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Mature companies:

•Need to innovate to stay competitive but may revert to different innovation models;

•Radical innovation can disrupt their existing markets and be commercially damaging;

•Their internal structures and existing skill sets may not provide the full breadth of innovation skills that are essential to compete in increasingly competitive markets;

•An increasing number of companies are developing a policy of open innovation, looking beyond their own internal resources; and

•Typically rely on self funding.

Closed and open innovation

The contrast between open innovation and closed innovation is illustrated in Table 1.2.

Table 1.2. Closed innovation versus open innovation principles

Source: Chesbrough, Henry (2003), Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press.

Why collaboration is important?

The new models of innovation emphasize collaborative relations between firms as a source of competitive advantage (Table 1.3.). This requires from firms the ability to develop specific skills and put in place strategies that explicitly incorporate this interaction to achieve superior innovation performance. “Collaborative innovation” should not be confused with the oneway relation of outsourcing (buyer-supplier) and its associated narrow emphasis on costs.

12 Policy Options and Practical Instruments

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Table 1.3. The benefits of collaboration

Source: MacCormack, Alan (2007), Innovation through global collaboration: a new source of competitive advantage, Harvard Business School Working Paper 07-079.

Collaborative capabilities

The development of collaborative capabilities must be anchored in four pillars:

•People: Specific management skills are required to coordinate the work of distributed teams and exert influence over resources that are not under the firm’s control.

•Process: Procedures need to be in place to manage collaboration. These can be refined from the experience gained from pilot projects.

•Platform: The development of technology platforms, involving tools for interaction, standards, rules sharing intellectual property and knowledge management systems facilitates interaction and creates a basis for future collaborative projects.

•Programme: As opposed to strict project-based management, a programme focus allows companies to gain better insights to increase performance.

Small and medium-sized enterprises: do they have a role?

Small and medium-sized enterprises (SMEs) are an essential ingredient in taking forward innovation that comes out of the knowledge base in a region:

•SMEs enjoy greater flexibility and can therefore take more risks than larger companies in experimenting with new processes or technologies.

•SMEs can capture ideas from the research base of universities, other public sector institutions and commercial laboratories and drive them to the market place.

A number of countries have established various support measures and instruments supporting the development of the SME sector. These measures are especially relevant for the UNECE catching-up economies, where the SME sector is an important factor for economic transformation and structural change (see Box C1.1.).

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Box C1.1. Policy support to SME development3

Russian Federation

The Federal Law No.209-FZ formulates basic goals of government policy in fostering favourable conditions and rendering assistance to small and medium businesses in the promotion of goods, services and the results of intellectual activities in local and foreign markets. The Law provides a general framework of SME support, which is transformed in concrete measures in other normative legal acts:

•Special tax regimes, simplified tax record-keeping rules, simplified tax return forms for specific taxes and fees for small enterprises;

•A simplified bookkeeping system for small enterprises pursuing certain types of activity;

•A simplified procedure of preparing statistical reports;

•A privileged procedure for settling accounts for the state and municipal properties that have been privatised by small and medium businesses;

•The details of SME participation in state and municipal tenders for delivery of goods and services for public needs;

•Measures for safeguarding the SME rights and interests;

•Tools of financial support to small and medium businesses; and

•Development of supporting infrastructure such as business development centres and agencies, state and municipal funds for SME support, guarantee funds, science and technology parks, business incubators, marketing and business training centres, etc.

Republic of Moldova

The Strategy for Support to SME Development is the main instrument of state policy in support of SME development in Moldova. The Strategy serves as a basis for the development and implementation of programmes and action plans of ministries, other central and local public authorities, as well as the technical assistance projects of foreign donors, aimed at creating the necessary conditions for development of small and medium-sized businesses. Its main objective is to create favourable conditions for SME development and, in particular:

•To increase the contribution of the sector to economic growth;

•To increase the contribution of the SME Sector to poverty reduction through development of new employment opportunities in order to secure the population with real wages; and

•To support the creation and development of a greater number of sustainable and competitive SMEs.

Various measures in the Strategy envisage improved access to finance by SMEs; support to the development of business support services; and promotion of the dialogue between the Government and private sector.

3 Source: documents submitted by members of the UNECE Team of Specialists on Innovation and Competitiveness Policies.