Innovation and Research in Business, including knowledge transfer in Portugal Nuno Vitorino Mateus May 19, 2012

EC DG Regio Initiative - Post 2013 Perspective Scientific Team Strategic Diagnosis Case Studies International Benchmarking Schuman Associates ‘umbrella’ 2/12 Team’s Knowledge and Experience

Strategic Diagnosis Dimensions Policy coordination, vital for innovation design and implementation, is still largely absent Business innovation and research in Portugal significantly depends from EU funds Portugal’s position in the EU-27 innovation ranking has significantly improved Good innovation performance has not resulted in the creation of sufficient wealth and jobs Structural change process must be reinforced/refocus ed, requiring enhanced business innovation and research 3/12

Case Studies Conclusions Success flows primarily from the promoter’s excellence and resilience, usually assisted by pro-active cooperation from Public Agencies Direct relationship between sophistication/ranking of business innovation and research projects and the need for tailor-made funding mechanisms Business innovation and research project’s life spans are often not compatible with EU funding cycles Companies focus on improving turnover, while researchers are more focused on the publication of results 4/12 Successful business innovation investments are possible in Portugal, namely when associated with internationalisation

International Benchmarking Lessons Both broad public innovation policy instruments and customised policy tools are necessary Business innovation and research promotion is a vital element of modern economic policies Business innovation and research demands adequate funding opportunities When risk-taking funding schemes are implemented with public financial support, the progressive association of private capital is often present and mostly desirable 5/12 Minimising transactions costs and red tape are a common goal and influence simplification of access, analysis and decision-making funding procedures Each benchmark has a value on its own, but common guidelines are relevant

Recommendation 1: Improve and Facilitate Access to Innovation Funding automatically approved once two conditions are met: (i) entrepreneurial initiative on the implementation of innovation projects + (ii) participation innovation partners through contractual arrangements Focus on experimentation of new concepts and ideas (e.g. proofs of concept, prototyping, market analysis), that require the participation of qualified business or technology partners Adoption of a large scale innovation and research voucher scheme to simplified short-term (6-12 months) targeted projects 6/12 Large spectrum of business innovation: (i) improvement of productive and commercial processes, (ii) creation of new products or services and (iii) improvement of managerial skills Together with knowledge or technological institutions, innovative or internationalised companies are innovation partners

Recommendation 2: Promote Business Innovation Partnerships Decision making process simplified by the outsourcing of analysis and negotiation processes to independent experts - cutting administrative costs and tailoring public intervention to business innovation specific requirements Focus on the implementation of innovation-oriented business investment projects through (i) consolidation of regional economic structures/smart regional specialisation strategies and (ii) implementation of thematic partnerships for the creation/improvement of export oriented products and services Funding by customised business investment results- oriented incentives 7/12 Negotiation process monitored by relevant specialised Public Agencies

Recommendation 3: Create State and EU co-financed Innovation Investment Funds 8/12 Reduced transaction costs, once funding decision-making from innovation investment funds is automatic upon (i) confirmation by independent experts of the innovative nature of proposed projects and (ii) validation of promoters’ financial resources (own resources, loans, equity or contracted State Aid subventions) Focus on leveraging promoter’s own or other financial resources in innovative investments Innovation investment funds should distinguish between (i) innovative early stage investment projects (67% funding of total investment costs) and (ii) technological mature commercialisation, late financing gaps investment and innovation expansion projects (33% funding) Encouragement of experienced foreign venture capital institutions involvement, through joint ventures or consortiums with Portuguese companies

Recommendation 4: Translate Knowledge into Economic Value through Innovation 9/12 Creation of a “one-stop-shop” service to start-up entrepreneurs, through contractual arrangements with specialised interfaced entities, which assume the preparation of applications, innovation projects monitoring and other support tasks Focus on narrowing the gap between knowledge creation, knowledge transfer and the creation of economic value through innovation Implementation of a stronger, more effective, flexible and integrated support from Structural Funds to academic scientific and technological institutions entrepreneurship Facilitated by: (i) cutting red tape for start-ups and young innovative companies and (ii) promotion of an entrepreneurship culture

Recommendation 5: Stimulate Integration in International Networks 10/12 Facilitated by renewed Innovation Strategies, improved high-level education, rationalised academic R&D, effective mobility between academia, R&D or technological centers and companies and increased innovation role to the response to key national societal challenges Focus on increasing the insertion of Portuguese R&D and business players in international R&D and innovation networks by (i) better adjusting the use of EU Funds to open, collaborative and global innovation and (ii) removing initial barriers to the entry of Portuguese players into European R&D and innovation projects Implementation through (i) funding by Cohesion Policy, (ii) blending EU funding with financial engineering mechanisms and (iii) encouraging the participation of external players and of mature domestic innovation stakeholders

Looking backwards with today’s eyes Concentrate innovation funding on lagging regions? Creation of specialised innovation funding vehicles? Focus business innovation on SMEs? 11/12 Invest on research rather than technological development ? Rely on subsidies or on US inspired funding models?

Thanks for your attention. 12/12