Periodic Reporting for period 3 - InnoCAP (Innovation Capacity Building in SMEs (InnoCAP))
Reporting period: 2022-08-01 to 2023-04-30
It has long been recognized that a wide range of barriers leads to the fact that small-to-medium-sized enterprises (SMEs) make suboptimal use of external advice and information. They are often slow to adopt proven technologies and business practices.
On the other hand, there is evidence that SMEs, due to their agility and lean decision-making processes and problem-solving skills, are more likely to develop new and innovative products and services.
A study on behalf of FFG (2015) analyzed problems and barriers of SMEs in carrying out innovation activities. Besides financial barriers, a lack of understanding the importance of iteration, early user involvement and a lack of know-how about methods to manage and sustain innovation, was identified for Austrian SMEs. This report resulted in the program “Impact Innovation”, that funds Start Ups and SMEs utilizing innovation methods, iterating their products and/or services and involving their users during development. The funding of these projects mainly addresses financial barriers, however most applicants still present an immature methodological approach and about half of them present a clear deficit in innovation know-how. Therefore, one may conclude that further support for SMEs to build up their innovation capacities and support their innovation actions is needed. However, whilst the rationale for intervention is widely accepted and numerous support schemes on national and European level have been implemented to support innovation activities in SMEs, there is very limited evidence on whether public support for building innovation capacities actually deliver positive benefits and what forms of support are most effective. For these reasons, it was the objective of this action to conduct a large-scale randomised control trial (RCT) to test if scalable support measures can increase the innovation capacity in SMEs in order to gain evidence on the effectiveness of the support measures in fostering innovation capacity in SMEs.
After running this RCT we conclude that the delivery of the support services do have some barriers. One has to be aware of the differing views about the purpose of the support measures. Applicants want to succeed with their proposals for funding, by that first of all look for guidance for the application process. The agency wants to have impactful innovations, and by that looks for good designed innovation processes. The impact of support measures therefore is dependent on how you can manage these differing expectations. For this effect, there is no difference between different support measures - it is a pre-requisite for all measures. However, regarding the best format for supporting the design of innovation processes, the peer-learning format seems to meet the needs from all sides best.
On the other hand, there is evidence that SMEs, due to their agility and lean decision-making processes and problem-solving skills, are more likely to develop new and innovative products and services.
A study on behalf of FFG (2015) analyzed problems and barriers of SMEs in carrying out innovation activities. Besides financial barriers, a lack of understanding the importance of iteration, early user involvement and a lack of know-how about methods to manage and sustain innovation, was identified for Austrian SMEs. This report resulted in the program “Impact Innovation”, that funds Start Ups and SMEs utilizing innovation methods, iterating their products and/or services and involving their users during development. The funding of these projects mainly addresses financial barriers, however most applicants still present an immature methodological approach and about half of them present a clear deficit in innovation know-how. Therefore, one may conclude that further support for SMEs to build up their innovation capacities and support their innovation actions is needed. However, whilst the rationale for intervention is widely accepted and numerous support schemes on national and European level have been implemented to support innovation activities in SMEs, there is very limited evidence on whether public support for building innovation capacities actually deliver positive benefits and what forms of support are most effective. For these reasons, it was the objective of this action to conduct a large-scale randomised control trial (RCT) to test if scalable support measures can increase the innovation capacity in SMEs in order to gain evidence on the effectiveness of the support measures in fostering innovation capacity in SMEs.
After running this RCT we conclude that the delivery of the support services do have some barriers. One has to be aware of the differing views about the purpose of the support measures. Applicants want to succeed with their proposals for funding, by that first of all look for guidance for the application process. The agency wants to have impactful innovations, and by that looks for good designed innovation processes. The impact of support measures therefore is dependent on how you can manage these differing expectations. For this effect, there is no difference between different support measures - it is a pre-requisite for all measures. However, regarding the best format for supporting the design of innovation processes, the peer-learning format seems to meet the needs from all sides best.
