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Green Paper on Innovation

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Green Paper on Innovation EUROPEAN COMMISSION 1 LIST OF CONTENTS I INTRODUCTION: 1 1. Innovation, the firm and society 1 2. Innovation and public action 2 II THE CHALLENGES OF INNOVATION 5 1. The new innovation context 5 2. The “European paradox” 5 3. European industry: improved but fragile competitiveness 6 4. The macroeconomic conditions conducive to innovation 8 5. Innovation, growth and employment 9 6. Innovation and enterprise 10 7. Innovation and society 11 8. Innovation and cohesion 12 9. Effective rules of play 12 a) maintaining effective competition 13 b) promoting effective and suitable legal protection 14 III THE SITUATION IN EUROPE: DIVERSITY AND CONVERGENCE 16 1. Great diversity 16 2. Genuine convergence 16 3. The Increasingly important role of SMEs and the regional level 17 4. Economic intelligence 19 5. Europe is not standing still 20 IV. INNOVATION IN A STRAIT-JACKET 24 1. Orienting research towards innovation 24 2. Human resources 25 a) Poorly adapted education and training systems 25 b) Too little mobility 27 3. Problems with financing 28 a) Financial systems which avoid innovation 28 b) Uncertainties and limits of public financing 30 c) An unfavourable tax environment 31 4. The legal and regulatory environment 32 a) Too little use of protection rules 32 b) Standards, certification and quality systems 33 c) Cumbersome administrative formalities 35 d) Legal formulae ill-suited to European cooperation 37 5. Conclusion 37 i V. ROUTES OF ACTIONS 38 Route of Actions 1: Develop technology monitoring and foresight 38 Route of Actions 2: Better direct research efforts towards innovation 38 Route of Actions 3: Develop initial and further training 39 Route of Actions 4: Further the mobility of students and researchers 40 Route of Actions 5: Promote recognition of the benefits of innovation 41 Route of Actions 6: Improve the financing of innovation 41 Route of Actions 7: Set-up fiscal régime beneficial to innovation 42 Route of Actions 8: Promoting intellectual and industrial property 42 Route of Actions 9: Simplify administrative procedures 43 Route of Actions 10: A favourable legal and regulatory framework 44 Route of Actions 11: Develop "economic intelligence" actions 44 Route of Actions 12: Encourage innovation in enterprises, especially SMEs, and strengthen the regional dimension of innovation 45 Route of Actions 13: Update public action for innovation 46 ANNEX 1: DESCRIPTIONS OF THE TASK FORCES ANNEX 2: LIST OF INNOVATION CENTRES ANNEX 3: SIMPLIFIED RESEARCH CONTRACT ANNEX 4: TABLES AND STATISTICAL DATA ii GREEN PAPER ON INNOVATION I INTRODUCTION: The objective of this Green Paper is to identify the The innovative firm thus has a number of factors - positive or negative - on which innovation characteristic features which can be grouped in Europe depends, and to formulate proposals for into two major categories of skills: measures which will allow the innovation capacity of the Union to be increased. - strategic skills: long-term view; ability to identify and even anticipate market trends; In the context of this document, innovation is willingness and ability to collect, process and taken as being a synonym for the successful assimilate technological and economic production, assimilation and exploitation of information; novelty in the economic and social spheres. It offers new solutions to problems and thus - organisational skills: taste for and mastery makes it possible to meet the needs of both the of risk; internal cooperation between the individual and society. There is a wealth of various operational departments, and external examples, including the development of cooperation with public research, vaccines and medicines, improved safety in consultancies, customers and suppliers; transport, (ABS, airbags), easier involvement of the whole of the firm in the communications (mobile phones, process of change, and investment in human videoconferencing), more open access to resources. know-how (CD-ROM, multimedia), new marketing methods (home banking), better It is this global approach which lies behind, for working conditions, more environment-friendly example, the success of Swatch watches. In techniques, more efficient public services, etc. practice, this amounts to four simultaneous innovations in: According to the dictionary, the opposite of innovation is “archaism and routine”. That is - conception (reduction in the number of parts); why innovation comes up against so many obstacles and encounters such fierce - production (assembly of the housing in a resistance. It is also why developing and single part); sharing an innovation culture is becoming a - design (new concept for the presentation of decisive challenge for European societies. the watches); 1. Innovation, the firm and society - distribution (non-specialised sales outlets). Innovation has a variety of roles. As a driving Research, development and the use of new force, it points firms towards ambitious long- technologies - in a word, the technological term objectives. It also leads to the renewal of factor - are key elements in innovation, but industrial structures and is behind the they are not the only ones. Incorporating them emergence of new sectors of economic activity. means that the firm must make an In brief, innovation is: organisational effort by adapting its methods of production, management and distribution. the renewal and enlargement of the range of products and services and the associated Human resources are thus the essential factor. markets; In this respect, initial and ongoing training play a fundamental role in providing the basic skills the establishment of new methods of required and in constantly adapting them. production, supply and distribution; Many studies and analyses show that a better- educated, better-trained and better-informed the introduction of changes in management, workforce helps to strengthen innovation. The work organisation, and the working conditions ability to involve the workforce to an increased and skills of the workforce1. extent, and from the outset, in the technological 2 changes and their implications for the updating in the new arrangements on research organisation of production and work must be aid adopted in December 1995. considered a deciding factor. This responsibility of the authorities is There is no hermetic seal between the particularly important as regards technological innovative firm and its environment, by which it innovation and the creation of businesses - is influenced and which it helps to transform. It fields in which the situation in Europe remains is the sum total of firms in an industry, the worrying compared with its competitors fabric of economic and social activities in a region, or even in society as a whole, which In the Commission’s opinion, Europe’s research makes up the “innovation systems”, whose and industrial base suffers from a series of dynamics are a complex matter. The quality of weaknesses. The first of these weaknesses is the educational system, the regulatory, financial. The Community invests legislative and fiscal framework, the competitive proportionately less than its competitors in research and technological development (...). environment and the firm’s partners, the A second weakness is the lack of coordination legislation on patents and intellectual property, at various levels of the research and and the public infrastructure for research and technological development activities, innovation support services, are all examples of programmes and strategies in Europe. (...) The factors impeding or promoting innovation. greatest weakness, however, is the comparatively limited capacity to convert 2. Innovation and public action scientific breakthroughs and technological achievements into industrial and commercial The Commission has clearly identified - first in successes. (White Paper “Growth, the White Paper on Growth, Competitiveness Competitiveness, Employment. The Challenges and Employment, and then in its 1994 and Ways Forward into the 21st Century”, Chapter 4, European Commission, 1994). communication on An Industrial Competitiveness Policy for the European Union - that firms’ capacity for innovation, and support for it from the authorities, were essential for maintaining and strengthening this competitiveness and employment. This Green Paper makes use of, adds to and extends that work with a view to arriving at a genuine European strategy for the promotion of innovation. While respecting the principle of subsidiarity, it will propose the measures to be taken at both national and Community levels. “In exercising their responsibilities, the authorities must promote the development of future-oriented markets and anticipate changes rather than react to them (...). The European Union must place its science and technology base at the service of industrial competitiveness and the needs of the market more effectively. Greater attention must be paid to dissemination, transfer and industrial application of research results and to bringing up to date the traditional distinction between basic research, precompetitive research and applied research which, in the past, has not always allowed European industry to benefit from all the research efforts made.”2 The Commission has paid attention to this aspect of Strengthening the capacity for innovation The Commission wishes to receive the opinion of involves various policies: industrial policy, RTD the interested parties on the analyses presented, policy, education and training, tax policy, the measures proposed and the questions raised. competition
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