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Young SMEs as a Motor of Europe’s Innovation Machine

Author

Listed:
  • Reinhilde Veugelers

    (Katholieke Universiteit Leuven)

  • Annalisa Ferrando

    (European Central Bank)

  • Senad Lekpek

    (European Investment Bank)

  • Christoph T. Weiss

    (European Investment Bank)

Abstract

Using large scale EIB Investment Survey evidence for 2016 covering 8,900 non-financial firms from all size and age classes across all sectors and all EU member states, the authors identify different innovation profiles based on a firm’s R&D investment and/or innovation activities. Basic firms — i.e. firms that do not engage in any type of R&D or innovation — are more common among young SMEs, while innovators — i.e. firms that do R&D and introduce new products, processes or services — are more often old and large firms. This holds particularly for ‘leading innovators’, which introduce innovations new to the market. To further explore why young SMEs are not more active in innovation, the authors explore their access to finance. It is concluded that young small leading innovators are the most likely to be credit constrained. Public grants seem to at least partially address the external financing access problem for leading innovators, but not for young SMEs.

Suggested Citation

  • Reinhilde Veugelers & Annalisa Ferrando & Senad Lekpek & Christoph T. Weiss, 2019. "Young SMEs as a Motor of Europe’s Innovation Machine," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(6), pages 369-377, November.
    • Handle: RePEc:spr:intere:v:54:y:2019:i:6:d:10.1007_s10272-019-0855-7
    DOI: 10.1007/s10272-019-0855-7
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    Cited by:

    1. Cathles, Alison & Nayyar, Gaurav & Rückert, Désirée, 2020. "Digital technologies and firm performance: Evidence from Europe," EIB Working Papers 2020/06, European Investment Bank (EIB).
    2. Pietro Moncada-Paternò-Castello, 2022. "Top R&D investors, structural change and the R&D growth performance of young and old firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 1-33, March.
    3. Samuel Amponsah Odei & Jan Stejskal & Viktor Prokop, 2021. "Revisiting the Factors Driving Firms’ Innovation Performances: the Case of Visegrad Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 1331-1344, September.
    4. Désirée Rückert & Reinhilde Veugelers & Christoph Weiss, 2020. "The growing digital divide in Europe and the United States," Working Papers of Department of Management, Strategy and Innovation, Leuven 654659, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    5. Veugelers Reinhilde & Faivre Clémence & Rückert Désirée & Weiss Christoph, 2023. "The Green and Digital Twin Transition: EU vs US Firms," Intereconomics: Review of European Economic Policy, Sciendo, vol. 58(1), pages 56-62, January.
    6. Ryota Nakatani, 2024. "Multifactor productivity growth enhancers across industries and countries: firm-level evidence," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(2), pages 401-446, June.
    7. Fuzhong Chen & Haifeng Li & Huini Wei & Wani Nelson, 2022. "The Ownership, Innovation, and Sustainable Development of Micro and Small Enterprises: Evidence of China," SAGE Open, , vol. 12(4), pages 21582440221, November.

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