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Report reveals that SMEs participating in FP7 perform significantly better than comparable non-participating SMEs

An interim evaluation of the participation of SMEs in the Cooperation Programme and the Research for the benefit of SMEs (RSME) schemes under the Capacities Programme of the Seventh Framework Programme for Research 2007-2013 (FP7) reveals very positive impacts, both on the participating SMEs and on society.

The overall objective of the interim evaluation was to assess the relevance, efficiency and effectiveness of the two SME initiatives in FP7 (the Cooperation Programme and the RSME) and their impacts on the participating SMEs and on society. This includes impacts on economic performance (employment growth, turnover and exports), Innovation, European Added Value (EAV) and behavioural additionality.

The interim evaluation was performed on the basis of different variables, such as quantitative analysis of participating company results compared with a control group from financial databases, SME and stakeholder interviews and case studies across the EU28 and beyond.

‘The SMEs participating in FP7 show a significantly better performance than comparable non-participating SMEs,’ explains Mr Koos van Elk, a Project Leader at Panteia, the Dutch company which headed the consortium conducting the interim evaluation. He cites the example of employment growth, which for SMEs participating in the FP7 Cooperation Programme increased almost five times faster than for non-participating SMEs in the same period. This trend is captured in the graph below.

Graph 1

Graph 1: Index of employment of SMEs participating in the FP7 Cooperation Programme compared to matched non-participants (control group) (Index 2006 = 100)

The FP7 Cooperation Programme supported all types of research activities carried out by different research bodies in trans-national cooperation during 2007-13. The programme had a budget of EUR 32.4 billion and aimed to gain or consolidate leadership in key scientific and technology areas. At its outset, the EU Council and Parliament set a target of 15% of the funding to go to SMEs, with the remainder going to larger enterprises, universities, research centres and public authorities throughout the EU and beyond. RSME had a budget of EUR 1.3 billion to strengthen the 'innovation capacity' of SMEs and boost their contribution to the development of new technology-based products and markets.

For SMEs participating in the Cooperation Programme, a positive impact on turnover was reported by 54%, for employment the figure is 50% and for exports 38%. On average, those participating SMEs that reported increases estimated plus 22% for turnover, plus 25% for employment and plus 28% for exports. For SMEs participating in RSME, a positive impact on turnover was reported by 32%, for employment this was 30% and for exports 27%. On average, these SMEs reported 16% higher turnover, employment and exports.

The other main findings of the study can be summarised as follows:

  • Relevance: Both initiatives score highly with regard to relevance. It is pertinent to SMEs, but mostly research intensive SMEs. Especially with regard to the RSME schemes this is a critical remark because the programme aims to target low- to medium-technology SMEs.
  • Effectiveness: Both the Cooperation Programme and the RSME schemes have met their targets with regard to participation of SMEs. Notably, the target that 15% of the Cooperation Programme budget should go to SMEs is achieved. In the RSME scheme, SMEs more often fulfil the role of coordinator, and are more often involved in taking the initiative, as compared to the Cooperation Programme.
  • Efficiency: The great majority of participants judge the initiatives to be an efficient use of public funds. 91% and 85% in the Cooperation and RSME schemes, respectively, state that the benefits already outweigh the costs or that they expect that this will happen in the future. SMEs are broadly satisfied with various aspects of the management efficiency of the programme.
  • EAV: It is considered to be rather high and the highest for those SMEs located in Member States with low levels of national support for research and innovation. Especially in RSME, participants report a high EAV as these projects provide a framework for international performance that is otherwise out of reach for participating SMEs. International cooperation with access to technological knowledge from abroad is highly valued.
  • Behavioural additionality: A significant proportion of all participating SMEs report a positive effect on their innovation behaviour. 59% report increased involvement in collaborative research and innovation. Only a very small percentage of SMEs state that they would have undertaken the project the same way without EC funding.
  • Innovation: The majority of participating SMEs has made progress with their innovation plans. In the SME interviews, 70% of SMEs in Cooperation and 67% of SMEs in the RSME schemes report that following participation in the FP7 project they implemented an innovation. The insight developed from the case studies is that the number of innovations successfully implemented in the market is more modest.

The evaluation also contains six main recommendations for some specific issues that may be further improved. These are:

  1. Develop overall SME support strategy with clear distinctions between different SME target groups;
  2. Collect more information to properly assess type of SME and improve monitoring;
  3. Develop objectives that are SMART, i.e. Specific, Measurable, Attainable, Relevant and Time-based;
  4. Assure better insight in actual role of SMEs within the projects (are they in the driver’s seat?);
  5. Include more instruments for commercialisation of project results;
  6. Set up support structure for SME associations.

Participation in the future: Horizon 2020

The report lastly gives an idea of how SMEs will be affected by participating in Horizon 2020, the EU's new funding programme for research and innovation. However, because Horizon 2020 has different features to FP7, some differences in impact are anticipated. For example, Horizon 2020 has a significantly larger budget - about EUR 80 billion over seven years in current prices (which means taking into account anticipated inflation). This compared to about EUR 50 billion over seven years for FP7 - and so SMEs will have more opportunities to benefit from funding.

Another difference is Horizon 2020’s greater focus on close-to-market activities and impact, which could lead to greater economic benefits for participating SMEs, compared to FP7. Mr van Elk concurs: ‘In our Interim Evaluation of SME participation it was noticed that in many projects the results have not yet reached the markets. This is often related to the short time elapsed since the closure of the FP7 projects, but also some SMEs are stating that they do not have the funds to actually bring the results of the FP7 project to the market.’