Technology development in the EU-27In search of the contribution by SMEs

Small & medium sized enterprises

• SMEs are seen as an essential driver of economic growth in Europe (Eurostat 2009)– 99,8% of non-financial companies in Europe classify as SMEs – Within the non-financial business economy SMEs represent

• 57,4% of turnover• 58,7% of value added• 66,7% of employment

– SMEs are assumed to play a pivotal role in the innovation process (EC 2000)

• Ability to respond quickly to changing market needs• Ideal setting to develop and roll out new technologies

The importance of IP strategy in R&D intensive SMEs

• Corporate IP strategy: how to protect market position and competitive advantage created through sustained R&D efforts? How to appropriate returns from extensive R&D and increase operating profit and added value?

2 IP strategy options:– Secrecy– Intellectual property rights

• Signaling function of patents (especially relevant for SMEs):– To customers: brand and marketing value– To investors and creditors: granted patents suggest novelty of technology and

potential for future earnings attracting VC,…– To employees: attract promising personnel, enhance employee moral– …

Barriers for SMEs to apply for IPR

• Barriers for SMEs to engage in patent activity– Lack of understanding of IPRs and application procedures– Fear for disclosing innovation to industry majors– Cost of patent application: patent office administrative fees,

patent attorney fees, industrial property consultancy– Cost of maintenance: (increasing) maintenance fees– Cost of legislation after grant : defence costs to enforce patent

protection against infringers (even worse in complex industries, defending a patent can mean betting the company for an SME)

Policy awareness

• Policy awareness regarding the role of SMEs within national innovation systems– Europe:

• European Commission hosts an IPR-helpdesk for SMEs• Unitary EPO patent (25 of 27 member states), reducing administrative costs,

translation costs and litigation costs– Japan:

• SME IP support at prefectural SME support centers• Database of senior personnel in large companies with experience in IP• Prior-art patent searching free of charge for a.o. SMEs• Reduction and exemption of patent annuities for a.o. SMEs• Accelerated examination system• JPO assistance for strategic foreign applications by regional SMEs

• Large scale mapping and monitoring of SME contribution to patenting is currently absent! Due to considerable methodological challenges,

Patent data: opportunities and challenges

• Opportunities: systematic availability of patent data (e.g. PATSTAT) with detailed information on:– Applicants, inventors – Address information– Technology domain– Claims of the patent– Cited prior art– …

• But: patent databases contain no business information on applicants, not even VAT number how to identify SME’s among patent applicants?

European Commission 2003 SME definition: financials

Financial data: opportunities and challenges

• Opportunities: systematic availability of financial data with detailed info on turnover, staff, assets, shareholders, …

• Deficiencies in financial data (e.g. Amadeus)– Due to national legislation, among others in line with European

Commission accounting directives, certain types of companies (among others companies not trespassing certain size criteria and having simple ownership structures are not obliged to comply with full disclosure and can publish simplified annual accounts or are exempted from disclosing financial information altogether.

– In addition serious issue with information coverage in financial databases (absence of firms, as well as absence of specific information on firms that are covered)

Relaxing the SME criteria

European Commission 2003 SME definition: ownership

• Company ownership information should be considered as well: ‘SMEs’ partly or fully owned by larger companies can benefit from the financial strength and/or centralized R&D / IP department expertise of the business group

assessment of shareholder structure per company to determine true size of a business and the resources to which it has access (at the business entity or business group level) • Entities with mother company (+50%): dependent• Entities without mother company (no +50% shares): independent

Feasibility study

• EUROSTAT (2012 – 2013): Feasibility study on large-scale identification of SME contribution in patenting

• ECOOM – INCENTIM (KU Leuven)• Coverage: EU-27• Methodology:

– Matching company names in patent database and financial database using name harmonization techniques

– Disambiguation of multiple matches– Allocation of matched patenting companies with sufficient

financial and ownership information to size-categories– Size verification of representative samples of unmatched

corporate applicants and matched companies with insufficient financial/ownership information (ongoing)

Matching PATSTAT – AMADEUS

Country # Applicants# Matched applicants

% Matched applicants # Applicants# Matched

patents% Matched patents

AT 6.918 4.253 61,48% 25.293 18.541 73,30%BE 5.700 4.308 75,58% 26.121 22.444 85,92%BG 146 57 39,04% 190 70 36,84%CY 495 150 30,30% 932 323 34,66%CZ 819 577 70,45% 1.450 965 66,55%DE 70.972 46.917 66,11% 537.091 443.974 82,66%DK 7.635 5.260 68,89% 29.469 24.368 82,69%EE 178 104 58,43% 226 130 57,52%ES 8.517 5.256 61,71% 17.017 11.413 67,07%FI 6.480 4.643 71,65% 50.997 44.439 87,14%FR 31.065 20.242 65,16% 179.521 140.816 78,44%GB 41.445 33.449 80,71% 129.728 112.384 86,63%GR 399 130 32,58% 676 195 28,85%HU 855 92 10,76% 1.674 121 7,23%IE 3.046 2.184 71,70% 8.761 6.061 69,18%IT 29.186 21.688 74,31% 77.174 60.025 77,78%LT 22 10 45,45% 27 13 48,15%LU 1.504 643 42,75% 5.399 3.031 56,14%LV 113 26 23,01% 288 37 12,85%MT 179 134 74,86% 426 361 84,74%NL 15.313 11.048 72,15% 132.864 118.698 89,34%PL 687 442 64,34% 1.179 796 67,51%PT 698 434 62,18% 1.065 738 69,30%RO 76 26 34,21% 95 34 35,79%SE 14.259 9.293 65,17% 84.813 52.711 62,15%SI 490 147 30,00% 1.431 434 30,33%SK 206 141 68,45% 305 225 73,77%Total 247.403 171.654 69,38% 1.314.212 1.063.347 80,91%

