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Innovations & Innovation Support for SMEs The Triangle Region of Denmark by P.R. Christensen, A. Cornett and K. Philipsen Centre for Small Business Studies The University of Southern Denmark Engstien 1 DK-6000 Kolding Denmark Kolding, June 1999 SMEPOL Report No. 2 Funded by the European Community (DG XII) under the Targeted Socio-Economic Research Programme (TSER) Project no. 1319: SME policy and the regional dimension of innovation Table of Contents Foreword 1 Aim of the Danish Study 1 1.1 Economies in transition as a background for the transformation of 2 innovation policies 1.2 Innovation policy in times of transition 2 - 1.3 The basic theoretical foundation 3 1.4 Criterions for the study region selected 5 1.5 The SME sectors selected for the study 6 1.6 The innovation policy tools selected 7 2 The Theoretical Frame of Reference 9 2.1 "The National System of Innovation" 10 2.2 Industrial Districts and Business Development Policy 18 2.3 The Regional Policy perspective 21 2.4 Industrial Districts reconsidered 22 2.5 Implications for the analysis - concluding and methodological remarks 24 3 The Triangle Region 26 3.1 The regional innovation system - theoretical applications 26 3.2 Profile of the Region 29 3.3 The Triangle Region as a regional innovation system 44 3.4 The innovation profile of the Triangle Region in summary 72 4 The National and Regional Support System 78 4.1 Theoretical perspectives taken on the national and regional support system 78 4.2 A general perspective on the regional industrial promotion system 82 in Denmark 4.3 The use of Subsidy Schemes 87 4.4 Technological Information Centres 97 4.5 The Approved Technology Service Institutes 103 4.6 Development Companies and Venture Capital 116 4.7 The Regional Policy Frame 118 5 Summary and Conclusions 126 5.1 The regional context 126 5.2 The industry sample selected 127 5.3 The innovation support system 128 References 132 Appendices Appendices Appendix 1 Key information on selected policy instruments Appendix 2 Questionnaire Appendix 3 Methodological reflection on the Danish Study Appendix 4 List of persons, firms and institutions interviewed Appendix 5 GTS Institutes Appendix 6 Examples of interview guides Table of contents (detailed) 1 Aim of the Danish Study 1 2.1 Economies in transition as a background for the transformation of 2 innovation policies 1.2 Innovation policy in times of transition 2 1.3 The basic theoretical foundation 3 1.4 Criterions for the study region selected 5 1.5 The SME sectors selected for the study 6 1.6 The innovation policy tools selected 7 2 The Theoretical Frame of Reference 9 2.1 "The National System of Innovation" 10 2.1.1 The constitution of the "National System of Innovation" 10 2.1.2 Coherence in the National System of Innovation 14 2.1.3 A sectorial and regional application 15 2.2 Industrial Districts and Business Development Policy 18 2.2.1 The Regional Innovation System 19 2.2.2 Innovation Policy Support Paradigms 20 2.3 The Regional Policy perspective 21 2.4 Industrial Districts reconsidered 22 2.5 Implications for the analysis - concluding and methodological remarks 24 3 The Triangle Region 26 3.1 The regional innovation system - theoretical applications 26 3.2 A profile of the Region 29 3.2.1 The Technological profile of the region 30 3.2.2 Supporting institutions and R&D activities in the Region 39 3.2.3 Summary of the Production structure of the Triangle Region 43 3.3. The Triangle Region as a regional innovation system 44 3.3.1 Overall indicators of the innovative activity 45 3.3.2 Innovation in the stainless steel cluster 53 3.3.3 Interactive perspectives on small firms' innovation 63 3.4 The innovation profile of the Triangle Region in summary 72 3.4.1 The generic profile of the region 72 3.4.2 The supporting institutions 74 3.4.3 The innovation patterns of SMEs 74 3.4.4 Innovation patterns in an interactive perspective 75 3.4.5 Challenges for the regional innovation policies 77 4 The National and Regional Support System 78 4.1 Theoretical perspectives taken on the national and regional support system 78 4.1.1 New policy perspectives based on the concept of learning 78 4.1.2 Innovation support focusing on SMEs 80 4.1.3 The regional innovation support system 81 4.2 A general perspective on the regional industrial promotion system in Denmark 82 4.3 The use of Subsidy Schemes 87 4.3.1 SMEs use of support schemes - a general view 87 4.3.2 SMEs use of support schemes - in the case of the Triangle Region 88 4.3.3 Industrial typology and the use of innovation support schemes 91 4.3.4 Four profiles of innovations support 92 4.3.5 Benefits and barriers seen by SMEs in relation to the use of innovations support 93 schemes 4.4 Technological Information Centres 97 4.4.1 The aim and target-clients of the TICs 97 4.4.2 The present organisation and management of TIC 98 4.4.3 The role of the TIC system in the national and the regional innovation system 98 4.4.4 Current resources and finance 99 4.4.5 The future role of the TIC - back to the region? 