Impact assessment of the SME-specific Measures FP5 and FP6, 2009

Transcription

1 EUROPEAN COMMISSION European Research Area 7th Framework Programme Impact assessment of the SME-specific Measures FP5 and FP6, 2009 Studies and reports EUR EN

2 European Commission EUr Impact assessment of the sme-specific measures FP5 and FP6, 2009 Luxembourg: Office for Official Publications of the European Union pp x 25.0 cm ISBN doi: /11620 How to obtain EU publications Publications for sale: via EU Bookshop ( from your bookseller by quoting the title, publisher and/or ISBN number; by contacting one of our sales agents directly. You can obtain their contact details on the Internet ( or by sending a fax to Free publications: via EU Bookshop ( at the European Commission s representations or delegations. You can obtain their contact details on the Internet ( or by sending a fax to

3 EUROPEAN COMMISSION Impact assessment of the sme-specific measures fp5 and fp6, 2009 Directorate-General for Research 2010 FP7 Capacities Research for the benefit of SMEs EUR EN

4 Europe Direct is a service to help you find answers to your questions about the European Union Freephone number(*): (*)Certain mobile telephone operators do not allow access to numbers or these calls may be billed LEGAL NOTICE Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of the following information. The views expressed in this publication are the sole responsibility of the author and do not necessarily reflect the views of the European Commission. A great deal of additional information on the European Union is available on the Internet. It can be accessed through the Europa server ( Cataloguing data can be found at the end of this publication. Luxembourg: Publications Office of the European Union, 2010 ISBN ISSN doi: /11620 European Union, 2010 Reproduction is authorised provided the source is acknowledged. Pictures Shutterstock, 2010 Printed in Belgium Printed on white chlorine-free PaPer

5 table of contents IntroductIon Key findings and recommendations how to advance the technological InnovatIon potential of smes case studies sidur a new way of applying varnish Impact-uss turning tatty tyres Into safer surfaces swirl jet the science of swirling finefish towards healthier fish fingerlings

6 IntroductIon Since the mid 1990s, the EU has run research programmes specifically designed for small and medium-sized enterprises (SMEs), offering them an excellent way to participate in research projects that lead to the development of new products or services. This report reveals for the first time the long-term economic impacts of these programmes on the SMEs involved, and also sets out recommendations for the programmes improvement: the overall aim is to better meet the needs of Europe s growing SME community. smes the backbone of europe s economy The EU is home to some 20 million businesses, and 99% of these are classified as SMEs (i.e. they have fewer than 250 employees). Between them, Europe s SMEs account for 65% of the EU s gross domestic product (GDP) and employ 65 million people, which is two thirds of the private sector workforce. Furthermore, the number of SMEs is rising rapidly, so their contribution to job creation and economic growth is critical. SMEs are active in all areas of the economy, including agriculture, tourism, transport, security, health, industry, consumer goods, the arts, information and communication technologies (ICTs) and biotechnology, to name just a few. Crucially, SMEs often provide a vital link in the innovation system, effectively transferring knowledge from where it is created to organisations where it can be exploited and commercialised. These companies therefore have a vital role to play in helping the EU to emerge from the economic crisis and meet the goals of the Europe 2020 Strategy. Launched in March 2010, the Strategy outlines the steps the EU needs to take to build a knowledge-based, low carbon economy with high employment levels. Unfortunately, SMEs are being hit hard by the economic crisis as they are more dependent than larger firms on external sources of finance. At the same time, they face increasing competition from abroad. smes and research turning knowledge into profit Research, development and innovation activities are key to helping SMEs stay ahead of the competition. Research in particular is essential if they are to develop new products and services or improve existing ones, or to take advantage of new markets. For example, novel products and services are urgently needed to help society tackle major challenges such as climate change, ageing populations and food security. However, the vast majority (around 70%) of SMEs rarely embark on research and development (R&D) activities themselves and lack the resources and expertise to do so. A further 20% engage in limited innovation activities, such as adapting existing technologies. This leaves just a small minority that is heavily involved in more advanced research and innovation. The EU s SME-specific measures For the past 15 years, the EU has run research programmes specifically designed for the majority of SMEs that do not have the resources to carry out research in-house. Put simply, the aim of these programmes is to make these SMEs competitive by providing them with funds to outsource their research needs to research, technology and development performing organisations (RTD performers). The scheme has proven extremely popular, and is one of the most oversubscribed parts of the EU s entire Research Framework Programme. 6

7 The SME-specific measures differ from most other parts of the EU s Research Framework Programmes in a number of ways. Firstly, the SMEs are free to pick the topic of the project themselves, whereas projects elsewhere in the framework programmes have to adhere to a list of priority topics that is drawn up to reflect specific research needs in various fields including climate change, health and ICTs. Because the partners select the research topic, the projects funded under the SME-specific programmes focus on finding technical solutions to a specific problem identified by the companies involved. Ultimately, the project results should boost the competitiveness of participating SMEs. In line with this, the SMEs own any intellectual property rights (IPR) relating to the project results. In addition, the networking aspect of these SME projects is highly valued by participants. Involvement in an EU-funded research project also confers considerable prestige on the companies concerned. Typically, projects in the SME-specific programmes are shorter and involve fewer partners than projects funded under other parts of the Research Framework Programmes. different kinds of projects for different research needs The projects supported under the EU s SME-specific measures fall into two categories. Cooperative research - Projects that bring together a small group of SMEs with a shared problem or need that can be addressed via a specific research project. The SMEs use the project funds to pay an RTD performer to carry out the research. Collective research - Projects that aim to provide new knowledge or technologies to entire communities of SMEs that are represented by an SME Association or industrial grouping. Here, the RTD performers carry out research on behalf of national or European SME Associations. The research results are transmitted to all SMEs involved in the participating associations, often in form of research training sessions for SME staff. The tables below outline how the names of and the budgets allocated to the SME-specific measures have changed over the years. Cooperative research measures Research Framework Programme Title of the cooperative SME measure Budget Fifth Framework Programme (FP5) Sixth Framework Programme (FP6) Seventh Framework Programme (FP7) CRAFT (Cooperative Research Action For Technology) Cooperative Research Research for SMEs EUR 520 million EUR 330 million Up to EUR 740 million 7