The work performed in the first reporting period encompasses the finalisation and implementation of an RCT, as well as adapting to early on indications of a mismatch between intervention and sample. The Action began with an intensive design finalisation phase in which the research design was finalised and translated into an actionable plan. Additionally, a monitoring plan was set up to measure the success of the RCT throughout its execution. Once this was finished, we transitioned into the actual implementation of an RCT. In short, the final research design is a randomized, double-blind, two-arm trial focused on testing the impact of a bundle of two digital tools on improving innovation projects funded under FFG’s funding program Impact Innovation. Naturally, the sample comprised firms receiving funding from Impact Innovation, who are randomized into either the control group or the treatment group. The intervention, which only the treatment group receives, consisted of an innovation management software and access to an online mentoring platform. The trial has been designed to take place over the course of 2 years, admitting firms periodically into the sample in line with the funding decisions for Impact Innovation, thus our trial has a unique “trickle sample”. The main outcomes being measured are the impact of the intervention on success of project implementation which is evaluated by the project evaluators at FFG.
First results of the RCT indicate that the combination of digital tools is unsuccessful in fostering innovation in SMEs due to the lack of willingness of SMEs to integrate the tools into their project plan. There is evidence, however, that a more interactive intervention would be more successful in addressing this lack of know-how. In response to these findings, the intervention will be changed and the RCT adapted, accordingly, to account for these results and to investigate the efficacy of different support measures.
The second reporting period encompassed the design and implementation of the adapted RCT design. The main focus was on the delivery of the two new interventions: Peer Learning and Expert Led Workshops versus an Infosheet plus voucher for an online expert consulting platform. The intervention was carried out and efforts were put to avoid attrition throughout the process. A baseline survey and a followup survey were carried out with both treatment groups. Because of low participation also qualitative interviews and a focus group were carried out to gain more insights. The workshops were perceived very well, the less intensive Infosheet and voucher was used very rarely.
Dissemination activities included presentations on the Innovate Conference 2022, and writing Blog articles (https://www.innovationgrowthlab.org/blog/search-evidence-running-three-rcts). Furthermore the results were shared in the social entrepreneurship community and especially within FFG, to ensure the learnings are used in future service designs.
First results of the RCT indicate that the combination of digital tools is unsuccessful in fostering innovation in SMEs due to the lack of willingness of SMEs to integrate the tools into their project plan. There is evidence, however, that a more interactive intervention would be more successful in addressing this lack of know-how. In response to these findings, the intervention will be changed and the RCT adapted, accordingly, to account for these results and to investigate the efficacy of different support measures.
The second reporting period encompassed the design and implementation of the adapted RCT design. The main focus was on the delivery of the two new interventions: Peer Learning and Expert Led Workshops versus an Infosheet plus voucher for an online expert consulting platform. The intervention was carried out and efforts were put to avoid attrition throughout the process. A baseline survey and a followup survey were carried out with both treatment groups. Because of low participation also qualitative interviews and a focus group were carried out to gain more insights. The workshops were perceived very well, the less intensive Infosheet and voucher was used very rarely.
Dissemination activities included presentations on the Innovate Conference 2022, and writing Blog articles (https://www.innovationgrowthlab.org/blog/search-evidence-running-three-rcts). Furthermore the results were shared in the social entrepreneurship community and especially within FFG, to ensure the learnings are used in future service designs.
The expaction was to see positive effects of different support measures. We learned however in Innocap that the chosen support measures, especially the digital tools did not reach our expectations regarding uptake and use. Even workshop formats with low entry barriers did not have huge response rates. All this even despite very intensive communication. Nevertheless huge learnings could be drawn from the experiment through the insights from the qualitative research. It is especially important that the organisation offering the support is seen as knowledge provider by the recipients. Innovation and funding agencies in Europe do have the label as funding provider, more than providing knowledge about innovation processes. Nevertheless funding also gives the possibility to make additional services obligatory, which might add impact to the money handed out by funding. Furthermore, peer-learning activities seem most suitable for the purpose in a very heterogeneous population.
These learnings are valuable, when the role of Innovation Agencies in Mission-oriented policies or Tranformative Innovation Policy is discussed. The need for more involvement of the agencies is often formulated, but often it is neglected how these agencies are built and how they are seen by companies and researchers. "Simply" offering more services is not enough, if we want transform industries, sectors or economies to become more sustainable. One has to think about how the agencies are perceived by organisations they want to change.
These learnings are valuable, when the role of Innovation Agencies in Mission-oriented policies or Tranformative Innovation Policy is discussed. The need for more involvement of the agencies is often formulated, but often it is neglected how these agencies are built and how they are seen by companies and researchers. "Simply" offering more services is not enough, if we want transform industries, sectors or economies to become more sustainable. One has to think about how the agencies are perceived by organisations they want to change.