SME vs. large company applicants

CountryCorporate applicants

per ctry

Matched corporate applicants

per ctry

AT 3.043 1.619 281 17,36% 293 18,10% 2 0,12% 46 2,84% 72 4,45% 920 56,83% 5 0,31%BE 2.236 1.493 190 12,73% 226 15,14% 22 1,47% 88 5,89% 44 2,95% 914 61,22% 9 0,60%BG 107 43 4 9,30% 20 46,51% - 0,00% 3 6,98% 1 2,33% 15 34,88% - 0,00%CY 245 62 5 8,06% 2 3,23% - 0,00% 1 1,61% 1 1,61% 21 33,87% 32 51,61%CZ 500 335 61 18,21% 68 20,30% 1 0,30% 8 2,39% 5 1,49% 190 56,72% 2 0,60%DE 30.137 16.188 2.882 17,80% 3.241 20,02% 126 0,78% 911 5,63% 544 3,36% 8.302 51,28% 182 1,12%DK 3.593 2.082 497 23,87% 198 9,51% 113 5,43% 91 4,37% 43 2,07% 1.125 54,03% 15 0,72%EE 112 63 27 42,86% 2 3,17% - 0,00% 1 1,59% - 0,00% 31 49,21% 2 3,17%ES 4.235 2.384 281 11,79% 350 14,68% 29 1,22% 98 4,11% 49 2,06% 1.574 66,02% 3 0,13%FI 2.684 1.705 192 11,26% 224 13,14% 110 6,45% 91 5,34% 15 0,88% 1.064 62,40% 9 0,53%FR 10.774 5.517 682 12,36% 995 18,04% 78 1,41% 283 5,13% 207 3,75% 3.231 58,56% 41 0,74%GB 16.768 12.318 2.959 24,02% 1.058 8,59% 658 5,34% 482 3,91% 393 3,19% 6.472 52,54% 296 2,40%GR 209 58 14 24,14% 8 13,79% - 0,00% 1 1,72% - 0,00% 32 55,17% 3 5,17%HU 501 64 11 17,19% 3 4,69% 1 1,56% 1 1,56% 1 1,56% 46 71,88% 1 1,56%IE 1.255 859 41 4,77% 50 5,82% 21 2,44% 15 1,75% 14 1,63% 683 79,51% 35 4,07%IT 13.101 8.933 2.796 31,30% 1.255 14,05% 142 1,59% 354 3,96% 111 1,24% 4.246 47,53% 29 0,32%LT 16 8 2 25,00% - 0,00% - 0,00% - 0,00% - 0,00% 6 75,00% - 0,00%LU 654 249 38 15,26% 37 14,86% 1 0,40% 11 4,42% 3 1,20% 154 61,85% 5 2,01%LV 74 18 2 11,11% 3 16,67% - 0,00% 1 5,56% 1 5,56% 11 61,11% - 0,00%MT 82 51 5 9,80% 4 7,84% 1 1,96% - 0,00% - 0,00% 41 80,39% - 0,00%NL 6.994 4.547 197 4,33% 367 8,07% 280 6,16% 202 4,44% 84 1,85% 3.319 72,99% 98 2,16%PL 401 238 50 21,01% 57 23,95% 1 0,42% 7 2,94% 2 0,84% 114 47,90% 7 2,94%PT 382 192 52 27,08% 35 18,23% 3 1,56% 10 5,21% 3 1,56% 86 44,79% 3 1,56%RO 57 17 1 5,88% 4 23,53% - 0,00% - 0,00% - 0,00% 12 70,59% - 0,00%SE 6.229 3.413 151 4,42% 319 9,35% 344 10,08% 197 5,77% 55 1,61% 2.337 68,47% 10 0,29%SI 266 76 9 11,84% 9 11,84% - 0,00% - 0,00% 2 2,63% 46 60,53% 10 13,16%SK 124 76 10 13,16% 13 17,11% - 0,00% 1 1,32% 1 1,32% 51 67,11% - 0,00%Total 104.779 62.608 11.440 18,27% 8.841 14,12% 1.933 3,09% 2.903 4,64% 1.651 2,64% 35.043 55,97% 797 1,27%

