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9DISCOVERING GERMAN PUBLIC STRATEGY TO FACILITATE INNOVATIVE SMES
DEVELOPMENT
Andrey S. Tsarenko,
Lomonossov Moscow State University, PhD (Cand. Sc.) in Economics, School of Public Administration
ABSTRACT
The aim of the article is to investigate some aspects of German strategy for national innovative system development, consider supporting measures of German government in the process of creation and development of innovative small and medium-sized enterprises (SMEs). It is focused on reinventing strategic model, describes the state as an architect of innovation system, that adapts specific innovation infrastructure. A separate attention is given to main actors of the process for creation complex "state-business-innoSMEs-science&education" network structures to facilitate innovations.
Keywords: innovation management, innovation small and medium-sized enterprised, public strategy, innovation strategy, innovation development, innovation economy
Introduction
In the modern Germany a great attention is given to maintenance of founding of small and medium-sized innovative enterprises (SMEs) and their further development. By recent estimations about 3,62 million small and average enterprises operated in Germany It gave to 34,4 % of the added value and provided employment of 53,8 % individuals [20].
On the one hand, support of small and average business pursues the aim of observance so-called "social market economy" principle. The German model of economy guarantees business and economic activities freedom. On the other, small and medium-sized enterprises are seen as the main actor of innovative development. Germany possesses powerful scientific potential, and its expenses for research and development — of the highest in the world. Among OECD countries, the United States has the highest level of gross domestic expenditure on R&D (GERD), with 40% of the total OECD GERD in 2013, followed by Japan (14%) and Germany takes the third place (9%). [18, p. 152]. Among leaders on R&D there are South Korea, Israel, Finland, Sweden, Japan and Denmark too. If large firms are concentrated in traditional branches, small and medium-sized businesses are inclined to be focused on technologies of the future («cutting-edge technologies»). Also, along with the organizational and technological mobility of the small and medium-sized enterprises allowing more operatively reacting to changes of business environment, special attention to them from the government speaks social policy reasons. The matter is that in the SMEs more than a half of all employed work and its majority is directly connected with high technologies.
The subject of the research
Public innovation policy aimed at supporting innovative SMEs as an element of the national German innovation system.
The aim of the research
The aim of the article is to investigate some aspects of German strategy for innovative system development, consider supporting measures of German government in the process of creation and development of innovative small and medium-sized enterprises, to describe «vision» of priority directions of a state innovative system, its main actors.
Research methodology Analysis of primary sources, policy documents, state programs, official sites of public bodies, subjects of innovative infrastructure.
Body of research
System of support and its actors
In Germany there is a specific system of support of a small and medium-sized businesses in innovative high-tech area. There is a collaboration between the federal government and 16 Land (state) governments in financing of innovative activity, vocational training and innovative projects. The competence of Land governments includes financing of vocational training and basic researches in universities, and also regional innovative programs. The federal government is responsible for a strategy of research and development fostering, especially important directions of a technological policy (power, transport, protection of environment and public health services), creation of national legislative base for innovation activity.
On the federal level public regulators of innovation activity the Federal Ministry of Education and Research (BMBF) [8] and the Federal Ministry of Economics and Energy (BMWi) [7] are.
In Germany in each of the Lands special companies named «mediators» have been created. They conduct monitoring in three basic directions: 1) revealing of the new perspective ideas arising in universities; 2) assessment of commercial potential of these ideas; 3) analysis of demand for ideas and products.
"Mediator companies" integrate groups of highly skilled experts, conduct extensive and detailed databases on new ideas, products and prospects of demand for them and leave with innovative offers to heads of research laboratories and managers of corporations.
The state research sector of Germany consists first of all of higher educational institutions (high schools) (383 establishments, from them 103 universities and 176 high schools of applied sciences); German Research Foundation (Deutsche Forshungsgemeinschaft,DFG [10]); specialised research societies: Fraunhofer society, that includes about 60 scientific institutions (Fraunhofer Gesellschaft, FhG [9]), Max Planck Society (Max-Planck Gesellschaft, MPG [17]), Helmholtz Association (Helmholtz Gemeinschaft, HGF [14] - 18 research centres), Leibniz Society (Leibniz-Gesellschaft, WGL [11]) and institutes of Academy of Sciences; and also the state scientific laboratories and the centers on the federal or Land (state) level.
The leading role belongs to the Fraunhofer Society which includes about 60 research institutes. Their activity is financed
at the expense of grants of the federal government and incomes from business contracts. The Max Planck Society supports universities in carrying out difficult and expensive experiments demanding special equipment. About 1800 independent (not interconnected) projects are carried out in cooperation with scientists from 50 countries of the world.
