Wednesday, March 21, 2012

Europe Needs to Combine Innovation with Entrepreneurship

20 March 2012 Written by Unexus.org

The European Commission must improve the framework conditions for entrepreneurship to address its self-described ?innovation gap? with the rest of the world.

The flagship initiative to create an ?Innovation Union?, as outlined in Europe 2020, goes some way towards addressing this gap. The ?Innovation Union? proposes to create an economy based on ?knowledge and innovation? in accordance with a theme of ?smart growth?. A target has been set of investing 3% of Europe?s GDP on R&D by 2020.

To achieve this target, the European Commission proposes to launch European Innovation Partnerships between the European Union and national levels, promote knowledge partnerships between innovative companies and research institutions, and strengthen links between education, business, research and innovation.

An important initiative to stimulate innovation is the European Institute of Innovation and Technology (EIT). Established in 2008, the EIT has created Knowledge Innovation Communities (KICs) composed of businesses, research institutions and higher education institutions. The KICs are designed to address ?grand societal challenges? and are inspired by the highly successful ?innovation clusters? stemming from MIT and Stanford University in the United States.

Europe?s flagship initiative to create an ?Innovation Union? caters to Europe?s research strengths and will increase levels of R&D spending. However, for this spending to have a wider societal impact in terms of growth and jobs, great ideas must be translated into workable business models that achieve success in the marketplace. The history of the steam engine in Europe teaches us that while Thomas Newcomen was needed to invent the atmospheric engine, James Watt and Matthew Boulton were just as important in its improvement and commercialisation. Entrepreneurship, therefore, is indispensible to the process of innovation.

Whilst initiatives to promote knowledge partnerships will improve conditions for innovation in Europe, to address its ?innovation gap? Europe must ensure R&D expenditure moves from input to impact spending. This will only occur by improving conditions for entrepreneurship.

An important condition for entrepreneurship is the creation of a fully operational digital single market. Benefits to the ICT industry would be immense, with the digital economy contributing 20% to France?s overall growth from 2004-2009, 23% to Germany?s growth from 1999-2007 and achieving growth rates in the United Kingdom around 10% as a sector.

The benefits of the digital single market to the European economy won?t be confined to one sector. A knowledge and innovation economy requires the free movement of knowledge across borders unrestricted by barriers. For collaborative innovation to occur beyond knowledge-based communities and entrepreneurs, knowledge must be unencumbered. Innovators, collaborators and entrepreneurs must be connected by knowledge. A digital single market? provides the essential infrastructure to facilitate knowledge transfer and results in innovation taking root in meaningful ways for the economy.

European governments must also facilitate access to early-stage finance, which would allow knowledge and ideas to be translated into entrepreneurship. Currently, venture capital investment in Europe is a quarter the level of the United States. The creation of a European Union wide single market for venture capital would address this. To move towards a truly pan-European venture capital market, the European Commission must also ensure that member state?s mutually recognise each other?s national regulatory frameworks. Under better conditions for early-stage financing, entrepreneurs have more opportunity to take new ideas to market.

The flagship initiative to create an ?Innovation Union? improves the prospects of creating a knowledge and innovation economy. To address the ?innovation gap?, the European Commission must demonstrate similar commitment to the digital single market and improving conditions for early-stage finance. Improving these conditions recognises that entrepreneurship is indispensable to the process of innovation.

20 March 2012 Last Updated on 20 March 2012 Written by Unexus.org

Source: http://blog.unexus.org/europe-needs-to-combine-innovation-with-entrepreneurship/

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