The Swedish Innovation Strategy

The Swedish Innovation Strategy Produced by: the Swedish Ministry of Enterprise, Energy and Communications Illustrations: Johan Hallnäs/Svenska Grafikbyrån Photos: Elliot Elliot/Johnér, cover, Morgan Karlsson/Johnér, page 4, Kari Kohvakka/Johnér, page 8, Plattform/Johnér, page 12, Mats Hallgren/Johnér, page 18, Lina Karna Kippel/Johnér, page 20, Susanne Kronholm/Johnér, page 50 Printed by: Åtta 45 Art. no.: N2012.33 Foreword

Innovation begins with the human being. Human beings have ideas and develop knowledge. Human beings use their knowledge, skills and experience in new solutions in their businesses, in their workplaces, in their spare time or as consumers. Sweden’s innovation capacity is essential to meet the challenges and opportunities of the global economy. Policy must therefore be based on a holistic view of how Sweden’s innovation capacity can be maintained and strengthened over time. This is the starting point for the Government’s national innovation strategy. The world today is undergoing fundamental changes. Many countries in the EU and the OECD, as well as emerging countries such as China, India, Russia and Brazil, have an increased focus on developing the innovation climate of their countries. Sweden stands relatively strong in most international comparisons of countries’ innovation capacities and competitiveness. However, global competition is increasing between companies and nations. The rising pressure on the earth’s resources also requires new solutions that combine ecological, social and economic sustainability. In Sweden, we need to be more innovative to meet the global societal challenges, to increase the competitiveness and to renew the future welfare and public services. This calls for an innovation climate that provides the best possible conditions for individuals, businesses, the public sector and civil society organisations to be innovative. The strategy presents long-term guidelines for how the work within many policy areas until 2020 can create better conditions for people in all parts of society to contribute to a more innovative Sweden through their knowledge, skills and creativity. This innovation strategy has been developed in a broad dialogue with many stakeholders. Now that the government has adopted the strategy, I would like to stress that this is the beginning of the real work to strengthen the innovation climate in Sweden in the long term, to empower us all to contribute to shaping the future Sweden in the global knowledge society: politicians, entrepreneurs, employees, citizens and consumers. In the process of developing this strategy, many people with different backgrounds and perspectives have shown a strong commitment and a willingness to contribute. This feels good and in- spiring for the long-term work that we now need to continue together.

Annie Lööf Minister for Enterprise Photo Anna-Karin Nyman

1 2 Table of Contents

1. Why Sweden needs an innovation strategy 5 2. Starting points 9 3. Vision for increased innovation in Sweden 2020 13 4. A good starting point – but global pressure for change is increasing 15 5. Many have responsibility and ability to influence Sweden’s innovation capacity 19 6. The road to a world-class innovation climate in 2020 21 Innovative people 21 Research and higher education for innovation 27 Framework conditions and infrastructure for innovation 30 Innovative businesses and organisations 35 Innovative public services 41 Innovative regions and environments 46 7. Implementation of the innovation strategy 51 8. Glossary 55

3 4 1. Why Sweden needs an innovation strategy

The purpose of this strategy is to contribute to further develop coordination between different a climate with the best possible conditions for actors in order to create the best conditions pos- innovation in Sweden with year 2020 in sight. sible for innovation. People and organisations in industry, the public The development of this innovation strategy sector and civil society will be able to develop and has taken place in broad consultation with sta- more effectively contribute to new or improved keholders in different parts of society. The work solutions meeting needs and demand. was conducted with a high degree of involvement Societal challenges faced by Sweden, together from all ministries within the Government Of- with the rest of the world, are big and complex in fices. This strategy constitutes a basis for a long nature. Therefore, no single actor or area of socie- term way of working in order to enhance the Swe- ty has sufficient knowledge or resources to meet dish innovation climate and innovation capacity. these challenges on their own. It is important to

Urgent societal challenges in Europe 2020

Based on the growth and jobs strategy, Europe 2020, and later clarified by the EU Council in the regulation of establishing Horizon 2020 – The Framework Pro- gramme for Research and Innovation (2014–2020), the following societal challenges has been highlighted as particularly important:

• Health, demographic change and wellbeing; • Challenges for European bioeconomy: Food security, sustainable agriculture, marine and maritime research; • Secure, clean and efficient energy; • Smart, green and integrated transport; • Climate action, resource efficiency and raw materials. • Secure societies: Protecting freedom and security of Europe and its citizens.

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6 An innovation strategy for Sweden is Deliver public services with increased quality needed in order to: and efficiency Healthcare, school, care, police services, built and living environments, as well as systems for en- Meet global societal challenges ergy, communications, water, sewage and waste Together with other countries, Sweden needs to are examples of public services, i.e. welfare ser- contribute to innovative and sustainable solu- vices, social security systems and other services tions to global societal challenges. This in turn that are publicly financed or otherwise important can contribute to increased quality of life for for a well-functioning society. As most European people, a more sustainable development and also countries, Sweden is faced with a major demo- to making Sweden more attractive as a country. graphic challenge to adapt to an ageing society, Furthermore, since demand for new solutions also with more young and old people in relation to the lays the ground for future markets, this can gen- number of people in the work force. By year 2030 erate growth and new jobs. it is estimated that more than one in five Swedish people will be over 65. In order to adapt to these Increase competitiveness and create more jobs changes, innovations are needed to deliver public in a global knowledge economy services with increased quality and efficiency, but Innovation is vital to long-term productivity also in work life in order to attain participation in development, and thereby to growth and future the work force at a higher level and a longer wor- prosperity. A good innovation climate is a con- king life. When Swedish authorities, businesses dition for the competitiveness of companies. and organisations manage to create new solutions Competing in increasingly global production and for areas in global demand, this can also entail innovation networks requires constant renewal export opportunities. of offers, processes and organisation. Clear and highly prioritised innovation policy work is particularly important for Sweden as a trade-oriented country with no major market of its own. Investments, operations and expertise are ever more internationally mobile. This increases competitiveness between countries and regions in terms of attracting individuals, organisations, head offices and other strategic operations.

7 8 2. Starting points

Innovation is about new or better ways of crea- Productivity development is an important fac- ting value for society, businesses and individu- tor that in the long term creates growth and the- als. Innovations are new solutions that serve the reby lays the foundations for prosperity. Produc- needs and demands in daily life and in the world tivity is a measure of how much value is produced around us. The value arises in the utilisation and per unit of various input factors and is often implementation of an idea. The value created measured in GDP or GVA (Gross Value Added) may be economic, social or environmental. Inno- per hour worked. New studies, from the OECD vation can occur in a step-by-step process or in among others, reveal that up to three quarters of disruptive leaps. OECD tends to differentiate productivity development in industry can be att- innovation by degree of novelty: it may be new ributed to innovation. OECD believes that inno- for an organisation, new for a market (or area of vation in the public sector can decrease costs and application) or new for the world. The substantial increase efficiency and quality, with better use of impact on value creation for society as a whole resources and improved target fulfilment. arises as new solutions are adopted and spread th- An innovation can take the form of new pro- roughout society. The word innovation refers to ducts or technological solutions. It may also be both the process of developing new solutions and new ways of planning and developing urban or the result of the process, i.e. the new solutions. rural areas and built environments. It can be combinations of goods, systems and services for the global telecommunications market or smart transport solutions. Innovation can also take the form Innovation: of new ways of designing or organising healthcare services for the elderly, new ways of submitting ”Events through which new ideas, beha- tax returns, new methods of involving customers viours and procedures are introduced into a or users in developing services or goods and new society and then spread” ways of taking advantage of and distributing art (translated from Nationalencyklopedin) and artistic achievements. Innovation can also be new ways of using old, naturally occurring conditions, e.g., cooling energy-intensive data servers ”The implementation of a new or signifi- through localisation in cold climates or new ways cantly improved product (good or service), or of using land, ecosystem services, raw materials process, a new marketing method, or a new from nature and biologically/ecologically based organisational method in business practices, technologies and methods. workplace organisation or external relations.” (OECD, Oslo Manual – Guidelines for How does innovation arise? Collecting and Interpreting Innovation Data) Innovation begins in the creativity and power of initiative possessed by the individual. This strategy therefore has its starting point in people

9 who can and want to bring about improvement, nomy activities such as design, business model and whether individually or together. organisational development or marketing are be- In order for ideas to become innovations, se- coming increasingly important. Innovation increa- veral roles are required: visionaries, inventors or singly takes place in open processes of co-creation creators who have ideas, users and customers who between diverse people and actors. Within organi- have demands and who to an increasing extent sations (whether businesses or others) innovation participate in the creation of new products, ser- processes tend to involve collaborators from all vices and processes, entrepreneurs who run and functions instead of, as in the past, being regarded organise the realisation of ideas, salespersons who as the responsibility of a separate R&D department. communicate ideas and financiers who believe in New ways of creating and sharing knowledge the potential value of ideas and provide capital and other resources changes the innovation pro- and often business competence as well. cesses and investments in intellectual property. Power of innovation is being able to turn know- The digital revolution is creating entirely new ledge, expertise and ideas into new solutions in possibilities for involving users and customers in order to meet needs and demands. Factors that innovations and creating new services, e.g., based affect power of innovation have been defined by on 'open data'. This concerns everything from innovation researchers as: transport solutions to culture and public services. • the knowledge and competence base for There is also an increased awareness of the innovation that is developed through re- importance of norms. Subconscious and unspo- search, education or independent learning ken notions such as innovators being men and innovations being technological solutions mean • incentives for investments in knowledge that there is a risk of overlooking the innovation and entrepreneurial activity potential among large groups of individuals and • demand and markets entire sectors. An innovation policy based on current know- • rules and regulations, organisational forms ledge combines initiatives geared towards stimu- and communication between actors in lating both the supply of and demand for new innovation processes: businesses, the public solutions. The supply perspective is a matter of sector, academia, civil society and individuals different forms of support for the development • specialised resources for the development of new knowledge or other innovation activities, of technology, methods, organisation or such as protection for intellectual property. The processes. intention is for businesses and other organisa- The innovation processes are developed in relations to have a good capacity for innovation. The tionships and through the exchange of informa- demand perspective is intended to stimulate the tion between individuals, businesses and other demand for new solutions, e.g., via innovation organisations. Central to these relationships is re- procurement, standardisation and legislation. ciprocal learning about needs and demands, pos- Both OECD and the EU emphasise the need to sible solutions and how these can be developed integrate these perspectives and start from a ho- and improved on. Learning occurs when people listic view. This means, for example, that inno- and actors from different areas of knowledge, vation policy initiatives in order to meet global organisations, disciplines or sectors of society societal challenges in the areas of climate and the meet and collaborate. Physical or electronic mee- environment must include measures for generating places and good incentives and processes for ting new knowledge or technology as well as mea- learning both within and between organisations sures to stimulate markets for new solutions. are therefore a prerequisite for innovation. Starting point in international A broad view of innovation policy development Today, innovation is seen as broader than the crea- This innovation strategy is in line with internatio- tion of value based on research and technological nal discussions and policy documents in the area. development (R&D). In the knowledge based eco- The broad view of innovation is a cornerstone

10 in both OECD's innovation strategy (The OECD 2020 includes, among other things, the Innova- Innovation Strategy: Getting a Head Start on tion Union (Europe 2020 Flagship Initiative Inn- Tomorrow, OECD 2010) and the strategy for jobs ovation Union, European Commission 2010), the and growth in the EU (Europe 2020 – A strategy Single Market Act (Single Market Act – Twelve for smart, sustainable and inclusive growth, Euro- levers to boost growth and strengthen confidence pean Commission 2010). These strategies are per- "Working together to create new growth", Euro- meated by the need for innovated goods, services, pean Commission 2011) and others, which serve as businesses and social solutions in order to facili- important bases for the innovation strategy. tate the preservation and development of today's OECD stresses that an innovation policy with welfare and living standard and to meet future a challenge-led perspective requires a system per- challenges. OECD's innovation strategy is based spective. Climate changes and sustainability issues on the need for an holistic innovation policy that will continue to create new market opportunities. integrates a number of different policy areas in The ambitious Swedish targets for e.g., reduced order to meet societal challenges. carbon emissions may, according to OECD, work In Europe 2020, the targets for smart, sustaina- as a facilitator, together with targets for renewable ble and inclusive growth have been set, and inno- energy and sustainable development. vation is key in large parts of this work. Europe

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11 12 3. Vision for increased innovation in Sweden 2020

A good innovation climate lays the foundations for more jobs, a more sustainable society with better quality of life for all inhabi- tants and growth throughout the country. The following vision for the innovation climate in Sweden 2020 serves as guidance for the national innovation strategy:

Sweden is a creative country characterised by pioneering ideas and new ways of thinking and doing in order to shape our future in a global community. People in all parts of Sweden can and want to contribute to creating value for people, the economy and the environment through new or improved solutions.

A strong innovation climate by 2020 will enable:

People and actors, by being more innovative, to contribute solutions to big societal challenges, in Sweden as well as globally.

