KN-32-12-216-EN-C

KN-32-12-216-EN-C
Guide to Research and Innovation
Strategies for Smart Specialisations
(RIS 3)

MayMay
2012
2012 May 2012
Regional
Regional doi:10.2776/65746
doi:10.2776/65746 Regional
PolicyPolicy Policy
 European Commission

����������������������������������������������������������������������������

Luxembourg: Publications Office of the European Union

2012 — 121 pp. — 21 × 29.7 cm

ISBN : 978-92-79-25094-1
doi:10.2776/65746

HOW TO OBTAIN EU PUBLICATIONS

Free publications:
• via EU Bookshop ([Link]
• at the European Union’s representations or delegations. You can obtain their contact details
on the Internet ([Link] or by sending a fax
to +352 2929-42758.
Priced publications:
Europe Direct is a service to help you find answers
to your questions about the European Union. • via EU Bookshop ([Link]
Priced subscriptions (e.g. annual series of the Official Journal of the European Union and
Freephone number (*): reports of cases before the Court of Justice
00 800 6 7 8 9 10 11 of the European Union):
(*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls • via one of the sales agents of the Publications Office of the European Union
may be billed. ([Link]

More information on the European Union is available on the Internet ([Link]

Cataloguing data can be found at the end of this publication.

Luxembourg: Publications Office of the European Union, 2012

ISBN : 978-92-79-25094-1
doi:10.2776/65746

© European Union, 2012

Reproduction is authorised provided the source is acknowledged.

Luxembourg

PRINTED ON ELEMENTAL CHLORINE-FREE BLEACHED PAPER (ECF)

Guide to Research and Innovation Strategies
for Smart Specialisation (RIS 3)

May 2012
 Authors (in alphabetical order)

Dominique Foray
John Goddard
Xabier Goenaga Beldarrain
Mikel Landabaso
Philip McCann
Kevin Morgan
Claire Nauwelaers
Raquel Ortega-Argilés

Disclaimer

The responsibility for the accuracy of the analysis and for the judgements expressed lies with the
authors alone. This document does not constitute the policy positions of the EU Commission.
The authors of this guide would like to thank for their contributions to the members of the
Steering Team supervising the Smart Specialisation Platform established at the JRC-IPTS,
including representatives of DG REGIO, JRC, RTD, ENTR, INFSO, EAC, SANCO, EMPL,
AGRI, CLIMA and the Committee of the Regions, as well as the valuable input provided by the
members of the Mirror Group of the Smart Specialisation Platform chaired by Christian
Saublens.

Steering Team Members

Guido Acchioni, Peter Baur, Dirk Beernaert, Elisa Boelman, Claire-Lyse Chambron, Dimitri
Corpakis, Ciaran Dearle, Rostislava Dimitrova, John Doyle, Ken Ducatel, Jean-Pierre Euzen,
Ricardo Ferreira, Ales Gnamus, Ignacio González Vázquez, Christophe Guichard, Marek
Havrda, Claus Kondrup, Alberto Licciardello, Anthony Lockett, Frank Mather, Sophie Mueller,
Fulvio Mulatero, Bart Neerscholten, Nivelin Noev, Nikos Pantalos, Paolo Pasimeni, Nathalie
Pasquier, Alessandro Rainoldi, Katja Reppel, Marielle Riché, Luisa Sanches, Claus Schultze, as
well as John Edwards, Carlo Gianelle, Inger Midtkandal, Ruslan Rakhmatullin.

Mirror Group Members

Mike Coyne, Gabriel Crean, Hubert Delorme, Dominique Foray, Michel Ganoote, John
Goddard, Vesa Harmaakorpi, Christian Ketels, Jerzy Langer, Susanna Longo, Markku Markkula,
Philip McCann, Kevin Morgan, Claire Nauwelaers, Mikel Navarro, Marc Pattison, Damien
Perissé, Felipe Romeras Lubias, Christian Saublens, Jean Severijns, Richard Tuffs, Philippe
Vanrie, Roger Williams.

1
 TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 5
PART I: THE POLICY CONTEXT OF SMART SPECIALISATION......................................... 7
PART II: THE RATIONALE OF SMART SPECIALISATION................................................. 11
What: Concentrating knowledge resources for economic specialisation ......................................11
Why: Learning lessons from the past.............................................................................................11
Who: Putting entrepreneurial knowledge to work .........................................................................12
How: Setting in motion regional change .......................................................................................12
Where: A role for every region......................................................................................................14
In summary… ................................................................................................................................15
PART III: RIS3 DESIGN IN A NUTSHELL............................................................................... 17
Step 1 - Analysis of the regional context and potential for innovation .........................................18
Step 2 - Governance: Ensuring participation and ownership.........................................................21
Step 3 - Elaboration of an overall vision for the future of the region............................................22
Step 4 - Identification of priorities.................................................................................................22
Step 5 - Definition of coherent policy mix, roadmaps and action plan .........................................23
Step 6 - Integration of monitoring and evaluation mechanisms ....................................................24
ANNEXES.................................................................................................................................... 26
ANNEX I: A STEP-BY-STEP APPROACH TO RIS3 DESIGN................................................ 27
Six key steps to design RIS3..........................................................................................................27
Step 1 - Analysis of the regional context and potential for innovation .........................................28
Step 2 - Governance: ensuring participation and ownership .........................................................34
Step 3 - Elaboration of an overall vision for the future of the region............................................45
Step 4 - Identification of priorities.................................................................................................51
Step 5 - Definition of coherent policy mix, roadmaps and action plan .........................................53
Step 6 - Integration of monitoring and evaluation mechanisms ....................................................59
ANNEX II: DELIVERY INSTRUMENTS AND HORIZONTAL APPROACHES .................. 65
Clusters and smart specialisation ...................................................................................................67
Innovation friendly business environments for SMEs...................................................................70
Research infrastructures, centres of competence and science parks..............................................75
Universities ....................................................................................................................................79
Digital Agenda for Europe.............................................................................................................82
Key enabling technologies.............................................................................................................88
Cultural and creative industries .....................................................................................................90
Internationalisation ........................................................................................................................95
Financial engineering instruments .................................................................................................98
Innovative public procurement ....................................................................................................104
Green growth ...............................................................................................................................109
Social innovation .........................................................................................................................113
ANNEX III: REGIONAL RESEARCH AND INNOVATION STRATEGIES FOR SMART
SPECIALISATION: GUIDANCE FOR EXPERT ASSESSMENT.......................................... 117

2
 LIST OF BOXES

Box 1 – Definition of RIS3 .............................................................................................................. 8

Box 2 - Key Enabling Technologies.............................................................................................. 13
Box 3 - The four Cs of smart specialization.................................................................................. 17
Box 4 - A stepwise approach for RIS3 design............................................................................... 27
Box 5 - Examples of elements for (self-) assessment .................................................................... 31
Box 6 - Distinctive features of smart specialisation for (peer) review ......................................... 63
Box 7 - ICT measures in RIS3....................................................................................................... 85

LIST OF TABLES

Table 1 - Methods used for Foresight........................................................................................... 33

Table 2 - Differentiated knowledge base: a typology ................................................................... 35
Table 3 - Innovation strategies for different types of region according to knowledge intensity of
productive fabric........................................................................................................................... 48
Table 4 - Innovation strategies for different types of regions according to internal and external
connectivity ................................................................................................................................... 49
Table 5 - Regional innovation delivery instruments: a taxonomy ................................................ 54
Table 6 - Innovation delivery instruments targeting SMEs .......................................................... 54
Table 7 - 'Building on current advantages': examples of regional strategies and associated
policy mixes................................................................................................................................... 55
Table 8 - 'Supporting socio-economic transformation': examples of regional strategies and
associated policy mixes................................................................................................................. 56
Table 9 - 'Catching up': examples of regional strategies and associated policy mixes................ 57
Table 10 - Examples of programme objectives, outputs and expected results and possible related
indicators ...................................................................................................................................... 61

LIST OF FIGURES

Figure 1 - The regional knowledge ecology ................................................................................. 36

Figure 2 - A Place-based leadership development programme ................................................... 40
Figure 3 - The Disconnected Region ............................................................................................ 42
Figure 4 - The connected region................................................................................................... 43
Figure 5 - Analysis of funding for RIS3 ........................................................................................ 44
Figure 6 - Europe 2020 dimensions: integrated regional typologies........................................... 47
Figure 7 - The 'trunk and branches' structure .............................................................................. 66
Figure 8 - Matrix of business functions and international services ............................................. 96

3
 LIST OF REGIONAL EXAMPLES

Example 1 - Analysis of the regional context — Skåne's innovation capacity ............................. 22

Example 2 - International benchmarking in a Top Technology Region – Provinces of Limburg in
the Netherlands and Belgium, Noord-Brabant (Netherlands) and Vlaams-Brabant (Belgium),
Province of Liège (Belgium) and parts of North Rhine Westphalia(Germany)............................ 23
Example 3 - Public-private cooperation in West Midlands.......................................................... 24
Example 4 - The vision of Flanders .............................................................................................. 25
Example 5 - Focus on priorities in Berlin/Brandenburg .............................................................. 26
Example 6 - OECD/European Commission guidance .................................................................. 26
Example 7 - Integrated monitoring and evaluation in Lower Austria.......................................... 27
Example 8 - Fine-tuning RIS3 through Peer-Review ................................................................... 28

4
INTRODUCTION
This guide has been conceived as a methodological guidance for policy-makers and
implementing bodies on how to prepare for and how to design, draft and implement a
national/regional research and innovation strategy for smart specialisation (RIS3).

Rather than an all-encompassing, prescriptive document, the guide is to be understood as a

general orientation document which will evolve as the concept develops. Indeed, the document
will be improved and updated on a regular basis.

Most of the concepts developed here are based on the previous experience that the European
Commission has gained over the years by working with the regions through initiatives such as
STRIDE and the PRAIS, as well as the former RIS. It also gained from comparative studies by
the OECD in this field.