8 Collective research measures Research Framework Programme Title of the collective SME measure Budget Fifth Framework Programme (FP5) Sixth Framework Programme (FP6) Seventh Framework Programme (FP7) Collective Research pilot action Collective Research Research for SME Associations EUR 5 million EUR 146 million At least EUR 370 million an evolving programme Over the years, the EU has made a number of changes to its SME-specific measures in part in response to feedback from small companies themselves. Today, there is more emphasis on collective research projects, as the results of these have the potential to reach a far larger number of SMEs. Under the FP7, the economic impact of proposed projects is given greater weight than in the past. The financial rules governing the projects have also been altered to increase SME partners control over the budget. Furthermore, projects have more flexibility regarding IPR ownership. This should prevent situations where for instance research results are not commercialised because the SMEs involved (which jointly own the IPR in most projects) either cannot afford or cannot agree on registering a patent. Looking to the future, the EU already has plans to launch demonstration projects which would help small businesses take products or services arising from applied research projects and test them on a larger scale prior to commercialisation. about this report Although the overarching aim of the SME-specific measures is to boost the companies competitiveness, until now no one has assessed the social and economic impacts of project participation on the SMEs involved. Earlier evaluations of the programmes effectiveness tended to gauge project success by comparing the project results with the project objectives, which are more often than not scientific or technical in nature. This report summarises the findings of a major study of the social and economic impacts of the SME-specific measures ( 1 ) under FP5 and FP6 on small and medium-sized companies themselves. Notably, the study reveals the factors that make for a successful project, as well as those that lead to poorer project outcomes. A series of recommendations outlines how these measures in future EU Research Framework Programmes could be improved to ensure that the projects they support go beyond merely meeting their scientific goals, and to help SMEs deliver new products and services and boost their bottom line. Finally, a series of case studies explores in depth the outcomes of four projects funded under the EU s SME-specific measures in FP5 and FP6. The cases chosen illustrate many of the report s findings, and demonstrate where there is room for improvement. 1 As stated, this study focuses exclusively on the SME-specific measures. A second study, due to be released later in 2010, investigates the impacts on participating SMEs of involvement in projects supported under other parts of the EU s Research Framework Programmes. 8

9 Key findings and recommendations

10 Key findings and recommendations maintain and strengthen the EU s SME-specific r&d measures The EU s SME dedicated R&D support measure (now called Research for the benefit of SMEs / SME Associations under FP7) should be maintained. The findings demonstrate this programme occupies a unique and essential niche among research support programmes. Its advantages include its bottom-up nature allowing SMEs to choose the research topics for themselves; its international dimension allowing SMEs to expand beyond their national borders in search of new markets; and the opportunity to work with leading international companies and researchers. It supports SMEs with no or limited R&D capabilities giving them an opportunity to innovate based on research activities outsourced to RTD performers. Business objectives to be strengthened throughout the project life cycle One way of ensuring that project objectives match SMEs technical and business needs would be to introduce an SME needs test to the proposal evaluation procedure. At this point, applicants would have to set out their business case explaining why R&D is needed to solve the technical problem this business case would be evaluated by business and industry experts. Consortia that pass this test would then submit a research proposal which would be checked by scientific and technical experts. Rules of participation may need to be revisited to allow for more decisive involvement of SMEs to drive projects towards exploitation, including making RTD performers share part of the risks (under FP7, they receive 100% coverage for their services whatever the results of the project) undertaken for project outcomes. Although the technical aspects of many projects may be achieved at the end of the project (80% of the SMEs and Associations are positive about the project outcomes) additional work is often required before the product or service can be commercialised. One recommendation to enhance exploitation would be to provide additional funding for industrial scale demonstration activities. Such activities should be integrated into the work plan from the beginning and monitored throughout the project lifecycle. 10

11 Keeping smes at the heart of the project Projects where the original idea came from the SME are more likely to result in commercial outcomes. It is crucial that SMEs play an active role in the project from the outset. They should also be allowed to validate interim project results and thus infl uence the review process with a go / no go decision. smes increase their economic competitiveness In total, 35% of SMEs claim that their economic standing had been raised as a result of their involvement in an EU funded project; the remainder report it remained the same. Overall a quarter feels that the benefi ts of project participation outweighed the costs. SMEs that were intensely involved in the project had a greater opportunity to exert their infl uence and steer the project towards exploitation. Other impacts include improved S&T knowledge, networking, improved market insight, increased visibility and project management skills. project participation boosts sme research capabilities SMEs that participate in the SME-specifi c measures are signifi cantly more likely to set aside a specifi c annual budget or employ personnel for R&D compared with other SMEs. Involvement in a successful project encourages SMEs to apply for further EU funding. According to the survey 38% of SMEs had already applied for FP7 funds and a further 17% were planning to do so. project consortia = lasting partnerships In total, 90% of SMEs continue working with project partners from their home country, 57% with international partners and they tend to be SMEs that were more intensively involved in the project. The latter have higher R&D capability (low-tech SMEs do not form very lasting partnerships). The lower the R&D capability, the less likely that they want to keep their contacts and network. flexibility and transparency needed on Ipr A third of the SMEs interviewed claimed the project resulted in new IPR. Exploitation was often complicated by the fact that it was shared with all the SMEs partners. They need to be fully engaged from the outset of the IPR regime chosen and its implications for the exploitation of the project results. 11

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13 how to advance the technological InnovatIon potential of smes

