Does EU regulation hinder or stimulate innovation? CEPS Special Report No. 96, 19 November 2014

Introduction. One frequently hears the question posed in the title to this report, but there is little systematic analytical literature on the issue. Fragmented evidence or anecdotes dominate debates among EU regulatory decision-makers and in European business, insofar as there is a genuine debate at all. This CEPS Special Report focuses on the multi-faceted, ambiguous and complex relationship between (EU) regulation and innovation in the economy, and discusses the innovation-enhancing potential of certain regulatory approaches as well as factors that tend to reduce incentives to innovate. It adopts an 'ecosystem' approach to both regulation and innovation, and study the interactions between the two ecosystems. This general analysis and survey are complemented by seven case studies of EU regulation enabling and disabling innovation, two horizontal and five sectoral ones. The case studies are preceded by a broader contextual analysis of trends in EU regulation over the last three decades. These trends show the significant transformation of the nature as well as improvement of the quality of EU regulation, largely in the deepened internal market, which tend to have a favourable and lasting effect on the rate of innovation in the EU (other things being equal). Among the findings include the following: Regulation can at times be a powerful stimulus to innovation. EU regulation matters at all stages of the innovation process. Different types of regulation can be identified in terms of innovation impact: general or horizontal, innovation-specific and sector-specific regulation. More prescriptive regulation tends to hamper innovative activity, whereas the more flexible EU regulation is, the better innovation can be stimulated. Lower compliance and red-tape burdens have a positive effect on innovation. The authors recommend incorporating a specific test on innovation impacts in the ex-ante impact assessment of EU legislation as well as in ex-post evaluation. There is ample potential for fostering innovation by reviewing the EU regulatory acquis.

Europe's economic challenges and the importance of ideas and innovation. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014.

How will we Europeans earn our living in 20 or 30 years' time? And how can it be done, while remaining true to our values of fairness, freedom and solidarity? These fundamental questions predate the financial crisis and will still be with us once we have fully overcome it. Of all the groups in society, business leaders are probably most keenly aware of the challenge posed by globalisation. They have their finger on the pulse of global economic activity and keep alerting me that Europe is losing out. The trade unions, generally more focused on the economy's demand side, regularly call for more (public) investment. Their leadership remains highly committed to Europe but they can sense a rise of Euro-scepticism among their members. We must, and can bring these two narratives together. Yes, global change is relentless and our societies must adapt, but we can also preserve what makes Europe such a special place: a unique combination of relative prosperity, solidarity, individual freedoms, and security. This challenge was always on my mind.

A "Triple-I" Strategy for the Future of Europe. Bruges European Economic Policy (BEEP) Briefing 10/2005

The paper lays down a strategy consisting of Innovation, Internalisation of Externalities, and Integration – called Triple I. ‘Innovation’ is seen along value chain management in a systems perspective, driven by competition and participation of stakeholders. ‘Internalisation’ refers to endogenous efforts by industry to assess externalities and to foster knowledge generation that leads to benefits for both business and society. ‘Integration’ highlights the role business and its various forms of cooperation might play in policy integration within Europe and beyond. Looking forward towards measures to be taken, the paper explores some frontiers for a partnership between public and private sector: i) Increasing resource productivity, lowering material cost, ii) Energy integration with Southeast Europe and Northern Africa, iii) Urban mobility services and public transport, iv) Tradable emission permits beyond Europe. Finally, some conclusions from the perspective of the College of Europe are drawn.

The Policy Framework for the Promotion of Hydrogen and Fuel Cells in Europe: a Critical Assessment. Bruges European Economic Policy (BEEP) Briefing 19/2008

This paper reviews the current EU policy framework in view of its impact on hydrogen and fuel cell development. It screens EU energy policies, EU regulatory policies and EU spending policies. Key questions addressed are as follows: To what extent is the current policy framework conducive to hydrogen and fuel cell development? What barriers and inconsistencies can be identified? How can policies potentially promote hydrogen and fuel cells in Europe, taking into account the complex evolution of such a disruptive technology? How should the EU policy framework be reformed in view of a strengthened and more coherent approach? The paper concludes that the current EU policy framework does not hinder hydrogen development. Yet it does not constitute a strong push factor either. EU energy policies have the strongest impact on hydrogen and fuel cell development even though their potential is still underexploited. Regulatory policies have a weak but positive impact on hydrogen. EU spending policies show some inconsistencies. However, the large scale market development of hydrogen and fuel cells will require a new policy approach which comprises technology specific support as well as a supportive policy framework with a special regional dimension.

