Innovation, SMEs, Entrepreneurship Dr. Magdolna Csath Professor, Dept.Head Economics and Management Department 5.th Erenet Jubilee Annual Meeting Corvinus University of Budapest Hungary 20 May 2011

1. Introduction But where is innovation coming from? „Today nothing is more important for the re- launch of the EU project than unleashing the potential for EU competitiveness through innovation.” (A New Approach to Innovation Policy in the EU. CEPS Task Force Report 2010) But where is innovation coming from? SMEs play a key role in generating innovation.

2. International research findings Innovation Union Scoreboard 2010 (Published 1. February 2011)

SMEs introducing marketing or organisational innovations as % of SMEs Innovators: SMEs introducing product or process innovations as % of SMEs SMEs introducing marketing or organisational innovations as % of SMEs

3. The reasons of the poor performance: SME research at the Kodolányi János University of Applied Science Research „Factors influencing and accompanying innovation in Hungarian SMEs.” Methodology: Questionnaire survey in SMEs. Standard interviews in SMEs. Case studies 855 + 20 Polish questionnaires 85 + 12 Slovak SMEs 50

4. Results External factors: Bureaucracy, corruption, discrimination against local SMEs, poor access to EU funds, high taxes and levies on labour, lack of state- level strategy, low level state support of innovation in the SME sector, lack of flexible programs to encourage innovation, innovation-unfriendly culture, low prestige of creativity and innovation in the society, lack of venture capital.

4. Results Internal factors: Uncertainty avoidance („don’t rock the boat”: low change resistance), lack of international expertise and knowledge, bureaucratic leadership and organizations, poor human resource management practices, lack of trust. (Open innovation is rarely practiced)

5. Open innovation Innovating with customers, universities, research laboratories, suppliers and competitors. More user – driven innovation Larger base of ideas

IMPORTANT TO FOCUS ON THE „SOFT” – INTANGIBLE SKILLS Trust Willingness and capabilities to cooperate (teamwork) Openness Flexibility

6. Conclusions Improving the innovative capabilities of SMEs is urgent, because: They are the most „entrepreneurial” They can create jobs They can create „whole person jobs” They can contribute to improving the innovation performance of the economy Innovation – based economies are the most competitive ones

6. Conclusions Government policy must provide a supportive environment in wich innovation skills can be developed and utilized.