14 how to advance the technological InnovatIon potential of smes strengthen the eu s SME-specific R&D support measures One of the key messages from the study is that the EU s SME-dedicated R&D support measures (now called Research for the benefit of SMEs/ SME Associations under the FP7) should definitely be maintained. The findings demonstrate that the EU s SME-specific programmes occupy a unique and essential niche among research support programmes for SMEs, as they are particularly well suited to (and should therefore continue to address) the following: n n a technological need which is shared by SMEs in different countries or regions, or where the critical mass needed to tackle the problem is not available in a single country; a specific technological problem which cannot be solved by the research capacities available in the SMEs home country, but can be addressed by researchers in other European countries. The bottom up nature of the EU s SME programme represents another major plus point that should be preserved in the future; few other programmes in Europe give SMEs the freedom to choose the research topics themselves. The EU s programme allows for technical issues identified by the SMEs themselves to be solved. In contrast, most other schemes have a thematic focus which may not be suitable for the core activity of all SMEs. A further advantage of the EU s programmes is their international nature; participation helps SMEs expand their horizons beyond regional and national borders. EU-funded projects often give SMEs the opportunity to work with leading international companies in their field and as well as top researchers in Europe in an attempt to develop new products and services to reach new international markets. The popularity of the scheme is also worth noting; in the FP6 it was one of the most oversubscribed parts of the entire framework programme, and only the very best proposals received funding. In practice, this means that many proposals were positively evaluated but did not receive any money. In the cooperative research scheme, 70% of successful proposals did not get any funding, and two thirds of these projects were dropped entirely. The rest proceeded with some modifications (i.e. fewer partners, a lower budget and more limited research objectives). One way to increase the number of projects funded would be to fund more, but smaller, projects or by increasing the total budget for these popular measures. Interestingly, participation in national SME research programmes seems to be a stepping stone to participation in the EU s programmes, with three quarters of SMEs reporting that they had experience of nationally-funded R&D projects before they applied for funding to the European Framework Programme. At the European level, although other programmes such as Eurostars are designed for SMEs, they tend to attract businesses which already have high R&D capabilities, while the SME-specific measures mainly target SMEs with no or limited in-house R&D capabilities and help them outsource research activities. 14

15 Overall, the study s findings suggest that the SME-specific measures should continue to be run (albeit with some improvements) under the Framework Programme for Research and Technological Development. The SME scheme should also be better integrated with the EU s Competitiveness and Innovation Framework Programme (CIP); this would enhance its ability to respond to the innovation and business needs of SMEs. Specifically, synergies between these two complementary EU programmes should be identified to better serve the needs of SMEs. sme and sme association projects respective merits Despite their many similarities, both schemes attract different kinds of SMEs. In general, SMEs in SME projects tend to be larger and have greater R&D capabilities and experience than SMEs in SME Association projects. Over half (55%) of the SMEs in the Associations projects (compared to 42% of SMEs in the SME only projects) have very limited R&D capabilities and working on an SME Association project provides them with the opportunity to take their first steps in the world of research and innovation, considering the inclusion of research based innovation in their business strategy by allocating human and/or financial resources to such activities. In addition, SME Association projects are particularly effective at creating pockets of collaboration at local, regional and national levels. The SME Associations (also known as Industrial Associations or Groupings, or IAGs) in such projects also benefit from improved networking and technological dissemination skills. This is important because through their membership, IAGs have the potential to reach large numbers of SMEs. However, the results of the SMEs projects appear to be closer to the market than SME Associations project outcomes; this could be because SME projects usually have more specific goals than SME Association projects which tackle more generic problems shared by a large number of small companies. Given the very distinct natures of both schemes, and the fact that they attract different kinds of SMEs, it is recommended that the two schemes be given separate budgets. One aspect of the SME Association scheme that merits further attention is the dissemination of the project outcomes. The ultimate aim of these projects is to provide entire communities of SMEs with new knowledge that could help them boost their business. The IAGs in the project may do this via fairs, conferences, workshops, or publications. In practice, the core group of SMEs that are directly involved in the project sometimes try to limit these dissemination activities while they seek to exploit the results or secure international property rights (IPR) for themselves. Project officers in the Commission and reviewers need to be aware of this; after all, the great strength of collective projects lies in their ability to influence entire industrial sectors, and not just the few SMEs that participated in the project. the project participants The SME-specific measures primarily target SMEs with no or limited research capability, and some three quarters of participating SMEs fall into this category; 45% have neither a yearly R&D budget nor an R&D department, and a further 31% have an R&D budget but lack a dedicated R&D department. However, the statistics show that around a quarter of SMEs participating in the projects had both a reasonable annual R&D budget and an established R&D department. This demonstrates that the SME measures also attract medium- to high-tech SMEs wishing to build on their current R&D activities and to complement their expertise by buying in knowledge from other sources. 15