Businesses and environments, by being more innovative, to create value, increase their competitiveness and attract expertise, investments and cooperation partners from around the world.

Actors in the public sector and their partnership with private and civil society organisations, by being more innovative, to supply public services of a high quality and efficiency.

13 14 4. A good starting point – but global pressure for change is increasing

Sweden is a small, trade- and globally orientated with university education and the proportion of country. The domestic market amounts to around young people with high school education) and nine million people, corresponding to Chicago in investments in innovation (private and public). the USA or Nagoya in Japan. In a ranking made Areas in which Sweden appears relatively weaker by the World Bank, the Swedish economy was are the result of innovation activities, e.g., in the number 32 by size in the world in 2011. The total form of the share of business’ revenues origina- investments in research and development in Swe- ting from new or significantly improved products den – an important input for innovation – con- (goods and services), especially for small and me- stitutes roughly one per cent of the world’s total dium-sized enterprises. R&D investments. Sweden’s R&D intensity (proportion of Sweden has a strong standing in internatio- Sweden’s GDP constituted by private and public nal comparisons of national innovation cli- investments in R&D) has decreased somewhat mate and competitiveness. On the Innovation over the last decade. The statistics for internatio- Union Scoreboard 2011, Sweden is ranked as the nal businesses reveal that the large international leading country of the EU’s 27 member states. In concerns dominate the investments in R&D in INSEAD’s Global Innovation Index 2011, Sweden Swedish industry. They have increased their in- is in second place, and holds fourth place in the vestments in R&D, but primarily outside of Swe- World Economic Forum’s 2012 ranking of global den, which represents a considerable challenge. competitiveness. In EU and OECD countries, just as in develo- The strong position is based on Swedish indu- ping countries such as China, India, Russia and stry being successful on international markets for Brazil, the development of the innovation cli- a long time. The open economy of Sweden, with mate has a high political priority. This increases competition from outside, has led to a pressure the pressure on the corresponding policy deve- for change that promotes innovation in Swedish lopment, on both national and regional levels, for businesses. Our strong position builds on what Sweden’s attractiveness in the long-term. are, in comparison with other countries, big in- China’s investments in R&D are increasing vestments in education, ICT, research and deve- rapidly; in 2010 they accounted for 60 per cent lopment. Similarly, Sweden’s position in terms of of the combined investments of EU27. India institutional framework is also good, with a high has proclaimed a decade of innovation and is in level of trust, good political stability and effective its innovation policy focusing on addressing the laws and regulations. needs of the poor people of the world and plan- The Innovation Union Scoreboard 2011 compa- ning to establish 14 ”innovation universities”. In res EU countries regarding conditions for inno- many developing countries, innovations create vation. Here, Sweden stands out as particularly new possibilities for poor people to improve their strong in terms of human capital (proportion of living conditions. Within information and com- graduates, proportion of population aged 30–34 munications technology, for example, the deve-

15 lopment of certain new functions and areas of dom, Australia and others are also making big application is moving quicker than in other more investments in increasing the pace of innovation wealthy countries. in the public sector. The area of social innovation The President of the United States returned is receiving an increasing amount of attention in to the need for increased innovation in his an- several countries. In Europe, a large number of nual “State of the Union” speech in February of countries have formulated national innovation both 2011 and 2012. The USA, the United King- strategies.

How Sweden’s economic prosperity is created

The economic value of the goods and services produ- ees has decreased over the past 20 years, from 34 ced in Sweden, in GDP, amounted to SEK 3 492m in per cent in 1993 to 28 per cent in 2011. 2011, corresponding to SEK 369 600 per inhabitant. In 2012, 40 per cent of the employees in the Just under 80 per cent of GDP is generated in the private sector worked in small and medium sized private sector, whilst the public sector accounts for 20 enterprises (10 – 249 employees). Evidence points to per cent. much of future growth in employment being created Nearly two thirds, 65 per cent, of GDP in the private in these companies, which is why the capacity of sector is generated in service industries. A fifth is these companies to engage in systematic innovation created in the manufacturing industry, whilst the con- activities is an important dimension in this strategy. struction industry and electricity, heating and waste Sweden’s international trade has increased consi- account for nearly 12 per cent. Agriculture, forestry, derably in the last 20 years. The value of the export of fisheries and mineral extraction have a 3 per cent goods and services corresponded to less than 50 per contribution to the private sector’s GDP. cent of GDP in 2011; SEK 1 703m. The importance In 2011, 69 per cent of all employees worked in the of knowledge-intensive goods and services in export private sector. The proportion of public sector employ- is increasing.

Table 1: Number of employees by enterprise size, out of those with at least one employee 19931993 2010 2010 Micro-enterprises (1-9 employees) Small enterprises (10-49 employees) Mikroföretag (1 –9 28% sysselsatta) Medium-sized enterpri- 26% ses (50-249 employees) 36% Små34% företag (10 –49 Large enterprise sysselsatta) (250+ employees) Medelstora företag (50 – 249 sysselsatta) – 19% Stora företag (250 – 21% 17% sysselsatta18%)

Source: SCB, LISA and self-assessments.

18 5. Many have responsibility and ability to influence Sweden’s innovation capacity

The Government has now adopted this stra- tive competition, functioning trade, regulations tegy by Government decision. The State has an and structures for taxation, labour market, fi- important role to play in continuing to provide nancial markets, education and research systems, good conditions for innovations in Sweden – a and infrastructure. Other examples are laws and good innovation climate – but it is individu- regulations pertaining to contracts and procure- als in collaboration that ensure Sweden retains ment. Suitable systems for intellectual property and strengthens its position as global leader in protection are of considerable importance. Not creativity and innovation capacity. Many public only public rules and regulations are relevant – actors such as universities, public agencies, coun- standardisation, for example, is handled to a great ty councils, regions and municipalities have a role extent by private actors. Norms and attitudes to in the public commitment to a strong innovation creativity, the capacity for innovation and general climate in Sweden. Success also depends on com- entrepreneurship in society are other examples of mitment to the strategy’s alignment from indu- framework conditions for innovation. stry and civil society. 2. Innovation in public services and the public Public commitment, public action in society sector generating demand for innovation to strengthen the innovation climate and innovation capacity, can be motivated by market fai- This concerns first of all the capability of public lures, system weaknesses or international policy services to be innovative. Secondly, it is about development. Public initiatives should be desig- the public sector contributing to the demand for ned to achieve the highest possible efficiency in innovation in society at large. This includes set- the use of public funds. The conception of the ting political goals, influencing the formulation of public commitment to a strong innovation cli- standards, designing procurement processes so that mate and innovation capacity is developed in line they are open for new solutions, carrying out inno- with the decision-makers’ knowledge of how po- vation procurements or designing processes for so- litical decisions can affect innovation processes in cial planning in ways that promote new solutions. businesses, public sector or civil sector organisa- 3. Direct measures targeting innovation processes tions. Ultimately, it is the political position on the significance of public initiatives in economy and Direct measures targeting innovation processes society that sets the framework. can take the form of financing of innovation activities and entrepreneurship, and advocacy – e.g., The public commitment to a strong innovation providing advice or support to collaborative pro- climate on a governmental, regional or municipal jects for research and innovation. They may also level translates into practical politics within three be a matter of financing knowledge and innova- areas: tion infrastructures such as incubators, the for- 1. Well-functioning framework conditions mation of clusters or networks, and test and de- Well-functioning, appropriate and stable frame- monstration facilities. work conditions, incentives and means of control The main point is that the guidelines presented in form the basis of a good innovation climate. Ex- the section The road to a world-class innovation cli- amples of such framework conditions are stable mate in 2020 can primarily be implemented through state finances, free and open markets with effec- prioritisation within existing financial boundaries.

19 20 6. The road to a world-class innovation climate in 2020

This strategy lays out the alignment of the work People, businesses and organisations that to develop a world-class innovation climate in 2work systematically with innovation: Sweden with 2020 in sight. The work is about • Innovative businesses and organisations • identifying and rectifying areas where today there are obstacles to innovation, or where • Innovation in the public sector Sweden reveals weaknesses in international • Innovative regions and environments comparisons • protecting and developing areas in which Implementation of the strategy Sweden is currently strong in comparison based on a holistic view: with other countries 3 • improving coordination between policy are- • in developed coordination between policy as, between different levels and social sectors areas and policy levels in order to make public initiatives more ef- • in dialogue with actors in industry, the public fective and have the biggest possible impact sector and civil society on renewal, sustainable growth and social development in Sweden. • in a process of continuous learning The strategy will be implemented in concrete initiatives from the Government’s side, but will also contribute to other actors’ initiatives to Innovative people strengthen innovation capacity in Sweden with 2020 in sight. Goal: People have the capacity, willingness and conditions to contribute to innovation People’s ability and willingness to contribute to innovation is central. In order for the innovation Innovation is reliant on people’s capacity and strategy to have a big impact, contributing to inn- conditions to develop new ideas and implement ovation must be of importance to many people. these in new solutions that change society, both on smaller and larger scales. It is people that seek The strategy is based on three main principles: out and develop knowledge, that are active in businesses, research environments, public organi- The best possible conditions sations and civil society. People make consumer 1for innovation: decisions, decide what is valuable and form regulations and attitudes. When people meet, ideas, • Innovative people knowledge and expertise from different sources • High quality research and higher education and areas are pitted against each other, resulting for innovation in renewal. To utilise the capacity and power of initiative of the entire population is therefore the • Framework conditions and infrastructures starting point for a powerful innovation strategy. for innovation

21 The road to a world-class innovation climate in 2020

Research and higher Framework conditions Innovative people education for and infrastructure for innovation innovation

Goal: Goal: Goal: People have the capacity, Research and higher Framework conditions and willingness and conditions education in Sweden is infrastructure that lays the to contribute to innovation of a high quality by inter- foundation for a strong national standards and innovation climate contributes to innovation in many ways

Sub target: Sub target: Sub target: People have the knowled- Education and research Regulations, market ge, skills and expertise to at universities with world- conditions and norms that contribute to innovation class quality and relevance promote innovation contribute to innovation

Sub target: Sub target: Sub target: People have the courage World-class research Functioning access to and willingness to contri- institutes meet knowledge competent capital that bute to innovation as an and development needs in promoted businesses’ entrepreneur, manager, businesses and society capacity for innovation and employee, user and citizen growth

Sub target: Sub target: Sub target: r inga Sweden’s working life is Strong Swedish research an Sustainable physical and m ut lls attractive on an interna- nodes have strong posi- ä digital communication that h m tional level and welcomes tions in global knowledge a promote innovation s

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i S Vision Sweden is a creative country characterised by pioneering ideas and new ways of thinking and doing in order to shape our future in a global community. People in all parts of Sweden can and want to contribute to creating value for people, the economy and the environment through new or improved solutions.

Innovative businesses Innovative public Innovative regions and organisations services and environments

Goal: Goal: Goal: Businesses and organi- Innovative and collaborative Sweden’s regional innova- sations in Sweden have public service organisation environments have world-class innovation tions that are legally secure international appeal capacity and effective, and has a high degree of quality, service and availability

Sub target: Sub target: Sub target: Businesses in Sweden Public sector organisa- Sweden’s regions are grow by offering innovative tions works systematically increasing their innovation solutions on global markets with innovation in order capacity based on their to increase efficiency and unique conditions quality

Sub target: Sub target: Sub target: Businesses in Sweden Public sector organisations Regional strategies for grow by offering innovative contribute in developing innovation are grounded in solutions on global markets innovative ways of meeting combined regional leader- societal challenges ship

r Sub target: Sub target: inga an m Using the potential in Efficient public sector sup- ut lls ä h social innovation and social port for innovation with a m a s entrepreneurship to con- focus on customer benefit a l a b tribute in meeting societal o l

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i S Sub target: People have the knowledge, skills learn and re-learn in order to adapt their exper- and expertise to contribute to innovation tise in a changeable working life. Innovative capacity is influenced by a broad range Sweden’s population has a level of education of knowledge, skills and expertise, not least crea- that in international comparisons is relatively tivity and the capacity for lifelong learning and high. Sweden’s position in terms of school pupils’ re-learning, as well as the capacity to interact ability to read and skills in maths and scientific with others. subjects has however come out weaker in international comparisons. The Government’s education The education system has a crucial role in or- policy is designed to turn this development on its der for young people to develop knowledge, skills head, in order for Sweden to be a competitive na- and approaches needed to be able, together with tion and retain its level of expertise. others or individually, to translate ideas to reality in work life as well as in other contexts in socie- The main role of the education system is to ty. The capacity of the education system – from convey subject knowledge, but it also has a role preschool to vocational training and university in developing social skills and entrepreneurship. – to develop subject knowledge is of fundamen- The importance of social skills and entrepreneur- tal importance to innovation capacity. The edu- ship is increasing as society is becoming more and cation system also plays an important role in the more complex and the pace of change is growing. development of people’s creativity, entrepreneur- The OECD among others have drawn attention ship as well as an understanding of sustainable to the need for developing entrepreneurial skills, development in society, etc. In the global know- also in the education system. ledge economy, which is changing at a rapid pace Life-long learning is increasingly important and where ICT is an integral part of daily life, for innovation, including different forms of pro- working life, entrepreneurship and relationships, fessional and adult training and digital learning the importance increases of digital literacy, good services. The main part of lifelong learning takes language skills, and the capacity to familiarise place as professional training of employees within oneself with different cultures. It is becoming in- companies and other organisations. creasingly important for people to continuously Part of the responsibility for a lifelong learning process is found in labour market policies. Em- ployment training is aimed at helping jobseekers to find work and at counteracting labour shorta- ges. The rate of employment in Sweden is high in an international perspective, a contributing factor of which is that the proportion of women gainfully employed in Sweden is higher than in most other countries. Among young men and women and foreign nationals, however, the rate of employment is relatively low. During the course of developing this strategy, the supply of people with appropriate skills has been emphasised repeatedly as one of the biggest challenges for Sweden’s innovation capacity. It is both a matter of having a sufficient quantitative supply of people for all parts of the labour market in different parts of Sweden, and about the supply of people with the required knowledge, expertise and skills. As the pace of change is high in economy, people and organisations are increasingly required to renew in order to adapt to the changing demand for knowledge and skills.

