
considering the question 'what are our strengths, how to expand them, who takes on
what?’ The triple helix approach (business, education/research and public authorities) have
to agree on a joint agenda. Only then can the right instruments and projects be selected to
fit into this agenda. Hence, the necessary conditions are a regional consensus and an
effective organisational structure. The same goes for national and European levels (e.g.
European Technology Platforms and Joint Technology Initiatives are vehicles for
coordination and comprehensive agendas). Mr De Pater argued that there is a need to

15
 start from content and challenges, not from policy instruments, when designing such
agendas. He highlighted two cases from the Netherlands of such comprehensive regional
agendas, namely the Randstad North Wing and North Netherlands Energy Valley.
(iii) Concerted implementation. National implementing innovation agencies should support
such regional agenda-setting, support bringing actors and levels together, and act as a
signpost to all relevant support: function as an 'innovation ambassador'. In a similar
manner, the EU-level instruments need to intervene in support of regional or national
agendas.

Mutual learning, in Mr De Pater's experience, should make use of existing channels wherever
relevant, and there should be no 'Chinese walls' nor the 'not invented here' syndrome. For
example, Dutch policy makers have been active in 'importing' good practices from abroad: the
French 'Pôles de competitivité', top research institutes, vouchers, tax reductions for R&D, Small
Business Innovation Research (SBIR), Innovation Platform, entrepreneurship education, etc.

George Strogylopoulos (Logotech) presented the results of a mapping of EU initiatives supporting

mutual policy learning and networking in support of innovation. Logotech, in collaboration with
Technopolis, has conducted a survey on the main European Commission-funded projects, with a
focus on those relevant to the Europe INNOVA initiative. The exercise aimed to provide a first
overview of the main 'mutual learning/networking' projects funded through the CIP, the SF (notably
INTERREG III and IV) and FP7, as well as other relevant initiatives.

Information was collected on 83 projects selected from each of the EU instruments.

Figure 7. Mapping of EU initiatives supporting mutual policy learning

Structural Funds 40
INTERREG IIIC 4
Transnational
Cooperation 13
INTERREG IVC 11
ESPON 2
URBACT I 6
LEONARDO DA
VINCI 4
FP7 29
CAPACITIES 7
Various 22
EUREKA 4
CIP 9
Intelligent Energy
Europe 5
Various 4
OTHER 1
Source: Logotech-Technopolis study for Europe INNOVA, 2009

Under the CIP, the survey has focused on the EEN, and PRO INNO Europe®. EEN is interrelated
with Europe INNOVA as regards innovation management, innovation standards and financing.
PRO INNO Europe® is based on three pillars, namely policy analysis, policy development and

16
policy learning, with each contributing or linked to the more operational concerns of Europe
INNOVA.

Concerning the SF, the desk research focused on the INTERREG III C, the Trans-national
Cooperation Objective (2007-13) as well as INTERREG IV C and JEREMIE. From over 200
awarded projects that were reviewed, 14 relevant projects have been identified. All these projects
are intended to enhance EU, national and regional policies on innovation. Selected INTERREG
projects are mainly related to innovation watch and innovation management areas. JEREMIE's
activities related to Europe INNOVA are in the area of innovation financing activities addressing
SMEs.

Under FP7, the survey has focused on the Regions of Knowledge, ERAWATCH and ERA-NET
initiatives. From the various awarded projects of the Regions of Knowledge initiative, six relevant
projects have been selected as being relevant, covering all Europe INNOVA themes except eco-
innovation. As for ERA-WATCH and ERA-NET initiatives, their focus is clearly on the EU, national
and regional policy on R&D and innovation.

The most relevant other initiatives identified at this stage include EUREKA Clusters and EUREKA
umbrella projects. These strategic initiatives aim to develop large-scale clustering activities, in
order to exploit the technologies through existing national and European programmes and to
define European standards and interoperability. Leonardo emphasised EU-wide innovation
policies and innovation management activities, as related to the Europe INNOVA initiative.

For each of the 83 projects, information is presented in a template format summarising objectives,
potential impact and contact information. The template is structured as illustrated in the following
example for an INTERREG IVB project in the field of financing for SME innovation activities.