16 Geographically, 60% of projects are coordinated by partners in just 4 countries (Germany, Spain, Italy and the UK). The newer Member States of the EU coordinate a small, but growing, proportion of projects (rising from 0.9% in FP5 to 2.32% in FP6). Under the FP5 and FP6, the SMEs in the projects had to come from at least two countries. FP7 projects must include SMEs from at least three countries. This requirement is designed to foster the creation of the European Research Area (ERA) through international research collaboration. However, in practice, distance, language and cultural barriers sometimes make it hard for a coordinator to manage the consortium effectively and achieve optimal results. NCPs based in the Member States can help small enterprises find relevant partners abroad. Experience shows that knowledge transfer is most effective between RTD performers and SMEs from the same country. Where possible, consortia should attempt to create national RTD-SME partnerships, although this will inevitably be determined by the availability at the national level of the scientific expertise required for the project. Nevertheless, the international dimension of the EU s SME projects is key to their success and should be maintained suggestion. what are the project partners looking for? Although the scheme is aimed at SMEs, more often than not the original idea for a project comes from the RTD performers. Nevertheless, over three quarters of SMEs feel that the project objectives match their own objectives to at least a reasonable extent. Most SMEs cite the development of a new or improved product, process or service as their main reason for getting involved in the SME-specific measures. Some SMEs set out to test the feasibility of a product or service, while others aim to ensure compliance with a new regulation or standard. SMEs identify financing research and innovation activities as their most important research and innovation need, followed by gaining access to new scientific and technological knowledge and solving technical problems. SMEs find that the SME-specific measures meet these top three needs that in turn may explain the popularity of the scheme and the oversubscription rate which has continued in FP7. During the project itself, SMEs involvement is often limited to participation in project meetings, where they can monitor progress and ascertain whether the project is on track to meet their needs and objectives. Towards the end of the project, SMEs involvement intensifies when they may carry out tests and validation or demonstration activities. SMEs should be more intensively involved to influence decisions made and to drive the project towards the exploitation of results. the project output business objectives to be strengthened throughout the project life-cycle. While many projects result in new products and services, additional work is often needed to develop these further before they can be commercialised. In other words, while the project s technical goals are met, the same cannot be said for the SMEs business objectives. One option here would be to provide additional funding for (industrial scale) demonstration activities to translate the project results into commercially viable products or services. Such activities should be integrated into the project work plan from the beginning and progress on these activities should be carefully monitored throughout the course of the project. In addition, the funding rules applicable under the SME-specific measures should be adjusted so that the RTD performers run risks as well. Currently, they 16

17 7 top tips for a successful project Analysing the case studies revealed seven factors that make for a successful project. 1 - Commitment is key! The commitment of the partners is what drives a project forward. All partners need to make the effort to deliver what they agreed to at the start of the project. 2 - Pick the right partners It seems obvious, but projects with the right kinds of partners, i.e. in the value chain, are more likely to be successful and result in a commercially viable outcome. On the SME side, that means companies that have the ability to make use of research results and turn them into commercial products or services. Meanwhile, the ideal RTD performer has a strong client focus and is keen to see the project results exploited. 3 - Select a strong leader A strong, highly competent project coordinator is needed to keep the project on track, smooth over misunderstandings between partners and overcome obstacles. A lack of leadership and management skills on the part of the coordinator is often cited as a factor among the problems and delays experienced by less successful projects. 4 - Respect SMEs business needs SMEs are more likely to commit to a project that addresses both their technical and business needs. Partners should drive the project towards exploitation so that SMEs can benefit economically from the project outcomes. 5 - Play fair on IPR While the consortium agreement is being negotiated, the project partners should discuss all IPR-related aspects of the project in depth and establish a clear, detailed set of IPR rules so that everybody plays a fair game. All partners should be informed of the nature of the IPR agreement that is in force within the project. 6 - Strengthen SME involvement The most successful projects are characterised by high levels of SME involvement, yet all too often, the lack of funds allocated to SMEs within projects limits their involvement. It is important that non-research partners be allocated a minimum amount of funds to facilitate their full engagement in the project. R&D projects are inherently risky; the project outcomes can never be predicted with certainty at the beginning. If intermediate results suggest that the project s original objectives will not be achieved, the SME partners should be able to modify the project objectives accordingly. 7 - Keep it personal Regular, face-to-face meetings between partners strengthen commitment to the project and make it easier for partners to effectively overcome any problems that arise during the project. 17

18 are paid 100% of their costs regardless of the project outcomes. This makes the SME-specific measures very attractive to RTD performers, and some research organisations are involved in a very large number of projects. Introducing an element of risk for the RTD performers would give them an incentive to focus on the business needs of their SME clients. In the longer term, one way of ensuring that project objectives match SMEs technical and business needs would be to introduce an SME needs test to the proposal evaluation procedure. At this point, applicants would have to set out their business case explaining why R&D is needed to solve the technical problem under discussion and how research will enhance the competitiveness of the participating SMEs. This business case would be evaluated by business and industry experts. Consortia that pass this test would then submit a research proposal which would be checked by scientific and technical experts. A new product or service is rarely the only benefit of participation for SMEs. These businesses also gain increased scientific and technological knowledge as well as experience of working with researchers, and improve their networking skills. Other advantages cited by the case study interviewees include greater market insight, increased visibility and project management skills. Keeping smes at the heart of the projects The good news is that 80% of the SMEs and SME Associations are positive about the project outcomes; just over 20% report that the project objectives were fully met and around 60% say that they were at least partially achieved. SMEs that are more heavily involved in the project are more likely to be satisfied with the project outcomes. Furthermore, projects where the original idea came from the SME partners are more likely to result in commercial outcomes. It is therefore vital for the success of the project that SMEs play an active role from the very beginning. SMEs should be allowed to validate interim project results and thus influence the review process with a veto on a go/no go decision. Asking SMEs and SME Associations to sign letters of commitment and to involve them in the negotiations at the start of the project would give them the opportunity to verify whether the project objectives and the proposed work plan are truly in line with their own business needs. During the project, coordinators should encourage SMEs to become more involved in the work by participating in project meetings and validating interim results. Related budgetary concerns for SMEs should also be addressed. Under the FP7, the business impact criterion carries much greater weight in assessing proposals potential impact on SMEs competitiveness through increased income, access to new markets or compliance with future legislation, for example. Furthermore, the European Commission seeks to ensure that at least half of the evaluators come from the business community. Elsewhere, the financial administration of projects has changed. Under the FP7, RTD performers invoice the SMEs directly, effectively allowing the SMEs to maintain greater control of the way the budget is spent. Increased sme competitiveness The goal of the SME-specific measures is to increase SMEs competitiveness by giving businesses an opportunity to innovate through research. Measuring the economic impacts of participation on SMEs is extremely difficult as it is hard to estimate how changes in a company s economic standing can be attributed directly to their participation in a single project. Nevertheless 19 of the out of the 40 case studies of fully completed projects (5 had just been finalised 18

