Various international assessments show that the stagnant intensity of business-science cooperation, the level of research publications, and the impact of investment research and development (R&D) on enterprise activities are the most worrying factors. Therefore, the innovation reform, which has been launched this year, is being implemented at the right time. According to innovation experts, Lithuania has the potential to develop world-class innovations, but there is a lack of closer cooperation with foreign innovators.
Companies more often declare their innovation activities
Key indicators used by MITA to conduct an innovation ecosystem analysis are the European Innovation Scoreboard, World Innovation Index, World Competitiveness Index and Bloomberg Innovation Index. According to the results of Scoreboard 2018, Member State Lithuania ranks 20th in the group of Moderate Innovators. It is good that Lithuania is the most advanced among all the Member States of the European Union, having achieved the fastest (more than 20%) growth in innovation performance over the last 8 years (2010-2017). Meanwhile, innovation performance across the EU has improved by an average of 5.8 percentage points.
“Lithuania’s rise on the European Innovation Scoreboard is one of the most prominent. The strengths of the Innovation system include the innovation-friendly environment, business and science cooperation and human resources. The results of the Scoreboard showed that over the last few years Lithuania has significantly improved its position in the areas of Venture Capital and investments in non-technological innovations,” says Ričardas Valančiauskas, MITA’s Head of Innovation Support and Technology Transfer Division.
The progress is also indicated by the share of innovative small businesses that carry out cooperative activities with other companies or institutions, compared to all small and medium-sized enterprises combined. In this area, Lithuania is planning to reach a share of 12% in a couple of years, and the newest value has already doubled by 15.2%. According to experts, this means that companies have learned to evaluate ongoing innovations and no longer bother to declare them. “Recognizing innovations and declaring them is a relatively new practice. Companies often develop innovations and do not recognize them as R&D activities, but we are glad that there is increasing familiarity with R&D activity and its benefits to business, both in terms of business development and tax incentives,” says Valančiauskas.
Scientific and business cooperation still remains a sensitive issue
The analysis showed that R&D expenditure in higher education and government sectors, compared to GDP, has decreased to 0.47% in the year before last. Lithuania has declared to reach 1% by the end of the next two years. The share of small and medium-sized enterprises, which incorporate new products and processes, has doubled over the course of one year, which means it increased to 33.7% in respect of all such businesses. However, there is still a risk of not achieving the planned value by 2020 (i.e., 40 percent). The cooperation between universities and businesses is also a concern, since despite the boost in business contracts, Lithuania, in this respect, dropped from the 27th place in 2015 to the 37th place last year, according to the Global Competitiveness Index.
Paulius Nezabitauskas, the Director of Innovation and Entrepreneurship Development of Kaunas Science and Technology Park, says that businesses and sciences need to become more familiar with the culture of cooperation which is still developing: “Business is looking for ‘ad hoc’ solutions right here and right now, since it sees potential in the market and also takes into account the costs and benefits for the end-user. Of course, scientists are also concerned about this, but the path from the research to modern future technologies is long, thus finding the right time for technology which is necessary in the market is complicated”.
According to the innovation expert, the scientific and business cooperation may be intensified by innovation managers of the companies, who are able to look for innovations both in the company and in the Science and Technology Parks, as well as in study and scientific institutions. A large part of these innovation managers’ salaries and the necessary training could be borne by the State as long as there will be enough specialists and work experience, and a culture of cooperation.
Embracing the experiences of foreign innovation ecosystem developers
“Another important factor that prevents faster development and commercialization of innovations is the extended amount of time which takes to launch a product. In the development of technology, both start-ups and scientists start to communicate with potential clients a little late. If this were to happen during the development phase of innovation, then this would encourage better market orientation of the technology being developed and earlier cooperation with investors who can become partners or mentors,” points out Nezabitauskas, who emphasizes that innovation managers would be able to provide marketing and sales skills for companies.
The annual Lithuanian innovation development analysis identifies an insignificant effect of innovation activities on sales, the lack of attractive research systems and the lack of intellectual property as the weak links of the innovation ecosystem. Analysts say that the bureaucracy of the public sector, the State’s slowness in promoting innovations and the procurement of high-tech products are reflected in assessments and contribute significantly to the overall low evaluation in international innovation development indicators.
“Lithuania needs innovation support measures which would generate tangible and prompt benefits. A number of such measures are already foreseen in the implementation of the new reform of the Lithuanian innovation system, particularly by promoting experimental development activities through which final products are being developed. To improve Incentives for the Promotion of Innovation, we can draw experience from foreign innovation ecosystem developers,” says Ričardas Valančiauskas, MITA’s Head of Innovation Support and Technology Transfer Division.
Direction towards self-sustaining innovation ecosystem
Director of Innovation and Entrepreneurship Development of Kaunas STP also emphasizes the need of such measures. “Integrated Scientific and Business Valleys in Lithuania achieve relatively high results in application of innovations in business, but there is a specific infrastructure built up there. This is noticed by companies, based in Kaunas Science and Technology Park ‘Santaka’ Valley, which appreciate the opportunity to meet scientists, researchers and discuss arising challenges with them. We also noticed that the opportunity for companies to travel abroad for business missions, to get acquainted with the markets of other countries and the knowledge of the consultants from Scandinavia is one of the most valuable experiences in the development of business based on innovations,” says Nezabitauskas.
The Director of Innovation and Entrepreneurship Development of Kaunas Science and Technology Park notes that there are currently no self-sustaining innovation systems, capable of successfully operating after the reduction of EU funds’ investments in Lithuania in 2020, and this is very important information highlighted in the MITA report. “Every element of the ecosystem must be prepared for this date, have a clear model of activity that would help both to survive and provide services to the participants of the innovation ecosystem. Obviously, it will also be necessary to switch to commercial services for the innovation support institutions to survive. Today, it is already necessary to change the model of activity and focus on providing services to companies, bringing the greatest added value,” says Nezabitauskas.
Diffusion of innovation culture across Science and Technology Parks
The role of today’s innovation ecosystem participants, i.e. science and technology parks, is underlined in the Study of the European Parliament ‘New Technologies and Regional Policy: Towards the Next cohesion policy Framework’, prepared in July. In this Study parks are considered as the most important part of infrastructure for integrated research, technology transfer, development and innovation-driven economic growth and should therefore ensure the diffusion of innovation culture.
Kaunas Science and Technology Park joined the Project ‘Fast Forward Europe (FFWD EUROPE)’, which is a part of the ‘Interreg Europe’ programme. Together with the Project partners from France, Germany, Denmark, Spain and other countries, Lithuanians will adopt the experience of European investors, entrepreneurs and business development policy advisers. The Project partners foresee that the international cooperation will help innovative businesses to increase their visibility at contact fairs, find business partners and try new markets.
The Project ‘Fast Forward Europe (FFWD EUROPE)’, No. PGI02042, is implemented through the European Regional Development Fund and the Interreg Europe Programme 2014-2020. This publication only reflects the view of the author, and the management of the programme ‘Interreg Europe’ cannot be held liable for any use which may be made of the information contained therein.