Search form

European Innovation Summit 5: What can we do to help SMEs in Europe?

I was invited to hold an address at the 5th edition of the European Innovation Summit in the European Parliament on the topic of helping to advance small and medium-sized enterprises (SMEs) in the European Union. We had three case-studies of SMEs in the panel, as well as Chief Science Officer of Commission President Barroso, Ms Anne Glover, in the panel. You can see the outcome of the innovation summit in this press release, which explicitly does not cover many of my observations. That is, however, normal and it is obvious from the line-up that the press release has premiated big and important political groups in the parliament.


The good news is that small and medium-sized enterprises are neither new nor controversial in the political discussions of Europe. We have widely cited statistics on the importance of small- and medium-sized enteprises for employment, productivity and innovation. Sometimes I have heard the distinction made between start-ups, the drivers of innovation, and SMEs, that many times perform already widely known services. We have a special liking for SMEs in new industries.

I work a lot with information policy. Clearly an outstanding and exceptionally recent political field. We are accustomed to information policy as driving the world forward for only slightly longer than I have been alive, which can be contrasted with the real estate sector which then obviously has existed for much longer than that.

To me it seems the problem for Europe is one of a lack of consistent, coherent political leadership. While at the European level we invest in privacy-friendly techologies for all sectors in society, and open source solutions suitable for the public sector, in the member states we rarely implement these tools. We don't even make legislation at the European level which is capable of creating the market conditions that are required for our important ambition to make use of our investments.

The discussions on e-authentication models for the public sector[1], the data protection regulation[2], network openness[3] or open acess for research and market data[4] have all reflected the inability of European policy makers to take advantage of their own investments. While we steer our researchers and companies down one line, ultimately we end up opting for implementations that are better served by large multi-nationals and especially foreign multinationals. Why we do this is a mystery to me - surely if I can detect this so easily and after so short a time, someone else must have also noticed.

The most recent policy to come out of DG CONNECT, with responsibility for telecommunications issues with which I work a lot, is the Digital Single Market Regulation[5]. It has been widely criticized by all parties except really large telecommunications companies that are also former state monopolies. We have four of them in Europe. There was no impact assessment made on this legislation which passed internal scrutiny processes of the Commission, but it seems clear to me that making policy for the four largest telcos in Europe is not necessarily beneficial to SMEs. Things like that could be easily fixed, but aren't. Why? I ask myself.

While SMEs is one of the most frequently raised topics in our political discussions, is is unavoidable that most interest groups in Brussels represent much larger interests than SMEs. It is nevertheless surprising to see the difference between the walk and the talk. For instance, while a good SME measue is to make competition clauses in employment contracts weaker, the European Commission has been looking to harmonise trade secret rules. Trade secret rules are known to create problems for employees that seek to migrate from their current workplace to a different workplace. In some member states this is already a problem, and now the Commission seeks to harmonize this problem of work force flexibility rather than enabling European legislation for better competition frameworks[6]. In many instances, it seems our policy work is directly counter-productive to supporting SMEs.

Similar problems arise in the field of intellectual property rights licensing. With increasing amounts of rights being granted, at the EU level and through EPO, and in the member states, the amounts of licenses by necessity also increases. But open innovation in the context of licensing agreements exists primarily between very large companies. Small companies instead suffer a high degree of legal uncertainty from law suits and injunctions where sometimes product seizures are made unlawfully (we have close to 3000 known wrong seizures per year at EU customs[7]) and where there are no good ways of seeing if a law suit actually comes from a legitimate rightsholder.

Ironically, we are just now working with a trademark regulation in the European parliament which, rather than making legally uncertain situations more clear, increases the complexity of the trademark law[8]. While this may be good for small and medium-sized law firms specialising in trademark licensing contracts, it's really difficult to see how the new rules will benefit anyone else. Unfortunately the Commission has not taken that into account at all, and so we have another policy unfriendly to SMEs.

But I also stand here mindful that most representatives in this room aren't going to be SMEs. It is difficult to know how to deal with our ambition to support SMEs and make good policy for SMEs. Competition and market entrance barriers are poorly understood, and at least in information policy our work aims primarily to make market entrance barriers high and competition slightly lower.

With a higher degree of focus on competition, openness and clear political leadership, SMEs and the European Union have much to gain. Policy needs to be coordinated in and between European member states, and also between research and innovation. It is my belief that a competitive advantage of Europe will emerge from our ability to cooperate and make good use of the European idea: together we are strong, at peace and working for a better tomorrow. The four freedoms make sense not only to avoid world wars, but also for a market place and a social Europe which respects human rights and the freedom of entrepreneurs to prosper.








[7] It doesn't appear to list the justification where the EU border control report should otherwise be listed.

[8] See or for an older example (2011).


Add new comment