19 at the time of the interviews) reported reaching an exploitation phase in the project of which 6 had tangible commercial output at the time of the study. Just over a third (35%) of SMEs claim that their economic standing had risen as a result of their involvement in an EU-funded project, and the remainder (60%) reported that their economic standing was unaffected by participation. Overall, a quarter of the SMEs feel that the benefits of project participation were much higher than the costs, but a third claim that the costs significantly outweighed the benefits. SMEs that were intensely involved in the project had a greater opportunity to exert their influence on the project and steer it towards exploitation; these SMEs therefore report a positive cost-benefit ratio. project participation boosts smes research capabilities The study shows that getting involved in the EU s SME-specific measures gives a significant boost to the development of many SMEs own research capacities, with 27% saying project participation had either a medium or high impact on their R&D and innovation capacities. The majority of SMEs embarking on projects under the SME-specific measures have relatively low R&D capabilities. SMEs that participate in the SME-specific measures are significantly more likely to set aside a specific annual budget and allocate personnel for R&D compared with other SMEs. Furthermore, involvement in a successful project encourages SMEs to turn to research in the future. According to the survey results, SMEs that participated in projects whose objectives were partially or fully reached are more likely to apply for funding under FP7 than SMEs in unsuccessful projects. In total, 38% of SMEs surveyed had already applied for FP7 funds and a further 17% were planning to do so. flexibility and transparency needed on Ipr With respect to IPR, just under a third of the SMEs interviewed contend that the project resulted in new IPR for them. However, exploiting IPR is not always easy. Under the rules of the SME-specific measures in the FP5 and FP6, any IPR arising from the project was, by default, owned by all the SME partners. However, joint ownership of IPR is not always ideal. When IPR is shared by several SMEs, exploiting it is rather complicated. Furthermore, applying for patents is simply too time-consuming and expensive for many SMEs to consider. Under FP7, the rules regarding IPR were relaxed so that if they wish, consortia can grant individual SMEs or sometimes RTD performers partial or even full ownership of IPR. The consortium may decide on the default regime or some kind of licensing agreement, for example. In all cases, the SME or SME Association participants must be provided with all the rights required for the intended use and exploitation of the project results. However, many SMEs still appear to be left in the dark when it comes to the IPR arrangement within their project. Consortia need to be flexible about IPR and also ensure that all SME partners are fully informed of the IPR regime chosen for the project and its implications for the exploitation of the project results. project consortia = lasting partnerships? The survey reveals that SMEs are more likely to maintain relationships with project partners from their home country than with international partners. Almost 90% of the SMEs continue working with domestic universities and research institutes once the project has come to an end; in many cases, however, these relationships were already established before the 19

20 start of the project. In contrast, just 57% of the SMEs report ongoing collaboration with foreign firms and research organisations. SMEs that are most likely to maintain contacts with overseas partners are those that were more intensively involved in the project and have developed an interest in building R&D capabilities. High-tech SMEs that participate in the SME-specific measures are more likely to carry on working with former project partners since research is their core business. Low-tech SMEs that are less active in the R&D area are generally less interested in continuing collaborations with research institutes or international partners because they joined the project to obtain solutions to a specific technical problem. Once they have their solution, they do not feel the need to stay involved in research activities. looking to the future In order to evaluate the effects and impacts of the SME-specific measures to the best possible degree, project information and participant data needs to be collected and updated systematically not only before, during and immediately after the project, but also three to five years after the end of the project. A more systematic monitoring process needs to be built to ensure more and good quality data for follow-up and impact assessment purposes in the future. the methodology In order to get a full picture and an objective assessment of the impacts of project participation on SMEs, a range of different, complementary research tools were applied. A large-scale online survey was used to gather information from organisations that had participated in the SME-specific measures under the FP5 or FP6. For comparison, a control group was also invited to complete the survey; organisations in this group had applied for funding under the SMEspecific measures and their proposals were evaluated positively. However, they did not receive funding because the budget had been exhausted. The survey was complemented by 45 case studies of individual projects funded under the SME-specific measures in the FP5 and FP6. For each case study, between three and four interviews were carried out with the project partners. The priority here was to explore both the impacts of participation on SMEs and the links between SME participation and project outcomes. Finally, the study drew on the AMADEUS database, which collects economic and financial data on millions of European companies, to assess and possibly quantify the impacts of the SME-specific measures on participating SMEs. Other groups involved in SME research policies, such as innovation agencies, National Contact Points (NCPs) and organisations representing SMEs, were interviewed as well. Major stakeholders were invited to a workshop to validate the results and contribute to the report s policy recommendations. The study was carried out by the Belgium-based group IDEA Consult in collaboration with ECORYS Nederland BV, the Centre for Industrial Studies (CSIL) in Italy, and ECOTEC Research and Consulting in the UK. 20

21 case studies

22 sidur a new way of applying varnish Development of a new cvd (chemical vapour deposition) technology to protect and colouring aluminium metalized plastics framework programme and funding scheme FP5, Cooperative project project duration March February 2005 total project budget EUR ec contribution EUR project coordinator Telstar Industrial S.L. (Spain, SME) the project The SIDUR project was the brainchild of Telstar, a Spanish SME, and the Chemical Institute in Sarrià (IQS), Spain. Their aim was to develop an industrial process that would allow companies to apply transparent, protective varnishes to plastics in the same vacuum packed chamber that is used for the metallisation process, in which an aluminium coating is added to the product. Telstar realised that carrying out both processes in the same chamber could cut costs signifi cantly. In addition, the project partners set out to create a transparent stained varnish to colour the plastics. 22

