Mapping SMEs Policies in the Digital Economy: Germany – Greece – UK
A guide to readers
November 2001
DEEDS - IST 1999-29035
MAPPING SMEs POLICIES IN THE DIGITAL ECONOMY: GERMANY – GREECE – UK
A guide to readers
1. TAXONOMY
Although the focus of analysis will be explicitly dedicated on SMEs-oriented policies, a systemic approach will be employed. The different components of the SMEs environment are addressed in that they are to be thought of as levers favouring the development of SMEs-oriented policies. Six components are identified: human resources, ICT and TLC infrastructures, the research community, enterprises and their relevant networks, the regulatory framework, the set of financial and fiscal incentives. When coupling these six components with the three layers of the access to the digital economy, in terms of the access to knowledge, a taxonomy emerges.
In this taxonomy, the 3 dimensions of access (access to digital infrastructure and technologies, access to networks and access to knowledge creation) are coupled together with 6 components of the economic environment where the SMEs operate:
HUMAN RESOURCES is the first component. Human resources are a crucial factor for the competitiveness of the enterprises. Enterprises lacking skills are restricted in their application of new technologies and in their potential growth. The actions are targeted to the development of skills, competencies, know how and jobs, including ICT and managerial ones. Often the requirements for qualified personnel increase with the use of new technologies and the traditional skill formation processes have to be supplemented with more intensive forms of life long learning and training.
ICT and TLC INFRASTRUCTURES is the very important component for the digital economy challenging the SMEs. The promotion of the adoption of ICT within the economy and the society represents one of the main pillars of policies for a competitive knowledge based economy.
RESEARCH and DEVELOPMENT where the actions are considered in order to favour R&D activities in the field of ICT or taking advantage from the ICT technological development. The main actions are considered towards networking between universities and businesses, digital communication and knowledge exchange among them, promoting of associate projects for R&D in ICT enabled business services.
ENTERPRISE and NETWORKS are core beneficiaries of e-policies. The innovation and growth rates are more and more concentrated in enterprises and in their networks. Some examples of actions are as follows: the establishment of regional centres for e-commerce, promoting co-operation between university innovation centres and new technology institutes. Launching IT incubators is considered as a support service mostly for new technology based start-ups which are an important source for growth.
REGULATION and e-government are very important components as they have an impact on economic performance. The actions are targeted to start-up regulation, the impact of regulation on SME, developments regarding e-government and the use of business impact assessment techniques in legislation. Administrative burdens are considered as a major constraint to business performance. The possibility to submit forms on-line normally makes the procedures simpler and more user-friendly. The introduction of ICT can allow businesses to increase their productivity and efficiency and lead to lower costs. Transactions carried out on-line can be much faster and cheaper. More transparency and easier direct contact represent an added value for businesses.
FINANCE and TAXATION in terms of access to finance are very important for enterprise’s growth and competitiveness. In the knowledge driven economy investments are concerning research and development projects, development of human skills, or other intangible assets. Meanwhile, many innovations are developed by start-ups or SMEs, which do not have access to stock markets and cannot obtain bank loans, because their cash flow only allows to service debts after a number of years of growth. SMEs need to seek alternative forms of finance such as venture capital. Venture capital firms frequently provide management competence, networks, marketing skills and therefore increase the potential of the SMEs and start-ups. Venture capital investments are aimed at enterprises with growth potential in high tech industries. For the SMEs in more traditional sectors, the investments like loan guarantee schemes and mutual guarantee schemes could be efficient tools for the provision of more risky loans to SMEs.
This taxonomy provides a methodological tool to classify a wide set of different policy actions in 3 countries and to distribute them guarding to the impact on the relevant access dimensions of the Digital Economy. In that way, the taxonomy leads to the assessment of the actions in national policies according to their technical focus and according to the impact on the knowledge circulation and generation process components. The categorisation of 3 types of access to the digital economy and 6 economic components provides the tool to compare each national framework in terms of policy strategy.