24 Sweden therefore needs to: The population’s willingness to change and capacity to quickly adopt new solutions are factors that • Continue the work to improve the know- benefit businesses’ innovation capacity, just as in ledge output of the educational system. the public sector and civil society. Sweden is at the • Continue to develop an educational sys- forefront in international comparisons that measu- tem that supports individuals – irre- re these factors. Internationally, Sweden is regarded spective of gender, age, social, ethnic or as a country well ahead in terms of global responsi- cultural background or– in developing bility and social and environmental accountability, knowledge, skills and expertise for inno- and also perceived as a creative country. vation, creativity and entrepreneurship Sweden’s employment has for a long time de- throughout their lives. pended heavily on large industrial businesses and the public sector. Even if these structures are chan- • Promote free choice of studies and profes- ging somewhat, there is still a general perception sion without stereotypical expectations in Swedish society that completed studies lead and limitations, e.g., in terms of gender, to employment rather than to self-employment. age social, ethnic or cultural background. This can repress people’s innovation capacity. • Develop methods and approaches in edu- The capacity for and interest in entrepreneurism cation and working life that promote the is important for people’s attitude to innovation in capacity to combine knowledge and skills their roles as entrepreneurs, managers, employees, from different fields of knowledge and users and citizens. The educational system is an spheres of activity. important arena in which to form attitudes, inte- rests and skills related to entrepreneurship. • Evolve the matching of supply and demand on the labour market, with regard According to data from Panteia/EIM, Sweden to both quantities and expertise, through has a lower proportion of entrepreneurs than the closer cooperation between the educatio- EU average, though the development trends with nal system and working life. regard to entrepreneurism are positive. Statistics from Swedish Agency for Growth Policy Ana- lysis show that the creation of new businesses in Sub target: People have the courage and Sweden has increased in recent years and analy- willingness to contribute to innovation as an ses from the Swedish Jobs and Society Founda- entrepreneur, manager, employee, user and tion indicate that young people are increasingly citizen. positive in their attitude to entrepreneurism. In Sweden, businesses are primarily created on the Entrepreneurship is about the capacity to identi- basis of new opportunities. A high level of oppor- fy opportunities and create or coordinate resour- tunity-based entrepreneurism has proven to have ces in order to implement these in activities that a positive connection with a country’s growth. create value. An important element of entrepre- The proportion of people starting up a business neurship is the willingness and driving force to as a result of unemployment or risk of unemploy- change and improve. People can be entrepreneu- ment is very low in Sweden. rial in both new and existing businesses, public Leadership and organisation of work in order services and other organisations. to promote the capacity of employees to contribute to innovation are fundamentally important Entrepreneurship: factors in businesses and non-profit organisations as well as in the public sector. A creative, involved ”… activities in economy that are intended working environment is not only a result of, but to create value. This occurs when actors also to a great extent a prerequisite for managers identify and realise new products and pro- and employees’ capacity and willingness to contri- cesses, implement organisational changes or bute to development and renewal. Good relation- reach new markets” ships between people in a workplace encourage (OECD/Eurostat, 2007) certain constructive behaviour, which in turn strengthens productivity and innovation capacity.

25 Knowledgeable and well-informed citizens, Sub target: Sweden’s working life is attrac- users and consumers are significant driving forces tive on an international level and welcomes for innovation. The capacity to involve people in diversity and mobility co-creation and open innovation is therefore ever more important. In addition, the capacity of pe- Innovation thrives in difference and diversity. ople being active and well informed consumers is When people move between workplaces, regions increasing. This capacity is facilitated by well-de- and countries across the world, the opportunity veloped consumer support. Active involvement of to develop and combine knowledge, skills and ex- users and consumers in innovation processes is fa- perience increases. Innovation and creativity also cilitated via new social tools and digital platforms, benefit from meetings and collaboration between among other things. To an increasing degree, people of different genders, ages and ethnic origin. groups of users and consumers in Sweden actively An open, inclusive society that benefits contribute to innovation by influencing e. g. met- people’s mobility and welcomes and utilises hods of delivery, design or other characteristics. their differences is therefore of fundamental im- People who have a lot of personal experience in portance to innovation. This is crucial in a global business development and entrepreneurship, and and fast-paced society, in order to take advantage who can support others who have business ideas, of all sources of creativity, innovative ideas and are important to a good innovation climate. Dif- the capacity for change. ferent forms of mentoring can provide access to In international comparisons, people living in experienced entrepreneurs’ business knowledge Sweden are prominent in terms of both creati- and networks. In cases involving ”business ang- vity and diversity. Here we find one of the hig- els”, this is combined with financial resources. hest percentages of foreign nationals in Europe, and a country in which nearly 200 languages are Sweden therefore needs to: spoken. People who come to Sweden from other countries contribute to a great extent to prospe- • Continue to develop good conditions, in- rity. At the same time, Sweden has not taken full centives and framework conditions for advantage of the expertise of certain groups of fo- entrepreneurship reign nationals. Likewise, it is very important to • Promote positive attitudes to entrepre- utilise the expertise and capacity for new lines of neurship and innovation in society, by thinking of young people in particular. e.g., highlighting good examples and role Sweden’s position as an attractive country for models and developing forms of mento- people with international peak competence in ring. different areas of society is becoming increasingly • Continue long-term development of en- important. In addition, the demographic chal- trepreneurship throughout the educatio- lenge presented by the ageing population means nal system, based on the Government’s there is a growing need for labour. International Strategy for entrepreneurship in the field mobility or migration, including the influx of of education presented in 2009. foreign labour, is important factors for Sweden’s innovation capacity. • Continue developing knowledge and good It is therefore important to make efforts to uti- practice in management and methods of lise the expertise of foreign nationals living and work to promote innovative workplaces working in Sweden to a greater extent, in order to and a work environment in which em- promote innovation capacity and growth. People, ployees’ expertise, creativity and capacity who have come to Sweden to work, start a bu- for cross-border work are utilised. siness, study or conduct research, are important • Develop conditions for citizens, users and groups in this context. consumers to contribute to innovation, Many foreign nationals come from countri- by e.g., promoting innovation brought es with well-developed small-scale trade and a about by users and appropriate, effective strong innovation climate. Creation of new busi- consumer support that is equal for all of nesses is more common among certain groups of the country’s consumers. immigrants than among people born in Sweden.

26 Foreign nationals are also an important source of knowledge about users, markets and contacts in other countries, which can promote international trade and other relations. It is ever more common for people living in Sweden to work, run a business, study or conduct research in other parts of the world for shorter or longer periods. A globalised labour market and increased mobility has meant that the practice of moving back and forth between countries – circular migration – has become more commonplace. This helps to enlarge Sweden’s contact surface with the rest of the world and can promote the transfer of knowledge and experience that are contributing factors in development and innovation capacity, both in Sweden and in other countries. The development towards equality has come a long way in Sweden. At the same time, the Swe- dish labour market is somewhat segregated in terms of gender, and the mobility on the labour market is relatively weak, especially among the directly and indirectly to problem solving and elderly and people with a low level of education. learning in innovation processes throughout society. This concerns not least the development Sweden therefore needs to: of new knowledge with a view to meeting global societal challenges. Research is of fundamental • Facilitate men and women’s mobility bet- importance to the quality of higher education. A ween businesses, organisations, sectors, high level of knowledge and expertise in the work regions and countries, by different means force is therefore dependent on excellent research among which good conditions for valida- in Sweden, as well as of the capacity to tap into tion and valuation of merits and know- and make use of new knowledge originating from ledge from different study and career other countries. paths and other parts of the world. Sweden is among the countries who invest • Develop knowledge and methods for most, in both the private and public sector, in workplaces to take advantage of diversity research and development (R&D) in relation to as a driving force for increased innovation. GDP. This activity is conducted in Sweden primarily in large international business groups and • Develop incentives and structures that universities. attract foreign entrepreneurs, employees, Investments in R&D and education in Sweden students and researchers. Sweden’s appeal contribute to high academic standards in research for people with the kind of expertise that and a well-educated work force. This has been of is in particular demand requires some fundamental importance for a high level of inno- attention. vation capacity and competitiveness in Swedish Research and higher education for innovation industry. In the global knowledge economy, where competition for investments and expertise is in- Goal: Research and higher education in creasingly tough, it is crucial to be able to offer Sweden is of a high quality by international attractive conditions in terms of the retention of standards and contributes to innovation in expertise, research collaboration, and established many ways and functioning knowledge networks and research environments. Access to leading innovation and Research is the systematic and methodical quest research infrastructure, including test and demon- for new knowledge. Research contributes both stration facilities, is important in this context.

27 An important requirement for Sweden’s ability tivity and capability for innovation and entrepre- to successfully contribute to addressing societal neurship, e. g. in the Strategy for entrepreneur- challenges is leading research within key enab- ship in the area of education presented by the ling technologies, i.e. research with applications Government in 2009. Apart from being employed in a variety of areas of society. or starting their own businesses, students have Strong, government-funded research for inno- numerous areas of contact in many forms with vation is promoted by and excellent level of re- businesses and other organisations during their search results. It also benefits from a good connec- studies, such as placements and degree projects. tion to research in education and a functioning Universities also work to ensure knowledge collaboration between producers of research and gained from research is refined, transferred or the surrounding society. Increased collaboration commercialised by means of patents, licensing can contribute to higher scientific quality and and the creation of new businesses, through re- have a positive impact on growth and societal search institutes and consultancies. The work at development. universities aiming at valorisation of research also include research collaboration with existing Sub target: Education and research at uni- large and small enterprises or actors in other areas versities with world-class quality and rele- of society. vance contribute to innovation The knowledge economy is becoming more and more complex, societal challenges tougher Knowledge from universities has a fundamental and international competitive pressure greater. value for society and constitutes a central pre- Businesses and other organisations therefore need requisite for innovation. Universities are social to increase their interaction with universities in forums for people who develop their knowledge, their innovation work. The capacity of these ac- creativity, expertise and driving forces and who tors’ to collaborate with each other is crucial to implement these in new solutions and the crea- development and renewal in society at large. tion of value in new or existing businesses, as well as in public and civil society organisations. Universities have an important role in making global business groups see the appeal of investing The results of university research constitute in their own and others’ R&D in Sweden. Glo- an important source of innovation. The efforts to bal competitiveness between knowledge centres increase the creation of value with a basis in such across the world for financing, research with peak research has, in Sweden for a long time, focussed competence and students is intense. In order to on developing incentives and expertise among remain competitive, Swedish universities must be researchers in order to encourage them to start able to conduct research and provide education of and develop their own businesses. This way of va- a high scientific and artistic excellence and of re- lorising research is an important yet lesser part levance to society and industry. of the ways in which research can contribute to innovation. In fact, research at universities is contributing to the development of new solutions in Sweden therefore needs to: many different ways. The introduction of innovation offices at many universities has contributed • Continue to develop excellence in re- to broadening this view. search at universities. Universities are actively interacting with the • Promote the development of leading re- surrounding society including work with valo- search environments at universities by risation of research based knowledge. Well-edu- means of the recruitment of internatio- cated students, who apply knowledge and met- nally prominent researchers. hods or implement ideas in their professional life • Continue to lay the foundations at uni- including their own business, are important for versities to support the efforts of resear- the valorisation of research. Students, from ba- chers and students’ in valorising research sic to research level, contribute to innovation to based knowledge. a large extent. Attention has been drawn to the importance of their ability to develop their crea-

