Innovation more important than ever, according to new studies
In an increasingly global, knowledge-based economy, innovation is more crucial than ever before, according to a series of innovation policy studies carried out under the 'Innovation and SMEs (small and medium-sized enterprises)' programme of the European Commission's DG Enterprise. The finding is one of five key consistent messages to have emerged from the 20 studies edited up to now. The first of these is that the application of new technology to meet fast-changing market needs is more important today than ever before. A report summarising the latest results of the studies states that: 'in the 21st century, while innovation will be the primary driver of successful industrial and enterprise policy, it must also inform policy in areas such as education, employment law and taxation.' The studies also revealed that innovation is not, and should not, be limited to high-tech, 'naturally innovative' sectors such as biotechnology and information technology. This includes a warning that 'innovation policy which focuses exclusively on high technology...risks missing the much larger opportunities for improved competitiveness and new products and processes in more traditional industries, which remain the EU's major employers.' The message that innovation, although widespread, is unevenly distributed, also emerges from the studies, specifically that the innovative capacity of industry is heavily weighted towards larger firms while 'the innovative capacity of most technology-using SMEs remains weak.' It emerges that many SMEs in the technology sector are handicapped by institutional barriers and costs such as patent-defence litigation. The study 'Enforcing small firms' patent rights' found, for example, that 49 per cent of small businesses see the cost of patent-defence litigation as a significant deterrent to investing in new inventions. The studies found that innovation is 'systematic rather than linear,' based on multi-dimensional processes of innovation and interaction between a variety of players. 'Innovation therefore requires the development, over time, of adequate networking and knowledge transfer mechanisms, which are crucial to exploit the potential of science-industry links,' states a report on the findings. It adds that although these systems may have technical elements, they are 'above all, networks of individuals.' It is important not only to identify and encourage good practice, the studies found, but to assess the state of a country's 'system of innovation,' including general framework conditions for the generation and use of R&D (research and development), the overall knowledge-base of the EU, business R&D incentives and rewards for successful discoveries, and mechanisms for networking and knowledge transfer.