How effective are EU support programs for innovation in SMEs?

A recently published study, in which Prognos was involved, investigated whether the effectiveness of public innovation support in the EU has improved since 2009. What are the biggest obstacles for SMEs? How satisfied are SMEs with the support they receive? Where aregaps in innovation support? How effective are the measures funded under the EU's Horizon 2020 funding program? To answer these and other questions, the study took a close look at the wide range of EU funding instruments for SMEs. Recommendations for policy action emerge based on the analysis.

Obstacles to innovation require an improved strategy

The study's findings were identified using a variety of methods: a topic-centered literature review, stakeholder interviews, an online survey, and an evaluation of six INNOSUP actions.

The literature review identified various barriers to innovation faced by SMEs. These include difficulties in financing, but also in recruiting skilled workers, as well as organizational hurdles caused by a lack of experience or expertise. Often there is a lack of market knowledge and the partner network is too small. Bureaucratic hurdles have to be overcome and knowledge and technology transfer is insufficient. Depending on how SMEs innovate – whether through R&D or through practical learning and interaction with other actors – different barriers come into play. To address the barriers to innovation, the EU 2020 developed An SME Strategy for a Sustainable and Digital Europe.

Online surveys revealed a differentiated picture

Two anonymous online surveys targeted European SMEs on the one hand, and regional, national and European innovation support actors on the other. 2176 SMEs and 498 in-novation intermediaries participated in the surveys. Regional differences emerged during the evaluation. For example, SMEs in Southern and Eastern Europe face greater challenges than companies in Northern and Central Europe.
For micro-enterprises, the biggest innovation hurdle is a lack of funding. They often lack information about financing options, new technologies and regulations. Since they are less likely than other companies to receive public funding, microenterprises are also less likely to be satisfied. However, if they do benefit from public support, they are more likely to appreciate it than other businesses.
"Overall, SMEs are more likely to benefit from public support than microenterprises, and they are more innovative as a result. However, SMEs are more concerned with access to skilled labor than with financial assistance," says Prognos project manager Jan-Philipp Kramer.

Positive evaluation of INNOSUP actions

The study evaluated INNOSUP actions in terms of their relevance, effectiveness, efficiency, coherence and EU added value. Overall, a positive conclusion was drawn. The actions meet the needs of the beneficiaries, work well overall and contributed to improvements in the medium term. All INNOSUP actions created synergies with other national or EU programs. The cross-border elements were considered particularly valuable.

Recommendations for policy makers

Overall, the vast majority of SMEs (85%) are more satisfied with public support than in 2009 (47%). Nevertheless, innovation support measures should be communicated more strongly, especially in member countries that only joined the EU from 2004 onwards. Procedures should be simplified and harmonized. Further recommendations with a view to the future can be found in the overall study.

Project partners of the study

The study "The Effectiveness of Public Innovation Support for SMEs in Europe" was commissioned by the EU Commission, DG GROW. In addition to Prognos, the project partners include the Centre for Strategy & Evaluation Services (CSES), the Centre for Industrial Studies (CSIL) and SME Research.

To the study (Website EU Commssion)

Authors:  Jan-Philipp Kramer, Janis Neufeld, Marie-Kristin Komendzinski and Thomas Stehnken