28 • Continue to develop incentives and struction capacity among businesses and in the public tures for collaboration between universi- sector in Sweden. Such infrastructure can play in ties and the surrounding society, inclu- important role in making regions and locations ding long term collaboration with a view in Sweden an attractive prospect for internatio- to develop knowledge and solutions to nal investors, businesses and people with peak address societal challenges as well as key competence. enabling technologies with wide applica- The Industrial Research Institutes are research tions in many areas of society. institutes more focussed on the needs in different • Continue to work on opportunities for parts of industry. The majority of these are gathe- students to develop entrepreneurial skills red under RISE Holding AB. They have a have a in line with the Strategy for entrepre- special task for supporting small and medium- neurship in the area of education presen- sized enterprises that often have limited resour- ted by the Government in 2009. ces of their own for research and development. In recent years, the development of Industrial Re- Sub target: World-class research institutes search Institutes in Sweden has led to larger and meet knowledge and development needs in fewer units with increased focus on this task, not least in collaboration with universities. businesses and society Research institutes are an important part of the Sweden therefore needs to: infrastructure for knowledge development and innovation in Sweden. In Sweden there are many • Enhance collaboration of research insti- different forms of research institutes. Many work tutes with universities, industry and the with research and development aimed at mee- public sector on national and regional le- ting the needs of industry and society in general. vels. Some are mostly focussed on the needs in different parts of industry. Others work primarily on • Develop the role of research institutes in needs on areas of society with substantial natio- providing facilities for test and demon- nal and international public stakeholders such as stration of new solutions, including col- Swedish Environmental Research Institute (IVL), laboration with users. Swedish National Road and Transport Research • Continue to develop the Industrial Re- Institute (VTI) and Swedish Defence Research search Institutes’ work to support small Agency (FOI). Advancement of scientific know- and medium-sized enterprises innovation ledge development in different research areas is a capacity in collaboration with other ac- prerequisite for the long term quality and compe- tors, including consultancy and financing titiveness of research institutes. actors and universities. Research institutes are often organised in order to facilitate cooperation between industries, sec- Sub target: Strong Swedish research nodes tors and fields of knowledge. They often have ex- have strong positions in global knowledge tensive collaborations with universities and inter- networks national research organisations. Therefore they Many countries are investing intensely in in- have an important role in developing knowledge creased research for the development of their and solutions addressing societal challenges. knowledge base and innovation capacity. The An important function of many research in- research in Sweden is in many respects of high institutes is to offer environments to certify, test, ternational standards, with good links to research verify and demonstrate possible solutions. The in other countries. At the same time, research in possibility to practically explore new ideas in real Sweden constitutes around one per cent of all environments involving a dialogue with users is research in the world. The total volume of re- important in order to understand needs and to search in the world is rapidly increasing. In order evaluate and develop various potential solutions. to strengthen Swedish knowledge development Access to and use of infrastructure for test and and competitiveness, it is therefore of increasing demonstration is therefore important for innova- importance for Swedish universities, businesses,

29 public and civil society organisations to develop • Develop and simplify forms of sup- strong positions in global knowledge networks porting international flow of knowledge through international cooperation. as a supplement to individual actors’ Important European knowledge networks are international cooperation. formed via cooperation within the scope of the • Develop international collaboration with EU’s research and innovation initiatives. Pro- countries where research and innovation grammes in which the EU Member States con- potential is high or otherwise deemed to tribute through funding, known as ”partnership be of strategic importance. programmes”, are expected to become more and more common. This places new demands on Swe- Framework conditions and infrastructure dish coordination. for innovation It is also important to create good research connections with actors in the countries combi- Goal: Framework conditions and infrastruc- ning high economic growth rates with research ture that lays the foundation for a strong and innovation policy investments. Important networks are formed via bilateral research and innovation climate innovation cooperation, for example in the scope Framework conditions for entrepreneurship and of the agreements and memoranda of understan- infrastructure are a very important factor in Swe- ding that Sweden has with a number of countries. den becoming an attractive prospect for invest- Sweden has research and innovation infrastruc- ments and innovative activities. Open markets tures of international interest that can contribute with healthy competition form the basis for a in making Sweden an attractive prospect for fo- dynamic industry that can adapt to developments reign actors. Among these, are unique data bases in a global knowledge economy with rising com- and registry data with person based information petitive pressure and pace of change. Rules and and multidisciplinary research facilities such as regulations must provide good conditions for cre- MaxLab and SciLifeLab, and European Spallation ativity and the creation of value. How rules and Source. regulations are formed affect incentives both di- The development of strong Swedish research rectly and indirectly, via norms and attitudes. Di- nodes in international knowledge networks is gital and physical infrastructures provide oppor- important for maintaining high quality in Swe- tunities for people and organisations to meet and dish research and education, for businesses’ ca- exchange knowledge and ideas, and implement pacity for development and competitiveness and these in new solutions. in society at large, just as they are for Sweden’s ability to contribute to addressing grand societal On innovation and markets challenges. Successful innovation processes will entail changes of existing markets and the Sweden therefore needs to: development of new markets. It is diffi- • Improve conditions for attracting inter- cult to foresee in advance how best to or- national investments and peak compe- ganise new or transformed markets. Mar- tence for research and development in kets change and new markets are formed the public and private sectors. in a continuous learning process between actors. Digitalisation and globalisation • Participate in high priority EU research are changing the very basis of market de- and innovation initiatives and promote velopment. a high level of Swedish participation in Balancing different actors’ interest and relevant EU programmes, in such a way taking potential future development into that the combined Swedish participation consideration is a vital public commit- contributes to strengthening the innova- ment. Depending both on the nature of tion capacity of Sweden. goods or services, and of political posi-

30 tions, markets can be more or less regula- The formulation of the tax system is crucial to ted. Taking into account the evolution of investments and growth and businesses’ compe- society, and ensuing changes in demand titiveness as capital, investments and people are and supply of new solutions, market re- becoming more and more globally mobile. Chan- gulations must be constantly updated. ges to the regulations for corporate taxation affect the access to capital, which in turn affects productivity and welfare. Tax regulations also in- Sub target: Regulations, market conditions fluence what businesses and individuals’ invest in, and norms that promote innovation how investments and recruitments are financed, and even attitudes towards risk-taking and entre- Good general framework conditions for busi- preneurship. In many countries, there are parti- nesses and entrepreneurship are crucial for the cular tax regulations formulated to promote in- innovation climate and in order for Sweden to vestment in innovation activities including R&D. be an attractive prospect for investments, businesses and individuals and in order to facilitate It is crucial that the tax system provides good structural transformation. Functioning markets incentives for investment in innovation and and industry depend on relevant regulation that provides equity or loaned capital for investment provides a stable set of rules, facilitates desira- in renewal and expansion. This is central to exis- ble development in society and does not result ting businesses’ expanding, foreign businesses be- in unnecessary costs for businesses and society. ing established and new businesses being formed. Regulation can also lay the foundations for new Framework conditions, such as legislation markets. Examples of regulation and framework concerning the environment and competition, conditions that are important for the innovation state aid regulations, trade agreements, regulation climate are the design of the tax system, compe- concerning furthering use of public data, intel- tition legislation, state aid regulation, standards lectual property rights, are to an increasing extent and intellectual property rights. formulated at the EU level or in other internatio- Sweden has in principal a well-functioning institutional framework and is in international comparisons at the top in this respect, e. g. in Global Competitiveness Report from World Eco- nomic Forum and Global Innovation Index from World Intellectual Property Organisation. Stable state finances constitute a strong foundation for a good innovation climate, as this provides businesses and society with good long-term conditions. For a long time, work has been underway to simplify for businesses by creating effective and practical regulations so that they can spend their time and efforts on development and running their businesses. In international comparisons Sweden and other Nordic countries are considered to have the most effective administration in the EU. Ad- ministrative costs associated with starting and running a business are relatively low. In terms of regulations and costs for trade and investments, however, Sweden’s position is somewhat low. Though the starting position of Sweden is good, many countries are working intensively to develop competitive framework conditions. The international competition for investments and expertise is increasingly tough.

31 nal contexts. Sweden’s international cooperation for the formulation of such regulations and struc- Standards and intellectual property tures is therefore very important to the innova- rights – two examples of rules and tion climate in Sweden. EU membership offers regulations for innovation free mobility of goods and services on the Single Market and increased free trade on international Standards promote the exchange of markets; important factors for driving innovation knowledge about technology or methods. and growth in Sweden as they increase the mar- Standards are more and more often ela- ket volume for new goods and services. borated in close connection to other development activities; this applies not least The regulations on government subsidies are to the ICT sector. Rules and regulations intended to maintain competitive on the EU based on standards can facilitate business Single Market. State subsidies for research, deve- development for individual businesses lopment and innovation are permitted on certain as well as international cooperation sur- terms, especially when the purpose of the subsi- rounding important societal challenges. dies is to facilitate the development of certain bu- Clear development of standards in areas siness activities or regions and provided that they such as the environment, ICT, life sci- do not have a negative effect on trade to an extent ence or nanotechnology may facilitate that goes against the common interest. The sub- the growth of new markets and thereby sidies are regulated through special framework drive innovation. For example, ambitious regulations for state subsidies for research, deve- demands for Eco design or energy label- lopment and innovation. There is a need for an ling and Eco labelling developed within overhaul of this regulation and a revision of these the EU help the consumer to make more is therefore underway. The new regulations will sustainable choices. Standards also con- take effect from 1 January 2014. tribute to spreading innovations throug- For a number of years, various market solutions hout the economy. Standardisation can for the implementation of public services have sometimes complement the protection been state or public monopolies. Readjusting and of intellectual property rights when opening up for both public and private executors businesses want to establish a new pro- may have an impact in terms of increased free- duct or service. dom of choice, accessibility, entrepreneurship Intellectual property rights are an and more effective use of resources. important part of the infrastructure for Society’s attitudes towards entrepreneurship innovation in that they provide the opp- and risk-taking are fundamental to the wil- ortunity for the developer of an idea or lingness and capacity of people to contribute to a creative work to protect their right to innovation and pursue various forms of entre- profit from their creation. The intellec- preneurship. It is a matter of having the courage tual property rights systems also facili- to venture out into unknown territory and take tate the dissemination of new solutions. risks, to accept failure and learn from experience. The protection creates rights that can be Challenging norms and attitudes is fundamental transferred and licensed. A well thought- to innovation, which by definition involves the out business strategy for management of creation of new things. Innovation can be ham- intellectual property that includes the pered by norms, which are very limiting, dicta- protection of intellectual property rights ting what innovation is and who can contribute. is particularly important for small and Highlighting the great number of innovative pe- medium-sized enterprises on an increa- ople and the value they create may contribute to singly global market. making innovation more natural and important to more people. The way in which the image of Sweden as an innovative country is communica- ted, both in this country and internationally, also affects our appeal and innovation capacity.

32 Sweden therefore needs to: conditions and a financial system for business’s demand for capital at different stages of deve- • Maintain and develop good framework lopment. It is a matter of capital both to develop conditions for innovation and all phases business ideas and stimulate growth on new and of entrepreneurship: start, growth and li- existing markets. Initiatives geared towards the quidation. In particular, the work to simp- development of the financial system and promo- lify the day to day life of businesses and tion of a business’s supply of capital are therefore identify and rectify rules and regulations an important element of the improvement of the that hamper innovation must continue. innovation climate. • Continued development of framework Investments in innovation often entail great conditions to give people, businesses and uncertainty and require the capacity to combine other organisations incentives to invest many competencies with financial and non-fi- in innovation and take risks in order to nancial resources. This is why the term compe- develop new solutions and grow through tent capital is often used. internationalisation. This includes revie- The need of business’s for development capital wing the possibility of changing tax regu- is primarily satisfied y the private market. Public lations in order to promote investments capital supply actors today represent around two in innovation – including R&D – and att- per cent of all supply of financing to businesses. ract investments to Sweden. A functioning supply of capital often depends • Continue to strive for appropriate and on good interplay between private and public effective protection for intellectual pro- sources of financing. Both formal (bankers, property rights on a national scale as well as fessional investors) and informal capital (such as a functioning, uniform patent protection family, friends and angel investors) are required. and a uniform patent court in the EU. In very early stages, informal capital has a substantial role. Business angels have a particularly • Promote standardisation as a driving important function in private supply of capital force for innovation, e. g. for increasing for innovation, as they combine economic resour- green innovation and the development of ces with considerable knowledge of business and a greener economy. with networks. There is potential to increase the • Continue to strengthen the Single Mar- scope of capital from business angels in Sweden. ket and open global market through in- In order to realise this potential, tax regulations ternational agreements and cooperation. need to be formulated in a manner that facilitates the formation of private funds and encourages • Continue to strive for appropriate for- risk-taking from individual investors. mulation and implementation of framework conditions for state subsidies for Growing businesses that intend to expand, for research, development and innovation which loan opportunities are limited, are in need within the EU. of external equity capital to a greater extent than other businesses. For this group of companies, ac- • Continue to develop the work to commu- cording to new studies, a well-developed venture nicate the image of Sweden as an innova- capital market is of particular importance inclu- tive country, both nationally and interna- ding fund directed to investment and develop- tionally. ment of growth companies. Against this background an important point of Sub target: Functioning access to competent departure is to strengthen incentives for risk ta- capital that promoted businesses’ capacity king and entrepreneurship. Taxation should be for innovation and growth formulated to promote enterprise, investments Access to capital is of fundamental importance and increasing employment. for a business’s capacity for growth and innova- Early stages of business development are cha- tion. A prerequisite for starting up and deve- racterised by high levels of risk, asymmetries of loping a business is therefore good framework information and assessment of value as well a