Programme: Trans-national cooperation objective: Baltic Sea Region - 1st call

Title: JOSEFIN - Joint SME Finance for Innovation
Finance: DG REGIO, ERDF

Budget: EUR 3 868 237 (ERDF: EUR 3 544 130; Norwegian budget: EUR 324 107)
Duration (finished/
ongoing)
Overall objective(s) and
Expected outcome(s)
Starting in 2009, for a duration of 42 months.
The Baltic Sea Region (BSR) shows a strong knowledge-based and
innovative economy. Accordingly, SMEs play a significant role as
drivers of the innovation process. In the context of future-oriented
understanding of territorial cooperation, regional development
highly depends on the ability of key actors to participate in
international markets. However, SMEs in particular often focus their
business activities on local markets. Among others, through the
predecessor INTERREG III C project TEICO-NET, JOSEFIN identifies
key areas of intervention for providing targeted and individualised
support to SMEs on their way to international markets. As
nowadays commercial banks are reluctant to provide access to
finance for SMEs, the support of JOSEFIN consists of stimulation of
direct transnational cooperation, as well as of provision of improved
access to finance to innovate and to exploit innovative products
and services.
For this, the key actors of the innovation process, namely
Incubators, Technology Transfer Centres, as well as Public
Development Banks will jointly take up and adjust or develop
concrete tools and instruments to be used in Estonia, Germany,
Latvia, Lithuania, Norway, Poland, Russia and Sweden.

17
Synergies (related
advantageous cooperation)
Partners/Network involved
The JOSEFIN partners will identify a roadmap toward SME
international activities as a highly individualised process in which
generalised and standard instruments will be factors of limited
impact. More concretely, JOSEFIN identifies two key needs
of SME support to assist them in the process of bridging the
significant development gaps.
-The first instrument will offer a highly focused and individual
coaching of SMEs in preparation for cooperative, transnational
innovation projects, and will fulfil the role of a useful tool for
preparation of the application for their funding. In this field,
JOSEFIN mainly will take up, adapt and apply the achievements of
previous BSR projects.
-The second instrument, a new transnational guarantee fund, will
advance existing regional financial support instruments for SMEs.
Actors in the financial sector will use the new and innovative
transnational guarantee fund of JOSEFIN to lower barriers in access
to finance for SMEs.
-The JOSEFIN transnational guarantee fund will be backed by a
counter-guarantee of the European Investment Fund (EIF), and will
provide a new and innovative risk-sharing facility in the BSR.
-The combination of individual coaching for SMEs and the
transnational guarantee fund offered by the JOSEFIN partnership
will significantly reduce the risk for both sides, as well as banks and
companies.
-Access to finance for innovation projects carried out in
transnational partnerships of SMEs and/or scientific institutions will
be improved by the JOSEFIN fund and will unlock investments of
SMEs in innovative products and services and support them on
their way to business internationalisation and sustainable growth.
Lead Partner: Investitionsbank Berlin (DE), and 24 partners.

Thematic area: clusters Other.

/eco-innovation/service
innovation /ICT

Focus of the project: Innovation support services.

1.analysis and strategy, Mutual policy learning and cooperation.
2.mutual policy learning and
cooperation, 3.innovation
support services, 4.other
Contact Information http://eu.baltic.net

Mr Strogylopoulos noted that this first overview of mutual learning type of project only represents a
sub-set of the hundreds of currently running EU-, national- or regional-level projects and tools.
Nevertheless, it draws attention to potential synergies as they result from similar thematic priorities
of the EU instruments. However, actual synergies derive not only from good organisation,
excellence as a criterion in selection of projects, or complementarity of policy focus. These factors
form the base for a synergy to occur, but do not necessarily lead to this result operationally.

In terms of the results of an analysis of the 83 projects, the key findings presented by Mr
Strogylopoulos were as follows.

(i) The main themes addressed by the projects were clusters (20.5%), followed by ICT
(17.8%), eco-innovation (12.7%), and services innovation (7.8%). However, a large
number of projects proved difficult to classify without more in-depth analysis.
(ii) In terms of the focus of the projects, 40% were about mutual learning and cooperation on
policy, 25% on development of innovation services, and 32% on analysis and strategy.

18
Figure 8. Focus of mutual-learning projects by theme

Focus per Theme

100%
0,00% 0,00% 0,00% 2,78%
18,87%
90% 21,33%
30,25%
35,50% Other
80%

70% Innovation Support

Services
60% Mutual policy learning
55,78% 22,88% & Co-operation
50% 45,81% 54,61% Analysis & Strategy

40%

30%
41,63%
20%
25,35% 23,94% 21,28%
10%

0%
Clusters Eco -Innovation Service ICT
Innovation

Source: Strogylopoulos, presentation to workshop

When broken down between the SF and FP7 projects, some differences could be observed with
respect to the overall figures. The SF projects focused more often on ICT (22.5% of projects) and
more on innovation support services (32.5%) than the overall average, while FP7 projects were
more often about clusters (26%) and less about eco-innovation (5%), and were much more
focused on analysis and strategy (62%).