This guide intends to highlight new features and aspects that improve the previous knowledge
and make innovation strategies and policies more effective. Countries and regions that already
have gained experience in designing and implementing innovation strategies should now support
activities for revisiting and upgrading them, while for the others the challenge is to engage in this
process and develop their own innovation strategies for smart specialisation.

Part I of the guide defines the policy context of smart specialisation. Part II presents the concept,
its rationale and economic fundamentals. In particular, it addresses the issue of the
entrepreneurial process of discovery, which is a key feature of smart specialisation, and provides
guidance on how to develop distinctive and original areas of specialisation.

The guide sets out a number of practical steps to design a national/regional RIS3, namely:

1. the analysis of the national/regional context and potential for innovation,

2. the set-up of a sound and inclusive governance structure,
3. the production of a shared vision about the future of the country/region,
4. the selection of a limited number of priorities for national/regional development,
5. the establishment of suitable policy mixes, and
6. the integration of monitoring and evaluation mechanisms.

These steps are presented in Part III and further detailed and developed in Annex I.

The guide also presents, in Annex II, an array of delivery instruments at the disposal of national
and regional policy makers for the development of the strategy and also advice on horizontal
approaches, such as sustainable growth, social innovation and skills development. The document
contains examples of different experiences on the development of innovation strategies.

Consistently, this guide is to be interpreted as the 'trunk' establishing the skeleton structure from
which a number of 'branches' develop and grow. These branches are delivery instruments and

5
horizontal approaches. These were identified in Annex II based on their relevance for Structural
Funds co-financing, and in particular for the ERDF and the ESF.

Finally, those who are interested in self-assessing their RIS3 process and strategy should be
interested in Annex III, which offers a fiche with relevant questions.

The elaboration of the guide has been channeled through the Smart Specialisation Platform (S3
Platform). This platform was created by the European Commission in 2011 to provide assistance
to Member States and regions in developing and reviewing their national/regional RIS3
strategies.1

1
[Link]

6
PART I: THE POLICY CONTEXT OF SMART SPECIALISATION
Europe is facing major economic challenges that require an ambitious economic policy for the
21st century. The EU has set out its vision for Europe's social market economy in the Europe
2020 strategy,2 which aims at confronting our structural weaknesses through progress in three
mutually reinforcing priorities:

x smart growth, based on knowledge and innovation;

x sustainable growth, promoting a more resource efficient, greener and competitive
economy;
x inclusive growth, fostering a high employment economy delivering economic, social and
territorial cohesion.

Investing more in research, innovation and entrepreneurship is at the heart of Europe 2020 and a
crucial part of Europe's response to the economic crisis. So is having a strategic and integrated
approach to innovation that maximises European, national and regional research and innovation
potential.

As José Manuel Barroso highlighted in his preface to the Europe 2020 strategy, 'Europe needs to
get back on track. Then it must stay on track. That is the purpose of Europe 2020. It's about more
jobs and better lives. It shows how Europe has the capability to deliver smart, sustainable and
inclusive growth, to find the path to create new jobs and to offer a sense of direction to our
societies'3.

That is why as part of the Europe 2020 strategy, the Commission adopted the 'Innovation Union'4
flagship initiative. It sets out a comprehensive innovation strategy to enhance Europe's capacity
to deliver smart, sustainable and inclusive growth and highlights the concept of smart
specialisation as a way to achieve these goals. The 'Digital Agenda for Europe'5 flagship
initiative is also part of Europe 2020 and aims to deliver sustainable economic growth and social
benefits from Information and Communication Technologies (ICT). The Digital Agenda for
Europe initiative is therefore relevant to all regions and cities, as it focuses on a key element for
the design of smart specialisation strategies.

The concept of smart specialisation has also been promoted by the Communication 'Regional
Policy contributing to smart growth in Europe 2020'.6 In this document the Commission
encourages the design of national/regional research and innovation strategies for smart
specialisation as a means to deliver a more targeted Structural Fund support and a strategic and
integrated approach to harness the potential for smart growth and the knowledge economy in all
regions.

2
[Link]
3
See previous footnote.
4
[Link]
5
[Link]
6
[Link]

7
Smart specialisation has also been strongly advocated by the Synergies Expert Group established
by the Commission's Directorate-General for Research and Innovation. It argues that the concept
is an important instrument for ensuring synergies between Horizon 20207 and the Structural
Funds in the interest of capacity building and providing a stairway to excellence.

In the context of Europe 2020, smart specialisation emerges therefore as a key element for place-
based innovation policies, and can be defined as presented in Box 1 below. This definition will
be further developed in the rest of this guide.

Box 1 – Definition of RIS3

National/regional research and innovation strategies for smart specialisation (RIS3) are
integrated, place-based economic transformation agendas that do five important things

x They focus policy support and investments on key national/regional priorities, challenges
and needs for knowledge-based development, including ICT-related measures;
x They build on each country's/region’s strengths, competitive advantages and potential for
excellence;
x They support technological as well as practice-based innovation and aim to stimulate
private sector investment;
x They get stakeholders fully involved and encourage innovation and experimentation;
x They are evidence-based and include sound monitoring and evaluation systems.

The RIS3 approach is relevant to all three priorities of Europe 2020 i.e. smart, sustainable and
inclusive growth. First of all, smart specialisation matters for the future of Europe because the
development of an economy based on knowledge and innovation remains a fundamental
challenge for the EU as a whole. Secondly, smart specialisation is relevant to achieve sustainable
growth, as an important innovation effort and considerable investment is required to shift
towards a resource-efficient and low carbon economy, offering opportunities in domestic and
global markets. Finally, smart specialisation contributes to inclusive growth between and within
regions by strengthening territorial cohesion and by managing structural change, creating
economic opportunity and investing in skills development, better jobs and social innovation.

This embedded role of smart specialisation in the Europe 2020 policy framework has been
highlighted by the Council of the EU in its conclusions on the Innovation Union. The Council
underlined 'the concept of 'smart specialisation', with each region building on its own strengths,
to guide priority-setting in national and regional innovation strategies, as well as cross-border
cooperation where appropriate' and invited the Commission 'to advise Member States on

7
[Link]

8
possible improvement of the performance of their national innovation systems and with the
implementation of smart specialisation strategies'.8

The RIS3 approach is also consistent with the aims and tools of the EU cohesion policy,
promoting growth and jobs across EU countries and regions.9 It suggests a strategy and a global
role for every national and regional economy, including both leader and less advanced territories.
It embraces a broader concept of innovation, not only investment in research or the
manufacturing sector, but also building competitiveness through design and creative industries,
social and service innovation, new business models and practice-based innovation. All regions
have a role to play in the knowledge economy, provided that they can identify comparative
advantages and potential and ambition for excellence in specific sectors or market niches.

The concept of smart specialisation is also consistent with and supports the main reform goals of
the proposals for the EU Cohesion Policy 2014-2020, published in October 201110:

x delivering the Europe 2020 objectives of smart, sustainable and inclusive growth,
x reinforcing policy performance and focus on results,
x maximising the impact of EU funding through thematic concentration.

Indeed, smart specialisation has a strategic and central function within the new Cohesion Policy
being a key vehicle for ensuring Cohesion Policy's contribution to the Europe 2020 jobs and
growth agenda.

Within the new Cohesion Policy, smart specialisation has been proposed as an 'ex-ante
conditionality'. This means that every Member States and region have to have such a well-
developed strategy in place, before they can receive EU financial support through the Structural
Funds for their planned innovation measures. This conditionality applies specifically for two of
the 11 thematic objectives of the ERDF:11

x strengthening research, technological development and innovation (R&I target),

x enhancing access to and use of quality of ICT (ICT target).

Likewise, the same conditionality applies to theme one ('Fostering knowledge transfer and
innovation in agriculture, forestry and rural areas') of the European Agricultural Fund for Rural
Development (EAFRD).12

In this context it is of crucial importance to understand the strong process element of smart
specialisation and the eminent role the various innovation stakeholder and entrepreneurs are

8
Council Conclusions on Innovation Union for Europe, 3049th Competitiveness Council meeting. Brussels, 26
Nov. 2010.
9
Article 174 of the Treaty on the Functioning of the European Union (TFEU) – Treaty of Lisbon.
10
Brussels, 6.10.2011 COM(2011) 615 final 2011/0276 (COD)
See: [Link]
11
Annex IV of the general SF draft regulation, COM (2011) 615.
12
[Link]

9
asked to play within that process in each Member State and Region. Their knowledge and
commitment is key to identifying those priority areas and knowledge-based investments that are
most likely to deliver growth and jobs in the regions. And it is not only a reinforced stakeholder
involvement and strong internal connectivity that counts but smart specialisation is also pointing
regions towards more strategic cross-border and trans-regional cooperation to achieve more
critical potential and related variety.

Last but not least, the importance of monitoring and evaluation within these strategies should be
particularly highlighted, providing the link between smart specialisation and the goal of
reinforcing results orientation of the Structural Funds in general. It is not accidentally that the
smart specialisation conditionality refers explicitly to the need for RIS3 strategies to include a
monitoring and review system.

To choose appropriate results indicators already at the level of the smart specialisation strategy is
extremely important for the cohesion policy, as it is the one of the essential keys for ensuring that
all stakeholder incentives and behavioural responses are correctly aligned and that the policy can
be monitored accordingly and adjusted where necessary, creating a virtuous policy learning
cycle13. As the Fifth Cohesion Report states, 'the starting point for a result-oriented approach is
the ex-ante setting of clear and measurable targets and outcome indicators'.

13
Barca, F., and McCann, P., 2011, Methodological note: Outcome Indicators and Targets – Towards a
Performance Oriented EU Cohesion Policy and examples of such indicators are contained in the two
complementary notes on outcome indicators for EU2020 entitled Meeting climate change and energy objectives and
Improving the conditions for innovation, research and development.
See: [Link]
See also Barca, F., McCann, P. et. al., 2011, Outcome Indicators and Targets – Towards a New System of
Monitoring and Evaluation in EU Cohesion”. Available at:
[Link]
Other relevant documents on this issue can be found at:
[Link]
[Link]

10
PART II: THE RATIONALE OF SMART SPECIALISATION

What: Concentrating knowledge resources for economic

specialisation

The underlying rational behind the Smart Specialisation concept is that by concentrating
knowledge resources and linking them to a limited number of priority economic activities,
countries and regions can become — and remain — competitive in the global economy. This type
of specialisation allows regions to take advantage of scale, scope and spillovers in knowledge
production and use, which are important drivers of productivity.