2. MAPPING POLICIES FOR THE SMEs IN THE DIGITAL ECONOMY: GERMANY – GREECE - UK
This paragraph shows the main results of the empirical assessment of the three country-case studies: Germany, Greece and UK. Differences and similarities will be addressed in order to eventually identify the presence of peculiar national features in developing SMEs policies.
Moreover, it is useful to seek and to explain the presence of any strong/soft correlation between national peculiarities in the process of policy making, and the national distinctive features in the structural and dynamic characteristics of the national SMEs environment and ICT infrastructure. Finally, it allows investigation of the level of congruity between national SMEs policies, the national framework of policy for the digital economy, and the eEurope framework.
2.1 UNITED KINGDOM
In the UK, the second level of the access to the digital economy (access to networks/clusters & networks) seems to be the main policy objective. The priority is also given to the codified knowledge and to the generation of new knowledge which are revealed by the actions dealing with incentives to research. Also the experience of the UK online centres deserves particular attention, because it couples content services to the provision of access to the digital infrastructure.
In the map, the link below each policy action summary is connected to the file containing the policy action description.
Therefore, the links related to the TRENDCHART database are marked by TRENDCHART, while the links related to the paper Opportunity for all in a world of change: a white paper on enterprise, skills and innovation are marked by WHITEPAPER . The colour of each link matches up to the highlighted parts of the White Paper text related to the issue pointed out in the map.
The highlighted parts of the UK on line Annual Report are marked by UK online in different colours.
In the UK, innovation policy actions have been formulated within a political context which held the principles of free market forces, privatisation and de-regulation of national economic and social welfare. The Department of Trade and Industry (DTI), acting as a key government actor in innovation policy has adopted a less interventionist policy approach towards industry. DTI policy focuses particularly on the diffusion of best practice and on the creation of networks and business support services rather than on direct funding of innovation related activities.
In the White Paper Our Competitive Future: Building the Knowledge Driven Economy , the Government is concentrated on innovation regarding the issue of regionalisation and a second Foresight exercise to further development of the strategies. The national priorities emerged in mechanism aimed at the stimulation of dialogue and research partnerships between research universities and business companies.
DTI is involved in various activities aimed at encouraging firms to innovate, exploiting new ideas successfully, diffusing best business best practice. Its main objectives are: promotion of enterprise, innovation and increased productivity, optimal use of the UK science, engineering and technology base, creation of strong and competitive markets and creation of effective regulatory framework.
The current innovation policy in the UK addresses the three priority areas of “fostering an innovation culture”, “establishing a framework conducive to innovation” and “gearing research to innovation”. A clear target of the UK Government is to improve and enhance the way in which the results of research produced in the higher education and independent research sectors are translated into commercial products, processes and services.
The objectives of the UK innovation policy measures are a strong, well-resourced science and engineering base, possessing a strong culture of entrepreneurship, in close relationship through the transfer of expertise, knowledge and trained personnel with the business and enterprise sectors. There is a variety of support measures to achieve improvements in the innovation practices, as well as a wide range of government innovation support measures targeted at SMEs as research and innovation policies which are imprinting the innovation policy and the policy debate in the UK.
Regional Development Agencies (RDAs) have been established and charged with the task of formulating regional economic and innovation strategies with a significant budget that have been allocated to them. The major roles of the RDAs is to enhance the level of regional networking and to promote the growth of clusters, specific co-operative arrangements between the regional higher education institutes, regional SMEs and large industries. The RDAs role is seen as a facilitator rather than as a funder.
A New Regional Innovation Fund has been created to assist RDAs in the implementation of regional initiatives.
2.2 GERMANY
In Germany, the access to codified knowledge and to the generation of new knowledge through the development of ICT infrastructure and networks seems to be the main policy objective.
Besides, the policies targeted to the circulation of information, through e-government and administrative simplification are increasingly relevant.
The regional competence centres for e-commerce network deserves particular attention.
In the map, the link that stays below each policy action summary is connected to the file containing the policy action description.
Therefore, the links related to the TRENDCHART database are marked by TRENDCHART, while the links related to the action plan Innovation and jobs in the Information Society of the 21st century are marked by INNOV&JOBS . The colour of each link matches up to the highlighted parts of the action plan text related to the issue pointed out in the map.