SMEs with unknown dependence status

No financials availableNon-dependent (<50%

owned) SMEsLarge companies

Dependent SMEs assignable to large

company level based on consolidated mother company financials

Dependent SMEs assignable to SME

company type based on consolidated mother company financials

Dependent SMEs assignable to large

company level based on sum of unconsolidated

business group financials

SME vs large company applicants

• Large entities• Independent small entities• Dependent small entities

– Small at group level (consolidated financials available)– Large at group level (consolidated financials available)– At least large at group level (sum of mother & daughter

financials)• Small entities with unknown dependence status (sample

checks for extrapolation)• No financials available (sample checks for extrapolation)

SME vs large company applications

Country

Applications assignable to

corporate applicants

per ctry

Applications assignable to

matched corporate applicants

per ctry

AT 25.009 18.476 1.620 8,77% 10.949 59,26% 5 0,03% 415 2,25% 558 3,02% 4.908 26,56%BE 25.934 22.328 2.222 9,95% 14.563 65,22% 74 0,33% 1.221 5,47% 501 2,24% 3.459 15,49%BG 187 70 6 8,57% 37 52,86% - 0,00% 3 4,29% 1 1,43% 23 32,86%CY 932 323 7 2,17% 10 3,10% - 0,00% 4 1,24% 1 0,31% 99 30,65%CZ 1.422 952 113 11,87% 362 38,03% 7 0,74% 46 4,83% 11 1,16% 421 44,22%DE 527.445 439.928 15.953 3,63% 293.621 66,74% 941 0,21% 30.181 6,86% 8.073 1,84% 91.332 20,76%DK 29.176 24.247 3.208 13,23% 15.159 62,52% 795 3,28% 727 3,00% 233 0,96% 3.966 16,36%EE 209 119 55 46,22% 6 5,04% - 0,00% 1 0,84% - 0,00% 60 50,42%ES 16.777 11.320 1.009 8,91% 4.801 42,41% 197 1,74% 690 6,10% 207 1,83% 4.462 39,42%FI 50.681 44.257 1.135 2,56% 35.146 79,41% 458 1,03% 685 1,55% 115 0,26% 5.173 11,69%FR 176.664 137.122 5.123 3,74% 106.232 77,47% 387 0,28% 3.474 2,53% 1.873 1,37% 20.084 14,65%GB 128.184 111.584 12.754 11,43% 52.893 47,40% 5.464 4,90% 5.670 5,08% 5.644 5,06% 27.604 24,74%GR 661 194 41 21,13% 29 14,95% - 0,00% 7 3,61% - 0,00% 113 58,25%HU 1.606 120 27 22,50% 5 4,17% 2 1,67% 1 0,83% 8 6,67% 76 63,33%IE 8.745 6.058 139 2,29% 1.205 19,89% 157 2,59% 362 5,98% 240 3,96% 3.545 58,52%IT 75.864 59.417 10.017 16,86% 30.790 51,82% 786 1,32% 2.290 3,85% 635 1,07% 14.956 25,17%LT 27 13 2 15,38% - 0,00% - 0,00% - 0,00% - 0,00% 11 84,62%LU 5.387 3.024 109 3,60% 1.221 40,38% 2 0,07% 49 1,62% 9 0,30% 1.591 52,61%LV 222 37 7 18,92% 9 24,32% - 0,00% 1 2,70% 2 5,41% 18 48,65%MT 426 361 29 8,03% 56 15,51% 7 1,94% - 0,00% - 0,00% 269 74,52%NL 131.526 118.187 933 0,79% 89.878 76,05% 1.646 1,39% 2.010 1,70% 1.277 1,08% 15.526 13,14%PL 1.163 796 157 19,72% 272 34,17% 3 0,38% 71 8,92% 5 0,63% 271 34,05%PT 1.015 729 211 28,94% 223 30,59% 12 1,65% 60 8,23% 7 0,96% 214 29,36%RO 95 34 1 2,94% 5 14,71% - 0,00% - 0,00% - 0,00% 28 82,35%SE 84.433 52.602 2.286 4,35% 34.451 65,49% 2.853 5,42% 1.792 3,41% 541 1,03% 10.427 19,82%SI 1.426 434 25 5,76% 62 14,29% - 0,00% - 0,00% 16 3,69% 109 25,12%SK 288 222 25 11,26% 59 26,58% - 0,00% 1 0,45% 5 2,25% 135 60,81%Total 1.273.254 1.034.461 57.204 5,53% 681.095 65,84% 13.796 1,33% 49.743 4,81% 19.951 1,93% 208.832 20,19%

SMEs with unknown dependence status (+/-)

Non-dependent (<50% owned) SMEs

Large companies

Dependent SMEs assignable to SME company type based

on consolidated mother company financials

Dependent SMEs assignable to large company level based on consolidated

mother company financials

Dependent SMEs assignable to large company level

based on sum of unconsolidated business

group financials

Overall corporate applicants matching/size-class status

Contribution of this research

• Scope of exercise: full EU-27• Use of comprehensive SME definition• Incorporating shareholder information• Dataset and deducted indicators on SME contribution in

technology development with this scope and coverage provides a number of applied research perspectives:– Technology management in SMEs– Investors in technology SMEs– …