Furthermore, strategies that combine innovation with specific strengths of the national/regional
economy offer a much greater chance of success. Imitating other regions by trying to create
'miracle growth' in headline industries such as semiconductor or biotechnology not only lessens
the chances for the imitating region to succeed, but also perpetuates patterns of market
dominance with leaders and followers. In short, Smart Specialisation is about generating unique
assets and capabilities based on the region's distinctive industry structures and knowledge bases.

Why: Learning lessons from the past

Previous regional innovation strategies have often suffered from one or more of the following
weaknesses14:

x They lack an international and trans-regional perspective, i.e. the regional innovation and
economic system is often considered in isolation.
x They are not in tune with the industrial and economic fabric of the region; there is too
much public involvement in R&D which is not sufficiently business driven.
x A sound analysis of the region's assets is missing.
x There is a ‘picking winner's syndrome’.
x The best performing regions are copied without consideration of the local context.

As a result, regional innovation policies have often demonstrated a lack of efficiency in

identifying priorities and forms of practical cooperation between regions. This issue is even more
critical in the current economic crisis where public and private financial resources are scarce.

The smart specialisation concept therefore promotes efficient, effective and synergetic use of
public investments and supports countries and regions in strengthening their innovation capacity,
while focusing scarce human and financial resources in a few globally competitive areas in order
to boost economic growth and prosperity.

14 For more information about previous innovation activities funded by the EU, please see the Commission
Working Document 'Innovative strategies and actions: Results from 15 Years of Regional Experimentation' at
[Link]

11
Who: Putting entrepreneurial knowledge to work

Smart specialisation addresses the difficult problem of prioritisation and resource allocation
decisions by allowing entrepreneurial actors to demonstrate the most promising areas for future
regional development through what has been described as an 'entrepreneurial process of
discovery.'15 This process can reveal what a country or region does best in terms of R&D and
innovation because entrepreneurial actors are best placed to know or discover what they are good
at producing. This typically happens through trial and error and experimentation in new
activities. Regions therefore need to pro-actively involve entrepreneurial actors in strategy design
and offer more incentives for risk taking.

Entrepreneurial knowledge involves much more than science and technology. Rather, it
combines and relates this to knowledge of market growth potential, likely competitors and the
entire set of input and services required for launching a new business activity. The synthesis and
integration of this previously dispersed and fragmented knowledge should help to create a vision
for opportunities in existing or new sectors. It is this type of knowledge that needs to be
activated, mobilised and supported as the main ingredient in a process of smart specialisation.

However, who has the entrepreneurial knowledge in the regional economy? It may be held by
firms, which is often the case in 'advanced' regions rich in entrepreneurial experiments and
discoveries. In this case, the process of smart specialisation is likely to be more evident. Yet in
many other cases where industry structures and entrepreneurial capabilities are weak, it is crucial
that knowledge is identified and activated elsewhere, such as in universities or public research
institutes. Collaborative projects with local firms can help to reveal information about the future
value of certain specialisations.

Entrepreneurial actors must therefore be understood in a broad sense to include inter alia firms,
higher education institutions, public research institutes, independent innovators; whoever is best
placed to discover the domains of R&D and innovation in which a region is likely to excel given
its existing capabilities and productive assets. Given the importance of entrepreneurial
experiments and discovery, there is no contradiction between a smart specialisation policy and
one to encourage entrepreneurship. On the contrary, these two policies are mutually reinforcing;
without strong entrepreneurship, the strategy of smart specialisation will fail because of a deficit
in the entrepreneurial knowledge needed to feed and nurture this strategy.

How: Setting in motion regional change

Smart specialisation strategies will usually require some sort of structural change, which could
follow from one of the following not mutually-exclusive processes:

15
This idea was introduced and is elaborated by Foray et al (2009) in 'Smart Specialisation – The Concept', a Policy
Brief of the Knowledge for Growth Expert Group advising the then Commissioner for Research, Janez Potonik.

12
 x Firstly, a transition from an existing sector to a new one based on cooperative institutions
and processes, i.e. the collective R&D, engineering, and manufacturing capabilities that
form the knowledge base for development of the new activity. For example, entrepreneurs
in Austria discovered a transition path from fine mechanical and optical engineering to
medical technologies; the initial set of inventions in medical technologies emerged from
the industrial capabilities and competences which were already strong in mechanical
engineering.

x Secondly, modernisation is the technological upgrading of an existing industry, involving

the development of specific applications of a Key Enabling Technology (see Box 2 for
more information) to improve efficiency and quality in an existing (perhaps traditional)
sector. For example, the Finnish pulp and paper industry views nanotechnology as a
promising source of valuable applications and its firms are taking steps to assess this
potential. Some companies are responding to these opportunities by increasing their overall
internal R&D investment, which is aimed not only at implementing available technologies
but also at exploring recent advances in areas of nanotechnology and biotechnology.

Box 2 - Key Enabling Technologies

The deployment of Key Enabling Technologies (KETs) can be an important component of a

smart specialisation strategy because of their horizontal nature and transformative potential.
Many future goods and services will be driven by KETs such as semiconductors, advanced
materials, photonics and nanotechnology. Moreover, these goods and services will be crucial in
addressing the 'grand societal challenges' facing the EU, including energy supply, public health,
ageing and climate change. Whilst Europe has very good research and development capacities in
some key enabling technology areas, it has not been as successful in translating research results
into commercialised manufactured goods and services.

Smart Specialisation strategies can help to address this gap between innovation and commercial
application. Not all Member States and regions can be leaders in developing KETs, but they can
benefit in different ways, including upstream and downstream links in value chains. An example
of the successful use of KETs is the Slovenian automotive sector which has developed
specialised products to supply the main European car manufacturers. This was achieved through
the identification of niche areas in KET related fields and the development of strategic research
agendas in priority technologies such as biosensors, hydrogen & lithium batteries, plastic
materials and nuclear magnetic resonance studies.

x Thirdly, diversification: In such cases the discovery concerns potential synergies

(economies of scope and spillovers) which are likely to materialise between an existing
activity and a new one. Such synergies make the move towards the new activity attractive
and profitable. For example, the region of Toulouse exhibits smart specialisation in
aeronautics (Airbus valley). This has led to an extension of entrepreneurial activities and
higher education and research infrastructure to new areas such as satellites and GPS
technologies.

13
 x Finally, radical foundation of a new domain: The discovery here is that R&D and
innovation in a certain field can make previously low growth activities suddenly become
attractive. Such radical foundation involves the co-emergence of R&D / innovation and
related entrepreneurial activity. For example, the development of IT applications for the
management and maintenance of the archaeological and historical heritage in Italy
(Florence) is a good example of the co-emergence of an R&D / innovation area and a niche
market.

Smart specialisation is not about creating technology monoculture and uniformity; on the
contrary, it is likely to promote greater diversity. Indeed, regions can sustain multiple lines of
smart specialisations (priorities). Most of the above structural changes generated by smart
specialisation strategies actually involve the creation of variety, such as the transition to new
activities or the diversification of existing sectors.

In particular, strategies aimed at fostering cross-sectoral or cross-border cooperation have proven

to be successful in generating ideas for new innovative applications and integrated solutions.
Cross-sectoral links can provide a region with the degree of originality and specialisation to
differentiate itself and provide a competitive advantage vis-à-vis other regions.

Where: A role for every region

The smart specialisation concept can be used in all regions, even though some are more
advanced in terms of knowledge production. However, the application of the concept in a
regional context has to be approached with care because the economic and institutional context
varies considerably between and within European regions.

This means that a Smart Specialisation strategy needs to take into account several geographically
specific characteristics to help generate growth in regions. In this respect the following points
need to be considered when applying smart specialisation to the regional context,16 as explained
also in Part III and Annex I of this document:

x The entrepreneurial process of discovery will work differently in every region: In some
places the process will be quite evident due to the high density of innovators and
entrepreneurs (usually core-cities). However, the process will be much harder in other
regions characterised by low population, a small number of sectors and large dominant
firms but with few external links. In this case, links between local universities and strong
public-private partnerships are the types of strategies that may be essential for smart
specialisation to work.

x Identifying sectors that can achieve critical mass should take into account the 'principles of
regional embeddedness and relatedness'. The first principle of 'embeddedness' refers to the

16
These points are based on a working paper by Phillip McCann and Raquel Ortega-Argilés (2001), 'Smart
Specialisation, Regional Growth and Applications to EU Cohesion Policy', Groningen University.

14
 existence of industries that are in tune with the relevant socio-economic conditions and can
rely on a trained local labour force and a history of cooperative relations with other
regional actors. Evidence shows that without displaying these characteristics, industries are
much more likely to be unsuccessful in the medium term. However, by concentrating only
on embeddedness, a regional development strategy may risk increasing vulnerability to
changing economic conditions. Therefore, it is crucial that the second principle of
'relatedness' is also taken into consideration. This principle describes the diversification of
firms into related areas based on new innovative techniques or processes. In other words, it
is a strategy of diversifying within a specialisation. This allows firms to build on the skills,
assets and capabilities within a region while adapting and improving on them through
innovation.

x Connectivity: Smart Specialisation should link emerging knowledge based industries to

other actors within and outside the region, but it does not always lead to good outcomes so
needs to be assessed. Firstly, we know that face to face interaction in particular places can
be crucial in nurturing innovation and there are many examples of regions that have used
what can be described as social capital to create knowledge based growth. Nevertheless,
local interaction can also be negative when it creates protectionism and rent seeking.
Interaction is most beneficial between different groups and across classes and power
structures. Secondly, connections to outside the region are only beneficial when ideas are
internalised to the benefit of local firms. Being connected to the outside, both digitally
(with ICTs) and physically (with transport infrastructure) may lead to a flow of human
capital out of the region (in a process labelled 'brain-drain').

x Integration of policies at regional level: Sector-based policies alone do not address the
need for links between different interventions. For example, increasing human capital
through a programme to enhance skills should match the needs of emerging industries.
Similarly, a strategy to increase the attractiveness of a place for investors has to take into
account social, cultural and legal issues in addition to purely economic considerations. A
successful strategy would therefore integrate policies that are formulated with demand side
considerations, through approaches such as public-private partnerships.