Mr Strogylopoulos noted that the focus on innovation within INTERREG was not always easy to
detect: the new-generation programmes are characterised by more emphasis on learning and
services under INTERREG IVC and more on strategic initiatives under the Trans-national Co-
operation objective, but are increasingly working on the same themes as the CIP. Equally, there is
a perceptible shift in the focus of Regions of Knowledge from more general R&D policy support in
FP6 to more thematic (CIP-related) support in FP7.

In conclusion, he highlighted that there remained room for improvement in terms of coordination
and diffusion of good practice amongst the Commission directorates. At the same time, he felt that
the risk of duplication of effort was limited to a few cases and that striving for a seamless
adjustment of the various EU innovation support instruments may be counter-productive. Some
thematic overlap may allow for testing of different approaches. A more detailed analysis of SF
support for innovation might change the picture presented today. As a final point, Mr
Strogylopoulos underlined that since the direct funding through the previous innovation
programme (under the Fourth, Fifth and Sixth framework programmes, i.e. FP4, FP5 and FP6
respectively) as a share of Framework Programme funding has always been approximately 0.5%,
and that this figure remains roughly the same when comparing FP7 to the CIP.
In more operational terms, the budget of only 5 (focused on themes relevant to the CIP) of the 97
ERA-NET actions ERA-NET totalled EUR 11.54 million compared to a total funding of PRO INNO
Europe® of EUR 15 million. For Mr Strogylopoulos, the scale of variation of investment intensity
into research versus innovation raises the question of whether the balance is right at EU level.

19
20
5 Improving the effectiveness of innovation support at EU
level
The third and final session of the workshop was the occasion to present and receive feedback on
two new operational tools for assessing the pertinence of an EU-level intervention and its likely
effectiveness.
The overall topic of this session can be summed up by the question: why and when should there
be intervention at EU level in favour of innovation? This question raises issues about the rationale
in a context of multilevel governance (or subsidiarity in EU jargon) and also one of effectiveness.
As many smaller enterprises operate locally, innovation support is likely to be most effectively
provided by agencies based close to the enterprise ('proximity matters'). However, EU instruments
may provide value added, if they, for instance:
(a) facilitate exchange of know-how on methods and tools for innovation support (avoid re-
inventing the wheel);
(b) allow access to complementary skills, technologies or expertise not readily available in
each Member State or region;
(c) create a European-level critical mass (e.g. joint cluster initiatives) to achieve economies of
scale or learning;
(d) develop 'lead markets' (LM): a main feature being that the resources required to develop
LM and their potential impact exceed the national level;
(e) provide financial leverage: access to investment resources or guarantee instruments
supporting national or regional funds.

Bart Kamp (INNOVA Europe) introduced the theme of the session with a presentation on
conceiving subsidiarity and effectiveness tests for innovation support measures at EU level.
Building on the previous discussion of the nature of innovation support measures and the current
state of play at EU level, Mr Kamp's presentation began by assessing the legitimacy and added
value of innovation support measures at EU level.

He noted that the rationales for public intervention were no longer uniquely the existence of market
failures, namely:
(a) leaving initiative to the private sector leads to under-investments (e.g. due to lack of
((financial)) resources);
(b) inability of private actors to recoup returns from their investments (e.g. due to knowledge
spill-overs and difficulties in result appropriation).

Increasingly, the existence of network failures is also highlighted as a factor justifying innovation
policy. Hence, if the design, development, production, etc. of a good or service is a multiparty
affair and there is weak cooperation due to lack of trust, institutional factors preventing knowledge
exchange or exploitation of intellectual property rights etc., then policy support can be indicated.
However, such market or network failures do not per se justify a role for or provide a rationale for
EU intervention. Legally speaking, the Commission services must take account of the 'principle of
conferral', meaning that the Commissions acts in domains where the Member States have
assigned competences to the EU. Hence, as the Maastricht/Lisbon treaty stipulates, IP is a shared
responsibility, and the Commission has the competence to coordinate, supplement and support
Member State innovation actions.

Secondly, the Commission should only develop EU level innovation instruments if they respect the
'Subsidiarity principle': the EU shall act only if the objectives of a policy measure cannot be
achieved sufficiently through Member State actions.

