Barriers And Future Policy Directions To Knowledge Demand And Absorption In South And East Bulgaria

The paper analyses SMEs competitiveness, innovation and knowledge networks using data gathered through a range of interactions with innovative SMEs including interviews and consultations with 50 innovative SMEs from a range of sectors in the region and a focus group with 8 managers of non-innovative SMEs. Survey results show that the region of South and East Bulgaria rely more on the tacit knowledge of their human resources rather than on their formal qualifications (codified knowledge). Bulgarian SMEs are facing mainly with problems of survival and business extension an still do put not enough emphasis on the role of knowledge to the firms’ competitiveness. Finding the appropriate policy initiatives to encourage firms to incorporate innovation strategy into the overall business development strategy is becoming a serious challenge for the government. A major factor hampering SMEs in carrying out R&D and innovation is the lack of financial resources. And there is still a large room for improvement and finding the appropriate mechanisms to support SMEs innovation and R&D invetsment. The uncertain demand for innovation product and services also appears to be a substantial factor hampering innovative activities in SMEs. This finding suggests that the general economic environment in the country does not stimulate the production of innovative products and services. Hence one of the avenues of promoting innovation is to convince SMEs that they will benefit from the results of their research efforts. The interviewed firms consider further elaboration of the system for business support and advice, improving physical infrastructure and allowing companies to locate in better equipped premises as the next step to form the core national regional innovation policy in the country.