23 the partners The project brought together four SMEs and four RTD performers in three countries. Telstar, which coordinated the project, already had a small R&D department at the start of the project as well as experience of working in international R&D projects. Due in part to the large size of the consortium (and in spite of the coordinator s efforts), some partners were not very active in the project. Nevertheless, the most intensively involved participants report that the project ran smoothly and relations between the active partners were good. the results The SIDUR project was extremely successful, resulting in the development of a prototype system for the application of the transparent varnish in the metallisation chamber. Five years after the completion of the project, the fi nal product is now on the market and is being used by Telstar s clients in industrial production. other R&D and innovation projects at the local and international level. Nevertheless, working in SIDUR has incited Telstar to get involved in more publiclyfunded R&D projects, including one FP7 project. Participating in SIDUR also boosted Telstar employees technical knowledge and international networking skills. Telstar already had strong links with some of the RTD performers before the start of SIDUR, and it continued to collaborate with these organisations after the project had come to an end. The SMEs that were more intensively involved in the project and tested the industrial process themselves also claim to have benefi ted most from the project. The impacts on the RTD performers were generally positive, with all benefi ting from the knowledge gained and the chance to meet colleagues in other countries. The Chemical Institute in Sarrià seems to be particularly pleased with the project outcomes; its involvement in SIDUR generated new business and provided it with the experience it needed to participate in other European projects. Other important project outcomes include a marketing study and tests of the protection of the coloured layer. long-term impacts of the project SIDUR had a positive impact on many aspects of Telstar s work. Economically, the project helped Telstar to launch a new product on the market and reduce the costs of producing the machines that perform the metallisation of plastic parts. This has given the company a major advantage in a highly competitive market. On the research front, Telstar s R&D department has doubled in size since the SIDUR project got off the ground. This can be attributed at least in part to SIDUR, although the company is involved in many 23

24 sidur the value of the eu s SME-specific measures what the sidur project demonstrates According to the project partners, SMEs most pressing needs are to fi nd valid and reliable partners, and to train and improve the skills of their staff; the EU programmes help them to do this. Both SMEs and RTD performers report that the project s benefi ts outweigh the costs. From Telstar s point of view, getting the same results without SIDUR would have resulted in a bigger burden to the budget. The partners are aware of the existence of similar, nationally run programmes. Advantages of the EU s programmes (compared to national programmes) include the chance to collaborate with European partners, the smaller size of the EU s projects, and the fact that they offer the opportunity to make greater advances in the generation of new knowledge. n n n n Although the EU s SME-specifi c measures are aimed primarily at SMEs with little or no R&D capacities of their own, SIDUR underlines the fact that high-tech SMEs like Telstar can also benefi t from them. SIDUR also demonstrates the potential of the SME-specifi c measures to result in both new knowledge and new, commercially viable products. Most notably, SIDUR had a positive economic impact on participating SMEs and helped them to increase their R&D capacities. The project also highlights the importance of keeping the number of project partners down to a reasonable size; SIDUR s eightpartner consortium was found to be too big for all partners to be able to contribute equally to the project. 24

25 Impact-uss turning tatty tyres into safer surfaces Innovative manufacturing process for added-value car tyre re-use into safer surfaces framework programme and funding scheme project duration total project budget ec contribution project coordinator FP6, Cooperative project May July 2007 EUR 1.39 million EUR Murfitts Industries Ltd. (UK, SME) the project Some Europeans are killed every year in trips and falls outside the home. In most cases, the fatal injuries are sustained when the person lands on a hard surface. Cushioned surfaces made from recycled tyres are widely used in playgrounds and sports centres for better protection, for example. However, only specialists can prepare and lay these surfaces as the process is notoriously difficult and involves hazardous chemicals. UK SME Murfitt recovers used tyres and turns them into safer surfaces for sports venues, and IMPACT USS was born out of the company s desire to broaden its product range. The aim of the project was to develop a novel way of converting rubber crumb from recycled tyres into a safe surface. Ideally anyone would be able to mix and lay the product themselves. Murfitt hoped that the project would prove whether it was possible to develop such a product or not. 25

26 Impact-uss the partners The project consortium comprised 10 SMEs and 2 RTD performers in 4 countries. While the project coordinator Murfitt had very little R&D experience at the start of the project, some of the other SMEs in the consortium were already extremely active on the research and innovation front. The team was brought together by the RTD performer PERA, and according to Murfitt, the different partners expertise matched the project needs well. All partners participated in the project meetings and according to Murfitt, they all did what was expected of them. However, there seems to have been a certain amount of confusion regarding the role of the project partners; some SMEs in the project were under the impression that PERA was responsible for pushing for the project result to market. In fact, this was Murfitt s job. the results Interviews with three of the project s SMEs reveal widely diverging views on the IMPACT USS outcomes. In Murfitt s opinion, the project objectives were largely achieved, and if anything their expectations were even exceeded. Going into the project, their attitude was have a go and see if it works. In fact, the early prototype product developed was better than they had hoped for and they are optimistic that, with a little more work, it could be turned into a lucrative product. to build a pilot plant to test the commercial viability of the system, but Murfitt turned them down. PERA was also interested in taking the project further. Meanwhile, Incorez noted that more market research should have been carried out before the project s launch. This raises the question of why Murfitt and the other SMEs have diverging opinions on the project: their initial objectives and expectations were quite different; while Murfitt viewed IMPACT USS largely as a feasibility study, 2km and Incorez were keen to get a commercial product out of the project. long-term impacts of the project None of the SMEs interviewed appears to have directly benefited economically from the project yet, although Murfitt says it plans to commercialise the product internally. They are investigating a system for drying rubber crumb and plan to build a small scale plant. They believe that a further six months of project time with PERA would have helped them achieve this. For their part, both 2km and Incorez say that they are still waiting for news from Murfitt regarding the commercialisation of the product. According to Incorez, the project could have been more successful had more market research been carried out before the project got under way. The two other SMEs interviewed for the case study, 2km (Germany) and Incorez (UK), paint a very different picture. Both criticise Murfitt s apparent lack of drive to develop the product further and commercialise it. In their view, the product would only be profitable if it could be sold directly to end-users; otherwise the distributor s cut would either make the product too expensive or eat into Murfitt s returns. Nevertheless, both SMEs remain convinced that the product could be successfully brought to market. 2km pointed out that some project partners had offered 26

