ENTERPRENEURSHIP AND INNOVATION PROGRAMME EIP PERFORMANCE REPORT January 2012 1 This report has been drafted by Commission staff responsible for the management of the Entrepreneurship and Innovation Programme (EIP). It was written for the EIP Programme Committee but is also aimed at a wider audience interested in obtaining insights into the impact of the programme. The report does not cover all the actions financed under the EIP since 2007. There are other reports available1 that are more comprehensive or more detailed, but this report gives an overview of the programme’s performance: it covers the most budget-intensive actions and illustrates how small scale policy actions have contributed to changing the regulatory environment for all businesses. The picture painted by the performance report does of course depend on the progress of the actions. While some have been completed and have therefore already produced visible impacts, others started being implemented at a later stage and their impact may not yet be (fully) visible. This is not necessarily an indication of bad performance — the final picture will only be available when the programme has been completed (i.e. towards 2015). Moreover, some actions have immediate objectives (e.g. specific conferences) while others have a longer-term perspective (e.g. eco-innovation actions); it is therefore not possible (nor is it the objective of the report) to make direct performance comparisons. 1 http://ec.europa.eu/cip/documents/implementation-reports/index_en.htm 1 EXECUTIVE SUMMARY The Europe 2020 Strategy — the EU’s growth and jobs strategy for this decade — aims, among other things, at boosting the competitiveness of European businesses and creating more jobs and prosperity. The Competitiveness and Innovation Framework Programme (CIP) is the key EU funding programme to address the challenges EU industry is facing today and in the years to come. More than 2.145 million EUR are earmarked for this under the sub-programme on Entrepreneurship and Innovation2 for the period 2007-2013. The six objectives3 of the Entrepreneurship and Innovation Programme (EIP) remain highly relevant in the context of the recent economic crisis. The EIP has made it possible to finance a number of growth-enhancing measures essential to the whole economy and especially to European small and medium-sized enterprises (SMEs). The EIP final evaluation,4 completed in April 2011, assessed the relevance, efficiency, effectiveness, information and awareness, utility and sustainability of the programme, with a specific focus on its main components: financial instruments, the Enterprise Europe Network, and innovation actions. The evaluation confirmed that EIP is on track to achieve the anticipated impacts. It also underlined that ‘it is addressing the needs, problems and issues it was designed for and it is doing so in a particularly efficient way at European level.’ The Programme is proving a real benefit to end-users, particularly SMEs. This report outlines some of the main achievements of the programme, concrete results and successes at this half-way point in the programme. Improving Major market gaps have been identified with regard to SMEs' access to finance. The access to multiannual financial instruments in the form of guarantee schemes, risk-sharing facilities and finance equity and quasi-equity support were designed to facilitate access to loans and equity finance for small businesses and to act as catalysts for public and private investors. The positive impact on the economic situation and business prospects of participating SMEs takes the form of stronger business growth and employment sustainability. Between 2007 and 2010, these instruments have assisted more than 90 000 companies,5 with underlying debt financing of 6.0 billions EUR under guarantees and with investment volumes of up to 1.3 billion EUR under venture capital. More than 108 000 jobs were created or maintained. 2 The EIP is one of the three specific programmes of the Competitiveness and Innovation Framework Programme (CIP) that began in 2007. 3 (a) access to finance for the start-up and growth of SMEs and investment in innovation activities; (b) creation of an environment favourable to SME cooperation, particularly in the field of cross-border cooperation; (c) all forms of innovation in enterprises; (d) eco-innovation; (e) entrepreneurship and innovation culture; (f) enterprise and innovation-related economic and administrative reform. 4 EIP final evaluation, CSES, April 2011. 5 Commitments for CIP financial instruments may be made until 31 December 2013; EIF has nine months beyond that to sign guarantee agreements with intermediaries. The availability period of loans may therefore run until September 2017. The total number of beneficiaries under this scheme will only be known by then. 2 Total investments/loan volume leveraged Number of beneficiaries assisted and (in billions) jobs maintained or created 14 400000 12 350000 300000 10 Implementation 2007 - 2010 250000 8 Target CIP (entire duration of 200000 the programme) 6 150000 4 100000 2 50000 0 0 Implementation 2007 - Target CIP (entire duration Beneficiaries SMEs Jobs created or 2010 of the programme) maintained Despite the existence of the Single Market, doing business across borders in Europe is still Providing business subject to significant barriers for SMEs. The Enterprise Europe Network has been in support contact with more than two million SMEs each year. More than half of the SMEs which services used the services of the Enterprise Europe Network confirmed that they had accessed new markets or developed new products. For the partnership services, on average, the impact on turnover was 220 000 EUR per company. The total impact on sales growth is estimated at 450 million EUR. Between 2008 and 2010, 2 400 jobs have been created by firms under partnership agreements. The trend of increasing number of partnerships per year is expected to continue in the coming years. The Enterprise Europe