ESBA - The Independant Voice for Small Business

CIP ALONE WILL NOT BE ENOUGH!! ESBA RECOMMENDS MORE R&D SPENDING IN SMEs THROUGH MORE AMBITIOUS NRPs

Brussels, June 14th 2006

On June 1, the European Parliament adopted the first “Competitiveness and Innovation Framework Programme” (CIP). The CIP aims to invest EUR 3.6 billion in European SMEs between 2007 and 2013 and is composed of 3 distinct strands. These are designed to help SMEs invest in all forms of innovation, boost energy efficiency, and improve the use of Information and Communication Technology (ICT).

Although ESBA regrets the significant reduction in the budget allocated to CIP by MEPs - from the original proposal of EUR 4.21 billion to just EUR 3.6 billion – the programme is largely supported by the Alliance. Its rapid adoption in Parliament augurs well for cross-party commitment to achieving the new Lisbon Agenda goals. ESBA however considers that more can still be done to stimulate innovation in EU SMEs.

A significant R&D spending gap between Europe and America is largely attributable to SMEs. The US has a greater proportion of ‘small’ enterprises with 10-49 employees (c. 20%) compared to the EU (c. 9% of all firms). On average, the R&D budget of an American SME is also 7 to 8 times higher. More R&D spending in EU SMEs could thus play a key role in achieving the Barcelona target of R&D spending in Europe equivalent to 3% of GNP. ESBA urges Member States to adopt quantitative R&D targets in the Lisbon National Reform Programmes (NRPs) and to institute US-Style mechanisms like the Small Business Innovation Research Programme (SBIR) to achieve them.

The SBIR, in combination with tax-incentive measures, assists SMEs at all stages of the innovation process. Based on the concept of the ‘SME Research Stairway,’ the SBIR offers differentiated policy options targeted at different categories of small business. It proposes however one broad policy objective: to help individual SMEs move, step-by-step, along a four point typology – from Basic SMEs, with no or little R&D activity, to Technology Pioneers, which engage in high-level research.

Comparisons with the US demonstrate that the SBIR really works. The UK has recently experimented with a similar programme, which also achieved good results. Described by Jorgo Chatzimarkakis MEP as a ‘the sunrise for innovation in Europe,' CIP is a step in the right direction. In order to ensure however, that it does not herald a false dawn, ESBA recommends that EU Member States should adopt more ambitious R&D spending targets in their Lisbon NRPs and follow the US’s lead to reach them.

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Note to the editor: ESBA is a non-party political European group, which gathers member organisations from 22 European countries. It is the only organisation in Europe to focus its representation on the needs of (fully) independent small business organisation (vs. statutory or compulsory membership groups). ESBA currently represents almost 2 million small business entrepreneurs and represents them through targeted EU advocacy activities. ESBA also works towards the development of strong independent lobby and benefits groups in European countries. For more information, please contact: secretariat@esba-europe.org

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Page last updated: 02/02/2007 16:59:05