33 long time spans to financial buoyancy which me- Sweden therefore needs to: ans that the private market seldom have the possibility or the will to invest capital on their own. • Strive for more equal conditions in terms of taxation between equity and lent ca- As pointed to by the OECD, the socio-econo- pital. mic gains of investments in the earliest stages can be considerable despite that the majority of • Investigate the conditions for collabora- investments may fail. There may therefore be a tion between public and private capital socio-economic value added to limited public with a view to increase private invest- financing that complement the market for com- ments in early stages. panies in early investment stages. All developed • Strengthen incentives for investments countries therefore have a public commitment to from private individuals in companies, e. public financing that bolsters the markets at an g. through investor deduction. early stage in order to favour an entrepreneurial and innovative climate. Public financing is often • Develop effective and appropriate struc- conditioned by the inclusion of some extent of tures, forms and regulations for the supp- private financing. ly of capital for innovation that takes into Public capital for innovation support in early consideration the conditions and needs stage businesses can include investment support, on local, regional, national and EU levels. soft and other types of loans, equity etc. It can also • Continue the improvements of state initia- include incentives for various innovation-related tives as a complement to market solutions activities such as development activities or the concerning the supply of capital in order acquisition of expertise in intellectual property to increase the benefit to customers th- rights or design services in established companies. rough a clearer and more effective system. Different categories of innovators and businesses have different needs and conditions to utilise capital: individual innovators, social entrepre- Sub target: Sustainable physical and digital neurs, small, medium-sized or large enterprises. communication that promote innovation In line with the changing conditions in economy, Innovation processes are dependent on physical on different markets and in the world around us, and digital infrastructures that dictate how pe- there is a need to continuously develop principles ople, businesses, authorities and organisations can and structures for a functioning supply of capital. meet and communicate. They are also necessary The Government therefore overhauls both man- for functioning markets. National and regional dates and roles for its public capital supply actors. border are also challenged and the flow of infor- This work includes improving customer benefit mation, goods and services is moving quicker and and governance by means of measurable goals in is taking new paths as Sweden becomes a part of terms of e. g. societal impact, rate of capital utili- the global knowledge economy. In the planning sation and financial return. and development of both physical and digital in- Sweden is an attractive country for foreign ca- frastructures, it is therefore important to take into pital, but international competition for invest- consideration how knowledge and information ments is increasing. From a global perspective, networks, markets and trade can be developed. there is a relatively good supply of private and public venture capital in Sweden. However, in The increase in digitalisation entails the develop- relation to a number of other comparable ment of new forms of contacts and exchanges bet- countries, a lesser volume of capital is allocated ween people across national borders. It also means to the very early stages. In addition, according that more and more information and knowledge to the Swedish Private Equity & Venture Capital is produced, stored and can be made available glo- Association (SVCA), in recent years financing of bally. Both of these trends provide great opportu- businesses from the private market in early sta- nities to develop and supply new solutions that ges has decreased. This entails a risk of negative better respond to needs and demands in society, impact on innovation and renewal, and thereby not least in addressing pressing societal challen- on Sweden’s competitiveness and growth. ges. At the same time, this development entails

34 challenges in terms of personal integrity and re- and instruments for sustainable urban and regio- gulations as well as for power structures in society. nal planning. Systems for built environment and Sweden is in many ways a prominent ICT na- transports are partly each other’s prerequisites. tion with good infrastructure, advanced services This is why a more cohesive urban, regional and and a population with a high proportion of pe- transport planning can contribute to good con- ople regularly using ICT and the internet. There ditions for innovation in society at large as well is however differences in accessibility between as for the development of a sustainable transport densely and sparsely populated areas. system and good quality living environments. This will require development and application of In the budget bill of 2012 (prop. 2011/12:1) the new knowledge as well as new forms of collabora- Government established that Sweden will be a tion combining different actors and sectors. global leader in the utilisation of the possibilities offered by digitalisation. This goal is the point of departure for ICT in the service of mankind - a Sweden therefore needs to: digital agenda for Sweden, an agenda launched in 2011, which in short imply that Sweden will be a • Continue to work towards the goal for leader in terms of using ICT to achieve political Sweden to be a world leader in the uti- goals for growth throughout the country, social lisation of the possibilities offered by welfare, democracy and improved climate con- digitalisation in line with what is stated ditions. It will be easy and safe to use the inter- in the budget bill of 2012 (prop. 2011/12:1) net and other digital services. There will be good and ICT for Everyone - A Digital Agenda conditions for e.g., the development of new e-ser- for Sweden. vices within both the private and public sector. • Continue to work towards world class Fundamental infrastructures such as broadband broadband in Sweden. and simple and safe methods of identification are extremely important conditions for the develop- • Continue to work towards a transport ment of new services. Improved conditions for system that is socioeconomically efficient cross-border and global trade in electronic servi- and sustainable, by means of developing ces and goods are necessary in order to fulfil the a robust and reliable infrastructure with targets for growth. Digital information and digi- high quality and capacity. tal tools will be utilised in the best way possible • Continued development of a more cohe- within research and innovation and in order to sive urban, regional and transport plan- contribute to a green economy. The capability of ning to create good conditions for inno- utilising the possibilities offered by digitalisation vation with a point of departure from the is increasingly a competitive advantage as softwa- 2012 Government Bill for Infrastructure. re and services are becoming means of differen- tiating products and delivering value. The globalised economy, with its increased Innovative businesses and organisations trade and competition as well as urbanisation Goal: Businesses and organisations in Swe- and the expansion of the labour market, creates a den have world-class innovation capacity great demand for renewal of built environments and transport systems with a focus on efficiency Businesses’ capacity to be competitive is among and sustainability. In order to meet the expec- other things based on the fact that they can make ted sharp increase in demand for transportation offers that are competitive in terms of price, hig- of both people and goods, a robust and reliable her quality or unique formulation. The fact that transport system is required, with higher quali- businesses are able to develop and adapt their of- ty and capacity than today. Building to meet in- fers to markets, i.e. the demand from customers creased demands for transport capacity will not and users and changing market conditions, is be enough. Initiative to develop the efficiency of therefore a matter of survival. Studies from the existing transport systems and developing new OECD among others, show that businesses that transport solutions will be required. work systematically and persistently with inno- Transport systems are both important parts of vation show a tendency of having a higher added

35 value per employee, higher salaries, turnover and profits than other businesses. Unique offerings – the core of a business’s creation of value Diversity in forms of businesses Through innovation, businesses develop their offers in order to create value that From a socio-economic viewpoint, a meets the needs and demands of custo- diversity of business forms is important. mers and users. The level of integration Businesses – organised operations in between goods and services is constantly which people work towards a common rising. This means that different forms goal – can have different legal forms, for of innovation are being incorporated in example joint-stock companies, one-per- new and better offerings. The value for son businesses, foundations, associations customers or users is first realised when or cooperatives. The forms of creating the demand product or service is used. value that businesses can pursue must be Innovation in all its forms – new ways of economical, to ensure the long-term via- creating value – is ever more important bility of operations. But the creation of for businesses’ competitiveness as the value can also, to a varying extent, take added value in production increases and the form of social or environmental va- global value chains become more and lues. It is often the actual business idea more complex. or the business’s goals that dictate the alignment in terms of what values will be created and for whom (customers, users, The proportion of innovative businesses in citizens).This way of looking at busines- Sweden is high in international comparisons. At ses makes the dividing lines between bu- the same time, it is important for Sweden’s eco- sinesses driven by profit, organisations in nomy, the competitiveness of the industry and the civil society or idea-based organisa- Sweden’s capacity to supply welfare services that tions, less significant. the innovation capacity in all sectors and for all types of businesses increases. As the international pressure for change in- The world economy is currently undergoing fast- creases and markets and value chains transform, a paced transformations and large markets are diversified industry can increase the capacity for materialising in China, India, Brazil, Russia and adaptation in the economy. many African countries, in line with the improvement of living standards associated with speedy urbanisation. This increases pressure on all of the New connections between different in- earth’s resources and the need for more sustaina- dustries and fields of knowledge ble production and consumption thus rises in, for example, the energy and materials sectors. At the The cultural and creative industries are same time, this also entails an increase in global experiencing an increased importance business opportunities. In order to take advantage for the Swedish economy. They often act of global growth opportunities and contribute to in global contexts and contribute to new a green economy and sustainable society, it is es- ways of interconnecting different indu- sential for businesses in Sweden to continue to stries and fields of knowledge. Businesses develop knowledge and expertise and strengthen within e. g. fashion, design, music, litera- their capacity to develop world-leading offers ba- ture, digital games, film and food are gro- sed on unique combinations of technology and wing rapidly in Sweden and contribute service content. to Sweden’s international attractiveness. New connections between different knowledge areas and industries are taking place in all parts of the country, from metropolitan areas to rural communities. Traditional agricultural businesses are

36 transforming and new businesses are be- years. Though the volumes have not decreased, ing created in the fields of e.g., hunting, Sweden’s total share of the world’s export to the tourism and in the experience industry. fastest growing countries such as China, India, At the same time, new business models Brazil and Russia is decreasing. There is therefore are being developed in for example the a reason to facilitate export and internationalisa- music industry by means of new digital tion, not least among small and medium-sized tools, and game development is used for enterprises, which represent the majority of new everything from educational tools to si- job opportunities. mulations in heavy industry. Links like At the same time, a large percentage of the these between different industries and Swedish work force is in multinational business fields of knowledge contribute to the re- groups. These business groups also represent the newal of industry throughout Sweden. majority of export from Sweden and a considerable proportion of industry’s investments in Sub target: Businesses in Sweden grow by of- innovation. These businesses are a cornerstone fering innovative solutions on global markets in Sweden’s growth and future welfare. They have extensive connections with other busines- To enable businesses to grow, there is an increases, suppliers and customers in Sweden and glo- sing need for a capacity to act on global markets. bally. These connections entail great potential for Sweden is a small market whilst development and a strong international position for large parts of production across the world is becoming more Swedish industry. and more specialised. This produces markets that At the same time, Sweden’s strong dependence are niched for different goods and services glo- on the global industry is also a weakness. Deci- bally. Digitalisation and globalisation allow for sions pertaining to investment and localisation the development of new solutions and for busi- in these businesses have a considerable impact nesses to produce and offer goods and services in on employment, export and knowledge develop- global networks. In order to develop the Swedish ment in Sweden. In order for Sweden to be able to innovation climate, it is therefore important that maintain and develop a position as a leading inn- businesses in Sweden, both large and small, have a ovative country, it is important that framework strong position in interlinked global value chains conditions, work force, cooperation partners (in- and knowledge networks. cluding other businesses), research-, test- and de- As global markets grow, the opportunities in- monstration facilities are attractive prospects on crease for more innovative products to find an a national as well as regional level. outlet, which in turn leads to greater export opp- Businesses with a firm international foothold ortunities as well as other internationalisations. are also important partners for other busines- New offers of goods and services from the local to ses and organisations. Such collaboration is im- the global are made possible thanks to digitalisa- portant for the development of strong innovation tion. Sweden’s industry produces a large propor- environments in Sweden with unique conditions tion of knowledge-intensive goods and services, in terms of the retention of knowledge and ex- not least corporate services. There is potential for pertise as well as leading suppliers, users and further improvement of the conditions for ser- customers. vice innovation and export, for example through continuing the development of access to systems for digital commerce. Sweden therefore needs to: Today, exports represent half of Sweden’s GDP. • Develop internationally competitive con- Exports will continue to be of crucial importan- ditions for both domestic and foreign ce to Sweden’s growth potential. Businesses can businesses to develop their operations in also grow internationally by participating in in- Sweden and deliver offers with a high ad- ternational networks of businesses and organi- ded value on global markets. sations. The proportion of small enterprises in • Create good conditions for strategic coo- Sweden (up to 49 employees) that export goods peration between global business groups and/or services has not increased in the last ten