Network provides integrated services to SMEs through its more than 3 000 staff in 600 regional offices.6 The Network helps SMEs to access market information, to find potential business and technology partners and to participate in the 7th Framework Programme for Research and Technological Development (FP7). It offers advice on funding and internationalisation services. More than 15 000 promotion, information, match-making and brokerage events have been organised; 4300 cross-border partnership agreements between companies have already been concluded through the Network in just 36 months. The number of partnership agreements between SMEs is growing steadily. Some 18 % of technology profiles have led to formal technology transfer agreements brought about by the Network. The success rate for turning research profiles into agreements to submit joint proposals under FP7 stands at almost 45 %. The Network is also a very effective mechanism in receiving feedback from SMEs. Over 10 000 contributions from SMEs have been collected, in particular on public consultations (e.g. on the SME Panels on European Contract Law or the Working Time Directive). Intellectual Property Rights (IPR) stimulate research, innovation, inventiveness and creativity. Small and medium-sized businesses are frequently not able to make the most of their creativity, because they do not incorporate IPR issues into their business strategies. Public support is often provided on a national basis alone or is entirely lacking. EU-level projects were therefore initiated to improve IPR support. 6 The network’s geographical coverage includes EU Member States, candidate countries, future candidate countries and other third countries. For more information, see http://www.enterprise-europe- network.ec.europa.eu/index_en.htm 3 During its three years of operation the IPeuropAware project organised 39 seminars on IPR enforcement and awareness-raising seminars in 15 countries with more than 400 participants, tested 72 new IP services and tools on SMEs, which were then implemented by the national IP offices, trained around 250 IP officials on enforcement issues, advised more than 4 000 universities, public research organisations and SMEs and created a pan-European website with input from nearly all the European National IP Offices. In addition to the IPR support in the EU, a dedicated helpdesk was set up to provide similar support for EU SMEs doing business in China. The China IPR SME Helpdesk provides training for European SMEs on how to protect their IP when doing business in China. In its first three years of operation it served some 50 000 website users and offered over 400 private confidential consultations. As a result of Helpdesk advice, 30 % of the users took a specific course of action (e.g. retaining lawyers, registering trademarks, undertaking administrative enforcement). This has increased the likelihood of effective protection for European SME-owned IPR, as well as offering protection against infringement, something which could potentially inflict substantial damage costs. The EIP programme helps to improve framework conditions for certain industrial sectors. Improving Unlike direct grants to SMEs, policy support measures play a part in changing the regulatory sectoral environment and thus have a significant influence on all the businesses in a specific sector. conditions As an example, EIP has helped to boost the competitiveness of the construction industry, which occupies an important place in the European economy. Not only does it generate around 10 % of the GDP, it also provides 20 million direct jobs, mostly in micro and small enterprises. The programme has supported various competitiveness analyses of the construction sector. The conclusions and recommendations provide key input to the forthcoming Communication on the sustainable competitiveness of the construction sector. The new regulatory environment will seek greater convergence in the way EU legislation is implemented at national level, facilitating cross-border services, reducing the administrative burden, and providing more opportunities for innovative solutions. The study on the Lead Market Initiative and sustainable construction developed a generic ‘burden catalogue’ structure with deep analytical and qualitative insights into how information obligations translate into administrative burdens for companies. The conclusions and recommendations of the study will feed into the future sustainable competitiveness agenda in the construction sector in terms of ‘smart’ regulation and administrative burden. The programme is also instrumental in supporting innovation policy itself and making sector Support all conditions as well as business support more innovation-friendly. forms of innovation The Europe INNOVA initiative, for instance, supports the development of sound, targeted policy measures through partnerships of relevant stakeholders, such as innovation agencies, technology transfer offices, business incubators, financial intermediaries, cluster organisations etc. In 2009, 3 new Europe INNOVA partnerships were set up on knowledge-intensive services (KIS-IP), eco-innovation (Eco-IP), and cluster co-operation (Cluster-IP). As a result, new policy tools are now under development. For example, the partnerships under the 4 Innovation Platform for knowledge-intensive services (KIS-IP) succeeded in the setting up three new sector specialised venture capital funds and two new grants and voucher programmes. The programme has also supported the market application of 134 eco-innovation projects Demon- in various sectors such as recycling, green business, the food and drinks sector, and the strating eco- buildings sector. These projects will have an added demonstration effect, by showing to the innovation market the growth potential of these eco-innovations. This grant scheme is highly popular solutions among SMEs, being an effective means of addressing the needs of innovative SMEs in the sector. Approximately 65 % of participants