Innovation and Research in Business, including knowledge transfer in Portugal

1. Innovation and Research in Business, including knowledge transfer in Portugal Nuno Vitorino Mateus May 19, 2012

2. EC DG Regio Initiative - Post 2013 Perspective Schuman Associates ‘umbrella’ Scientific Team Strategic Diagnosis International Benchmarking Case Studies Team’s Knowledge and Experience 2/12

3. Strategic Diagnosis Dimensions Portugal’s position in the EU-27 innovation ranking has significantly improved Structural change process must be reinforced/refocused, requiring enhanced business innovation and research Good innovation performance has not resulted in the creation of sufficient wealth and jobs Business innovation and research in Portugal significantly depends from EU funds Policy coordination, vital for innovation design and implementation, is still largely absent 3/12

4. Case Studies Conclusions Direct relationship between sophistication/ranking of business innovation and research projects and the need for tailor-made funding mechanisms Successful business innovation investments are possible in Portugal, namely when associated with internationalisation Companies focus on improving turnover, while researchers are more focused on the publication of results Business innovation and research project’s life spans are often not compatible with EU funding cycles Success flows primarily from the promoter’s excellence and resilience, usually assisted by pro-active cooperation from Public Agencies 4/12

5. International Benchmarking Lessons Business innovation and research promotion is a vital element of modern economic policies Each benchmark has a value on its own, but common guidelines are relevant Minimising transactions costsand red tape are a common goal and influence simplification of access, analysis and decision-making funding procedures Business innovation and research demands adequate funding opportunities Both broad public innovation policy instruments and customised policy tools are necessary When risk-taking funding schemes are implemented with public financial support, the progressive association of private capital is often present and mostly desirable 5/12

6. Together with knowledge or technological institutions, innovative or internationalised companies are innovation partners Funding automatically approved once two conditions are met: (i) entrepreneurial initiative on the implementation of innovation projects + (ii) participation innovation partners through contractual arrangements Recommendation 1: Improve and Facilitate Access to Innovation Focus on experimentation of new concepts and ideas (e.g. proofs of concept, prototyping, market analysis), that require the participation of qualified business or technology partners Large spectrum of business innovation: (i) improvement of productive and commercial processes, (ii) creation of new products or services and (iii) improvement of managerial skills Adoption of a large scale innovation and research voucher scheme to simplified short-term (6-12 months) targeted projects 6/12

7. Decision making process simplified by the outsourcing of analysis and negotiation processes to independent experts - cutting administrative costs and tailoring public intervention to business innovation specific requirements Focus on the implementation of innovation-oriented business investment projects through (i) consolidation of regional economic structures/smart regional specialisation strategies and (ii) implementation of thematic partnerships for the creation/improvement of export oriented products and services Recommendation 2: Promote Business Innovation Partnerships Negotiation process monitored by relevant specialised Public Agencies Funding by customised business investment results-oriented incentives 7/12

8. Encouragement of experienced foreign venture capital institutions involvement, through joint ventures or consortiums with Portuguese companies Reduced transaction costs, once funding decision-making from innovation investment funds is automatic upon (i) confirmation by independent experts of the innovative nature of proposed projects and (ii) validation of promoters’ financial resources (own resources, loans, equity or contracted State Aid subventions) Recommendation 3: Create State and EU co-financed Innovation Investment Funds Innovation investment funds should distinguish between (i) innovative early stage investment projects (67% funding of total investment costs) and (ii) technological mature commercialisation, late financing gaps investment and innovation expansion projects (33% funding) Focus on leveraging promoter’s own or other financial resources in innovative investments 8/12

9. Facilitated by: (i) cutting red tape for start-ups and young innovative companies and (ii) promotion of an entrepreneurship culture Creation of a “one-stop-shop” service to start-up entrepreneurs, through contractual arrangements with specialised interfaced entities, which assume the preparation of applications, innovation projects monitoring and other support tasks Recommendation 4: Translate Knowledge into Economic Value through Innovation Focus on narrowing the gap between knowledge creation, knowledge transfer and the creation of economic value through innovation Implementation of a stronger, more effective, flexible and integrated support from Structural Funds to academic scientific and technological institutions entrepreneurship 9/12

10. Focus on increasing the insertion of Portuguese R&D and business players in international R&D and innovation networks by (i) better adjusting the use of EU Funds to open, collaborative and global innovation and (ii) removing initial barriers to the entry of Portuguese players into European R&D and innovation projects Facilitated by renewed Innovation Strategies, improved high-level education, rationalised academic R&D, effective mobility between academia, R&D or technological centers and companies and increased innovation role to the response to key national societal challenges Recommendation 5: Stimulate Integration in International Networks Implementation through (i) funding by Cohesion Policy, (ii) blending EU funding with financial engineering mechanisms and (iii) encouraging the participation of external players and of mature domestic innovation stakeholders 10/12

11. Looking backwards with today’s eyes Focus business innovation on SMEs? Concentrate innovation funding on lagging regions? Invest on research rather than technological development? Creation of specialised innovation funding vehicles? Rely on subsidies or on US inspired funding models? 11/12

12. Thanks for your attention. 12/12