How to tackle structural barriers to innovation support

Updated: Apr 20, 2020

To tackle the grand challenges the world is facing today, the innovation is indispensable. The reasons for providing public support for innovation activities are many, however, public innovation support actors face a set of barriers in offering their services that lead to a mismatch in support and therefore reduced impact. The H2020 SMEthod project work uncovered a set of structural barriers that public support organisations across the EU face when offering innovation support to SME’s. Furthermore, SMEthod articulated policy recommendations for how to tackle these.

Our results confirm a set of 10 structural barriers that hamper innovation support in SME’s. While the majority of the barriers identified relate to the supply side of support, the most essential barriers relate to the demand side for support. The demand side of public innovation support is characterised by (1) a lack of diverse teams, (2) lack of ambition and (3) rising disparities in innovation. The supply side in its turn is characterised by (4) gaps in support, (5) complexity of the support system, (6) lack of matching private funding, (7) lack of stability in policy, (8) lack of resources for policy implementation, (9) support of grand challenges and (10) lagging skill development in support ecosystem. To be able to innovate in a sustainable way and to offer optimal support to innovator teams important investments will need to be made in capability building. In addition to the identified barriers listed above the analysis offers policy makers and support agencies recommendations on how to tackle these.

In terms of recommendations to policy makers, firstly our results highlight that funding is not enough to succeed. Fundamentally, the right framework conditions have to be in place for firms to be able to innovate. Framework conditions that can absorb shocks and offer maximum stability are crucial for the operation of innovative SME’s. Secondly, as access to talent sets the boundary conditions for which type of SME’s can be developed, a set of policy instruments should focus on building capabilities, accessing global talent and forging strong teams. Thirdly, business support needs simplification by fostering complementarities between different support agencies enabling the growth of different types of firms with appropriate instruments. Fourthly, the predictability in policy and instruments has to be safeguarded and in case changes are needed additional implementation resources have to be reserved.

In terms of recommendations to innovation support agencies, firstly, there is a need for R&D funding towards United Nations Sustainable Development Goals and market creation and risk balanced public private partnerships. Secondly, each support agency should be aware of the framework they use to segment firms for firm support. While all support agencies have to make decisions on which firms are receiving innovation funding, not all agencies have a clear framework on how to segment firms. Important segmentation criteria for SME support that deserve more attention are ambition (long-term motivation), skill base, regional location and ecosystem participation. Thirdly, the support service system should be more user-friendly, limit data-inputs and be based on client needs. Finally, as resources are under increased pressure and the speed of technology development accelerates, support agencies should invest sufficiently in their infrastructure and skills. Summary of the Smethod H2020 project policy conclusions by VTT Finland’s M. Mikkola and M. Deschryvere