in these three calls were SMEs. The programme has a significant leverage effect, given that participants are required to provide 50 % of the co- funding.7 Following the first call in 2008, the very first grants were not made until 2009. It is therefore too early to predict what results and impacts the projects will have as they are still at the implementation stage.8 However, a dedicated study has recently been launched, to investigate the results and achievements and to analyse the economic and environmental impact of ongoing and completed eco-innovation projects. The EIP is also concerned with fostering better framework condition for SMEs. A key Improving component is to facilitate exchanges of best practices between the CIP participating countries. framework For example, the EIP has financed ways of measuring and supporting Member States’ progress conditions for SMEs in simplifying the administrative procedures involved in starting up a small business, working towards targets set by the Competitiveness Council. This takes the form of annual checks and of identifying and exchanging good practices between the participating countries. The result has been a fall in the average time and cost required to start a company in the EU, as illustrated by these graphs: There has been a major reduction in the time taken and the costs involved in starting up and running a small business. In 2010 the average time and cost of starting up a private limited company was 7 days and 399 EUR, compared to 12 days and 485 EUR in 2007; this improvement is partly due to best practice exchanges and benchmarking financed by the EIP. 7 Final evaluation of the EIP.(http://ec.europa.eu/cip/files/docs/eip-final-evaluation-report_en.pdf) 8 Final evaluation of the EIP.( http://ec.europa.eu/cip/files/docs/eip-final-evaluation-report_en.pdf) 5 Monitoring policies, The EIP has also supported a wide range of policy-related measures such as statistical providing analysis and benchmarking; policy monitoring and analysis; workshops and exchanges of analysis best practices between policy makers. and bench- marking Studies which involve collecting data and assessing market performance and the regulatory framework at industry level in the single market have identified strengths and weaknesses and shaped the Europe 2020 flagship initiatives, in particular the Communication on 'A new industrial policy for the globalisation era' and the 'Innovation Union' Communication. For instance, the European Innovation Scoreboard makes a yearly comparison of the innovation potential and performance of Member States and selected other countries, drawing on statistics from a variety of sources, primarily EUROSTAT and the OECD. Another example is The reports are widely used by national and regional stakeholders in the EU in Another example concerns the EU SME innovation policy related conferences and a range of policy and academic workshops. The scoreboard is a reference source on innovation performance in the European innovation policy community. Its results are used as a background for press articles on innovation issues. It also benchmarks EU innovation performance against that of major economic partners (e.g. the US, China, Brazil and Russia), so its results are used in a variety of international meetings as background documents for expert and political meetings. Another example concerns the EU SME annual reports and the SBA country factsheets. The series of annual reports on the most important SME trends in the EU and the set of annually updated SBA country factsheets for a total of 37 countries (EU-27 Member States plus 10 non-member countries) are the result of extensive discussions and exchanges since 2009. These recurrent publications have helped to establish a central monitoring tool for measuring the implementation of the Small Business Act (SBA). At the same time, they have greatly helped to raise the awareness of the general public on SME issues, and SBA implementation in particular. Over the reporting period, data have been cited in media articles, in both printed and electronic form. In the area of sustainable industrial policy, a number of studies were launched to identify the potential of sectoral approaches to limiting CO emissions in a post-2012 international 2 framework. These studies significantly contributed to the EU position on sectoral crediting in international climate change negotiations. Options for a possible mandate for a more formal type of business engagement in the international climate change negotiations were also identified. The first ideas were presented at the Copenhagen climate change conference in December 2009 and the final report at Cancun in December 2010. 6 The analysis of European industry formed the basis for the Commission Decision on sectors at risk of carbon leakage. That was essential in ensuring the competitiveness of EU industry while maintaining the environmental effectiveness of the EU emissions trading scheme. These studies made a significant contribution to the EU's leadership role on international climate change negotiations. The programme has boosted entrepreneurship and a culture of innovation by its common Boosting initiatives in the areas of entrepreneurship education and female entrepreneurial activity, entre- developed by the Commission and countries participating in the CIP. At present, the preneur- Commission supports nine Europe-wide projects in the field of entrepreneurship education.9 ship They will serve as models for introducing novel methods of entrepreneurship education in all the Member States. In total, the nine projects are estimated to involve around 70 000 students and young people and some 900 teachers. However, the added value is not limited to the number of direct beneficiaries, but lies also in the creation of new models that can be widely replicated. In the Netherlands, following measures taken by the government to promote the teaching of entrepreneurship in schools, the number of students in secondary education who say they want to be an entrepreneur has risen from 13 % to 23 %. Female entrepreneurship is promoted by the European Network of Female Entrepreneurship Ambassadors and the European Network of Mentors for Women Entrepreneurs. The Ambassadors aim to have successful entrepreneurs campaigning on the ground to encourage women of all ages to set up their own businesses and become entrepreneurs. The Mentors support enterprises owned and run by women during the first few crucial years, by providing women entrepreneurs with advice and support with the start-up, functioning and growth of their businesses. The European Network of Female Entrepreneurship Ambassadors has campaigned in 22 Member States to inspire women to set up businesses. 