21
Thirdly, the EU intervention has to respect an 'Effectiveness imperative', which can be
characterised by four criteria:
(a) stakeholders adherence to the action's cause and the deployed means;
(b) additionality (no substitution or discouraging of private initiatives);
(c) adequacy of design to achieve objectives in practice (implementation / application costs);
(d) alignment with related policy initiatives.

In order to assess compliance of EU innovation support measures with the above-mentioned

requirements, a ‘score-card' approach has been developed, sub-divided into three 'tests' summed
up in the following flow-chart.

Figure 9. Process for applying subsidiarity and effectiveness tests

Is there a market or network failure? no Legitimacy check
Are we talking about a collective/public good?
yes

no
Is government intervention appropriate to No government action
resolve this?

yes

no
Are there net benefits to action at EU level? Action at MS and/or regional level

yes
Subsidiarity test
What are the benefits of EU-level action?
- Cross-border aspects
- Scale economies
- Mobilisation of necessary resources
- International policy learning effects
What are costs of EU-level action?
- Lack of adaptation to local circumstances
- Less opportunities to learn from diversity
of experiences
Effectiveness test
Quid operational modalities and back-up from
audiences of interest:
- Is the action supported by the major
stakeholders?
- Is the action offering additionality vis-à-vis
private sector?
- What are the delivery costs of the action
(initiator(s)): design, implementation, monitor;
beneficiaries: application and participation
administration)

Recommendations

- Reinforce stakeholder support

- Increase additionality or leave more to the market
- Reduce delivery costs by diminishing administrative burden
- Improve horizontal and / or vertical alignment with relevant policy context
Source: INNO Learning Platform

The subsidiarity and effectiveness tests can be used to assess the adequacy of policy actions both
at an ex ante (policy design) and ongoing / ex post (exit strategy) stage. In order to test the
approach, the tests have been applied to several existing EU innovation support measures:
(a) Cluster-IP (ex ante)
(b) European Cluster Observatory
(c) IPR Helpdesk
(d) EEN

22
 (e) European Cluster Alliance.

Mr Kamp summed up the 'common denominators' from the pilot tests as follows: the legitimacy
and subsidiarity principles are generally respected so that projects are correctly
governed/supported at EU level. However, on the effectiveness tests, the results are more mixed.
Positive elements include the following: most projects succeed in creating critical mass and
'agglomeration' advantages for stakeholders via a European approach; the projects contribute to
transnational learning and exchange; and the projects have a large outreach for diffusion of
information and counselling (e.g. EEN and IPR helpdesk).
However, Kamp argued there were also a number of less effective outcomes.
(i) Most projects rely insufficiently on the market: the public-private-partnership (PPP)
component can be strengthened, and too many measures rely exclusively on public-sector-
based initiatives (causing risks of distortion of competition and crowding out of private
initiative).
(ii) There is an insufficient mapping of and aligning with the vertical/horizontal policy context:
no gaps, therefore (rather overlap and redundancy), but also less learning and synergy
effects and inspiration from adjacent initiatives.
(iii) Certain cases build weakly on stakeholder interests: policy exercises with risk of low
impact for targeted beneficiaries.
(iv) Effective dissemination and communication of results remains a point of attention.

According to Mr Kamp, an important point to note is that 'free-of-charge' public support to

innovation is not necessarily optimal. Such 'free' services can obstruct (or crowd out) similar and
more sophisticated private-sector services from developing. Public innovation support should thus
seek to unlock private initiative and help it 'into the saddle' (acting as a first customer, helping to
overcoming start-up costs or facilitating a roll-out on a wider scale)
In addition, Mr Kamp argued that the tests can serve as a self-assessment tool for project owners
to find out whether they are on the right track, i.e., for preparing or redirecting a project (e.g.
through mapping its policy, stakeholder, target audience and market context). Equally, for (EU)
policy makers, it can help to reflect on where to invest (tax payers') money and as a means to
focus the EU mandate in the innovation policy field. In fact, the test have already served to
sharpen the terms of reference for a number of upcoming PRO INNO Europe® innovation support
projects (INNO-Nets and INNO-Actions 2009).

Finally, Mr Kamp considered that the tests are complementary to 'hard-core' impact assessment
exercises, e.g. on indicators like goal attainment, value for money, and positive/negative
externalities (outreach/effects beyond stakeholders).

