South-East European Research Centre (SEERC)

Recent research on SME development in South East Europe suggests three critical areas of policy focus: improving the availability of finance; reducing bureaucratic barriers to start-up; and enhancing the flow of knowledge among SMEs (e.g., through business alliances) and from knowledge producers (universities, laboratories, think tanks, researchers) to SMEs. This project focuses on the third of these priorities. The overall aims and objectives of the project are as follows:

• To examine the current and potential knowledge capability of SMEs in FYROM, Serbia and Kosovo, and the scope for improving their competitiveness through the development of knowledge infusion and business alliances strategies within supply chains and across industries and markets.
• To understand the current role played by Business Alliances in the region and barriers and opportunities for their expansion.
• To draw out the specific knowledge deficits/surpluses within SMEs.
• To explore the scope and options for establishing a platform to support knowledge infusion across South East Europe, beginning in the three target countries.
• To identify and understand the likely intermediaries and institutions (particularly universities) required to be involved in establishing a knowledge infusion platform.
• To understand the processes best suited to stimulating engagement from SMEs in the region.

The main findings of the project are summarised below:

In general, SMEs in the region have a higher propensity for the direct application of potential solutions to their business problems rather than improving competitiveness through more long-term research and development processes. Only limited number of SMEs have a vision for developing their businesses through strengthening the new market, new product and new process developments.

The most frequent form of knowledge interaction is on a business-to-business basis, with 44% of respondents stating that they interacted with other SMEs to exchange or gain knowledge or research on a frequent basis. At present existing institutions and intermediaries are not significantly utilised in facilitating SMEs in knowledge transfer and infusion processes.

There is a lack of specialised research/institutions, a lack of relevant research, a shortage of access to research information, low quality of research, limited research output, financial burden and the overall business environment, prohibiting SMEs accessing information or partners from research communities. The ability to purchase research (69%) is the most dominant barrier for SMEs in utilising information and knowledge. This is followed by their ability to access to finance (66%).

Only 8% of the SMEs perceived that they had experienced a "very good service" from research communities. Also, only 7% of SMEs fully trusted that research community will always meet their commitments with the business community in knowledge-based collaboration. A lack of applicable research emanating from the research community (91%), a lack of funding and finance to facilitate business-research community interaction (90%), a lack of awareness by businesses of the potential existing within the research community (89%) and a lack of awareness by the research community as to the potential role of businesses as collaborative partners (89%) are the most dominant barriers to SMEs interacting with other businesses and research performers.

In total, some 80% of research actors have never been involved in the patenting of inventions, and 66% have never been involved in licensing of technology to commercial organisations.

Also, none of the knowledge produced by the research communities is transferred overseas. Some 53% of the knowledge produced is mainly transferred within the region, and 30% within the nation. The knowledge the research communities receive is largely a mix of regional, national and overseas location (63%).

A lack of an institutional framework (external) (97%) is the most profound barrier for research communities to transferring and infusing knowledge into SMEs. This is followed by difficulties in accessing suitable funding and undertaking market research (both at 93% respectively).

Research institutions consider that the interface with SMEs regarding knowledge transfer would be enhanced through information/awareness raising events, network facilitators, and the establishment of a specialised Think-Tank. SMEs place most emphasis on electronic and internet information portals but also emphasize the awareness raising and the presence of Think-Tanks. There is overwhelming agreement amongst institutions that the knowledge transfer activities of the business community would be better stimulated via intermediary organisations linking research and business sectors, as well as the establishment of a knowledge transfer platform for the regional research sector. SMEs also place similar emphasis on intermediary organisations and the knowledge transfer platform.

01/03/2005 - 28/02/2006

38.600 €

British Foreign & Commonwealth Office (FCO)