101 new women-led companies were created in the first year alone. Reducing The programme has also played a part in economic and administrative reforms, e.g. by helping adminis- to reduce regulatory and administrative burdens. A High-Level Group of Independent trative Stakeholders on Administrative Burdens was set up to advise the Commission on the action burden programme that was launched in 2007. By the end of 2010, the Commission had proposed measures that reduce administrative burdens by more than 31 %. The Council and European Parliament have so far adopted some of these measures, amounting to a reduction of 21.8 %. The measures proposed by the Commission to date could lead to savings of more than 40 billion EUR. The data contained in this report confirms that the programme is on track to achieve the anticipated impacts. It also shows that a lot remains to be done in the second half of the programme period. Since the beginning of the programme in 2007, the financial, economic and 9 Dealing with such things as training teachers in entrepreneurship, producing innovative teaching material and promoting entrepreneurship among young people. 7 then sovereign debts crises have made the programme's objectives even more relevant. The financial instruments will continue investing in SMEs for several years to come, their intervention even more urgent with the new capital requirements for banks; the Enterprise Europe Network will reach out to millions more of SMEs with support needs; new calls for eco-innovation projects are foreseen while the current projects are followed-up and their impacts evaluated; a wide range of best practices will be identified and disseminated; policies, regulations and framework conditions for entrepreneurship and SMEs will continuously be improved. In accordance with the EU response to the crisis set out in recent European Council conclusions, and in particular with the need to frontload growth-enhancing measures, the programme will continue to support competitiveness and spur innovation in the European economy. Building on the lessons learnt from the EIP, the Commission will propose by end 2012 the new generation of EU programmes covering the next EU financial framework (2014-2020) and therefore underpinning the Europe 2020 objectives and targets in the areas of competitiveness, SMEs and innovation. 8 1. INTRODUCTION..................................................................................................4 2. ACCESS TO FINANCE FOR THE START-UP AND GROWTH OF SMES AND INVESTMENT IN INNOVATION ACTIVITIES.........................................5 2.1. Improving access to finance...........................................................................5 2.1.1. EIP Financial Instruments for SMEs.................................................5 2.1.2. Improving policies on financing innovation and SMEs....................14 3. CREATION OF AN ENVIRONMENT FAVOURABLE TO SME COOPERATION, PARTICULARLY IN THE FIELD OF CROSS-BORDER COOPERATION..................................................................................................17 3.1. Business support services.............................................................................17 3.1.1. Services in support of business and innovation (cid:127) EIC Network and Enterprise Europe Network............................................................17 3.1.2. Strengthening the IPR dimension of EU industry and SMEs............23 3.2. Sector-specific action................................................................................... 30 3.2.1. Knowledge networks for tourism....................................................30 3.2.2. Enhancing competitiveness in the construction sector.....................33 3.2.3. Promoting the competitiveness of the European agro-food industry 40 3.2.4. Initiative for better involvement of defence SMEs in the European internal market................................................................................43 3.3. Other action to create an environment favourable to SMEs..........................45 3.3.1. Policy-relevant research on SMEs................................................... 45 3.3.2. Participation by SMEs and craft enterprises in the European standardisation process...................................................................47 3.3.3. Follow-up of implementation of the European Statute for Cooperatives.................................................................................. 49 4. ALL FORMS OF INNOVATION IN ENTERPRISES..........................................52 4.1. Innovation policy development.....................................................................52 4.1.1. Innovation policy monitoring and performance analysis................... 52 4.1.2. Development of demand side policies for innovation.......................64 4.1.3. Innovation policy and experimentation............................................69 4.2. Best pratices and testing of innovation policy tools and support services......75 4.2.1. PRO INNO EUROPE®: Fostering trans-national cooperation on support for innovation....................................................................75 4.2.2. European Cluster Agenda Conference.............................................81 1