Smart Specialisation as a tool for regional policy has to be carefully considered and must follow
the 'place based approach' to economic development that has been promoted by both the
European Commission and the OECD. The strategies on their own will not bring about change if
they are not translated into delivery instruments considered in the Operational Programmes of
Cohesion Policy.

In summary…

The concept of Smart Specialisation is 'smart' for two main reasons:

x Firstly, it links research and innovation with economic development in novel ways such as
the entrepreneurial process of discovery and the setting of priorities by policy makers in
close cooperation with local actors.

15
 x Secondly, this process is carried out with an eye on the outside world, forcing regions to be
ambitious but realistic about what can be achieved while linking local assets and
capabilities to external sources of knowledge and value chains.

However, while each regional or national strategy will share common features, the place based
approach shows us that understanding the local context is crucial in their successful design.

The process of shaping and implementing a strategy is now considered in Part III and Annex I of
this guide.

16
PART III: RIS3 DESIGN IN A NUTSHELL
A national/regional research and innovation strategy for smart specialisation can be seen as an
economic transformation agenda based on four general principles summarised in four 'Cs' (Box
3).

Box 3 - The four Cs of smart specialization

x (Tough) Choices and Critical mass: limited number of priorities on the basis of own
strengths and international specialisation – avoid duplication and fragmentation in the
European Research Area – concentrate funding sources ensuring more effective
budgetary management

x Competitive Advantage: mobilise talent by matching RTD + I capacities and business

needs through an entrepreneurial discovery process

x Connectivity and Clusters: develop world class clusters and provide arenas for related
variety/cross-sector links internally in the region and externally, which drive specialised
technological diversification – match what you have with what the rest of the world has

x Collaborative Leadership: efficient innovation systems as a collective endeavour based

on public-private partnership (quadruple helix) – experimental platform to give voice to
un-usual suspects

These four 'Cs' are the leading elements of a RIS3 process that incorporate its main novelties
when compared to past experiences and inspire the strategy design.

In the following pages a simple six-step approach to RIS3 is sketched out, where the mentioned
leading elements are re-composed around a logical design structure for a RIS3. The six steps are
defined as follows:

1. Analysis of the regional context and potential for innovation,

2. Set up of a sound and inclusive governance structure,
3. Production of a shared vision about the future of the region,
4. Selection of a limited number of priorities for regional development,
5. Establishment of suitable policy mixes,
6. Integration of monitoring and evaluation mechanisms.

These six steps can be implemented in sequence, following the order in which they are presented
above. However, it is important to point out that they are likely to overlap in time as new actors
enter the process, new analysis uncovers unrealised potential, or ongoing projects deliver results
that can modify the fundamental context during the process.

17
Therefore, they should not be thought of as separate and autonomous stages in the process, but as
interacting components of a comprehensive design scheme whose implementation pattern
depends on the specificity of the regional context.

For those regions that are already advanced along the way of defining and adopting an
Innovation Strategy, the purpose of a RIS3 is not to restart a new process from scratch. Rather, it
is to build on achievements and bring them further to reinforce those components that are not yet
sufficiently developed: the outward-looking perspective, the focus on a few priorities, the
evaluation component associated with policy learning capabilities, etc.

This section presents each of the steps as defined above, including boxes with practical examples
for each step. Further details and useful references about each step can be found in Annex I of
this guide.

Step 1 - Analysis of the regional context and potential for innovation

As highlighted in Part II, RIS3 needs to be based on a sound analysis of the regional economy,
society, and innovation structure, aiming at assessing both existing assets and prospects for
future development. The common principle that is central to such analyses is the adoption of a
wide view of innovation that spans across economic activities and involves many sectors of the
civic society.

The analysis should cover three main dimensions:

x regional assets, such as technological infrastructures,

x linkages with the rest of the world and the position of the region within the European and
global economy, and
x dynamics of the entrepreneurial environment.

Regional assets: a strategy rooted in the regional specificities

First, it is necessary to focus on the regional specific context, assessing the existing assets,
evaluating major regional strengths and weaknesses, identifying any bottlenecks of the
innovation system and key challenges both for the economy and the society.

Economic differentiation is one of the central principles behind smart specialisation. The key to
successful differentiation is to exploit related variety, which suggests that a regional economy
can build its competitive advantage by diversifying its unique, localised know-how into new
combinations and innovations which are close or adjacent to it. The key point is that these new
combinations must be feasible or accessible given the existing assets, so as to exploit the
experience accumulated by regional actors. Therefore, it is important to capture during the
analysis phase any existing differentiation patterns, in particular by looking at those activities
that are emerging at the interception of existing and well-established ones.

18
Tools suitable for this kind of analysis can include SWOT analysis, regional profiling studies,
targeted surveys and expert assessments.

Example 1 - Analysis of the regional context — Skåne's innovation capacity

Skåne carried out a self-assessment in 2009 and has also performed a network analysis, a
functional analysis and an international peer review. Together, these form the basis for action
plans and ongoing work. The studies try to identify what the weaknesses and strengths of the
industrial and innovation system of the region of Skåne are. The studies show that:

x relatively substantial resources are invested in the early stages to pick up ideas that have
the potential to become new enterprises, but support structure for businesses is weak,
x structure for picking up service innovations is poor,
x access to risk capital is too limited,
x need for a systematic environmental and market analysis is great and is not satisfied.

The analysis also shows that better coordination of the efforts of the various players is
needed, as well as increased internationalisation of the supporting bodies. These findings have
been important for Skåne in developing the regional innovation strategy.

Looking beyond regional boundaries: the outward dimension of smart specialisation

An assessment of existing regional assets implies looking 'inside' the region; however, this might
be insufficient for a smart specialisation strategy. A major novelty of the smart specialisation
approach is that a region has to make its strategic decisions taking into account its position
relative to other regions of Europe, which implies that the RIS3 approach requires looking
beyond the regional administrative boundaries.

In other words, a region should be able to identify its competitive advantages through systematic
comparisons with other regions, mapping the national and the international context in search of
examples to learn from, or to mark a difference with, and performing effective benchmarking.
Moreover, a region should be able to identify relevant linkages and flows of goods, services and
knowledge revealing possible patterns of integration with partner regions. This is particularly
important in the case of less developed regions that would often need to source know-how and
technology from the rest of the world. The position of regional businesses within international
value chains in this respect is a crucial element to be considered.

This type of analysis is important because the concept of smart specialisation warns against
'blind' duplication of investments in other European regions. Such blind duplication of efforts
could lead to excessive fragmentation, loss of synergy potential, and ultimately could hamper the
reach of the critical mass required for success. On the contrary, interregional collaboration
should be pursued whenever similarities or complementarities with other regions are detected.

19
Tools suitable for this kind of analysis can include comparative studies, rounds of interviews
with other regions and interregional work groups.

Example 2 - International benchmarking in a Top Technology Region – Provinces of Limburg

in the Netherlands and Belgium, Noord-Brabant (Netherlands) and Vlaams-Brabant
(Belgium), Province of Liège (Belgium) and parts of North Rhine Westphalia(Germany)

The public administrators of the Top Technology Region contracted the Swiss research firm
BAK Basel to benchmark and map out their economic strengths. The research resulted in an
analysis and international benchmark of the region’s strengths and weaknesses. It indicates
how the Top Technology Region relates on an international level playing field to similar
regions such as Oberrhein and Øresund, and what development potential the cross-border
region has.

The BAK-based study identified and confirmed a number of the region’s strengths, as shown
in the BAK Technology Competitive Index. The Index reveals the technological strength of a
region based on the scale and growth of the relevant sector, the number of publications and
the number of patents. The focus is on sectors (clusters) that are by their nature 'top
technological'.

Entrepreneurial dynamics: prospects for a process of entrepreneurial discovery

Smart specialisation requires deep involvement of entrepreneurial actors in the strategy design
process. Entrepreneurial actors are not only firms, but also any individuals and organisations
who have some entrepreneurial knowledge. This analysis aims to build a systematic
understanding of the areas in the economy and society that have the greatest potential for future
development, and that are ready to be tapped (or need to be encouraged and extracted).

The analytical effort carried out in order to generate the basic information input for a RIS3
should have a special focus on the regional entrepreneurial environment, assessing whether it is
lively and can generate a significant flow of experiments, innovation ideas, or entrepreneurial
discoveries, or it is poor in experiments and entrepreneurial proposals and hence such activities
should be specifically supported.

Besides using and developing statistics on entrepreneurial activities, an effective appreciation of

entrepreneurial dynamic can only be performed if entrepreneurial actors and management and
governance bodies responsible of RIS3 engage in direct discussion. A RIS3 should hence
provide for a set of consultation and auditing tools, as for instance technology auditing,
interviews with cluster management and firms, mixed working groups, setting up of
observatories and monitoring organisations.

20
Step 2 - Governance: Ensuring participation and ownership

The fact that RIS3 is based on a wide view of innovation automatically implies that stakeholders
of different types and levels should participate extensively in its design. The perhaps most
common, tripartite governance model based on the involvement of industry, education and
research institutions, and government (the so-called Triple Helix model), is no longer enough in
the context of smart specialisation.

Innovation users or groups representing demand-side perspectives and consumers, relevant non-
profit organisations representing citizens and workers should all be taken on board of the design
process of RIS3. In other words this means that the governance model includes both the market
and the civic society. When it comes to the sensitive moment of deciding on strategic priorities, a
truly inclusive RIS3 governance structure should be able to prevent capture by specific interest
groups, powerful lobbies, or major regional stakeholders.