37 in Sweden, smaller enterprises, universi- sources, not always involving monetary ties, research institutes, public organisa- rewards. Other forms of incentives for tions etc. sharing knowledge, such as acknowledge- ment and the desire to make a difference • Facilitate the growth of small and medi- are becoming ever more important. um-sized enterprises with growth ambitions, to grow through export and other Many businesses, from global business forms of internationalisation. groups to smaller enterprises, are re-organising their research and innovation • Take advantage of linguistic and cultural activities towards open innovation. The expertise among foreign nationals and level of investment in innovation can be people with international experience in retained, but the work is carried out by order to promote trade. a small number of in-house personnel in collaboration with external actors in uni- Sub target: New and existing businesses versities, research institutes and other bu- work systematically to increase their innova- sinesses, as well as with individual users tion capacity and experts. The networks and relation of people, businesses and other organi- According to studies from the OECD among oth- sations are therefore core factors in open ers, businesses that carry out systematic innova- innovation processes. The development tion work and are in themselves innovative tend of networks is facilitated by the mobility to have higher added value and export to a grea- of people and efficient digital tools for so- ter extent. Systematic innovation work within cial interaction. businesses includes a wide variety of activities. As services become an increasingly larger part of businesses’ creation of value, the scope of inno- The systematic innovation work within a bu- vation-related work in direct interaction with siness can include in-house R&D and, design, test customers and users in the development of new and demonstration operations, development of solutions and offers, increases expertise, organisation of work, external relations or marketing methods as well as investment in software, patents and other intangible assets. As Open and user-driven innovation innovation processes become more open, com- In the light of the development of new plex and international, the handling of intellec- business models and global value chains tual property becomes a central part of a business with faster and simpler transfer of know- strategy. This applies not least to cultural and ledge across borders, methods of develo- creative industries, where the business potential ping and protecting knowledge and new is largely based on intangible assets. Businesses solutions are changing rapidly. Innova- therefore need to work in new ways in order to tions arise to an increasing extent in the valorise their intangible assets and exploit them borderlands between different actors – for their strategic business development. large and small enterprises, public organi- According to the EU’s inquiry into innovation sations and individuals – in processes that in businesses, which in Sweden is carried out by are increasingly open and complex. Statistics Sweden (SCB), Sweden is somewhere Open innovation is about businesses in the middle layer in terms of the proportion of combining knowledge and ideas develo- businesses pursuing innovation-related activities. ped internally and externally. Open inno- The proportion of businesses introducing pro- vation implies that businesses actively ducts that are new to the market is relatively high involve external actors in their own inno- in Sweden. On the other hand, the inquiry reveals vation work. Phenomena such as ”crowd that the turnover generated by these products is sourcing”, which is facilitated by new di- lower than in other countries. gital and social tools, enable involvement Sweden’s large business groups are catalysts for of expertise from a number of different the development of innovation and competitive-

38 ness in Swedish society. They invest in innovation the Nordic countries or the Baltic region, have a in many forms. Investments in R&D by large inter- great potential. Within the EU’s Single Market national enterprises in Sweden constituted more there is a population of almost 500 million pe- than half of all the industry’s R&D investment in ople, in the Nordic countries 25 million and in Sweden in 2009. They are thereby an important the Baltic region 100 million. Despite the great factor in Sweden’s knowledge infrastructure and potential, there is still only a small proportion of for Swedens’ strong international position as a re- small and medium-sized enterprises in Sweden search country. These investments have however that collaborate through networks. According to decreased in recent years. This means there is a risk surveys from the Swedish Agency for Economic that Sweden will lose its competitive edge. Studies and Regional Growth, their collaboration seem to of quotations in scientific journals reveal that the be decreasing. research conducted in large enterprises is often of Publicly-financed resources at universities and the highest quality, which also has a positive effect institutes such as R&D, peak competence, speciali- on the quality of the researchers in universities as sed equipment or test and demonstration facilities, well as research institutes in Sweden or in other are important resources in the innovation work countries, which work with these enterprises. conducted by small and medium-sized enterprises Small and medium-sized enterprises can have with little or no resources of their own for syste- a varying capacity of innovation and ambitions of matic innovation work. This applies to businesses growth. Therefore the innovation work can take in many sectors in all parts of the country. many shapes, depending on, among many things, Studies of the effects of investments in research the one person-business kind of business, mar- and development on productivity and growth re- ket, competence and collaborations. Innovation veal that businesses with good in-house expertise activity is taking place in many types of smaller that invest in R&D find it significantly easier to ab- enterprises – e.g. research companies within bios- sorb knowledge acquired externally. As it appears cience or materials technology, engineering firms in studies from the OECD among others, publicly or consultancies that are subcontractors to large financed resources for businesses, whether direct enterprises in the vehicle or telecommunications or indirect via tax incentives, can contribute to an industries, film producers and businesses in the increase in these businesses’ investments in R&D. agricultural and forestry industries, as well as in The formulation of this type of support does ho- energy, tourism or healthcare, welfare and services. wever require careful consideration, in order for it The proportion of small and medium-sized to be socio-economically effective. enterprises in Sweden that conduct innovation The capacity of small and medium-sized enter- work internally or in collaboration with others prises to take advantage of the opportunities offe- is experiencing a weaker increase than in other red by digitalisation is of fundamental importance countries. Research from the OECD, among oth- to their innovation capacity. In international com- ers, shows that small and medium sized enterpri- parison, Sweden is considered to be in a good posi- ses sees lack of time and resources as the main tion in terms of ICT usage in small and medium- obstacles for engaging in different forms of syste- sized enterprises. There are however indications matic innovation work. that Sweden is no longer at the top in a European One way to overcome the lack of time and re- perspective, which in the long run risk hampering sources is in fact to cooperate with other busines- the competitiveness of these businesses. ses, customers and suppliers. Cooperation of this The start, development and liquidation of bu- nature can take the form of collaboration in net- sinesses are important to industry dynamics and works or clusters, where geographical proximity thereby for the innovation climate and economic and density in relations can be important factors. growth. New businesses are often key players in Small and medium-sized enterprises that coope- the development and introduction of new goods, rate through networks, often locally or regionally services, processes, and business models, etc. They grounded but branching out internationally, grow are also important for spreading new solutions, faster and become more competitive. Networks not least where new markets are appearing. Aca- of businesses. universities, public players and the demic spin-offs have a very important function civil society’s organisations within e.g. the EU, in renewal and dynamics in this context. As is

39 evident in the Global Entrepreneurship Monitor, gain in finding new ways of using the potential Sweden is relatively low in international com- in social innovation and social entrepreneurship. parisons in the creation of new businesses even though the interest in starting a business as well Civil society and as the number of new businesses, according to non-profit organisations the Swedish Agency for Economic and Regional Growth, has increased over the past decade. The The civil society represents an arena – se- number of new businesses in relation to the to- parate from the state, the market and the tal number of businesses is lower in Sweden than individual household – in which people, in most other countries. Sweden is somewhere in groups and organisations act together in the middle among innovation-driven countries pursuit of common goals. Idea-based or- when focussing on expectations of future growth ganisations comprise organisations in among new and young businesses. the civil society and the cooperative mo- vement. The term is somewhat broader Sweden therefore needs to: than the civil society. The organisations can be profit-driven, but the profit is not • Promote increasing numbers of innovati- the sole or dominant goal. Even though ve businesses and promote the propensity social innovation and social entrepre- of these companies to carry out systema- neurship take place in all parts of society tic innovation work internally as well as civil society organisations can play a par- in collaboration with external partners, ticularly prominent role. for increased competitiveness, sustainable growth and welfare. This applies to new as well as established businesses. There is a growing focus on business and investments aimed at achieving desirable changes • Create good conditions for collaboration in society. Among many things, it is about reach- in the innovation process between busi- ing the insight that the people with the lowest nesses, as well as between businesses, uni- incomes in the world (sometimes called the base versities, research institutes, the public of the pyramid), despite their limited individual and civil society organisations. purchasing power, have great needs, and together • Based on identified needs, promote in- constitute large markets. In a report from World creased ICT usage in small and medium Resources Institute 2007, the total market volume sized enterprises to strengthen growth for households with a purchasing power below potential and increase market opportuni- USD 3,000 per year was estimated at USD 5,000 ties nationally and internationally. million. Together, they constitute the majority of the world’s households. Social innovation and social entrepreneurship Sub target: Using the potential in social inno- is receiving more and more attention in Sweden vation and social entrepreneurship to contri- as well as in the rest of the world. Social innova- bute in meeting societal challenges. tion and social entrepreneurship is largely about Social innovation and social entrepreneurship people’s driving force; about utilising opportuni- is about processes aimed at solving societal pro- ties we identify in order to create a positive socie- blems in new ways, with innovative ideas and tal development on a local, regional, national or methods. These processes often take place in the global level, based on the needs in the individual’s borderland between industry, the public sector reality. The aim is to meet environmental or so- and civil society. cietal needs. The needs can be satisfied by businesses, civil society organisations or in interaction It is of great importance to better understand between businesses, the public sector and civil so- and develop the conditions for social innovation ciety. This can take many different forms, from and social entrepreneurship. The society as a developed private or non-profit organisations to whole, as well as businesses, organisations in the pure grassroots initiatives. This type of initiatives civil society and the public sector, has much to

40 can have a special meaning in rural areas and in villages for the development of solutions for ser- Sweden therefore needs to: vice and infrastructure. • Increase the knowledge in how social In addition, there is a development in the work innovation and social entrepreneurship with Corporate Social Responsibility (CSR), can contribute to meeting societal chal- where ever more businesses also build their bu- lenges on a global, national, regional, and sinesses on contributing to positive societal de- local level. velopment and long-term creation of value. Pre- viously, much focus in this work has been about • Increase knowledge about the needs for handling risks through following regulations and new goods, services, systems and business ethical, social and environmental codes as well as models that are adapted to single countri- shaping their brand to attract customers and em- es challenges within e.g. water and sani- ployees. With this development, the work with tation as well as poor peoples’ needs and Corporate Social Responsibility is becoming ever purchasing power. more integrated in their innovation work. • A diversity of performers of public servi- More and more businesses now see possibilities ces, including civil society organisations. in the needs in which poorer countries as well as poor people face, which in turn results in a need of new business models, goods, services or systems. It Innovative public services is seldom effective to adapt existing models and solutions after these needs. Instead one has to Goal: Innovative and collaborative public ser- start from the needs in the context of which they vice organisations that are legally secure and exist to develop goods, services etc. that are adap- effective, and has a high degree of quality, ted for these needs. A continuous dialogue bet- service and availability ween many stakeholders among the groups that are affected by a business operation on the actual Publicly financed activities need to be innovative market is therefore central. Through the dialogue and effective, not least in order to cope when fe- the businesses can create an agenda and priorities wer workers in the workforce will need to provide for a long-term responsible undertaking of busi- for an ever increasing elderly population. ness and also get a picture of which sustainable innovations that are sought after. There is also a development of new forms of investments geared to meeting societal challenges, through the development of e.g., crowd funding, social bonds and new models for integrating the creation of economic value with other social values. On many of the markets formed in the borderland between services previously carried out under public auspices which are now more and more commonly offered by the private sector, social innovation and social entrepreneurship are becoming increasingly large elements. This is an important part in driving innovation to meet societal challenges, or innovation driven by challenges.

41 dency ratios among comparable countries. In ad- The administrative policy objective dition, this is estimated to increase in the coming decades. Analyses from the Swedish Public Em- In 2010, the Swedish Parliament establis- ployment Service reveal that 44 per cent of public hed the administration policy objective sector employees will leave the labour market bet- ”an innovative and collaborative state ween 2010 and 2025, and at the same time people’s administration that is legally secure and average life expectancy is rising. The public sector effective, has a high degree of quality, will struggle to fill the positions left open by reti- service and availability, and thereby con- rees with new labour. The dependency ratio will tributes to Sweden’s development and an be particularly burdensome in certain rural areas. efficient EU work.” The demographic challenge entails great de- To be ’innovative’ entails, among other, mand on innovation and renewal in order to the capacity to successfully develop and provide social services with efficiency and qua- introduce new processes, services and met- lity within the scope of the public undertaking, hods that result in significant improve- whether this takes place under private or public ments of quality, efficiency or appropriate- auspices. ness. It can be a matter of new perspectives on old problems, redefining the purpose or objectives of an activity, improving the Public policy instruments for quality of existing services, changing the strengthened innovation climate and manner in which services are provided and innovation capacity finding new or improved forms of collabo- The public policy instruments for car- ration. This particularly applies to finding rying out the public commitment to new ways of organising and carrying out strengthen the innovation climate and public services based on the various needs innovation capacity can be divided into of citizens and businesses. three types: administrative, economic or In order to increase the efficiency and informative. Administrative instruments standards of public services, the Natio- include laws and other regulations, in- nal Council for Innovation and Quality cluding authority control through, for in the Public Sector, which was establis- example, instructions, appropriation di- hed in 2011, will support and stimulate rections, government commissions and innovation and change in public services, organisational and appointment power. which can result in significant improve- Economic instruments include taxes, fees ments for citizens and businesses. and subsidies. Informative instruments are information and communications initiatives used to influence the behaviour of Innovation in the public sector is largely a matter individuals, businesses or organisations. of developing governance, organisation of work and leadership, and finding new ways of defining and carrying out public sector tasks. Increasing focus on creating value, simplifying matters for A programme for the renewal citizens and businesses and involving them in of state administration public sector development are all central to this. From a public administration perspective, pro- In order to support the state authorities’ curement issues such as innovation procurement, development of administration, the Go- authorities’ roles on markets, the retention of ex- vernment has established a programme pertise in states and municipalities, methods for for the development of state administra- co-creation, dialogue with users, etc. are all im- tion. The programme ”En statsförvalt- portant tools for developing an innovative admi- ning i förnyelse” [State administration nistration. in renewal] describes the Government’s alignment and priorities for the admi- Today, Sweden has one of the highest depen- nistration policy and deals with the areas