To further illustrate the practical application of the tests, Marc Pattinson (inno group) presented in
greater detail the results of the test carried out on the case of the European Cluster Observatory
(ECO). This case was chosen as the number of interventions at EU level in favour of cluster policy
is relatively large, raising an issue about coordination, synergies and overlaps. Current initiatives
at EU level include:
(a) PRO INNO Europe® (Cluster Memorandum, INNO-Nets, ECA )
(b) Europe INNOVA (cluster projects, like the European Cluster Observatory)
(c) EUREKA clusters
(d) SF, regional and inter-regional clusters (territorial cooperation objective)
(e) FP7 Regions of Knowledge, etc.

23
Clusters are also a growing priority in a number of Member States, with examples of initiatives
including the German Spitzencluster competition and the French competitiveness 'poles'. There is
a wide range of policy themes addressed through cluster initiatives: innovation, R&D
internationalisation, training and capacity building for cluster managers, cluster awards, cluster
support infrastructure, etc.

The European Cluster Observatory (ECO) project, funded under Europe INNOVA, provides data in
four sections:
a) Cluster mapping: regional clusters based on 38 cluster categories (agglomeration of
employment in co-located industries) in 259 regions (predominantly NUTS 2 regions).
b) Cluster organisations: short list of regional and local public-private partnerships.
c) Cluster policies: reports on national and regional cluster policies and programmes.
d) Cluster library: including cluster cases and other cluster-related documents.

Mr Pattinson argued that applying the tests to the existing ECO case had allowed a clearer picture
to emerge of the strengths and weaknesses of the different sections and of their respective
instruments. Concerning the market failures test, the ECO principally acts to repair information and
networking gaps through improving the visibility of clusters for SMEs and providing the basis for
the creation of a community. The policy action tackles the market failure since the private sector
has not yet shown itself ready to step in. Hence, does the ECO have legitimacy? Mr Pattinson
considered that the ECO is only a partial success given that at present not all market failures are
addressed, for example due to the limited quality of the information provided and the fact that it
only partly helps to overcome network failures. If there are missing links in clusters or actors are
unable to find the right cluster environment or their activities and this is (partly) due to information
shortage, imperfect and fragmented information on it will not solve the problem.

In terms of subsidiarity, there are clear benefits of funding such an instrument at the EU level, like:
(a) common definitions and baseline tools;
(b) avoiding reinventing the wheel;
(c) scale economies;
(d) pooling information;
(e) stimulation of international policy learning.

The ECO seems well aligned with other EU level actions (horizontal coherence) and with the
interests of a fair number of, if not all Member States (e.g. the UK does not have an active cluster
policy).

The results on the effectiveness test are less clear-cut. For instance, it is not clear if the instrument
is fully supported by the major stakeholders. There are a diversity of actors involved, but are the
needs of SMEs really met? Additionality seems to be self-evident, since no such database existed
previously. However, Mr Pattinson questioned if this is sufficient justification. The outputs and
impacts of the ECO need to be more clearly identified, although from an cost-effectiveness point of
view, delivery or transaction costs are relatively low at EU level.

The types of recommendations arising from the pilot test on the ECO include the following: to
develop tools and related services that are more market responsive, to be more proactive in
information exchange, and to focus on key themes such as lead markets or target themes such as
eco-innovation.

24
As Mr Pattinson concluded, effectiveness of the instrument is linked to the awareness of the ECO
(in the 'market place' but also in other directorates-general of the Commission). A pro-active
approach of the ECO management is required to secure quality information and increase value
added (e.g. through policy linkages to fields such as lead markets). Mr Patinnson raised the issue
of how the ECO could develop critical mass, suggesting there was a trade-off between a focus on
world-class clusters (concentration) versus coverage of a greater number of smaller clusters.
Since the relevance of the instrument to the direct needs of businesses (particularly SMEs) is not
apparent (except perhaps in supporting internationalisation), Mr Pattinson questioned if the ECO
could move towards a service level solution, through a private sector funding model. Therefore,
the opportunities for partnering with a mix of public-private stakeholders to extend the ECO model,
should be investigated.

