The OECD Innovation Strategy and SME Policy

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The OECD Innovation Strategy and SME Policy

• Pier Carlo Padoan
• Deputy Secretary General
• Guangzhou, China
• 3 July 2008

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The OECD Innovation Strategy

• Emerged from the Ministerial Mandate of May 2007
• Growing recognition that innovation
• is a key driver of growth and helps address
  critical global challenges
• changes and evolves rapidly, engaging new models,
  players, and geographies
• challenges governments to understand the role of
  policy within a dynamic, multi-player system

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Expected outputs ofthe Innovation Strategy

• New evidence, measures, and indicators
• Reports
• Forum for dialogue among governments and
  stakeholders
• New capacity within OECD
• New approaches to programme planning, budget
  development and resource allocation

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OECD Working Party on SMEs Entrepreneurship
(WPSMEE)

• Mission
• To help member countries develop policies that
• Foster entrepreneurship
• Facilitate sustainable growth, competitiveness,
  and skilled jobs creation, and
• Help their SMEs to meet the challenge of
  globalisation.

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WPSMEE current work investigates

• The role of innovation and intellectual assets as
  drivers of growth in SMEs as compared to other
  factors
• The difficulties in accessing finance as an
  obstacle for innovative and HGSMEs
• The policies that best promote innovation and
  growth in SMEs

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In-house product innovators

• 2002-2004 ( of all firms)

Source OECD Science, Technology and Industry
Scoreboard 2007
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In-house process innovators

• 2002-2004 ( of all firms)

Source OECD Science, Technology and Industry
Scoreboard 2007
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Non-technological innovators2002-2004 (as of
all firms)
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Some key issues

• The use and acquisition of knowledge
• Business life cycle and key transition points
  The management of intellectual property
• Access to finance

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Total Venture Capital as a of GDP
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Venture CapitalStart-up vs. Development
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Access to finance

• Developed financial markets boost SME growth
• SMEs, including innovative ones, rely more on
  debt financing and make little use of external
  equity financing
• Innovative and HGSMEs use external equity more
  than other SMEs
• No evidence on use of intellectual assets as
  collaterals for debt financing in SMEs

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Policy survey on programmes to foster enterprise
growth
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Policy implications

• Innovation is a key factor in firm growth, but
  SMEs lag in their innovation capacity as compared
  to large firms. Policy should focus on improving
  the innovation performance of SMEs.
• Other factors are relevant for firm growth, e.g.
  IA management and networking are important to SME
  innovation. New policies need to be developed in
  these areas.
• Innovative SMEs still rely on debt more than on
  equity. Policy should therefore encourage credit
  readiness of SMEs in addition to investment
  readiness.