Philip Shapira

7/30/2019 Philip Shapira

http://slidepdf.com/reader/full/philip-shapira 1/29

Technology upgrading, diffusion and transfer:

Building capabilities for innovation in small

and medium-sized enterprises

Philip Shapira1,2

Congress on Innovation Policy and Technology TransferUniversidad de San Martin de Porres, Lima, PeruSeptember 6, 2011

1Manchester Institute of Innovation Research, Manchester Business School, UK2Georgia Tech School of Public Policy, Atlanta, USA



Technology upgrading, diffusion and transfer: Building capabilities for

innovation in small and medium-sized enterprises

Overview

Proposition and concepts

SME innovation challenges & case for

intervention

Upgrading services and strategies

Program examples

Insights and design parameters

Key questions



Proposition

...an effective set of innovation

support mechanisms for small and

medium-size firms (SMEs) is one of the foundation measures that nations

and regions seeking to improve their

economic standing need to have inplace.



Key concepts

Economic

standing

Foundationmeasures

Innovation

SMEs 99% of enterprises (focus: 10-250 emp.) manufacturing, services, agri. lower productivity, use of technology

new ways of doing things product, process, service, business model new to market, new to firm

value-added / living standards equity, resilience, sustainability

free trade < performance, distinctiveness

innovation system policy mix broader economic & societal frameworks national and regional roles



Constraints to SME innovation

Multiple barriers, including:

Finance: difficulty in accessing external finance, high innovation costsand therefore high economic risk

Know-how: limited internal know-how to manage the innovation

process;

Skills: shortage of, and limited access to, qualified personnel; limitedabsorptive capabilities

Markets: access to markets to meet customer needs and enter foreignmarkets;

Relationships: isolation and weaknesses in business relationships, valuechains, networks

Regulation: addressing laws and restrictions;

Strategy: challenges in identify new trajectories and means to achieve

them

Markets

Skills

Finance

Know-how

Relations

Regulation

Strategy



Upgrading services

Expert guidance, brokering and outreach mechanisms inthe field to stimulate companies to improve their use of technology and to stimulate innovation

Also known as: technology extension, industrial extension,innovation services, real services

Typical mechanisms

Information provision

Benchmarking and assessment

Technical assistance or consultancy Training

Group or network services

Collaborative projects (R&D, implementation)

Strategy development; coaching and mentoring



Upgrading services:

Rationales for Intervention

Market failures

Demand-side: SMEs lack information, knowledge, resources toimplement modern methods and new technologies

Supply-side: Large customers, vendors, consultants don’t or can’tsupport SMEs; Trade associations weak

Government and service failures

Gaps in public service provision for SMEs

Local economic development

Promote local and regional clusters of enterprises

Strategic concerns

Economic competitiveness – maintaining jobs while growing wages;

Expand exports

Develop supply-chains and clusters, for new rounds of technological

growth



Orientation and integration

Enterprise Innovation Capabilities and Strategies: Product, process, and service innovation

Organizational and managerial innovation

Innovation in marketing or business models

Upgraded skills and capabilities

Approach:

Pragmatic approach to technology; step-wise change

Integrate technology with other enterprise needs and strategies

Complementary Policy Actions: Demand-side measures

Innovations in systems of innovation (public & private)



+ Positioning upgrading services

Start up Existing Declining

LIFE CYCLE

Advanced

Mature

LimitedSBA/SBDCs/SCOR

E

Incubators,

SBIR, TLOs

TAA

TECHNOLOGYFOCUS



Upgrading SMEs for innovation:

What it is not!