In order to secure that all stakeholders own and share the strategy, governance schemes should
allow for 'collaborative leadership', meaning that hierarchies in decision-making should be
flexible enough in order to let each actor to have a role and eventually take the lead in specific
phases of RIS3 design, according to actors' characteristics, background, and capacities.

When actors are many and different, it might be very difficult for them to find their own way to
collaborate and manage potential conflicts. In order to tackle this potential problem, RIS3
governance bodies should include 'boundary spanners', that is to say, people or organisations
with interdisciplinary knowledge or proven experience in interaction with different actors, and
who can hence help moderate the process.

The governance structure should have a dedicated Steering Group or a Management Team, a
Knowledge Leadership Group or Mirror Group, and should also allow for thematic or project-
specific working groups.

Example 3 - Public-private cooperation in West Midlands

The West Midlands Innovation Strategy project started in 1996, and aimed at fostering
innovation by enabling stronger cooperative links between public sector and different
elements of the private sector. After a detailed audit of regional capabilities the strategy
prioritised the establishment of a team of network brokers aiming to build on the existing
sector-based networks and to catalyse new ones. The establishment of three technology
centres bridged the gap between science and industry and served the requirements of three to
four sector-based networks. A sector-led system of designing and vetting business plans and
loan applications was established to close the gap between validation of technology and
market assessment.

21
Step 3 - Elaboration of an overall vision for the future of the region

Analytical evidence should be used to depict a comprehensive scenario of the regional economy,
society, and environment shared by all stakeholders. The scenario constitutes the basis for
developing a vision about where the region would like to be in the future, what the main goals to
achieve are, and why they are important.

Having a clear and shared vision of regional development is crucial in order to keep stakeholders
engaged in the process, a task that is particularly challenging, given that a RIS3 is a long-term
process.

An element closely intertwined to formulating an effective vision is RIS3 communication. Both

during the RIS3 design process and all along the process of implementation of the strategy, it is
crucial to have good communication. This is a way of spreading the vision, ultimately generating
a positive tension in the regional society towards strategic goals, thus allowing to embark new
stakeholders and keep the current ones engaged.

Example 4 - The vision of Flanders

By 2020 Flanders wants to rank among the top five knowledge-intensive regions in Europe.
To reach this target, the region has taken steps towards a transformation policy approach. This
focuses on value chains, economic clusters, open innovation and 'grand projects', which are
selective investments in future-oriented domains with a high innovation and growth potential
and large societal impact. The long-term vision about Flanders future development is
contained in the plan 'Vlaanderen in Actie' (ViA), a broadly-based initiative consisting of
several breakthroughs in the socio-economic domain. ViA conveys a vision that entails more
than a moderated improvement or some growth percentage points. Namely, it points to an
evolution that fundamentally alters the landscape and society of Flanders.

Step 4 - Identification of priorities

Priority setting in the context of RIS3 entails an effective match between a top-down process of
identification of broad objectives aligned with EU policies and a bottom-up process of
emergence of candidate niches for smart specialisation, areas of experimentation and future
development stemming from the discovery activity of entrepreneurial actors.

It is of crucial importance that RIS3 governance bodies focus on a limited number of innovation
and research priorities in line with the potential for smart specialisation detected in the analysis
phase that is anchored in entrepreneurial discoveries. These priorities will be the areas where a
region can realistically hope to excel.

22
As mentioned in Part II, in addition to specific technological or sectoral priorities, it is important
to pay attention to defining horizontal-type priorities, referring to the diffusion and application of
Key Enabling Technologies (KETs), as well as social and organisational innovations (see also
Annexes I and II).

Example 5 - Focus on priorities in Berlin/Brandenburg

In 1998/99 a RITTS study laid the foundation for an active innovation policy in Berlin. In
2007 it was decided to bundle forces with the surrounding Brandenburg region. Five joint
future Fields of Excellence were identified: Biotechnologies and Medical technologies and
pharmacy, Energy technologies, ICT and new Media, Optical technologies, and Transport
system technologies. These are underpinned by 4 cross-sectoral priorities: New materials,
Production and automation technology, Cleantech, and Security. These fields present the
regional strength in regional publicly funded R&D and industrial activity. Innovation support
measures concentrate on strengthening private sector R&D and knowledge transfer, especially
for SMEs.

Step 5 - Definition of coherent policy mix, roadmaps and action plan

The strategy should be implemented through a road map, with an effective action plan allowing
for a degree of experimentation through pilot projects.

An action plan is a way of detailing and organising all the rules and tools a region needs in order
to reach the prioritised goals, and it should provide for comprehensive and consistent information
about strategic objectives, timeframes for implementation, identification of funding sources,
tentative budget allocation.

Pilot projects constitute the main tools for policy experimentation and allow testing
unprecedented mixes of policy measures at a small scale, before deciding on implementation at a
larger and more expensive scale. In order to serve such a purpose effectively, pilot projects
should be coupled with effective evaluation mechanisms leading to sound appraisal of success
and feasibility as mainstream RIS3 projects.

Example 6 - OECD/European Commission guidance

Publications such as the joint 2011 OECD/European Commission book 'Regions and
Innovation Policy' or the 2011 EC Communication 'Regional Policy for smart growth in
Europe 2020' identify taxonomies of delivery instruments and/or offer a catalogue of possible
innovation instruments and examples from regions that have successfully used them, which
should act as an inspiration to regions to design smart and efficient policy mixes.

23
Step 6 - Integration of monitoring and evaluation mechanisms

Mechanisms for monitoring and evaluating should be integrated in the strategy and its different
components from the very beginning.

Monitoring refers to the need to follow progress of implementation. Evaluation refers to

assessing whether and how strategic objectives are met. In order to perform evaluation, it is
essential that objectives are clearly defined in a RIS3 in measurable terms at each level of
implementation, i.e. from the strategic overall objectives to the specific objectives of each of its
actions. A central task of RIS3 design is to identify a parsimonious yet comprehensive set of
output and results indicators and to establish baselines for the result indicators and target values
for all of them.

The design effort a RIS3 implies does not come to an end when the strategy moves on to the
implementation phase. A strategy for smart specialisation should evolve and adjust to changes in
economic and framework conditions, as well as to emergence of new evidence during
implementation through evaluation and monitoring activities.

Example 7 - Integrated monitoring and evaluation in Lower Austria

The Innovation Assessment Methodology Lower Austria is a comprehensive system of

different monitoring and evaluation tools for Lower Austria’s innovation policy. Its aim is to
gain insight into the results of innovation support services with the aim of improving delivery
instruments, justify amounts spent and promote its success.

One of the tools used is the Balanced Scorecard Methodology, a strategic performance
management tool, developed and heavily used in the private sector. In Lower Austria it is
used to define the objectives and target values for the 6 components of Lower Austria’s
economic strategy (including innovation) and to break them down at intermediary level as
well as at programme level.

A particularly important source of information and indications on how to review a RIS3 is peer
review, which is a comprehensive RIS3 examination carried out by peer regions. Engaging in
this sort of exercises allows learning lessons from regions that might have already experienced
some of the problems the peer-reviewed region is facing and/or establishing direct contact with
potential partners for cooperation.

24
 Example 8 - Fine-tuning RIS3 through Peer-Review

Peer-review can provide regional policy-makers with new and important insight into their
RIS3 strategy by looking at it from other regions' perspective. As such, peer-review exercises
are currently organised by the S3 Platform (IPTS) in order to allow regions to learn from
other regions. In general, such a peer-review exercise goes through three stages: preparation,
assessment (a review by peer regions and experts) and post-review follow-up.

Stage 1: During the preparation stage, a region has to prepare a structured presentation of
their RIS3 strategy following a report template, which addresses a number of areas defined in
the RIS3 Guide. The template is provided by the S3 Platform. During this preparatory stage,
the representatives of the region under review prepare a review of their region's RIS3 in
consultation with the S3 Platform team and experts.

Stage 2: The actual review phase generally takes the form of an interactive workshop. During
the workshop, the region under review presents its strategy and has an opportunity to engage
in dialogue with peer regions, representatives of the European Commission and independent
academic experts working in the field of smart specialisation. Following the peer-review
phase, the S3 Platform team prepares a summary report, which includes an outline of the
peer-review session, feedback from peer regions, as well as any conclusions and expert
recommendations.

Stage 3: During the post-review follow-up stage, the S3 Platform team will then contact the
reviewed region to monitor its progress based on the actions listed in the post-workshop
report. The region will be asked to complete a follow-up questionnaire twice: three and six
months after the peer-review workshop.

25
 ANNEXES

26
 ANNEX I: A STEP-BY-STEP APPROACH TO RIS3 DESIGN

Six key steps to design RIS3

This Annex develops the stepwise path for the design of RIS3 presented in Part III of the Guide.
Each of the steps (see Box 4) is discussed here in more detail, along with implementation advice,
methodological approaches and further useful references.

Box 4 - A stepwise approach for RIS3 design

STEP 1. Analysis of the regional context and potential for innovation

STEP 2. Governance: Ensuring participation and ownership

STEP 3. Elaboration of an overall vision for the future of the region

STEP 4. Identification of priorities

STEP 5. Definition of coherent policy mix, roadmaps and action plan

STEP 6. Integration of monitoring and evaluation mechanisms

27
Step 1 - Analysis of the regional context and potential for innovation

Differentiation is at the very heart of RIS3. The key to successful differentiation is to exploit
related variety, suggesting that a regional economy can build its competitive advantage by
diversifying its unique, localised knowledge base (existing specialisation) into new
combinations/innovations which are close or adjacent to it. Closeness is important because new
combinations must be feasible or accessible given the existing assets, precisely in order to
exploit the experience accumulated by regional actors (see box below).

Analysing and assessing the potential for innovation-driven differentiation is crucial for creating
an evidence base for the prioritisation process in the RIS3. The need to analyse regional
innovation potential was a fundamental starting point in the history of regional innovation
strategies in Europe. The focus was on dual analysis: an analysis of SME needs and barriers for
innovation; and an assessment of the support provided by the infrastructure in place in the region
to back innovation.