As a follow-up to the presentations by Mr Kamp and Mr Pattinson, Alfred Radauer (Technopolis

Group) commented on how to apply the subsidiarity/effectiveness tests in the future in order to
improve the effectiveness of CIP actions. He noted that the main characteristics of the tools were
in the three tests to check for legitimacy, subsidiarity and effectiveness, which pose a total of 15
rather generic questions. The approach is intuitively friendly since open answers can be given
together with 'traffic-light' assessments. Mr Radauer's first impression was that the test put a
strong focus on the cost side (inputs) and the market failure argument (which are relevant issues
to look at). However, for Mr Radauer, there is a need to make a distinction between procedural
and content-focused issues. The former include a target group of the tests and a (complementary)
methodology to harvest the information needed, while the content issues include a stronger focus
on impacts, more detail on policy delivery and the need for critical success factors and caveats
(akin to a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis).

Concerning the target group issue, Mr Radauer argued that the selection of the right experts is a
critical issue for the tests to work. There may be the danger of self-affirmation, if only Commission
staff and Member State representatives are involved ('must be a good thing'). Hence, to be really
effective, the tests need to consult with people involved at a more operational level, who are either
part of the target group or deal with them on daily basis. The main issue is thus to bridge the
distance between the programme/project formulation and the up-front delivery. A possible option
proposed to overcome this issue would be to organise a series of moderated discussion groups.
Participants should be different in each group while the agenda should be identical, addressing
the five main questions. Policy delivery and impacts could be addressed by making some space
for discussion on the practical ways the programmes/actions are being implemented and the
implications in terms of the impacts on the target group.

The roundtable discussion, moderated by Helmut Kergel (VDI-VDE IT) focused on how to improve
the effectiveness of innovation support on the one hand at national level through improved
national strategies, and on the other hand by optimising the use of EU instruments. He questioned
if the strategic objectives of the EU authorities are always mirrored in the way national or regional
actors used the EU level instruments. Mr Kergel argued that there was a need to better
understand what was being done on the national level (policy monitoring and evaluation), and then
to ask how this knowledge is used for improving innovation support. Equally, he noted the need for
good practice examples of users achieving synergies between different programmes and/or
different levels of support.

25
6 Conclusions
This workshop of the PRO INNO Europe® INNO-Learning Platform provided an opportunity to
extend and deepen a debate that has been in progress now for three years on how to optimise the
synergies between EU initiatives supporting innovation. Optimising policy design and delivery (the
policy cycle) is a process that requires:

a) a common and shared conceptual understanding of the scope of the policy field and
types of instruments concerned by innovation support;
b) appropriate tools and methods available to ensure an efficient management of the entire
policy cycle (from priority setting through project selection to evaluation);
c) open and pro-active (pre-emptive) communication between the stakeholders concerned
(both vertically amongst EU, national, and regional/local levels and horizontally between
different directorates-general, ministries, etc.) to avoid overlaps, gaps and duplication of
effort.

Given the cross-cutting and multi-level nature of innovation support, these requirements are all the
more important since initiatives influencing innovation performance of enterprises may be
launched by various departments or ministries. The workshop enabled an exchange of view on
these three topics, as well as a presentation of tools developed with the specific purpose of
mapping 'what exists' or improving priority setting and project development for future EU level
initiatives. Hence the workshop was intentionally more focused on discussing possible options for
improving future innovation support instruments in the EU, and notably those funded under the
CIP, than attempting to embark on an 'appraisal' of the existing instruments, or a critique of past
strategic choices on the existing programmes and schemes. The latter debate would require a
much more wide-ranging mapping and ex post evaluation exercise to be carried out.

The process of designing European-level innovation support instruments needs to begin from an
identification of those areas where the 'market' or 'system' failure is most effectively tackled by a
Community-level action (e.g. creating a European level VC market) or 'pushing the boundaries' of
what is done nationally and regionally (a 'policy-laboratory' function).

A first step is to ensure that the 'policy community' has access to and understands trends on the
why (the rationale), the what (sorts of measures, targeted at which actors, etc.) and the how (the
process of implementing through various financial or non-financial instruments) of national and
regional support instruments. Policy monitoring initiatives such as the INNO-Policy TrendChart,
the Sectoral Innovation Watch, the ECO, etc. help to build such a knowledge base. The
benchmarking of policy instruments below European level can point to emerging policy areas or
challenges (justified by statistical analysis, stakeholders' views, etc.) where national or regional
authorities are only beginning to develop their response, and where an early EU-level intervention
can support and catalyse such efforts.
The rationale for EU-level intervention in policy analysis and benchmarking is relatively clear since
it allows a sharing of costs for information collection and structuring that would otherwise be
duplicated numerous times in a piecemeal manner at Member State or regional level. Such
structured information gains in value when tightly linked to and feeding into mutual policy learning
'networks or platforms' bringing together policy makers and those involved in delivering policy on
the ground (practitioners). The value of such initiatives is recognised, but they need to evolve and
increase their qualitative and predictive potential rather than simply report on past trends.