Sustainable Development and Collective Learning: Theory and a European Case Study. Bruges European Economic Policy (BEEP) Briefing 7/2004

Network governance of collective learning processes is an essential approach to sustainable development. The first section of the article briefly refers to recent theories about both market and government failures that express scepticism about the way framework conditions for market actors are set. For this reason, the development of networks for collective learning processes seems advantageous if new solutions are to be developed in policy areas concerned with long-term changes and a stepwise internalisation of externalities. With regard to corporate actors’ interests, the article shows recent insights from theories about the knowledge-based firm, where the creation of new knowledge is based on the absorption of societal views. This concept shifts the focus towards knowledge generation as an essential element in the evolution of sustainable markets. This involves at the same time the development of new policies. In this context innovation-inducing regulation is suggested and discussed. The evolution of the Swedish, German and Dutch wind turbine industries are analysed based on the approach of governance put forward in this article. We conclude that these coevolutionary mechanisms may take for granted some of the stabilising and orientating functions previously exercised by basic regulatory activities of the state. In this context, the main function of the governments is to facilitate learning processes that depart from the government functions suggested by welfare economics.

Do Clusters Generate Greater Innovation and Growth? An Analysis of European Regions. Bruges European Economic Research (BEER) Papers 21/October 2011

The analysis of clusters has attracted considerable interest over the last few decades. The articulation of clusters into complex networks and systems of innovation -- generally known as regional innovation systems -- has, in particular, been associated with the delivery of greater innovation and growth. However, despite the growing economic and policy relevance of clusters, little systematic research has been conducted into their association with other factors promoting innovation and economic growth. This article addresses this issue by looking at the relationship between innovation and economic growth in 152 regions of Europe during the period between 1995 and 2006. Using an econometric model with a static and a dynamic dimension, the results of the analysis highlight that: a) regional growth through innovation in Europe is fundamentally connected to the presence of an adequate socioeconomic environment and, in particular, to the existence of a well-trained and educated pool of workers; b) the presence of clusters matters for regional growth, but only in combination with a good ‘social filter’, and this association wanes in time; c) more traditional R&D variables have a weak initial connection to economic development, but this connection increases over time and, is, once again, contingent on the existence of adequate socioeconomic conditions.

Forms and role of the cluster initiatives in fostering innovation in post-industrial regions: A comparative study of environmental clusters in British West Midlands and Spanish Basque country. ACES Working Paper No. 8, August 2008

The objective of this research is to present cluster initiative approaches in post industrial regions characterized by similar economic history and challenges, with additional emphasis on their role in promoting innovation among regional businesses. The research is based on a comparison study of two environmental industry clusters: Environmental Technology Cluster (ET) from British West Midlands and ACLIMA from Spanish Basque Country. The study analyzes clusters' design and their role in fostering innovation based on environment industry clusters. In both regions environmental industry clusters represent strong potential for further dynamic development with grow opportunities driven by legislation introduced at EU, national or regional levels. The paper compares clusters' heterogeneity, goals and priorities, financing schemes, management structure, types of projects, character of private-public partnerships, challenges, as well as clusters' collaboration at regional/national/international levels. Also focus is given on how the clusters enhance innovation and what types of projects are executed by the regions in this field.

Measuring firm innovativeness: towards a composite innovation index built on firm innovative posture, propensity and performance attributes. ACES Working Paper No. 12, 2008

The ability to innovate is generally accepted as a critical success factor to growth and future performance of firms. Yet, this acceptance obscures a comprehensive perspective on how firms can influence their innovation capacity and resulting performance. This paper proposes a '3P' construct of innovation measurement that simultaneously considers the Posture, Propensity and Performance related to a firm's innovation capabilities. We propose and provide empirical support showing that robust measurement of the performance implications of innovation requires the consideration of input, throughput and output factors simultaneously. Single or more limited indicators do not offer the degree of fine-tuning to a firm's innovation system that managers require. Thus, we propose the development, and future research into contingent variations, of a Composite Innovation Index (CII). We further demonstrate its use in comparing innovators and allowing managers to design a firm's innovation system.