Not just about technology transfer from labs to firms

but about systemic measures to improve firms technological andbusiness capabilities for innovation

Not just about advanced technology

but about pragmatic improvements in operations and practices, usually with commercially-proven technologies

Not a short-term jobs program

Results will take time to materialize and require sustained efforts; andsome direct jobs may be lost as productivity increased

Not just a government program

but a process that is driven by industry needs and market opportunitiesand leverages existing resources

Not a resolution to crisis or radical economic transition

requires an existing, reasonably stable industrial base



SME upgrading services:

Anticipated outcomes

Business improvement - above the line Capabilities

New knowledge and skills

Stronger relationships

Innovative products and services

Business performance - below the line Increased productivity (value-added / employee)

Increased quality, performance

Business stability and growth

Added sales, exports

Regional & national economic development Increased wages; may retain jobs (but this is not a quick-fix jobs

program)

Develop innovative regional clusters

Increase attractiveness for FDI



SME upgrading program models

Varied models (in multiple countries)

Program goals, structure and operations

Services and strategies

Resources, customer relations, & evaluation

Five international examples

Fraunhofer Institutes (Germany)

Kohsetsushi Centers (Japan)FEDIT - the federation of technology centers

in Spain

Manufacturing Extension Partnership (US)

Innovation Vouchers (UK)



1. Fraunhofer Institutes (Germany)

The model:

Non-profit association

Applied R&D; commercialization and transfer services

Scale: 59 Fraunhofer institutes, 40 cities in DE

€1.4B revenues, 40% industry

14,000 staff; 12,000 projects/year

Bottom line: Highly advanced capabilities, developing and transferring

new technologies to firms; project focus; requiressophisticated SME demand

http://www.fraunhofer.de/en/

http://www.google.com/imgres?imgurl=http://de.academic.ru/pictures/dewiki/73/Isi.jpg&imgrefurl=http://de.academic.ru/dic.nsf/dewiki/467194&usg=__D7qPeKfv4tPSpIRzMsyIYN2hB4w=&h=1536&w=2048&sz=1168&hl=en&start=10&um=1&itbs=1&tbnid=g-Jk8eqgC5cHJM:&tbnh=113&tbnw=150&prev=/images?q=fraunhofer+isi&um=1&hl=en&tbs=isch:1



2. Kohsetsushi (Japan)

The model:

Public industrial technology and testing institutes,dedicated to SMEs, run by local governments under nationalframework

50% R&D; 50% transfer and field services

Scale:

180 centers in 47 prefectures (20 in Tokyo)

€0.8B revenues / very low fee income

6,000 staff; 50,000 SMEs/year

Bottom line:

Good in transferring “catch-up” R&D to SMEs; extensiveservice; field service; networking; public sector rigidities.

http://www.mit.pref.miyagi.jp/sisetsu/pict/center.jpg



3. FEDIT* (Spain)

The model:

Non-profit association of innovation & centers

Dedicated to SMEs

Scale: 67 centers – focused to regional SME clusters

€0.5B revenues / 60% private fee income

5,500 technology & other staff; 26,000 SMEs/year

Bottom line: Decentralized federation, local centers guided by local

industry associations. R&D (62%), innovation supportservices & technical assistance (25%), training

*Spanish Federation of Research and Technology Bodies

http://www.fedit.com/English/

http://www.fedit.com/English/PublishingImages/img_FEDIT/comunes/fachadanuevasede2.jpg



4. MEP* (US)

The model: Public-private partnership to foster technology, innovation and

competitiveness in manufacturing SMEs

Decentralized network under federal (NIST) framework

Scale:

50 centers, 390 offices in all 50 US states; no R&D €200M (1/3 federal; 1/3 state; 1/3 private)

1600 field staff / 32,000 manufacturers (10% of total)

Bottom line:

Experienced field staff; mentor, develop strategies, resolve

problems, make qualified referrals for SMEs 1:1, supply chain, cluster, university, & group initiatives

Extensive evaluation: increase in productivity of participating v.non-participating firms

* Manufacturing Extension Partnership

http://www.google.com/imgres?imgurl=http://www.kimkingassoc.com/images/buildings/Centergy.jpg&imgrefurl=http://www.kimkingassoc.com/Lease_1.html&usg=__KR0E5jVPU6H0DaHxMTxEtSh30fw=&h=218&w=247&sz=22&hl=en&start=11&um=1&itbs=1&tbnid=RMJjtCHfvqu5AM:&tbnh=97&tbnw=110&prev=/images?q=centergy&um=1&hl=en&tbs=isch:1

http://www.nist.gov/mep/index.cfm



+

MEP Program Model

Development

OutcomesBusiness

Outcomes

Intermediate

Actions

Centers

Projects

Companies

MEP Staff Consultants

Managers



MEP Services2009 Results> Created 17,721

jobs

> Retained 54,354 jobs> Increased $3.5billion in sales> Retained salesof $4.9 billion