The workshop discussions confirmed the need to develop appropriate tools to ensure that
European-level innovation support instruments are designed to be complementary (subsidiarity

26
test) and add value (effectiveness test). The value of this form of ex ante appraisal is that it raises
appropriate questions about the rationale for intervention (in general, and at what level) and the
likely impact of intervening at European level versus national or regional levels. As discussed
during the workshop, it can also allow corrective actions to be taken during the course of
implementation and forms part of the whole broader mutual learning effort.

In terms of optimising the potential synergies between different EU instruments, the regional and
national level experiences (Ireland, the Netherlands, Scotland, etc.) outlined during the workshop
by participants underlined the need to anticipate opportunities rather than try and adapt different
instruments to work together once implementation has begun, and to streamline (reduce
administrative burden, innovation vouchers, etc.) and focus (clusters, thematic, etc.) instruments in
order to maximise synergies. At European level, it is not enough to expect that thematic closeness
will automatically lead to operational links between say, the Lead Market Initiatives (CIP) to Joint
Technology Initiatives (FP7) and the future Knowledge and Innovation Communities (funded by
the European Institute of Innovation and Technology, EIT).

Christophe Guichard (DG ENTR) noted that at European level, the Commission services need to
start with the 'low hanging fruits', that is, identifying the cases for stronger coordination that can be
addressed under the current EU programme regulations and funding tools. The series of reports
published since 2007, the practical guide developed by the Commission service and events such
as this workshop had helped in underlining that the overlaps between action are probably less
extensive than was initially feared, but that the Commission services could still do more to fully
exploit potential synergies between existing initiatives. Equally, certain 'gaps' may exist between
the current instruments that reduce the overall effectiveness of innovation support at EU level (e.g.
in joining up the different stages and sources of financing for innovative SMEs). However, the
administrative burden and the complex programme landscape seemingly continue to hamper the
effectiveness of EU instruments in support of innovation.

In her concluding remarks, Katja Reppel (deputy head of unit, DG ENTR, Innovation Policy
Development) noted that the Commission services were committed to improving coordination and
synergies between the various DGs with respect to the existing European instruments. Having
noted that often inter-service consultation was only taking place at a late stage, when it is difficult
to align operational implementation, the services of the Commission have begun to work together
earlier and seek opportunities for joint actions more proactively. Some steps at European
Commission level could include:
(a) systematic exchange of information about selected projects;
(b) identification of possible links and opportunities for cooperation between selected
projects (for instance through the fast-track initiative for INTERREG IV C projects);
(c) identification and systematic collection of future events on innovation-related issues
organised by the services or by the selected projects;
(d) assessment of areas with potential overlaps;
(e) involvement of the different services in the work on innovation-related issues.

Hence, the experience of the current period of parallel programming and increasing search for
synergies between the major European initiatives (CIP, SF and FP7) will provide a stronger
foundation with a view to the development of the post-Lisbon policy (2014 and beyond) framework.

27
Annex

1. Agenda of workshop

EXPERT WORKSHOP
TOWARDS MORE EFFECTIVE INNOVATION SUPPORT IN EUROPE:
HOW TO BETTER STREAMLINE AND USE SYNERGIES BETWEEN EU INSTRUMENTS SUPPORTING
INNOVATION
3 - 4 MARCH 2009
VENUE: SCOTTISH ENTERPRISE 5 ATLANTIC QUAY 150 BROOMIELAW GLASGOW
AGENDA
3 March 2009

13:30 – 13:40 Welcome by Carole McCarthy, Director of Innovation and

Commercialisation, Scottish Enterprise

13:40 – 13:50 Introduction by Christophe Guichard, Support for Innovation, DG

Enterprise and Industry
SESSION 1

13:50 – 14:30 Concept of innovation support and mapping of Community initiatives

supporting innovation
Moderator: M. Pattinson, INNO AG,
– Definition of the concept of innovation support,
J. Edler, based on INNO-Learning Platform Study 2008

– Mapping of Community initiatives considered as 'innovation support',

A. Reid, based on ILP Study 2008

– Focus on Community instruments supporting innovation in services

Jorge Gallego, based on a DG ENTR Study
14:30 – 15:30 Roundtable discussion: How to define Community 'innovation support'?
Roundtable participants:
- T. Lippenyi, National Office for Research and Technology, HU
– S. Davies, European Policies Research Centre, University of Strathclyde, UK
– C. Saublens, Eurada, BE
– A. Radauer, Technopolis, AT
– Representatives of EC DG Enterprise & Industry
15:30– 15:45 Coffee break