42 of innovation and quality, working with more efficiently and offer services which are easy. values, collaboration, service, promotion The target is a more open and smarter public sec- of growth, supervision, increasing the tor which supports innovation and participation, efficiency of administrative services and an easier everyday life for individuals and busi- EU work. nesses as well as higher quality and efficiency in The programme’s point of departure public services. is that the Government and the authori- When the public sector develops new services ties have a common task based on their and methods, this generates a demand for new respective roles to develop the state ad- knowledge and expertise, or the need to procure ministration based on the existing chal- new or better solutions. Retention of expertise in lenges. The programme emphasises that the public sector and procurement issues such as good collaboration and an open dialogue innovation procurement are therefore strategi- between the Government and authori- cally important instruments in the development ties is crucial to positive development, of an innovative public sector activity. and that the public, businesses and other By opening what used to be public markets organisations need to participate in the for providers under private administration – th- process of change. rough e.g., deregulation competition neutrality and systems for freedom of choice – the offer of Sub target: Public sector organisations works new solutions, quality and diversity in welfare systematically with innovation in order to services and public services for citizens, users, pa- tients and relatives can increase. In order to push increase efficiency and quality renewal and quality development via innovation, Trust in the public sector organisations among it is important to develop competence in procure- citizens, businesses and users, is at the centre of ment as well as methods of pinpointing and mea- a functioning society. In order to protect and suring both quality and achievement of results. strengthen such trust, public sector organisations Public services are parts of a wider context. must focus on users’ different needs of and condi- A developed collaboration between different tions to use public services. This may involve the public services is necessary in order to unify the development of new ways of organising public need of a holistic perspective with an innovative services. In Sweden, there are good conditions for development of the core activities. public services to benefit from involving citizens In the work with the strategy, clearer manda- and users. tes and better incentives have been highlighted as In a developed e-goverment, there is a great po- central prerequisites for an increase in innovation tential for new solutions that facilitate citizens in the public sector. and businesses’ daily communication with the public sector. Providing access to public information for the development of digital services from Innovation for efficiency and producti- third parties increases the possibilities for crea- vity in the public sector ting value based on public data that constitutes In publically financed activities, it is of- a unique resource for Sweden. Access to the in- ten more appropriate to use the broader formation must be made secure and anonymous, term ”efficiency” instead of the more li- which calls for the development of standardised mited ”productivity”. Efficiency means structures for digital information. New solutions both ”doing the right things” and ”doing in the area are developed in cooperation between them in the right way”. Publically finan- public and private actors. ced activities have a specific purpose and Sweden is a global leader in e-government and are often regulated by laws and other re- is at the top of the UN’s e-government readiness gulations. It is therefore desirable that index, which measures countries’ capacity to the activities are run according to the ob- develop and implement e-government services. jectives, to ensure that everything is done A developed e-government will contribute in correctly. This may include optimal use making the public sector more open and to work of resources with consideration for the

43 objectives and based on the prevailing refore plays an important role in engaging actors conditions. with different knowledge, expertise and resour- International studies of innovation in ces in collaborating with the purpose of develo- public sector reveals that through news ping new solutions. ways of working with public sector tasks, People living and working in Sweden have good there is considerable potential for redu- opportunities to contribute to meet global socie- cing costs and simultaneously increasing tal challenges. Sweden has an internationally re- the benefit for citizens and users. nowned capacity to develop knowledge and innovative societal solutions within a number of areas; Sweden therefore needs to: including childcare, traffic safety, and security in society via e.g., risk assessments. Sweden also has • Continue to develop and intensify the a longstanding tradition of ambitious work with public sector’s work for finding new solu- the environment through, for example, the envi- tions and more effective processes aimed ronmental quality objectives established by the at creating greater benefit for citizens Swedish Parliament. and the surrounding society, based on for The public sector, with clients that can put example the results produced by the Na- high demands and well-developed structures in tional Council for Innovation and Qua- many areas, offers opportunities of international lity in the Public Sector. interest in terms of demonstration and test bed operations, particularly for various new system • Continue the development of e-govern- solutions. In Sweden, there is a well-established ment and increase opportunities for tradition of collaboration across sectors and areas private actors to develop new services of society between businesses, labour market par- through providing public data, among ties, universities, research institutes, other actors other. in the public and civil society. • Continue to develop the expertise, met- The increased and ever more urgent global hods and networks of actors in the public pressure on the earth’s resources sets demands on sector in order to effect increased appli- increased green innovation. The rapid global so- cation of innovation procurement, in- cietal changes make it even more important for cluding function or performance-based actors on various levels, even internationally, to innovation competitions. develop new knowledge and new constellations • Develop processes of reregulation and for cooperation on innovation that meets the management by objectives, as well as sys- new and shifting needs of society. tems for freedom of choice and competitive neutrality, in more areas. The plan of action for environmental innovation – public policy instrument for sustainable growth Sub target: Public sector organisations contribute in developing innovative ways of An example of public policy instrument meeting societal challenges towards a green economy is the EU- commission’s message Innovation for a The task of the public sector is to create a well- sustainable Future - The Eco-innovation functioning society and a good quality of life for Action Plan (KOM(2011)899). The mes- the citizens. By this token, the public sector’s sage concerns among other how envi- work is closely associated with important socie- ronmental policy and environmental tal challenges (in fields such as the environment, legislation can be shaped to drive envi- healthcare and poverty alleviation) on global, ronmental innovation, and points among national, regional and local levels. The complex- other at the importance of the support of ity of the societal challenges means that the re- demonstration projects and partnership sponsibility for coordinating solutions cannot be to facilitate the growth of markets for en- down to individual actors. The public sector the- vironmental innovations.

44 Increased focus on innovation Sweden therefore needs to: in the aid policy • Have public services that based on their In the Swedish aid, there is now more fo- purpose and area of responsibility initia- cus on developing and supporting new te and get involved in collaboration with and innovative solutions for reduced po- relevant actors in innovation processes, verty by developing new ways of working in order to meet important societal chal- and better utilising the ideas and initiati- lenges - innovation driven by challenges- ves of collaboration partners, particularly on global, national, regional and local the local actors in partner countries and levels, among other through innovation the private industry. Examples of initia- procurement tives are Swedish International Develop- • Continue to develop methods and exper- ment Cooperation Agency’s (Sida) Inno- tise for innovation promotion as a part of vations Against Poverty programme and the global development policy, in multi- DemoEnvironment (administrated by lateral and bilateral cooperation. the Swedish Agency for Economic and Regional Growth). Within foreign aid, • Identify the areas and sub targets in the various forms of aid will be used: inno- system of environmental objectives, vation promoting as well as interaction where eco-innovation has in a broad sen- between solutions from both the private se a particularly important role in achie- and public sectors. Swedish aid should ving the generational goal and to develop complement other resources and stimu- the environmental quality objectives. late other actors to financially contribute • Develop the international cooperation to initiatives geared towards reducing po- around eco-innovations in order for Swe- verty in Sweden’s partner countries. den to take advantage of new knowledge The reform of aid also involves taking and solutions from other countries as a advantage of the opportunities afforded by part of the internationally competitive digitalisation, in order to achieve a more ef- Swedish system solutions. fective aid and better development results. This means that information technology Sub target: Efficient public sector support for and digital services will be used to open up innovation with a focus on customer benefit for new ways of thinking, ideas and forms of collaboration with various actors, as All public services, irrespective of their purpose, well as to establish new working methods can be more or less innovative and also act as a dri- and processes. This includes initiatives for ving force for innovation in other parts of society increased transparency, accountability, ci- to a greater or lesser extent. A number of public vil insight and participation, anti-corrup- services are also tasked with promoting innovation work and an effective and transparent tion capacity and innovative climate in industry, administration. Sida is also charged by the Government’s to “create space for flexibility and innovation” (2 §. SFS 2010:1080) within its own operations.

45 other public services and other areas of society. In the process of shaping the strategy the need Firstly, these activities are involved in finan- for increased awareness of intellectual property cing, analysis or guidance, all with the purpose rights protection and knowledge about intangible of supporting knowledge development and the assets as a strategic business tool in small and creation of value based on the needs of different medium sized enterprises, has been highlighted. actors or areas of society. They include research This underlines the importance of continuing to boards and sector and expert authorities as well develop the competence of private as well as pu- as development offices in regions, county council blic advisors, to be of support on these questions. and municipalities. Also, short-sightedness and fragmentation of Secondly, they work with regulation, financing public funds for innovation support have time or the implementation of initiatives that in diffe- and time again arisen as hindrances to more ef- rent ways enable innovation and promote entre- ficient initiatives. Short project cycles and rigid preneurship and transformation by means of e.g., prerequisites can lead to difficulties in adapting incubators, guidance, test beds, demonstration the implementation to unforeseen developments. facilities or network building. This can sometimes result in counter-productive driving forces such as the start of new activities In addition, certain activities handle and sys- rather than focusing on the long-term develop- tematise information and knowledge critical to ment of activities that function well. innovation processes such as standardisation, measurement, accreditation and intellectual pro- Sweden therefore needs to: perty rights. These activities fill important roles in coun- • Develop more coordinated public sector teracting weaknesses in the system and market initiatives that support innovation with a failures. They must work both independently and firmer focus on customer benefit and ef- together in order to develop a clear division of la- fects. One important part in this is to de- bour, simple structures from a customer perspec- veloped forms for measuring effects and tive and efficiency in the use of public funds. results in different horizons of time. There is a need to formulate initiatives that • Review the needs and possibilities to support innovation for competitive solutions, to increase the longer term orientation of find out whether the recipient of the support is large parts of the initiatives supporting situated in a rural or urban area, in the private, innovation. public sector or civil society or if the initiatives are primarily targeted at individual innovators, • Continue developing initiatives that sup- researchers or students at universities, small en- port innovation on local, regional, natio- terprises, public services, non-profit organisa- nal and European level, to create easier, tions or global concerns. The formulation should clearer and more effective structures with also take into account the context in which the well-functioning collaboration between new solutions are to be formulated. The formula- actors in the public sector as well as re- tion of the support may differ depending on e.g., levant supporting actors in the private whether it is intended for services, goods, sys- sector.. tems, business models, development of commu- • Continue developing the expertise of nication or the organisation of work, and to what supporting actors in the public sector to, extent the market and user base is in Sweden or within the scope of their existing manda- internationally-based. As the time between start tes, work with intangible assets as a busi- to result in different types of innovation proces- ness strategy resource and to work with ses varies, it is urgent to further increase the focus different forms of innovation. on effects in the innovation supporting interven- tions. It is also important to continue the work with developing improved forms for measuring and monitoring outcomes and impact on different time horizons.

46 Innovative regions and environments collaborations. It is important to take advantage Goal: Sweden’s regional innovation of the potential in each region and make use of environments have international appeal possible synergies. In the global knowledge economy, the The innovation climate is essential to the regional importance of proximity a in relationships bet- potential for development. The capacity to attract, ween different actors in innovation processes retain and develop expertise, capital, businesses is increasing. Physical distance is an important and other activities is crucial if Sweden is to keep factor in this context, even though globalisation up with the increasing national competition. and digitalisation are changing the conditions for When businesses become more and more inter- interaction and exchange over long distances. At nationalised and dependent on the development the same time as it gets easier to communicate of markets in other countries the need for stra- over long distances, the increased specialisation tegic work on regional level to create conditions makes trustful relations ever more important. for strong innovation environments, increase. This creates new challenges and possibilities for The possibilities for businesses to collaborate urban as well rural areas, non the least conside- with other businesses and public actors, among ring geographic proximity to strong innovation other universities, in their geographical proxi- environments and knowledge centres. mity to strengthen their innovation capacity and There is a tendency to differentiate between long-term competitiveness become increasingly formal knowledge and tacit knowledge, where central as criteria’s for investment and location the latter is not as easy to transfer between people decisions for businesses and entrepreneurs. The- without meeting in person, which can be facili- refore it is pressing that strategies for the regional tated by geographic proximity. Other resources growth and development work are distinct con- that are closely linked to a certain geographical cerning areas of strength, internationally unique area are resources that are extracted at given areas competitive advantages, including the opportuni- or climate conditions, natural or cultural environ- ties of collaboration with customers, users, supp- ments or other unique cultural values attached to liers and knowledge producers in a global context. a certain area (e.g. through history, film, music or literature). Such site-specific resources are of Sub target: Sweden’s regions are increasing particular importance for innovation in Sweden. their innovation capacity based on their This includes increasing the added value of acti- unique conditions vities that are based on these resources, including Sweden’s regions hold many opportunities that natural resources (such as forests, minerals, water, are unique in the world. Several of these oppor- cold and sparsity). Sweden’s unique nature and tunities are based on resources that are in various ”allemansrätten”, the right of public access, entail ways dependent on their environment. They are good opportunities for nature tourism and the found everywhere from sparsely populated rural development of employment in rural areas. In the areas to densely populated urban areas. These same way, the digitalisation of cultural heritage opportunities characterise businesses’ capacity constitutes a source of innovation. for innovation as well as people’s chances to deve- The supply of people with relevant knowledge, lop and live a full life. skills and expertise for businesses and the public Urbanisation and the demographic develop- sector is crucial to innovation and the capacity ment entail a number of challenges in terms of for change in Sweden’s regions. Better matching the possibility of a development that is econo- between the supply and demand of expertise is mically, socially and environmentally sustainable a key issue in this. As a means of ensuring the for several parts of the country. At the same time, retention of expertise throughout the country, these challenges entail the possibility for develop- regional ”competence platforms” have now been ment of innovative service solutions, services and established in all countries as strategic tools for goods. There are also a number of synergies that this matching. Long-term work is required in or- can be achieved by strengthening the links bet- der to achieve a functional organisation and good ween urban areas and the surrounding country- cooperation in the scope of these platforms. side, as well as other national and international Collaboration in and between innovation envi-