The majority of universities are financed by the Lands. The government of Germany departs from concept of equality of universities and their research institutes. Current trend is to support only interdisciplinary research together with the scientific organizations. In an issue of transfer of innovations there is a positive experience of cooperation between scientific research institute and industry.
State initiatives and strategy
First of all it is necessary to make an excursion into recent history: study in detail state initiative «Germany - the country of founders [enterprises]» («Gründerland Deutschland» that was announced on January, 25th, 2010 [13].) The initiative covered the actions directed on the further strengthening of entrepreneurial culture in Germany.
It was noticed in the document, the economic growth creates favorable conditions for realization of new ideas of business. Forming the culture of independence of citizens is necessary. According to opinion of world experts, in Germany there was one of the most effective systems of business support. But simultaneously, the statistics showed: results (realized potential) are still insufficient.
The main idea was: one should focus on change of mentality, a social climate, development of spirit of business, reception by citizens a pleasure from conducting own business. Even at schools and universities young German citizens should experience appeal of business, receive chance to make practical steps to the given direction.
Necessity of carrying out of mass explanatory communications, presentation of examples of successful business is outlined to aggravate requirement for independence at citizens. Great role here developed by the Ministry of Economics and Energy (in 2010 — Ministry of Economics and Technologies) the Internet platform www.existenzgruender.de plays. It provides necessary information for a specific situation - stage of business creation.
Regular arrangement German Week of Founder [of Enterprise] («Gründerwoche Deutschland») is planned. Thus, Germany in scales of all country became in 2011 for the first time the participant of Global week of business («Global Entrepreneurship Week»).
Prominent topic in this document: „Enterprise creation as a professional choice — early introduction in an education system"Values need to be formed in the children's age. It is an initiative of inclusion in the secondary school program the courses «Creation of own business», «Conducting own business». It is necessary to reach interest of schools in design work on the issue.
Under supervision of the ministry the initiative «Spirit of Business at Schools («Unternehmergeist in die Schulen ») in which frameworks 11 inter-regional projects (with the assistance of the several earths) will be implemented was planned.
Public support of projects "Junior" (JUNIOR) and German Prize to the Founder of the Enterprise for Schoolboys (Deutscher Gründerpreis für Schüler) has great importance.
Eventually, at schools the teaching material "Dream Profession- Chief (Boss)" ("Traumberuf Chef") will be given.
Very interesting the public competition "EXIST-entrepreneurial culture — founding businesses universities seems" ("EXIST-Gründungskultur — die Gründerhochschule") — it is focused on encouraging universities to develop strategy for creation a specific entrepreneurial culture, empower students' business spirit.
It is a new trend, which was noticed by some experts too. Friederike Welter in work «On a way to «to culture of business: the estimation of the state support of business both the small and average enterprises in Germany» [21] says, that«the Federal government and the governments of the Lands start to address to the tool of state-private partnership. Creation of state-private networks to which problems carry mentoring and coaching new businessmen takes place. New approaches are not limited to financial support and advisory maintenance of creation of new business ». One more prominent practice: creation of Fund of High Technologies II (High-Tech Gründerfonds II) which model will be based on the best practice of the first fund High-Tech Gründerfonds[15]. The new fund focuses on financing of founders of the innovative enterprises. But it will be created within the limits of public-private partnership with technological concerns.
One observe initiative of development a favorable environment for activity of so-called business angels («Business Angels») skilled businessmen who help new companies by the finance and are considered as the basic financial source for start ups.
As to finance for projects received now from public-private funds, prominent organization here the already mentioned German Research Foundation (DFG — Deutsche Forschungsgemeinschaft) is. Moreover, for scientific research more than hundred private funds are opened, largest of which are created by companies Volkswagen and Thyssen.
As to next important document: German High-Tech Strategy 2020 [16] — it is related towards European HighTech Strategy and represents main issues: measures to improve general conditions for doing business (not only innovative one); next — to improve conditions for setting up businesses, there is an innovation-oriented procurement; innovation financing / venture capital described in detail. One accent a well-qualified workforce as an important factor for innovative growth. The part "From knowledge to product" describes how governments goes to facilitate process of commercialization. Moreover standardization is seen as a mean for quality management in the area.