> $1.3 billion incost savings> $1.9 billioninvested inmodernization,including plantand equipment,

informationsystems, andworkforce andtraining



5. Innovation Vouchers (UK)

The model:

Incentives to forge new linkages between SMEs and

technology & knowledge providers

Voucher €3,600 - €8,500 to SME to engage qualified knowledge

provider – university, private sector, creative sector

Scale (through to 2010):

3,000+ vouchers / year; 20% SME match

12 regional development agencies, multiple local organizations

Bottom line:

Vouchers seek to incentivize SMEs to make new connections

with knowledge providers, then to develop deeper links and

services (with own funds)

http://www.businesslink.gov.uk/northwest

http://www.nesta.org.uk/



Upgrading Programs

Funding, Clients, Staff

0

10,000

20,000

30,000

40,000

50,000

60,000

$0 $500 $1,000 $1,500 $2,000

Gross budget in USD (millions)

C l i e n t s s e r v e d

INTIIRAP

MEP

Steinbeis

FEDIT

Kohsetsushi

Fraunhofer

In-house staff



Universities

Technologycenters

Nationallaboratories Other public

programs

Suppliers

Collaborativefirms

TargetEnterprises

Customers

Arena for upgradingservices

Outreach and brokering

to enterprises

Privateconsultants



Insights from program models: 1

Practices related to program goals, structure and

operations

Decentralized, local delivery systems

Capable and credible delivery

organizations

Value-added national role

Targeting




Practices related to services and support strategies

Technology offerings pragmatically relatedto client capabilities

Servicing interrelated enterprise needs

Coordinating with regional innovationsystem partners

Go beyond immediate problem solving.

Competent, quality core staff, with anindustrial/business focus




Practices related to resources, customer relations, and

evaluation

Scale, stability, and a long-term perspective

Leverage existing resources and partnering

with industry

Promote evaluation and strategic planning

to strengthen program capabilities



SME technological upgrading

good practices … and current debates

Good practices

Embedded, sustainable business

models

Customised, intensive & flexible

support

Expert-led, long-term

relationships with business to

develop trust

Strong service networks

Strong brands, through quality-

led assistance

Current debates

Focus on high-growth potential

firms rather than blanket

support

Effectiveness of general versus

specialized business support

Regional networking and cluster

approaches

Linking SMEs to research base &

commercialization of ideas

Public procurement & promoting

innovation



Benchmarking our upgrading services:

Ten key questions (1-5)

1. Do we have a coordinated offer of service – or do werun many small, overlapping programs?

2. Do we have scale and reach – are we servingenough firms to make a difference

3. Are we “segmenting” the market – access for allfirms, but focused assistance on firms withcapabilities and greatest potential

4. Are we providing technical assistance and field

service to mentor and engage SMEs to upgrade?5. Are we engaging & training capable staff with

business experience, who have the flexibility andcapability to customize services?



6. Are we qualifying and upgrading 3rd party serviceproviders and consultants?

7. Are our programs decentralized, flexible, and linkedto local business clusters, working with supply

chains, clusters, universities, other regional resources

8. Are we building new capabilities in SMEs and in thesupport system?

9. Is the national level providing value-added services(rather than top-down control)?

10. Do we have evaluation & learning functions tounderstand our impacts and improve serviceperformance?

Benchmarking our upgrading services:

Ten key questions (6-10)



Ongoing Challenge

...an effective set of innovation

support mechanisms for small and

medium-size firms (SMEs) is one of the foundation measures that nations

and regions seeking to improve their

economic standing need to have inplace.



“The difficulty lies, not in the new ideas, but in escaping

from the old ones…”*

*John Maynard Keynes, The General Theory of Employment Interest and Money (1935)

Documents

Philip Shapira