SESSION 2

28
15:45– 16:30 Toward better synergies between Community initiatives supporting
innovation – the case for mutual policy learning and networking
Moderator: Ian McCoull, Director of Innovation Support, Scottish Enterprise
– Rationale for mutual policy learning and networking in support of innovation at
Community level
K. de Pater, SenterNovem

– Community initiatives supporting mutual policy learning and networking in the

field of innovation support initiatives – focus on policy learning and networking
G. Strogylopoulos, based on a DG ENTR report on related initiatives to
Europe INNOVA

– Challenges for better using synergies between Community initiatives supporting

innovation
A. Reid, based on ILP Study 2008
16:30 – 17:45 Roundtable discussion: How to improve effectiveness of mutual policy
learning and networking in the field of innovation support at Community
level?
Roundtable participants:
- S. G. Edlund, VINNOVA, SE
– L. Hunt, South West Regional Development Agency, UK
– Erwin Siweris, Interreg IVC
- Walther Stöckl, Central Europe INTERREG IVB
– Representatives of EC DG Enterprise & Industry
4 March 2009
SESSION 3
09:15 - 09:25 Wrap-up of previous day discussion and setting the scene for final
session
Alasdair Reid, Workshop rapporteur
09:25 – 10:15 How to improve effectiveness of innovation support at EU level?
Moderator: H. Kergel
– Concept of a 'Subsidiarity test' and of an 'Effectiveness test' for innovation
support at EU level
B. Kamp, based on INNO-Learning Platform Study 2008

– The case of the 'European Cluster Observatory' initiative

M. Pattinson, based on INNO-Learning Platform Study 2008

– How to apply this 'test' instrument in the future with a view to improve
effectiveness of CIP actions (from input to impact indicators)
A. Radauer
10:15– 10:30 Coffee break
10:30 – 12:00 Roundtable discussion: How to improve the effectiveness of Community
innovation support? Lessons to be learned from national practices.
Roundtable participants:

29
 - M. Sharp, Enterprise Ireland, IE
– K. de Pater, SenterNovem, NL
– Marie Kanstrup-Clausen, Ministry of Science, Technology and Innovation, DK
– C. Saublens, Eurada, BE
– Representatives of EC DG Enterprise & Industry

12:00 – 12:30 Closing Remarks

Reinhard Büscher, DG Enterprises and Industry, Head of Innovation Support

Unit

12:30 - 13:30 Lunch and End of meeting

30
2. List of participants

No Name First name Organisation

1 DAVIES Sara European Policies Research Centre, University of
Strathclyde
2 DE PATER Koen SenterNovem

3 EDLER Jakob Manchester Institute of Innovation Research

5 GALLEGO Jorge University of Alcala, FACULTAD DE CIENCIAS

ECONÓMICAS Y EMPRESARIALES
6 HUNT Lorelei South West Regional Development Agency

7 KAMP Bart INNOVA Europe sàrl

8 KANSTRUP-CLAUSEN Maria Ministry of Science, Technology and Innovation, Center
for Innovation Policy (DASTI)
9 KERGEL Helmut VDI/ VDE Innovation & Technik, Berlin

4 LARS Fernvall Vinnova - Swedish Agency for Innovation Systems

10 LIPPENYI Tivadar National Office for Research and Technology

11 MC CARTHY Carole Scotland Europa, Scottish Enterprise

12 MC COULL Ian Scotland Europa, Scottish Enterprise

13 PATTINSON Marc Inno AG, Sophia-Antipolis

14 RADAUER Alfred Technopolis Group, Vienna

15 REID Alasdair Technopolis Group
16 SAUBLENS Christian Eurada Association

17 SHARP Michael Enterprise Ireland

18 SIWERIS Erwin INTERREG IVC Joint Technical Secretariat

19 STOCKL Walther Central Europe INTERREG IVB Managing Authority

20 STROGYLOPOULOS George Logotech

21 LILJELUND Lotta Ministry of Enterprise, Energy and Communications

22 BUESCHER Reinhard DG Enterprise and Industry

23 GUICHARD Christophe DG Enterprise and Industry

24 FREITAS Jose DG Enterprise and Industry

25 REPPEL Katja DG Enterprise and Industry

31