40 Policy Options and Practical Instruments
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Table 2.3. Basic principles in the organization and delivery of business services
Client Orientation |
Putting service to the client as the overriding principle. |
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Comprehensiveness |
Ensuring enterprises have convenient access to all the services |
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they need. |
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Coherence and |
The provision of complete and coherent packages of services |
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that cover all the management functions. In some instances, |
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Rationalization |
this requires the integration of the services already allocated to |
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one-stop shops. |
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Targeting |
Coherent packages of services, employing a common |
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methodology, must nonetheless be differentiated according to |
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client groups. |
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Use of ICT |
The use of ICT can not only revolutionize the delivery of |
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services, especially information provision, but also have a |
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major impact on the nature of the services provided. |
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A Strategic Approach |
A strategic approach is often more appropriate both in relation |
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to the role of support organizations and to the advice given to |
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enterprises. |
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Coordination |
Achievement of coherent and well-targeted services requires a |
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high degree of coordination, mainly at the regional level. |
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Quality |
High service delivery standards. |
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Professionalism |
High quality services need high quality professional staff to |
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deliver them. |
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Top-class Resources |
Efficient advice and (especially) information services require |
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appropriate resources, notably in the IT area. |
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Effective Promotion |
Even the best services are of limited value if they are not |
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known or fully utilized, by the target population. |
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Evaluation |
More extensive and rigorous evaluation of initiatives, to see if |
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they really work and how cost effective they are. |
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Source: Analysis of Good Practice. Top Class Business Support Services, 2001, available at http://ec.europa.eu/enterprise/entrepreneurship/support_measures/supportservices/analysis_of_good_practice_en.pdf.
Fiscal instruments
Research and development activities carried out by companies (Box K2.4.) benefit in many countries from a favourable fiscal treatment. In addition, public resources can be used for direct funding of R&D projects.
Enhancing the Innovative Performance of Firms |
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Box K2.4. What is R&D and why it matters?
R&D can be defined as any project to resolve scientific or technological uncertainty aimed at achieving an advance in science or technology. Advances include new or improved products, processes and services. In practice, definitions may vary in different countries to qualify for specific tax allowances. International research has consistently demonstrated the positive correlation between R&D investment intensity and company performance measures such as sales growth and share price in the sectors where R&D is important. Businesses are in a better position to achieve and maintain competitive advantage in the increasingly global market place with sustained R&D and other related investment at the right levels.
R&D tax incentives
The objective of this policy instrument is to encourage business R&D providing financial incentives through the tax system. There are different types of R&D fiscal incentives that can be used. These can be classified as:
•General: They are granted to all companies under certain conditions.
•Specific: They depend on obtaining a certain status as a R&D company. This status is usually contingent on a certain threshold on the share of revenues from research and development services over total income. Fiscal incentives may also be limited to small enterprises.
These incentives specify:
•The specific type of expenditures covered (all innovation expenses/only R&D, inhouse or external, including foreign; cost of patents);
•Any differentiation of rates. Typically, systems are more generous for basic research and less for development;
•The limits for any possible deduction (absolute or in relation to an identifiable benchmark);
•The modalities of certification of expenditures by the authorities (in advance or subject to review); and
•The time period for the application of the deduction.
Tax incentives can take the form of:
•Credits: Reducing the amount of taxes to be paid;
•Allowances: Reducing the tax base for the calculation of corporate earnings.
There are some generally accepted principles in designing R&D tax incentives (Table 2.4.).