The highlighted parts of the Technology
policy: paths to growth and employment: The Courage to Innovate:
Technology Policy
are marked by PROMOT INN SMEs in different colours.
The priorities in the German innovation policies are: the adoption of the Tax Reform at mid-2000 which has remarkably influenced the development of the German economy. Companies and employees will experience tax relief in a gradual path extending to the year 2005.
The Action Programme Small/Midsize Enterprises bundles together the many individual measures aimed to assist SMEs. Since the SME policy is a cross-section task whose successful structuring and implementation can only be carried out in dialogue and co-operation with various policy institutions.
One of the priority areas of the German government is the technology transfer between industry and science, by giving incentives to universities to bring to market new technologies produced in laboratories and by stimulating mobility of personnel between industry and science.
The action plan Innovation and Jobs in the Information Society of the 21st century has launched numerous measures in the field of multimedia and electronic commerce. Besides, in order to increase flexibility and competition for R&D, some thematic programmes are promoted.
Support of SMEs in R&D and innovation is a main objective of the innovation policy in Germany. Several programmes in this field are established that support national and international research co-operation among SMEs and between SMEs and research institutions
In the recent years, some efforts have been made to support the creation of new firm foundation and the development of an efficient market in Germany.
The support of technological catch up of the East Germany industry was done by BMWi.
As far as the regional policies are concerned, each of the 16 Lander has been developing a set of innovation policy actions.
2.3 GREECE
Basing on the available documentation provided, the first level of the access to digital infrastructure and technology coupling the development of ICT and TLC infrastructure and networks seems to be the main policy objective in Greece.
Besides, the efforts towards the access to the codified knowledge and to the generation of knowledge through investment in human resources and partnerships between university and business are remarkable.
In the map, the link that is below each policy action summary, is connected to the file containing the policy action description.
Therefore, the links related to the TRENDCHART database are marked by TRENDCHART.
Besides this source, information about the policy action underway or planned have been kindly provided by the Greek member of the Deeds policy group.
The Government strategy for the Information Society is based on some basic principles: equal opportunities and access for all, the creation of an environment that conducts to the entrepreneurship and innovation and safeguarding the operation of democratic institutions. Some goals have been set and they requires co-operation between the public and private sector. These are: offering better services to citizens and firms, through the modernisation of the state operation and grater access and transparency; realising faster economic growth, through fostering the creation of new firms, the emergence of new sectors and increased productivity and competitiveness; increasing employment by supporting the creation of new jobs, upgrading skills and developing of new form of work, developing the national communication infrastructure through regulatory reform in telecommunications.
Since the economic competition is based on technology and knowledge, a number of initiatives are aimed at improving the use of new technologies in the economy for example: supporting the SMEs through upgarding the IT industry and by interventions in the product and processes.
Sources:
· Federal Ministry of Economics and Technology-Federal Ministry of Education and Research, Innovation and jobs in the Information Society of the 21st century. www.bmwi.de/Homepage/download/english/innovation_and_jobs.pdf
· Action Programme by the German Government’, November 1999; Federal Ministry of Economics and Technology, ‘Small-Midsize Enterprises Action Programme’, July 2000.www.bmwi.de/Homepage/download/mittelstand/Aktionsprogramm-Mittelstand_E.pdf
· Technology policy: paths to growth and employment www.bmwi.de/Homepage/download/english/technologiekonzept_e.pdf
· DTI-DFEE, ‘Opportunity for all in a world of change: a white paper on enterprise, skills and innovation’; http://www.dti.gov.uk/opportunityforall/
· e-Envoy, ‘UK on line. Annual report 2001’, 2001. http://www.e-envoy.gov.uk/ukonline/progress/anrep1/default.htm
· TRENDCHART: Database of innovation policies measures in Europe http://trendchart.cordis.lu/Datasheets/index.cfm?
· Greek Government White Paper Greece in the Information Society, Strategy and Actions http://www.primeminister.gr/index_en.htm