47 ronments can take many different forms, where tion regionally, nationally and internationally. A interlinked business networks and clusters in con- development of tourism and cultural and creative nection with research and education are important industries can also contribute to more attractive elements. The growth and development of trans- innovation environments. These industries are national networks within the EU and among the experiencing rapid international growth and Nordic countries have a special potential in terms Sweden has good opportunities to increase ex- of the combination of geographical proximity and port and the creation of value in these areas. increased market volume. The EU Strategy for the Baltic Sea Region is an example of this. Sweden therefore needs to: As a catalyst for development, the underlying infrastructures for research and innovation – e.g. • Take advantage of the unique national European Spallation Source, MAX IV and SciLi- and regional opportunities that the na- fe Lab or test and demonstration facilities – are tion has to offer in the development of very important, especially in their contribution globally attractive innovation environ- to the international appeal of regional innovation ments environments. Test and demonstration facilities • Develop collaboration between actors on are important in many areas, including sustaina- different levels that strengthen the regio- ble urban development, materials based on bio nal appeal, based on e.g., clusters and test and nano technology, energy-efficient buildings, and demonstration facilities where rele- smart ICT solutions and environmentally adap- vant. ted goods and services. Strong international marketing of Sweden as • Strengthen and further develop the col- a country with particular focus on opportuni- laboration in the regional competence ties for innovation is crucial, to enable regions of platforms, among other through expan- Sweden to attract businesses, capital and people. ded cooperation with universities and The desire of people with different backgrounds industry. and expertise to live in Sweden is key to innova- • Enable regional actors to benefit from tion capacity and sustainable regional growth. An international collaboration agreements attractive environment in which to live and work that Sweden has in different areas and is therefore a prerequisite for innovation capa- continue to develop regional and national city in all areas of the country. The possibility to collaboration in the promotion of export offer an attractive living environment and lifest- and investments. yle is affected by several different factors, such as a dynamic industry, a functioning labour market, • Continue utilising the opportunities for accessibility and service, planning of the physical development and internationalisation of environment, access to culture and good recrea- environmental innovation from test and tional prospects. demonstration facilities with base in the environment regarding sustainable urban It is essential that the development of regional development that is being developed in innovation environments in Sweden embodies a many areas in Sweden, as well as through strategic approach to the international develop- the incentives carried out within the ment. There is a special potential for sustainable Government’s Strategy for Development growth and renewal in the regional economy in and Export of Environmental Technology the connection between different sectors and 2011–2014. Areas like sustainable urban fields of knowledge. Creating social forums, for and regional planning, transports, energy, example in the form of clusters or networks, is water and sewage and waste are examples therefore important for innovation capacity and of important linchpins for regional and regional growth. Collaboration in these innova- local growth and development. tive environments can be a driving force for renewal and competitiveness and has the possibility to become attractive nodes in global knowledge and innovation networks and platforms for collabora-

48 Sub target: Regional strategies for innovation tegies and programmes. This entails the need to are grounded in combined regional leadership develop cooperation and coordination between EU, national, regional and local levels in order Regional growth takes place in interaction bet- to take full advantage of synergies. Realising this ween national and regional levels. Important opp- potential places great demands on sustainabi- ortunities are further developed in the Cohesion lity, strategic planning and a combined regional Policy on an EU level. Functioning regional growth leadership in the regional growth agenda. This relies on the involvement of the concerned actors is especially true for the strategic alignment of in industry, the public sector and civil society. the Structural Fund programmes and the priori- The cohesion policy has as a target to contri- ties made in the implementation. This also calls bute to economic, social and territorial cohesion for valorising experiences from national, regional within the EU through decreasing regional diffe- and international level through improved forms rences and inequalities between people. The im- of providing feedback, making available and di- plementation of the policy takes place through scussing these experiences, in order to increase the programme of Structural Funds on the basis learning among actors on various levels. of regional and national strategies and in collaboration with a broad partnership of actors. The Sweden therefore needs to: programme of structure funds includes all parts of the nation, and the EU-funds are co-financed • Develop the work with long-term regio- by national, regional and local public co-finance nal strategies, with particular focus on and private actors. The cohesion policy pro- strong innovation environments such as gramme is a part of the regional growth policy in clusters. Sweden. For the next programme period 2014 to • Develop the interaction between natio- 2020, closer cooperation has been proposed bet- nal authorities, regional development ac- ween the Structural Fund programmes and pro- tors and the work with projects and programmes that are co-financed by the European grammes within the EU. Agricultural Fund for Rural Development and the European Fisheries Fund. The proposal also sta- • Continue to promote learning in the con- tes that the Structural as well as the Agricultural text of regional growth, both nationally Fund programmes shall to an even greater extent and regionally, by e.g., developing the use be targeted at measures that increase innovation of policy intelligence and evaluations. capacity among businesses and develop innovative environments in line with the EU’s common strategy for labour and growth, Europe 2020. Especi- ally within the target for investment in growth and employment shall programmes co-financed by the European Regional Development Fund focus on initiatives that creates good conditions for, as well as they support, research and innovation, green economy and entrepreneurship. The negotiations before the upcoming programme period of the Cohesion Policy emphasise the importance of the regional growth policy’s collaboration with strategic initiatives in research and innovation, e.g., linked to the EU’s research and innovation policy. On an EU level, the term Smart Specialisation is used to describe a more strategic way of working with regional areas of strength. There is a considerable potential for increased resource efficiency and synergies between regional, national and international instruments, stra-

49 50 7. Implementation of the Innovation strategy

Goal: Sweden will learn from other countries' “As no single actor has the know- work with developing the innovation policy ledge and resources to tackle the and be a source of inspiration globally by innovation challenge unilaterally, all means of a long-term and coordinated work countries – in one way or another – face the task of better co-ordinating to strengthen the innovation climate actors in formulating and implementing policy.” The national innovation strategy is a sustaina- The OECD Innovation Strategy; Getting a Head ble work to keep and further develop Sweden’s Start on Tomorrow, p 196. OECD 2010 leading position in terms of innovation climate and innovation capacity to meet the global socie- Continuous dialogue tal challenges, increase the competitiveness and Many actors in the public sector, industry and renew the future welfare and public services. civil society have important roles in supporting The vision for 2020 will be a target for ini- Sweden's innovation capacity. A shared under- tiatives in many policy areas. Innovation geared standing of challenges and opportunities as a towards meeting societal challenges will perme- basis for initiatives is therefore needed. An im- ate the policy's implementation. Increased inno- portant part of developing the innovation policy vation will contribute to faster and better fulfil- is therefore the creation of functioning venues ment of policy objectives in different areas. for dialogue and coordination between different The Government intends to present an over- areas as well as between local, regional, natio- view of the implementation. As the implementa- nal and international levels. The importance of tion of the strategy is also a matter that concerns leadership on different levels cannot be stressed many actors in society, the Government also in- enough. tends to report at regular intervals on the deve- The Government's point of departure is that lopment of the innovation climate in Sweden. the implementation of the strategy, within respective areas of responsibility, relies upon the A holistic view through collaboration continuation of international, regional and the- The starting point of this strategy, in line with matic work to further establish what needs to be the correspondent innovation policy work within carried out. A continued focus on an open and the OECD and the EU, is that the challenges that inviting dialogue, thematic as well as between re- Sweden and the rest of the world faces requires a gional and national level, around pressing areas is holistic view. This includes an approach towards an important way of implementing the national the policy for strengthened innovation climate innovation strategy. and innovation capacity, to an increased extent, gathered regard, needs and conditions for initia- A learning innovation policy tives from different policy areas, policy levels and The Government intends to continue promoting societal actors. and developing a policy for increased innovation

51 that is knowledge-based, grounded in available evidence, utilising lessons learnt and good examples, both nationally and from other countries. An effective way of monitoring initiatives is required in order to develop and adapt initiatives without compromising the long term character and clarity of ambitions. Monitoring and evalua- tion of implemented initiatives are important in contributing to increased focus on results, effects and learning. Policy intelligence aimed at following developments in other countries and regions should be further developed in order to develop strategic initiatives from a competitive perspective, and to gain inspiration and to learn from different types of initiatives. To enable continuous learning, objectives that are possible to monitor over time, as well as good analyses for well-founded priorities are needed. To facilitate such analyses, calls for access to indi- cators that reflect the analysed conditions in the best possible way. A learning innovation policy also contributes to developing and improving of collaboration processes and methods of working. A learning policy for innovation contributes to strengthening the innovation climate in Sweden and the innovation capacity of people, businesses, civil society and public sector organisations.

52 53 regional competence platforms crowd funding crowd sourcing crowd funding bonds social Entrepreneurship INFORMATION ASYMMETRY innovation activities Key Enabling Technologies Social entrepreneur System weaknesses

Bottom of the Pyramid innovative business innovative business offering

products taxes Formalized knowledge Market failure Business angel SOCIAL BONDS products subsidies

Structural transformation

54 innovation procurement regional competence platforms

8. Glossary

System weaknesses Bottom of the Pyramid Innovation activities Represents the part of the world's population Scientific, technical, organizational, financial with the lowest incomes. and commercial steps, including investments in the development of new knowledge, which in Business Angel practice lead to, or are intended to lead to, the A private person, who invest capital and provi- introduction of innovations. The activities may des business knowledge to unlisted companies themselves be innovative, or prerequisites for the with growth potential, either as an individual or introduction of innovations. through a company. A business angel is usually a person with experience and knowledge of en- Innovation procurement trepreneurship that helps businesses develop by Procurement for development and implementa- providing capital, expertise, commitment, and tion of new solutions, i.e. innovations. Innovation networks. procurement includes both procurement made in such a way that it does not rule out new solutions, Crowd Funding so-called innovation-friendly procurement and A method of funding projects or ideas by appea- procurement of innovations, i.e. procurement of ling to a large number of donors, often via Inter- the development of new solutions not yet availa- net-based systems. ble on the market.

Crowdsourcing Innovative businesses A method to seek proposals for solving problems Enterprises engaged in innovation are characteri- with the contributions from many parties, often zed as innovative. via internet-based systems. Key Enabling Technologies Entrepreneurship Research areas with applications in a large num- The ability to identify opportunities and create ber of sectors. Examples of such Key Enabling or coordinate resources to put these into value- Technologies include biotechnology, nanotech- creating activities. nology, information technology, and software and service innovation. Formalized Knowledge Market failure Knowledge that can be expressed in writing and A situation justifying a public commitment, where transmitted via a formal and systematic language. the free market does not create an optimal use of resources in society, according to neoclassical eco- Information Asymmetry nomic theory. Market failures can occur due to A situation where the parties entering into a cont- collective goods, asymmetric information, mono- ract have access to different information in advance. polies, cartels and external effects, among others.

55 Offering Social Bonds Good, service or experience, often in combina- A financial instrument that implies that, if a soci- tion, offered a customer and the value of which al enterprise can venture private capital, the State arises when it is demanded and used by the custo- guarantees the investment of the financier on mer. condition that the agreed social objectives have been reached. Products Subsidies Products subsidies are subsidies payable per unit Social Entrepreneur of produced or imported goods or services. An entrepreneur who has chosen to address social issues as a central part of hes entrepreneurship. Products Taxes Product taxes are taxes that are payable per unit System Weaknesses of a good or service produced or that are a part A situation justifying a public commitment of a transaction. Import duties, energy taxes and where there are weaknesses in the system of in- VAT are examples of product taxes. terdependent actors and institutions relevant for innovation. These weaknesses are usually divi- Regional Competence Platforms ded into four types: infrastructural weaknesses, institutional weaknesses, interaction or network In 2010 the Government mandated actors with weaknesses and resource weaknesses. regional growth responsibilities to establish competence platforms for short and long-term collaboration and education planning. The aim is to contribute to a better matching of supply and demand for skilled labour all over the country.

Structural Transformation Changes in the composition of the economy occurring as the society changes, and markets, industries and social sectors emerge, transform or disappear.

56 57 58 The Swedish Innovation Strategy www.government.se/innovationstrategy