27 On a more positive note, the project helped 2km meet other companies and opened up new market opportunities for them. 2km also cited networking as a benefi t of participation. Research-wise, Murfi tt s own R&D team remains small but it has increased its R&D spending and is involved in two other research projects, one of which is funded by the EU. The other SMEs interviewed already had strong track records in R&D and they have continued to carry out research under other projects following the end of IMPACT USS. the value of the eu s SME-specific measures According to 2km, the EU s SME-specifi c measures represent an important source of fi nance for SMEs seeking research funding. However, these projects really need a coordinator with the drive to push the project to generate commercially viable results. Incorez recommends that the commercial feasibility of a project be thoroughly assessed when the project proposal is evaluated. what the Impact uss project demonstrates n When SMEs embark on a research project, they hope to reap economic rewards. However, even if a project s technical objectives are achieved, further work is often needed to transform these results into commercially viable products, processes or services. Cases like IMPACT USS highlight the need for follow-up and demonstration projects to take research results from the laboratory to the market. n The exploitation and commercialisation aspects of the project should be considered right from the start. With this in mind, project proposals should be evaluated by business experts to ensure they match the business objectives of participating SMEs. Proposals that pass this SME needs test would then be assessed on their scientifi c and technical merit as they are today. 27

28 swirl jet the science of swirling Research to evaluate the technological application of swirling jets in the fields of seabed excavation, vessel propulsion and underwater cleaning framework programme and funding scheme FP6, Cooperative project project duration December January 2008 total project budget EUR 1.74 million ec contribution EUR project coordinator Kort Propulsion (UK) the project The SWIRL JET project set out to study the dynamics of swirling fluid jets and to investigate how these jets could be applied in three key areas, namely seabed excavation, vessel propulsion and underwater cleaning. The aim was to generate potentially commercial outcomes in the seabed excavation and underwater cleaning areas, and investigate the commercial viability of using swirling fluid jets in vessel propulsion. More generally, the partners were keen to fuel their understanding of how their equipment works. The project was the brainchild of the UK-based SME Silt, which provides dredging services to the shipping industry. A burning issue facing the project partners was the unpredictable nature of swirling fluid jets. For example, a jet with a low swirl intensity may remain columnar in shape but increasing the swirl intensity slightly can cause it to suddenly splay out into a cone shape. External factors can also disturb the jet. 28

29 the partners As well as coming up with the project concept, Silt was responsible for bringing together the partners that made up the consortium. Fellow SME Kort (UK), which designs and supplies propulsion equipment for small commercial vessels, took on the role of project coordinator. In total, the 13-strong consortium included 7 SMEs, and the partners came from 6 European countries. Coordinating this large, international group proved difficult in the early stages of the project due to language issues among other things. Some partners were also frustrated by an apparent lack of direction in the project., One of the RTD performers (Newcastle University) was instrumental in supporting Kort during this period. Fortunately, the issues were resolved relatively quickly and the rest of the project ran smoothly. the results At the start of SWIRL JET, the partners thought that the work on the three applications being assessed (i.e. seabed excavation, vessel propulsion and underwater cleaning) would prove to be quite similar. In fact, as the project progressed, work on the different applications split into three distinct strands. Nevertheless, the project achieved its goal of developing potentially commercial outcomes in at least two of the three applications under investigation. The propulsion strand of the project resulted in a new propeller design, which Kort has incorporated into its product range. For Silt, the project generated a better understanding of how the company s equipment works and led to the development of a new control system for its products. In addition, the project revealed that the swirling fluid jets may have other applications, and the partners are now investigating these further. long-term impacts of the project With its newly developed propeller already on sale, Kort is hopeful that the project will deliver economic benefits in the future. However, it points out that the project costs in terms of staff time were much higher than expected. For Silt, SWIRL JET delivered a potential commercial product, although further trials and demonstration activities are needed before it can be brought to market. Silt has continued to work with some of the project s RTD performers and maintained its links with another UK SME, ABPmer (Associated British Ports Marine Environmental Research Ltd.). Both Silt and Kort note that participating in SWIRL JET helped to enhance their networking skills (particularly with regard to universities) and technical know-how. Furthermore, Silt feels that it now has a greater incentive to assimilate new knowledge, while Kort s ability to develop innovative services and bring new products to market has improved. Kort has continued to work with Newcastle University (UK) and employed a member of staff to work on the development of a new product. Overall, Silt and Kort are happy with the project outcomes. However, a third SME interviewed for the case study, ABPmer, offers a less positive view. ABPmer was brought into the project because of its marine expertise; they were supposed to review the project outputs, and ABPmer s parent company represented a potential end-user of products developed by the project. Unfortunately, ABPmer believes that SWIRL JET s objectives were not met within the timeframe of the project and furthermore, it is not clear what the final outcome of the project was. As far as ABPmer is concerned, the costs of participation outweighed the benefits. On the RTD side, the interviewee from Newcastle University was more optimistic about the project stating that the project objectives were broadly met. 29

