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Growth through diversity: tailoring innovation policies for Europe's sectors

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The source of Europe INNOVA is a sector-based approach that is maintained throughout the analyses and debate fostered in the Sectoral Innovation Watch and Innovation Panels and the strong focus on co-operation among the organisations involved in the clusters and financing networks. Deeper understanding of the innovation process and how it differs between firms active in different sectoral industries has promoted this sectoral approach, and raised profound policy implications.

Innovation differs across sectors in terms of its characteristics and sources, the actors and activities involved, and the boundaries to the process. A focus on a "representative firm" as the main actor; on narrowly well-defined and static boundaries as the sector delimitation; on R&D and learning-by-doing as the only sources of innovation; on competition and formal R&D joint ventures as the only types of interaction among firms; and on the patent system and public support for R&D as the only relevant institutions and policies that matter for innovation, would not truly capture sectoral performance. Such an approach includes only part of the actors and activities involved, and would identify only a few of the key variables that matter for sectoral innovation and performance. Some studies (Franco Malerba, 'Sectoral Systems: How and Why Innovation Differs across Sectors', in The Oxford Handbook of Innovation, OUP, 2005) have highlighted the striking differences among innovation actors, sources of knowledge, etc. and demonstrated that the role of innovation in the dynamics and transformation of these sectors is highly diverse.

The Europe INNOVA initiative is driven by the need for a greater understanding of the "key variables that matter for innovation across European sectors and how they determine the development of targeted innovation policies across the European Union.

There are two industry sectors examples that could illustrate the importance of recognising sectoral differences for European competitiveness:

First, the ability of biotechnology firms to access and make efficient use of scientific and technological research and networks of collaborative relations has become a crucial source of competitiveness. Most bio-technology firms are primarily research companies supplying high technology intermediate products and performing contract research for, and in collaboration with, established companies in downstream sectors (including both pharmaceuticals and medical, and increasingly chemicals, food and beverages, etc.). Ethical and regulatory issues often play a role in driving or impeding innovation in the biotechnology sector.

Second, the food and beverages sector, which is relatively fragmented, encompassing a few large multinational corporations competing in the global market, with global brands and a large product range, plus many smaller enterprises, often serving local markets, and focusing on regional preferences and local specialities. This sector therefore is important for rural development and continuation of industrial activities in rural areas. Alongside its economic importance, this sector is prominent in environmental and consumer protection issues, for example quality of products, food safety and animal welfare. The food and beverages sector is characterized by European standards for local products (protection for geographically identified produce), and ecological/biological issues, as well as labelling and inclusion of genetically modified ingredient.

Europe INNOVA combines analytical work on key European sectors (Sectoral Innovation Watch) with support for co-operation and learning platforms in the fields of clusters and financing to study these sectoral differences in greater detail.

Sectoral Innovation Watch produces detailed reports, built up in a series of modules concerning 9 key industrial sectors for Europe's future competitiveness: Biotechnology, Food/Drink, Machinery/Equipment, Textile, Chemicals, Energy, ICT/Electrical/Optical, Space & Aeronautics, Automotive and Eco-innovation, and two cross-cutting themes: 'eco-innovation' and 'fast growing enterprises' (the gazelles).

For each of these areas Sectoral Innovation Watch analyses statistics on innovation, appraises policy frameworks for supporting innovation in sectors, identifies variables in the regulatory or socio-cultural environment that help explain national differences in sectoral innovation performance, and pin-points and examines a series of enterprises characterized as "sectoral innovation leaders". Europe INNOVA Innovation Panels contribute to the outputs of Sectoral Innovation Watch by formulating policy recommendations and debating cross-cutting themes based on actual evidence rather than anecdote.

Sectoral Innovation Watch also interacts with a series of sector specific cluster and innovation financing networks to ensure feedback and allow these sectors to benefit from the sectoral data gathered through qualitative innovation analyses The 11 cluster networks (covering most of the sectors mentioned above) will enhance co-operation amongst technologists, entrepreneurs and other stakeholders from across the EU25 with a view to exchanging good practices on policy design and implementation. Similarly, the 10 finance networks will strengthen the currently poor access to finance for innovative companies in sectors varying from as space and satellite technologies, to construction, textiles and medical devices.