Comparison of the results of the two analyses leads to a 'gap analysis', where mismatches
between SME latent and implicit needs and demand for support, on the one hand, and the
effective value added of the existing support, on the other hand, are identified. Questions such as
the visibility, relevance and effectiveness of the support infrastructure are at the heart of these
analyses. This then leads to proposals for improvement in the innovation support infrastructure
and better use of public funding, and, as a result of more effective support, improved innovation
potential in regional firms

Several methods can be used to collect and treat information for such analyses. They are
described in a methodological guide using a decade of experience with Regional Innovation
Strategies (IRE 2006).17 The most widely used methods are desk research, large scale
questionnaires (web-based or surveys) and personal interviews (face-to-face, telephone, or in
working groups). A key feature brought in by these European Union-sponsored exercises was the
introduction of external experts in this analytical phase.

The benefits of bringing in an external view to address sensitive issues such as redundancies and
overlaps, or the lack of efficiency and effectiveness of agencies and programmes in supporting
innovation, were particularly demonstrated in the 'supply' analysis. These benefits were greater
when the external consultants and experts were truly involved in the exercise, when foreign
experts teamed up with national or regional ones, or when they acted as coaches for the regional
decision-makers (to ensure a strong legacy from their input, rather than a one-off contribution).

These analyses have the great value of introducing systematic, non-partisan and evidence-based
information on innovation and innovation support. In the most successful cases, international
comparisons and benchmarking were also used in a smart way to improve regional policy.

17
Innovative Regions in Europe Network (2006), RIS Methodological Guide, Stage 1.

28
However, despite the major benefits of these structured and strategic approaches for promoting
innovation in regions, shortcomings were identified in these methodologies: they reflect a too
linear view of innovation, run the risk of autarky, and take a narrow view on the role of policy in
the exercise. Within the perspective of a RIS3, it can also be argued that too little emphasis is
placed on the identification of 'niches' or specific domains for (present and future) competitive
advantages, from an international stance. Hence, the work for this analytical step of a RIS3
strategy should combine the above types of analyses with other analyses aiming at shedding light
on potential for knowledge-based transformation of the economy, based on information on the
positioning of the regional economy in international value chains and on identification of
specific key assets.

Several methods can be used to support the identification of potential niches for smart
specialisation.

An integrated method that delivers a unique solution to this question does not exist: it is the
combination of an array of evidence that is most likely to provide a suitable basis for this
identification process. The main relevant methods are listed below, ranging from purely
quantitative to more qualitative ones. The last two — in-depth cluster case studies and peer
reviews, and foresight — provide the opportunity to integrate the field knowledge held and
concrete experimentation carried out, by regional actors in the spirit of an 'entrepreneurial
discovery process'.

1. Analysis of (matching) Scientific and Technological specialisation: analyses of

specialisation of R&D investment, publications and citations, and patent applications and
citations by 'field'. A region has a comparative advantage in a certain field if it shows an
above-average concentration of these indicators compared to the value taken in the country
or a group of countries.18 The advantage of this method is that such data are available in a
comparative format (with some restrictions), but the disadvantage is that it reflects S&T
potential rather than commercial value or innovation prospects. A major problem is to
relate scientific disciplines to technological domains and production sectors, since many
disciplines and technologies are generic and find applications in many different sectors.19
Sector classification is also an important restriction as it is a based on rather outdated
product definitions which do not match current product mixes (e.g. the difficulty of
defining environmental product or services 'sectors'). It is more interesting to calculate
changes of indexes over time, indicating specialisation trends which give a perspective on
the evolution of a region’s S&T specialisation.

2. Analysis of regional economic specialisation: quantitative analyses calculate degrees of

specialisation of regional economies on the basis of employment (or value-added) data.
Location quotients measure whether some sectors are over-represented in a regional
economy compared to other regions or countries. This is sometimes equated with 'cluster
presence' even if these indicators only capture agglomeration effects, and not interactions,
an essential feature of a cluster. Specialisation indexes thus indicate the presence of critical

18
This was thoroughly carried out, at national level in Europe Innova (2010), National Specialisation report,
Sectoral Innovation Watch.
19
Conversion tables exist which try to address this problem.

29
 masses of activity, but not innovation-driven linkages. They can point to problems when
regions remain too specialised in declining non-competitive activities. Hence, it is
important to match these specialisation data with performance indicators (value added,
exports, etc.) which is one of the main tasks performed by the European Cluster
Observatory.20 As with the previous type of analysis, analysis of specialisation changes
over time is likely to bring more insightful elements than static analyses.

The elements identified in points 1 and 2 above should be highlighted when conducting a
preliminary analysis/(self-)assessment of the regional innovation system and strategy. Further
elements are suggested in Box 5.

20
[Link]

30
 Box 5 - Examples of elements for (self-) assessment

Strategic approach: endorsement of the innovation strategy at the highest political level; prioritisation of
public investment in research/education/innovation in the region (by all levels of government);
predictability of the innovation policy framework for regional stakeholders; reliance on the consultation
and support of regional stakeholders as a basis of innovation policy; degree of control over strategic
regional assets.

Policy mix and framework conditions: cooperation between the local, regional, national and EU levels in
the relevant policies (R&D, innovation, education, ICT …); coordination of all the relevant policies
within the region; consistency between policies addressing the supply and the demand (take-up) of
innovations.

Entrepreneurship: Favourable conditions for equity investment, business angels and venture capitalists;
business environment favourable to the creation of new SMEs; existence of policies and instruments to
foster the commercialisation of the output of innovation; existence of specific measures to support young
innovative companies; appreciation of regional inventions.

Assessment and mapping of digital infrastructures and e-communication services: existing and planned
technology infrastructures (broadband networks) and other telecom- and internet-related services are
presented in the Digital Agenda Scoreboard.21

Human resources: Attractiveness of working conditions for researchers compared with other employment
opportunities; facilitated mobility of research and innovation personnel between the public and the
private sector.

Public sector: Existence of specific provisions in standard public procurement procedures to foster
innovation; the introduction of innovations within public sector organisations.

Education and research: Existence of policies to ensure proper supply and mix of skills; existence and
coverage of training on entrepreneurship and creative problem-solving; autonomy and transparency of
education and research organisations; existence of policies to support the regular and long-term
collaboration of education and research organisations with businesses; explicit consideration of the role
of Key Enabling Technologies (KETs).

Evaluation system: Institutionalisation of ex-post assessment of innovation policy and support measures
through evaluations; monitoring of the results of innovation policy and support schemes through output
indicators; transparent evaluation of research and innovation projects and performers on the basis of their
quality.

Finance: Predictability of the budgetary framework; stability of public investment in research, education
and innovation; proper balance between institutional and competitive funding for innovation; efficiency
of support schemes (value for money); leverage of private financing.

21
[Link]

31
 3. 'Cluster' in-depth case studies and peer reviews: to move beyond the figures that are
available for comparison, more qualitative studies can be carried out on activity domains
where a region shows relative specialisation. This involves expert work on value chain
analysis (undertaken in an international environment and enlightening the spatial division
of labour), context conditions for the operation of the cluster, labour market situation, etc.
It also involves an analysis of the linkages between the cluster and other clusters or
industries, in order to examine whether one can talk about related variety across the areas
of regional specialisation. One interesting approach is the 'revealed skill relatedness' (RSR)
method (Neffke and Svensson Henning, 200922). RSR measures the degree to which
industries share similar skill requirements, and this is seen as a very important vehicle for
knowledge transfer between clusters (through people mobility). It is based on a network
analysis using data on job changes between industries, showing proximity between
industries in terms of skill sets.

Sophisticated analyses of clusters such as Henning et al. (2010)23 combine this type of
analysis with a functional analysis linking economic structure to cluster challenges and
assessing the functions taken by the cluster initiative. The functions analysed are:
knowledge creation and knowledge diffusion; identification of opportunities and barriers;
stimulation of entrepreneurship/management of risk and uncertainty; market formation;
mobilisation of resources; and legitimation. These types of analysis are conducted by
experts who study the cases in close cooperation with cluster actors: this helps to take into
account innovation opportunities identified by leading actors (companies, universities,
intermediaries, etc.) Mixing regional experts with international experts helps to give more
weight to the international competitiveness issue. Adding key stakeholders from foreign
clusters brings in a useful peer review dimension to the analysis.

4. Foresight: the aim of foresight is to capture existing expert intelligence sources on future
trends and make them accessible for present decision-making. The role of foresight is to
elucidate possible paths for the future in order to open the debate on possible development
paths. Foresight has the following characteristics24: Action-oriented; Open to alternative
futures; Participatory; and Multidisciplinary. There is a multiplicity of methods that can be
used and combined to implement foresight studies, the best known being expert panels and
multi-round Delphi surveys. They differ in their expected benefits, conditions of use, time
requirement, etc. and their common feature is that they rely heavily on expert knowledge
and involve interactions between experts (Table 1; see more details on the FOREN
website). For RIS3, foresight studies would ideally combine regional expertise with
international expertise able to put regional assets in perspective with wider trends.

22
Neffke F. and Svensson Henning M. (2009), Skill-relatedness and firm diversification, Papers on Economics and
Evolution 0906. Jena Evolutionary Economics Group, Max Plank Institute of Economics.
23
Henning M., Moodysson J. and Nilsson M. (2010), Innovation and Regional Transformation: from clusters to new
combinations, Region Skane.
24
European Commission (2001), FOREN Guide - Foresight for Regional Development Network - A Practical Guide
to Regional Foresight. IPTS Seville.