Concerning International innovation strategy one should mention case of German Houses of Research and Innovation creation (Deutsche Wissenschafts- und Innovationshäuser (DWIHs) [4]) By establishing German Houses of Research and Innovation (DWIHs), government provided a platform for the German science, research and innovation landscape at selected locations and a platform for showcasing the accomplishments of German science, research and research-based companies at selected locations and promoting collaboration with Germany
and innovative German organizations.
As one can read on the website "The German Houses of Research and Innovation are part of the Federal Foreign Office's 2009 Research and Academic Relations Initiative which, in turn, is the Federal Foreign Office's contribution to the internationalization of science and research".
These organizations promote Germany as a research location, provide a forum for international dialogue and scientific exchange, provide support and services (advising international researchers; consultation for foreign researchers, a „bridgehead" for German research, educational events)
Before were outlined initiatives aimed at fostering SMEs in general, it is turn to focus on support for innovative SMEs State programmes for innovative SMEs Regarding acceleration of innovations in small and medium-sized businesses should pay attention to some uncommon measures presented in government programs, among them the «Program of Innovative Support of the SMEs» (PRO INNO) focuses on facilitating research and development projects fulfilled by small and medium-sized enterprises in cooperation with scientific institutions. This program provides also possibility of temporary transfer of experts from higher educational institutions in small enterprises and on the contrary.
The Central Innovation program of small and average business, (Zentrales Innovationsprogramm Mittelstand, ZIM)) is the base program of the federal Ministry of Economics and Energy operating at present and created with a view of market-focused support of technological innovative small and medium-sized business in Germany. Started in 2008, it lasted till now [22]. The program operates in all Germany, is directed on support of the hi-tech enterprises. The support system includes three directions: ZIM KOOP (Kooperationsprojekte), ZIM SOLO (Einzelprojekte), ZIM NEMO (Netzwerkprojekte).
In the beginning of 2000s the government had been initiated the program «Partnership for innovations» which proceeds till today. Two-three times a year the meeting of heads of leading universities, scientific associations and the companies with the German chancellor is spent. The main issue of the discussion is innovative development. 16 working groups in various directions have been created. Representatives state the offers, the government puts problems. All results of conversation are considered at financing planning for 4 years, and also register in the agreement between the scientific organizations and the
government. In particular, so changes have been made to the innovative policy.
The exclusive right of professors, etc. to intellectual property has been cancelled. Now such rights universities or the scientific organizations as employers possess. It is authorized to universities and scientific organizations to create the innovative companies, not asking the permission of higher bodies, but only them notifying.
Technological and informational infrastructure
A lot of attention is given to issues of an innovative policy. Establishment of new agents of innovative system is not supposed. It is considered, that all necessary in a part of technological infrastructure is already created. Statistics on innovative technological infrastructure can be found on the website of the ADT — German Association of Innovation, Technology and Business Incubation Centre (Bundesverband Deutscher Innovations-, Technologie- und Grunderzentren e.V.) [1]. Results of its activity for today are: 159 innovation, technology and business centers (Fig.1), ca. 5.800 companies in ADT-member centers, ca. 46.000 employees in these centers. The centres successfully outsourced more than 17.400 companies.
What are key functions of the organization one can take into account while using this best practice?
Its persuasively presents the interests of its members in key places, both internally and externally, through its competence and experience and communicates these interests to a broad public; serves as a point of contact for its members with regard to questions and problems connected with the operation of innovation centres and supporting of entrepreneurs and also recommends competent partners to consult; identifies best practices for the successful operation of innovation centres and provides these to its members; offers its members the possibility of exchanging experiences on specific topics in working groups organized according to subject and develops working guidance or policy documents; provides its members with useful contacts through its national and international networks; advises project teams that are planning to establish new innovation centres by drawing on its extensive experience; contributes towards current legislation processes and the organisation of funding measures; awards the quality seal "Recognised Innovation Centre" as part of an evaluation procedure for guaranteeing the quality of the work carried out by centres. Over 30 German centres have successfully undergone this evaluation [3].
Fig. 1 Map "Location of innovation, technology and business incubation centres in Germany" Source: adt-online.de
Information about innovation centers one can obtain on the website Germaninnovation.org [2]. There is here in use an interactive map and contacts of officials.
Internet portal Existenzgruenderinnen.de represents the network platform focuses on information-consulting support. Also on the website service "Assistant to a founder of company" is provided (BMWi Gründungsassistent), there is forum of experts of the ministry (BMWi-Expertenforum).
The information databank on existing measures of support «Fordermitteldatenbank» is developed and operates under the aegis of the Federal Ministry of Economics and Energy [19]. It represents selected data, taking into account different searching parameters: geographical area, type of support, type of recipient etc.
