Meeting Global Challenges German-U.S. Innovation Policy: Summary of a Symposium (2012) / Chapter Skim
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DAY 2 & Panel V: Helping Small Business: Current Trends and Programs
DAY 2 & Panel V: Helping Small Business: Current Trends and Programs
Pages 105-116
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From page 105... ...
Most notably, small firms are credited with creating virtually all new jobs. "Both countries undertake impressive policies to promote their small firms," he said.
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From page 106... ...
Germany's economic strength is reflected by its standing as by far the largest applicant for patents at the European Patent Office. No less important, he said, is the excellent research infrastructure, with the Fraunhofer institutes playing a lead role in technology transfer.
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From page 107... ...
It decided to invest six billion Euros in R&D in the current legislative period, and six billion in the education system. "We had a large consensus from all the major parties," he said, "that our future depends on innovation, research, development, and education, and that this is not the moment to economize." He said that the investment by the private sector did not drop significantly, while the state contribution increased.
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From page 108... ...
"Therefore, the central point of our policy is to strengthen cooperation between SMEs and research institutions." He noted that the Ministry of Research had opened a window specifically to connect SMEs with the hightechnology trade program of the Ministry of Research. In regard to entrepreneurship, he described a program called EXIST that encourages universities and research institutions to familiarize students with entrepreneurial thinking.
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From page 109... ...
He added that a special feature of innovation in Germany is its communal industrial research, by which many branches of industrial sectors have, for more than 50 years, maintained research associations to monitor the particular needs of those branches. Such monitoring usually precedes competitions, and the results of the competitions are often made public.
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From page 110... ...
Competition in the 21st century is based on innovation, he continued. In terms of policy, the key challenges in sustaining innovation are to fortify national R&D budgets, create a positive environment for innovation, support high-tech innovation clusters, and use innovation awards to "provide oxygen" for the process itself.27 Innovation was a central motivation in formulating the "Lisbon agenda" of the European Union, in which European leaders pledged to invest 3 percent of each nation's GDP in research and development.
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From page 111... ...
On a positive note, the federal government does invest generously in health care research, Dr. Wessner added, which has the potential to bring enormous opportunities for our well-being and productivity.
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From page 112... ...
fare the worst, spending 45 percent more per employee than large firms to comply with federal regulations.32 In addition, new firms struggle for adequate financing. They are often forced to depend on "friends, family, and fools," with banks hesitating to lend to small businesses.33 The Peril of the Funding Gap Many people assume that small companies routinely turn to venture capital firms for support, but this is true only for those with a track record and preferably revenues.
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From page 113... ...
Because recoupment is through the tax system, grants and contracts lower the risk faced by prospective entrepreneurs. After nearly two decades of operation, the Congress asked the National Academies to assess the program; in turn, the Academies found SBIR to be "sound in concept and effective in practice." Some favorable aspects of the program are that loans don't have to be paid back, a company can keep its IP, and approval by SBIR achieves a "certification effect" that raises the profile of awardees as potential investments for venture capitalists.
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From page 114... ...
The SBIR certification effect can be seen through program "alumni" that are successful as public companies, including Qualcomm, ATMI, Martek, and Luna.36 The potential role of SBIR funding is well illustrated in the example of A123, an innovative battery company in Massachusetts. The research for A123 was done at MIT, where NSF funds had helped develop a technology based on "an advanced cathode material for lithium-ion batteries." When the inventors decided to form a company, they won an SBIR award from the Department of Energy to help develop the core technology, which has applications for computers, power tools, and hybrid-electric vehicles.
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From page 115... ...
Helping companies scale up their production and grow remains difficult, and the causes are not always clear. A questioner asked about the Manufacturing Extension Program in the United States, which helps SMEs acquire new skills, such as lean manufacturing.
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From page 116... ...
We bring together knowledge to let them be more successful in the market." Dr. Neuhoff asked whether the SBIR program held open calls for proposals.
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