30 swirl jet Benefi ts of participation include new contacts and a scientifi c paper that will hopefully be published in an academic journal. The interviewee has an industrial background and is fi rmly convinced of the benefi ts of the EU s SME-specifi c measures and similar schemes. the value of the eu s SME-specific measures Silt and Kort were already aware of the benefi ts of engaging in research, but a lack of resources held them back. The SME-specifi c measures provided them with funds to invest in research that has resulted in new products and a greater understanding of the science behind their technologies. The upshot of getting involved in SWIRL JET is that they will ultimately become more competitive. what the swirl jet project demonstrates n n Although SWIRL JET s technical objectives were met, further work was needed after the project to turn the research results into commercial products. This highlights the need for additional support for follow-up projects and demonstration activities. The good news is that in the longer term, Silt and Kort hope to see their turnover rise thanks to increased sales of SWIRL JET products. Meanwhile, the partners are already benefi ting from the project in other ways; in addition to providing them with new knowledge, the project has helped the SMEs to improve their ability to collaborate with researchers in academia. n The main factor preventing SMEs from engaging in research is a lack of resources, as R&D is a costly business. EU fi nancial support from SWIRL JET helped Silt and Kort overcome this hurdle and move forward with glowing results. n Coordinating a research project with partners in different countries is extremely timeconsuming. Smaller companies may face many diffi culties, including language and cultural barriers as well as misunderstandings between SMEs and RTD performers, when they take on the coordinator role. 30

31 finefish Towards healthier fish fingerlings Improving sustainability of European fish aquaculture by control of malformations framework programme and funding scheme FP6, Collective project project duration November November 2008 total project budget EUR 4.79 million ec contribution EUR 3.02 million project coordinator FEAP - Fédération Européenne des Producteurs Aquacoles (France) the project The seeds of the FINEFISH project were sown at a 2004 conference in France, where fish farmers and researchers discussed the challenges breeders face when raising juvenile fish. During the event, the issue of malformations affecting fingerlings (juvenile fish just a few centimetres long) came up time and time again. Obviously these disfigured fish cannot be sold, so the problem costs fish farms and hatcheries a lot of money. SMEs and researchers alike seized on a suggestion of applying for EU funding to investigate the problem in depth, and the FINEFISH project was born. Specifically, its aim was to study how factors such as the quality, quantity and timing of food, and the management of environmental conditions (temperature, the chemical condition of the water and the strength and direction of water flow) affected malformation rates in juvenile Atlantic salmon, cod, rainbow trout, sea bass and sea bream. 31

32 finefish the partners FINEFISH was coordinated by Fédération Européenne des Producteurs Aquacoles (FEAP), a grouping of national aquaculture associations from across Europe. The FEAP brought 10 SMEs from 8 countries into the consortium. During the project s duration, eight RTD performers carried out research into the factors affecting malformation levels and used their results to draw up protocols and routines that were subsequently tested by the SMEs at their fish farms and hatcheries. The SMEs also gathered data from the field which they entered into common project databases. Slight, yet critical glitches emerged at the start of FINEFISH, as cultural differences and questions as to whether the project was primarily for the benefit of SMEs or the RTD performers threatened to hamper progress. Fortunately, excellent coordination work by FEAP, effectively smoothed over these problems. Practical steps were also taken to build bridges between the SMEs and the RTD performers. For example, the scientists visited the SMEs to see how they work, while informal dinners provided the partners with the opportunity to get to know each other better. Bridging the gaps between the two groups proved to be a winning move all around. Finally, the enthusiasm of all partners was instrumental in driving the project forward. The malformation problem was widely recognised, and SMEs and RTD performers alike were motivated to get results. the results FINEFISH was both a scientific and a commercial success. The RTD performers generated a wealth of new knowledge on the factors behind many common malformations. Thanks to FINEFISH, we now know that water speed affects malformation rates in cod, for example. Crucially, this knowledge was transformed into practical guidelines for the SMEs. Among other things, the project resulted in a diagnosis manual that helps SMEs identify and tackle malformations and understand their causes. Another important output is a series of best practice recommendations on all aspects of juvenile fish care. A number of training courses were also run for the SMEs. More broadly, the FINEFISH consortium has made all the project s findings and outcomes available to the wider fish farm and hatchery communities through presentations at national association meetings, regional workshops and the project website. long-term impacts of the project The FINEFISH SME partners have already acted on the project results by improving existing protocols and introducing new routines to ensure that their work is in line with the FINEFISH findings. According to one SME, before the project, some 8% of its juveniles suffered from malformations, costing the company EUR On account of the FINEFISH protocols, the proportion of fingerlings lost due to malformations has fallen to just 2.8%. What s more, the SMEs report that the quality of their products has risen, and they are optimistic that this will help them increase their market share. In addition, the SMEs note that their networking skills as well as their scientific and technical knowledge have improved as a result of their participation in the project. FINEFISH has also prompted the SMEs to step up their own R&D efforts. Some have allocated a part of their turnover to research activities, while others have hired staff with research experience. Thanks to FINEFISH, the SMEs are now in a better position to specify their research needs, and they are positive about the prospect of working on other EU-funded projects in the future. 32

33 The RTD performers have also benefi ted as a result of their involvement in FINEFISH. As well as providing them with the data needed to produce high-quality scientifi c publications, FINEFISH has enhanced their reputation in both the research and business communities. The fact that they were able to validate their fi ndings in the fi eld (via their SME partners) has increased their standing in academia, while their ability to understand companies needs and transform their fi ndings into practical solutions has given them greater credibility in the business world. For FEAP, there are two positive outcomes from the project: an expanded network of contacts among both SMEs and RTD performers, and a greater ability to seek out public funding for promising projects. However, it complains that the fi nancial support provided by the EU did not match the project coordinator s heavy workload, and this has put it off the idea of coordinating any EU-funded projects in the future. the value of the eu s SME-specific measures All FINEFISH partners believe that a major advantage of the EU s collective scheme is the way it creates links between national, regional and local pockets of collaboration across Europe. They also appreciate the fact that the EU s SME programmes allow companies to tackle specifi c technical problems in the short or medium term. what finefish demonstrates n The profi les of both the SMEs and the RTD performers involved in the project were extremely complementary, and their shared goals and enthusiasm helped drive the project forward. n This case highlights how participation in a collective project can encourage small companies to bolster their R&D capabilities. The FINEFISH project took SMEs with very little formal R&D experience and turned them into companies with dedicated R&D personnel and budgets. 33