32
 Table 1 - Methods used for Foresight

Methods & Tools Diagnosis Prescription Qualitative Exploratory Open

Prognosis Quantitative Normative Predictive
Environmental scanning &
XX X X
monitoring
System dynamics XX X X X X
Structural analysis XX X X X X
Agent modelling XX X X X
SWOT analysis XX X X X X
Trend intra & extrapolation X XX X X X X
Modelling & simulation X XX X X X
Gaming X XX X X X
Creativity methods
(brainstorming, mind X XX X X X X X
mapping…)
Expert panels XX X X X X X
Delphi survey X X X X X X XX X
Backcasting X XX X X X X
S&T roadmapping X X X XX X X
Critical & key technology
X X XX X X X X
study
Scenario building XX X X X X
Morphological analysis &
XX X X X X
relevance trees
Cross-impact analysis XX X X X X
Multi-criteria analysis XX X X X X
Source: [Link]

33
Step 2 - Governance: ensuring participation and ownership

At the beginning of a RIS3 design process, it is necessary to define the scope and expected goal,
with a view to ensuring participation of the key actors and securing ownership of the approaches
defined in the strategy.

With respect to the ultimate and long-term goal of the RIS3, the Vision for the future of the
region should underpin the whole process: all analyses, debates, participative actions, pilot
projects, etc. should be seen as participating towards the long term goal identified in the Vision.
Potential actors relevant to the RIS3 process span from public authorities to universities and
other knowledge-based institutions, investors and enterprises, civil society actors, and external
experts who can contribute to the benchmarking and peer review processes.

Defining the scope of the RIS3 is crucial, since different stakeholders will have different
expectations and agendas on the question at stake, often restricted to their own areas of action.
Since RIS3 aims to achieve more effectiveness in all public action targeting regional
transformation, a wide view of innovation is to be adopted. This will emphasise that innovation
may occur everywhere, in different forms, and not only in the form of high technology
development in metropolitan areas:

x Including innovation in services and in the public sector, in addition to innovation in the
manufacturing sector which most policies currently target;
x Encompassing innovation based on different types of knowledge bases, leading to different
modes of innovation (Table 2): 1) the 'STI' (Science, Technology, Innovation) mode, based
on analytical knowledge/basic research (science push/supply-driven approach) and
synthetic knowledge/applied research (user-driven approach), emphasising product and
process innovations; and 2) the 'DUI' (Doing, Using, Interacting) mode, based on synthetic
and symbolic knowledge (market/user-driven), emphasising competence building and
organisational innovations.25

With respect to policy areas and organisations involved, the above wide view means that several
policy areas are concerned with the RIS3, beyond the traditional science and technology and
economy ministries and agencies. Interministerial Committees are tools to cope with this need
for a wide conclusion of stakeholders.

A RIS3 is an exercise that deals with policies developed by local, regional and national
authorities (as well as EU Cohesion policy and EU research policy). This multi-level dimension
of policy implies that governance mechanisms need to include stakeholders and decision-makers
from these various levels. It also involves that links must be established between strategies for
research (usually decided upon at national level) and strategies for innovation (usually under the
responsibility of or developed in coordination with regional authorities). They use different

25
Lorenz P. and Lundvall B.A. (2006), How Europe’s Economies Learn. Coordinating Competing Models:
Different modes of innovation.

34
delivery instruments but need to look at common results. This process also enables the
identification of the most adequate policy-mix to use.

Table 2 - Differentiated knowledge base: a typology

Analytical Synthetic Symbolic

(science-based) (engineering-based) (art-based)

Developing new knowledge about Applying or combining existing Creating meaning, desire, aesthetic
natural systems by applying knowledge in new ways; know how qualities, affection, intangibles, symbols,
scientific laws; know why images; know who

Scientific knowledge, models, Problem-solving, custom production, Creative process

deductive inductive

Collaboration within and between Interactive learning with customers and Experimentation in studios and project
research units suppliers teams

Strong codified knowledge content, Partially codified knowledge, strong tacit Importance of interpretation, creativity,
highly abstract, universal component, more context-specific cultural knowledge, sign values, implies
strong context specificity

Meaning relatively constant between Meaning varies substantially between Meaning highly variable between area,
areas areas and gender

Drug development Mechanical engineering Cultural production, design, brands

Source: Cooke, P. et al. (2006)26

The governance of a RIS3 strategy

No matter who is involved, the RIS3 process needs to be interactive, regionally-driven and
consensus-based. This is because, far from the stereotype of heroic individuals in labs and
garages, the innovation process is increasingly a collective social endeavour in which success,
for regions as well as firms, depends on the inter-organisational capacity to absorb, generate and
exchange knowledge in a timely and cost-effective manner. Although regional development is
also a collective social endeavour in which national and supra-national levels play their part, the
regional level is the most important part of the process, not least because no one has a greater
commitment to or knowledge of a region than the individuals and organisations that are based
there.

The governance structures and processes that are described and recommended here should not be
seen as a rigid template that must be applied in all regions regardless of local circumstances. On

26
Cooke P., Asheim B., et al. (2006), Constructing Regional Advantage: principles, perspectives, policies. Report to
the European Commission.

35
the contrary, they are offered as general guidelines that need to be assessed and applied in
particular regional contexts, each of which has its own unique combination of problems and
possibilities. In other words, the regional context will help to determine the precise mix of
organisations that need to be involved in the RIS3 process. The regional context is also the
appropriate context in which to decide who is best placed to lead the RIS3 process.

In terms of process, RIS3 design involves analyses, experimentation, debates and decision-
making, with a wide participation of actors and experts from within and outside the region. This
needs to be communicated, understood and acknowledged: it is a time-consuming process that
should be seen as an investment rather than a burden.

The most important types of organisation that need to be involved in the RIS3 process are public
authorities, universities and other knowledge-based institutions, investors and enterprises, civil
society actors, and international experts who can offer benchmarking and peer review services,
for example. Figure 1 exemplifies a number of organisations belonging to each of the previous
categories, as identified by EURADA.

Figure 1 - The regional knowledge ecology

Source: EURADA

36
A criticism that was sometimes levelled at the RIS process was that it was prone to being
'captured' by traditional interest groups in the region, groups that were more interested in
preserving the regional status quo than transforming the regional economy through innovation.
Although this criticism can be overdone (because regional governments, for example, had to be
involved in the RIS process), the design of the RIS3 architecture needs to anticipate the risk of
capture and make it more difficult for traditional groups to frustrate the process.

In the Open Innovation era, where social innovation and ecological innovation entail behavioural
change at the individual and societal levels if the challenges of health, poverty and climate
change are to be addressed, the regional governance system should be opened to new stakeholder
groups coming from the civil society that can foster a culture of constructive challenge to
regional status quo.

In particular, in order to guarantee a livelier and truly place-based entrepreneurial process of

discovery that generates intensive experimentation and discoveries, it is imperative that new
demand-side perspectives, embodied in innovation-user or interest groups of consumers, are
represented along with intermediaries who offer a knowledge-based but market-facing
perspective. This means that the traditional, joint-action management model of the triple helix,
based on the interaction among the academic world, public authorities, and the business
community, should be extended to include a fourth group of actors representing a range of
innovation users, obtaining what is called a quadruple helix.27 This is the necessary
organisational counterpart of an open and user-centred innovation policy, because it allows for a
greater focus on understanding latent consumer needs, and more direct involvement of users in
various stages of the innovation process. RIS3 processes can develop environments which both
support and utilise user-centred innovation activities also with the aim of securing better
conditions to commercialise R&D efforts.

The quadruple helix allows for a variety of innovations other than the ones strongly based on
technology or science, in the spirit of the wide concept of innovation at the basis of RIS3, but it
requires significant flexibility, adaptation of processes, acquisition of new skills, and potential
re-distribution of power among organisations. This in turn calls for collective leadership and
moderation of the process as necessary practices for achieving successful governance.

Leadership assumes many forms. Three different, but equally important forms of leadership are
the following: political leadership (the people who are chosen by the electorate to represent us
and to lead our governments); managerial leadership (the people who manage the 'enterprise
function' in the public, private and third sectors); and intellectual leadership (the people who play
a leading role in connecting their universities to the worlds in and beyond their regions). The
Guide does not presume to suggest which form of leadership is the best or the most appropriate,
because this is a decision that needs to be made at the regional level, where the choice can be
informed by local knowledge of competence, credibility and character, the essential attributes of
a leader.

27
Arnkil R., et al. (2010), Exploring Quadruple Helix. Outlining user-oriented innovation models. University of
Tampere, Work Research Center, Working Paper No. 85 (Final Report on Quadruple Helix Research for the CLIQ
project, INTERREG IVC Programme).

37
Although a leader needs to have certain personal attributes, like the ones identified above,
leadership research has taken a ‘relational turn’ in recent years. Rather than being a static 'thing'
that a minority of people possess, leadership is now understood as a dynamic relationship
between leaders and led in which both sides play an active role in finding joint solutions to
common problems. In this context, a way to secure understanding and ownership of the main
strategic orientations is to allow for effective collaborative leadership among the key actors
involved in the process. When innovation processes embrace many different areas of the society,
as in the case of RIS3, collaboration among stakeholders holds the key to successful
implementation of innovative practices, implying that leadership has to be shared and exercised
across organisations. Collaborative leadership requires the emergence of collaborative practices,
as actors must find ways of managing conflict themselves.

In order to moderate the RIS3 design process, actors playing the role of boundary spanners
between the organisations are needed. These are actors endowed with an interdisciplinary
knowledge or experience of interaction with several different types of organisations; hence they
can facilitate new connections across sectors, foster new conversations between disciplines, and
inject novelty into the process. This in turn helps to overcome the sectoral and disciplinary silos
that reproduce old habits and routines, locking regional economies into their traditional paths of
development.

Boundary spanning skills tend to emerge from activities that straddle sectors, disciplines and
professions and they are invariably fashioned in action learning environments where there is a
high degree of novelty associated with the activity. Examples of such activities include
technology transfer, knowledge exchange, venture funding, regional economic development,
business services, and management consultancy, all of which afford an overview of the regional
economy. Formal recognition of the boundary spanning role, and its significance for universities,
businesses and the regional economy, would do much to promote a skill set that is critically
important to the moderation of the RIS3 process, particularly of the entrepreneurial process of
discovery, which lies at the heart of the process.