101 4.4.6 The Technological Information Centre in the Triangle Region 102 4.5 The Approved Technology Service Institutes 103 4.5.1 The history of the GTS 104 4.5.2 The present organisation and management of the GTS 106 5.5.3 The role of the GTS system in the national and the regional innovation system 108 4.5.4 Current resources, finances and activities 110 4.5.5 The future role of the GTS system 111 4.5.6 The regional profile of GTS exemplified - TI Syd 113 4.5.7 Summary and conclusions on GTS 114 4.6 Development Companies and Venture Capital 115 4.7 The Regional Policy Frame 118 5 Summary and Conclusions 126 5.1 The regional context 126 5.2 The industry sample selected 127 5.2.1 Networks as a contextual frame 127 5.2.2 The outcome of the study of innovation patterns 127 5.3 The innovation support system 128 5.3.1 The national innovation support system 128 5.3.2 The regional innovation support system 129 5.3.3 Networks as a policy frame 130 5.3.4 The consultant and knowledge transfer system 130 References 132 Appendices Appendix 1: Key information on selected policy instruments I Appendix 2: Questionnaire V Appendix 3: Methodological reflection on the Danish study XXVI Appendix 4: List of persons, firms and institutions interviewed XXXIV Appendix 5: GTS institutes XXXV Appendix 6: Examples of interview guides XXXVII Tables Table 1.1 Classifications of the 4 main categories of enterprises in the study. 6 Table 1.2 Selected Policy Instruments. 8 Table 2.1 Different Business Development Environments. 22 Table 3.1 Employment allocated according to line of industry in 1993 and 1996. Per cent. 31 Table 3.2 Product innovation classified by size of enterprise. 3 years. 1998. No. and per cent. 37 Table 3.3 Number of Foreign Owned Manufacturing Enterprises in the Triangle Region in 38 relation to the number of Manufacturing Enterprises. 1995. Table 3.4 Collaborative partners involved in product development. Percentage of enterprises. 1998. 41 Table 3.5 Educational levels of the manpower in the Triangle Region, Århus and Denmark. 42 1997. Percent. Table 3.6 Enterprises engaged in product or process innovations in the last three years. 1988. 46 Table 3.7 Danish product innovation activities: SMEPOL versus DISKO study. 46 Table 3.8 Enterprises engaged in market innovations over the last three years. 1998. 48 Table 3.9 Innovative intensity by firm size. Share of enterprises by per cent. 1998. 48 Table 3.10 Turnover based on New Products in Relation to New Product Spending. 51 Share of enterprises. 1994-1997. Table 3.11 Types of Product Innovations by Size of Enterprises. Absolute and per cent. 1997. 52 Table 3.12 Drivers to enterprise's start of product development. 55 Table 3.13 Decisive reasons for the enterprise's choice to start process development. 56 The Stainless Steel cluster. Table 3.14 Barriers to innovation. The Stainless Steel cluster. 1998. 57 Table 3.15 Number of (estimated) years the enterprise has invested in the product and process 61 development projects. The Stainless Steel cluster. Sample Year 1998. Table 3.16 Contribution from different groups of employees in product and process innovation 62 ranked by importance by management. The Stainless Steel cluster. 1998. Table 3.17 Current investments in competence building. The Stainless Steel cluster. 1998. 63 Table 3.18 A Typology of firms and innovative activity based on their main activity. 1998. 67 Table 3.19 The enterprise's and the partner's role in product development. 68 The Stainless Steel cluster. 1998. Table 3.20 Stand-alone or systemic innovations. The Stainless Steel cluster. 1998. 69 Table 3.21 Types of relationships and their importance. The Stainless Steel cluster. 1998. 70 Table 3.22 The geographical distribution of the most important new market and new type 71 of customer. The Stainless Steel cluster. 1998. Table 4.1 State Budget for Business development in Denmark 1994-1999. (DKK millions, 84 Percentage of total spending.) Table 4.2 Types of support schemes selected for the study. 90 Table 4.3 Shares of firms using innovation support schemes by the typology of firms.
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