In the modern dynamic world the role of the timely analytical information is difficult to overestimate. German fair (Deutsche Messe, messe.de) is an effective media of marketing activity, international exhibitions allow with the minimum
expenses of time and efforts objectively to estimate own production. It is the best start for the new goods and services. The company gives as much as possible full information on forthcoming actions.
Conclusions
To sum it up, beyond traditional focus on financial support or attention to founding more and more innovation centers and incubators (developing technological infrastructure) in Germany one can observe focus on some new 'key issues":
a) developing entrepreneurial culture, in schools and universities, fostering business spirit can be seen especially useful in universities, where students of natural-science specialties are potential founders of innovative high-tech firms.
b) informational support: make information about all existing programs, measures, initiatives easy to access for a potential innovative enterprise founder or current businessman, manager of SMEs, make it clear and comprehensive, not only description of itself, down to the smallest details: how and
where to get it, what actions should be fulfilled, contacts of a certain official, who can consult you in a certain local area.
c) standardization of innovation centers. Promising is seen a new function of association of organizations that constitute technological infrastructure (ADT) — evaluation procedure for guaranteeing the quality of the work carried out by innovation centers, standardization of their business processes, namely quality management.
d) creation complex "state-business-innoSMEs-science&education" networks to facilitate interactions between innovators.
e) shifting to public-private partnership in financing SMEs , and deployment of specific measures and technologies to make it happen .
All these solutions can be seen as a kind of best innovation practice and should be taken into account while developing strategy to improve national innovation system.
References:
1. ADT — German Association of Innovation, Technology and Business Incubation Centre official website: www.adt-online.de
2. Centers of Innovation in Germany. German Center for Research and Innovation. http://www.germaninnovation.org/ research-and-innovation/centers-of-innovation-in-germany
3. Competence for Innovations. ADT. URL: http://www. adt-online.de/files/adt-english.pdf
4. German Houses of Research and Innovation German Center for Research and Innovation.http://www. germaninnovation.org/about-us/german-houses-of-science-and-innovation
5. EXIST program official website. URL: http://www. exist.de/exist/index.php
6. Existenzgruendunsportal - Business founder portal Source: http://www.existenzgruender.de/
7. Federal Ministry of Economics and Energy (BMWi) official website - URL: http://www.bmwi.de
8. Federal Ministry of Education and Research (BMBF) official website - URL: https://www.bmbf.de/
9. Frauenhofer Society official website. - URL: http:// www.fraunhofer.de/institute-einrichtungen
10. German Research Foundation "DGF" official website: http://www.dfg.de/en/
11. Gottfried-Wilhelm-Leibniz Society official website: http://www.gottfried-wilhelm-leibniz-gesellschaft.de
12. Gruenderland-Deutschland. Die Fakten URL: http:// www.bennoheider.de/tl_files/brh/others/PDFs/factbook-gruenderland-deutschland.pdf
13. Gruenderland-Deutschland. Die Fakten. URL: http:// www.bennoheider.de/tl_files/brh/others/PDFs/factbook-gruenderland-deutschland.pdf Max-Planck-Innovation official website. URL: http://www.max-planck-innovation.de
14. Helholtz Society official website. http://www. helmholtz.de/helmholtz_zentren_netzwerke/helmholtz_ zentren/
15. High-Tech Gründerfonds http://www.en.high-tech-gruenderfonds.de/
16. Ideas. Innovation. Prosperity.High-Tech Strategy 2020 for Germany. URL: https://www.bmbf.de/pub/hts_2020_ en.pdf
17. Max Plank Society Official website: https://www.mpg. de/de
18. OECD Factbook 2015-2016 http://www.oecd-ilibrary. org/docserver/download/3015041e.pdf?expires=1464110102 &id=id&accname=guest&checksum=5304AF47023C353D1D 6BB9555A3FDF8C
19. Supportdatabank „Foerderdatenbank" official website www.foerderdatenbank.de.
20. Unternehmensbestand. KMU insgesamt nach KMU-Definition der EU-Kommission Institute for SME research official website. http://www.ifm-bonn.org/statistiken/unterneh mensb estand/#accordion=0&tab=0
21. Welter, Friederike. 2009. On the road to a «Culture on Entrepreneurship»?: Assessing Public Support for Entrepreneurship and SMEs in Germany (chapter in a book) // Leptao J., Baptista R. Public Policies for fostering Entrepreneurships. A European Perspective. Vol 22, Part 2. Springer New York, 2009. P. 181-195.
22. ZIM program official website. URL: www.zim-bmwi.
de