Strategic knowledge serendipity and arbitrage & intellectual venture capitalists: An emerging breed of knowledge entrepreneurs; and Part II: Global and Local (GloCal) knowledge logistics for innovation and competitiveness. ACES Working Papers, August 2009

Strategic Knowledge: While entrepreneurship may occur as a natural result of personal drive, it occurs most often, most robustly and is most sustainable in an environment designed to encourage it. Potential entrepreneurs become active entrepreneurs when the conditions are most supportive of their commercial opportunities and their business thus helping channel the two key qualities they exhibit as individuals obsessed maniacs and clairvoyant oracles (Carayannis, GWU Lectures, 2000-2005) and (Carayannis et at, 2003a) towards the generation of sustainable wealth. So far, entrepreneurial scholars who turn into intellectual venture capitalists by founding knowledge-driven companies remain one of the least explored specie in the territory of entrepreneurship. GloCal: The increasing engagement of firms within global knowledge and production networks and their ability to source knowledge globally as well as locally (GloCally), for the development of innovation capacities will shape the future of UK's knowledge resources and its role in the global economy. Practices such as off-shoring R&D activities are widely adopted, creating challenging, and not very well understood, issues related to cross-country and inter-firm knowledge and technology flows. We seek to address the internationalisation and networking of research and innovation activities, including the roles and strategies of enterprises, universities, research centres, governments in a cross-country and inter-sectoral way, to assess the impact and the implications for sustaining and enhancing the competitiveness of UK firms and other British knowledge producers and users.

Global and local (GloCal) knowledge logistics for innovation and competitiveness. ACES Working Papers, August 2010

The increasing engagement of firms within global knowledge and production networks and their ability to source knowledge globally as well as locally (GloCally), for the development of innovation capacities will shape the future of UK's knowledge resources and its role in the global economy. Practices such as off-shoring R&D activities are widely adopted, creating challenging, and not very well understood, issues related to cross-country and inter-firm knowledge and technology flows. We seek to address the internationalisation and networking of research and innovation activities, including the roles and strategies of enterprises, universities, research centres, governments in a cross-country and inter-sectoral way, to assess the impact and the implications for sustaining and enhancing the competitiveness of UK firms and other British knowledge producers and users.

Real options in the context of innovation and development policies and practices. ACES Working Papers, 2012

This paper proposes to build on previous research on the use of real options in strategic decision making (Carayannis and Sipp, 2010) and instill some real options-related concepts stemming from systems design, more particularly engineering. It also builds on previously-established concepts of strategic knowledge serendipity and arbitrage and strategic knowledge co-opetition, co-evolution and co-specialization developed by Carayannis (2009). The application of real options “in” system and real options to innovation and innovation policies demonstrate how embedded real options can more effectively be identified and therefore the decision to execute them or not more effectively made.

EU-US S&T Collaborations, Challenges and Opportunities for Development. Innovation Diplomacy, Special case in point: the Hellenic-American innovation bridge and its underlying dimensions. ACES Working Papers, October 2012

Developed and developing economies alike face increased resource scarcity and competitive rivalry. Science and technology increasingly appear as a main source of competitive and sustainable advantage for nations are regions alike. However, the key determinant of their efficacy is the quality and quantity of entrepreneurship-enabled innovation that unlocks and captures the pecuniary benefits of science enterprise in the form of private, public or hybrid goods (for instance, bio-entrepreneur-millionaires, knowledge for the public good - ie: public health awareness, and new public-private research centers funded partly by bio-entrepreneur-millionaires and monies levied as taxes on bio-ventures).

L’Européanisation des politiques d’innovation en France: une révolution copernicienne? Le cas de la région Rhône-Alpes = "The Europeanization of innovation policies in France: a Copernican revolution? The case of Rhône-Alpes". Bruges Political Research Papers 42/2015.

No abstract.

Matching research and innovation policies in EU countries. Bruegel Working Paper 2015/16, December 2015

The European Union has prioritised the pursuit of innovation based growth and targeting of resources to promote research and development, but performance on innovation remains weak.With the lack of results comes fatigue, waning interest and mounting criticism about policy. Should the EU abandon its ambition to become the most innovative region in the world?We examine EU member state research and innovation policies. We assess whether the deployment of innovation policy instruments in EU countries matches their innovation capacity performance relative to other EU countries.We find a relative homogeneity of policy mixes in EU countries, despite the fairly wide and stable differences in their innovation capacities.Our analysis therefore provides a rationale for a more comprehensive review of innovation policy mixes to assess their adequacy in addressing country specific innovation challenges.

Service innovation, embeddedness and business performance:UK regional evidence

This paper asks to question. First, what types of linkages make firms in the service sector innovate? And second, what is the link between innovation and the firms’ productivity and export performance? Using survey data from Northern Ireland we find that links intra-regional links (i.e. within Northern Ireland) to customers, suppliers and universities have little effect on innovation, but external links (i.e. outside Northern Ireland) help to boost innovation. Relationships between innovation, exporting and productivity prove complex but suggest that innovation itself is not sufficient to generate productivity improvements. Only when innovation is combined with increased export activity are productivity gains produced. This suggests that regional innovation policy should be oriented towards helping firms to innovate only where it helps firms to enter export markets or to expand their existing export market presence.