As far as the structure of the management body is concerned, it will clearly vary according to
local circumstances, it must be supported by robust governance arrangements. The RIS
experience is instructive here because it shows that local diversity can exist within a generic
governance system. The governance system of a typical RIS project revolved around three
elements — Steering Group, Management Team and Working Groups — and they worked in the
following way:

x Steering Group: the SG was responsible for the overall performance of the project and it
normally included members of the business community, local and regional government,
and key innovation actors, all of whom were expected to embed the project in their
respective fields of activity. The size of the SG was always carefully considered: too few
members could compromise the consensus-building process, while too many members
could be a recipe for a bureaucratic and unwieldy process. An appropriate balance was a
membership of around fifteen people meeting as a group every two or three months. The
main tasks would typically include the following: setting objectives and monitoring
activities, selecting the members of the Management Team, supervising the work

38
 programme, political and institutional support, and liaising with the European Commission.
The chair of the SG was invariably a local notable drawn from the business community,
academia or the public sector;
x Management Team: the MT was responsible for implementing the RIS project under the
general guidance of the SG. The composition of the MT varied a lot between the regions,
though all regions had a Project Manager who was supported by a small team of up to three
people. The main tasks of the MT often included the following: liaising with the EC and
providing progress reports, providing a secretariat to the SG, launching and coordinating
the study assessment tasks of the project, and fostering regional consensus around the
project, acting as a focal point for networking with other RIS regions to draw on their
experiences. Choosing the location of the MT was an important decision because how the
project was perceived was largely a function of where it was physically situated;
x Working Groups: the WG mechanism fulfilled two purposes: it helped to build regional
consensus for the RIS project throughout the region and it provided a means to engage the
business community, especially if the Working Groups were sector-based, as they were in
regions with strong sectoral specialisations. Where they were most effective, Working
Groups had clearly defined terms of reference and a credible timetable for the delivery of
results. The conclusions of the Working Groups were supposed to inform the strategic
discussions in the Steering Group.

Many regions will be able to draw on their unique RIS experience when they embark upon their
RIS3 strategies because these two processes have a good deal in common. It is important to
remember that regions are not being asked to do something totally new when they begin the
RIS3 journey of discovery. The original RIS experience also offers some instructive lessons with
regard to the involvement of the business community in the process:

x Communications: a clear communications strategy was deemed to be of enormous

importance, especially for the business community. The businesses actually involved in
RIS projects also required honest and timely feedback;
x Management: the Management Team and Steering Group personnel often played a key role
in maintaining effective communication, especially where the chair of the Steering Group
or the leader of the Management Group was a prominent local business leader or a well-
connected local networker (as they were in Yorkshire and Humber and Dytiki Macedonia
respectively);
x Sector Champions: Sector champions can help to engage the local business community in
traditional sectors as well as in new or emerging sectors, both of which need to embrace
innovation;
x Local Media: the involvement of local media helped to raise the profile of the RIS exercise,
especially in RIS Aragon, where two journalists from daily newspapers were involved in
the RIS process from the outset. Frequent coverage in the media helped the project to
resonate in the local business community;
x Pilot Projects: To overcome the criticism of the RIS process being no more than a ‘talking
shop’, it was found that pilot projects led by local business leaders were an effective form
of action learning which generated useful information as well as helped to maintain the
active engagement of the business community.

39
Some or all of these engagement mechanisms will be relevant to the RIS3 exercise because the
latter involves an even deeper and more iterative relationship with the business community. But
innovation is increasingly a collective social endeavour, and the business community should not
be expected to carry the full burden of innovation on its own shoulders. Success in the
innovation stakes will increasingly go to countries and regions that transcend the sterile
ideological debate about private versus public and embrace the fact that innovation is a collective
social endeavour, at the heart of which is a judicious private + public partnership.

Getting firms, universities, development agencies and regional governments to accept that
innovation is a collective social endeavour — where participants freely acknowledge that
working in concert can deliver far more than working in isolation — is arguably the most
important ingredient in the ‘recipe’ for purposeful entrepreneurial search. This does not displace
the firm from the forefront of the search process; but it does mean that the costs and risks
associated with entrepreneurial search are shared and therefore do not become too prohibitive for
the firm that is leading the search process.

To tap the potential of related variety, regional authorities and development agencies will need to
behave less like traditional public bureaucracies and more like innovation animateurs, brokering
new connections and conversations in the regional economy. New opportunities are emerging in
old regions as a result of connections and conversations that are now occurring but which never
occurred in the past despite the parties being co-located in the same region (proving that
cognitive proximity is far more important than mere physical proximity).

The onus of responsibility for creating such iterative processes rests primarily with public sector
bodies, especially universities, development agencies and regional governments. Learning by
doing will help these public sector bodies to appreciate the needs of firms, but more formal
action learning programmes will also be needed. A good example of such a programme is the
Place-Based Leadership Development Programme, which regions may wish to adapt and adopt
to help them acquire the iterative skills needed in the RIS3 exercise (see Figure 2).

Figure 2 - A Place-based leadership development programme

40
Under such a programme, universities, development agencies and regional governments could
jointly identify a project to explore the prospects for related variety in the regional economy.
Collaborative leadership development expertise would be developed through each actor bringing
substantive knowledge (‘know what’), professional networks (‘know who’) and skills (‘know
how’) to the initiative and explicitly sharing their knowledge and experience with other members
of the project team. The participants are then encouraged to introduce these collaborative
leadership skills back into their respective public bodies to help the latter to behave less like
traditional bureaucracies and more like animateurs of innovation and development. The
formation of a Knowledge Leadership Group would give an institutional expression to the
alliance between universities, development agencies and regional governments.

Finally, as the original RIS programme took consensus-building seriously, it is worth distilling
the lessons from that experience as a starting point for the RIS3 exercise. In the best cases, the
consensus-building process focused on three inter-related themes, namely awareness-raising,
priority-shaping and fostering a sense of ownership, each of which merits attention. Awareness-
raising was achieved in a number of different ways, including: (i) a project launch event such as
a high profile seminar or conference (ii) a series of presentations throughout the region to key
sectors, especially to the business community and the higher and vocational training institutions
(iii) publicity through radio, television and newspaper coverage (iv) the distribution of
customised brochures (v) the creation of a specialised project web site and (vi) the use of iconic
companies in the region as ambassadors for the project. Awareness-raising needs to be measured
and also needs to be calibrated with action, otherwise there is a danger that expectations will be
raised too early in the process, leading to disillusionment before the project has had time to show
some tangible results.

Enabling key actors to shape the priorities of the programme proved to be an important way of
retaining their commitment. Each actor will have a keen sense of their own priorities, as well as
their own diagnosis of the strengths and weaknesses of the regional economy, and these views
were subjected to critical review through a combination of SWOT analyses and collective
debate. Giving all participants the opportunity to shape the policy priorities is the key point to
establish because this process of open deliberation spawned a sense of ownership.

A sense of ownership was a natural outcome of the consensus-building process when the latter
was properly conducted. A sense of shared ownership among the Steering Group members
proved to be particularly important and this intangible asset was enhanced by regular
consultation with participants and by securing concrete outputs, proving that the RIS exercise
was about results as well as processes, more than just a ‘talking shop’ in other words.

Multi-level/multi-fund approach to RIS3

The process of innovation and the policies that shape it operate at multiple levels, from the
global to the local. For many key actors involved in the region, notably private firms and leading
universities, the development of the region will not be their primary focus. While regional public
authorities do have a territorial responsibility, innovative public services are increasingly being
delivered by external organisations. At the same time, although many national government
agencies and the European Union itself operate a range of innovation-orientated policies that do

41
not have an explicit territorial dimension, these supposedly space-neutral policies have a
profoundly uneven spatial impact. This is not to deny the importance of an active regional
dimension to innovation. On the contrary, for both corporate strategy and public policy the
region can be a living laboratory for new, more sustainable ways of working and living,
contributing to local, national and European development objectives. It is therefore vital that the
regional Knowledge Leadership Group includes stakeholders operating both outside and in the
region. In this respect, universities can be critical actors.

How does regional funding fit into this multi-level system? As a first step the region should use
technical assistance funding to build capacity to tap into the knowledge base of what is
happening outside the region, enhancing the connectivity of the region to the wider world. Such
knowledge needs to be shared amongst the regional stakeholders, as all too often partnerships
fail because of a lack of understanding of the other’s business drivers.

A powerful mechanism for achieving this common understanding is properly resourced regional
foresight and scenario-planning exercises involving the public, private and higher education
sectors, the chief aim of which would be to produce a regionally-attuned smart specialisation
strategy.

Figure 3 and Figure 4 suggest this may reveal how well-connected the key regional actors are
both internally and externally, and how structural funds can be used to overcome barriers and
strengthen connections within and outside the region.

Figure 3 - The Disconnected Region

42
 Figure 4 - The connected region

While the RIS3 conditionality in the Structural Funds regulations for 2014-2020 applies to the
ERDF for thematic priorities 1 and 2, RIS3 is a strategic process that should be set before the
actual analysis of which funds to use for implementing the strategy. From its inherent logic and
the fact that one of its key tenants is to increase synergies between different funding streams and
policies, it is clear that RIS3 is to be oriented towards a multi-level/multi-fund approach as
regards the delivery of its delivery instruments and projects.

Furthermore, regional research and innovation strategies for smart specialisation will have to be
aligned with national strategies for innovation and research, where these exist. In a few Member
States this process is already advanced and the approach taken in this guide follows those good
examples. But in most Member States, research and education policies are in the exclusive
competence of the nation state. And that is the case even for those countries that have a devolved
administrative and political set-up. For the latter this alignment is needed.

These strategies are therefore to be the backbone of operational programmes of cohesion policy,
i.e. the managing authorities will select from the range of delivery instruments and projects
identified to implement the strategy those which will be included in the operational programmes.
The structure and dimension of the latter depends on the Member State. In most Member States
Regional Programmes exist alongside Sectoral ones. The smaller Regional Programmes (in terms
of budget) cover a mixture of territorial priorities, while the larger ones can have separate parts
for innovation and research. In the majority of Member States both cases exist, with small
regional programmes covering all types of thematic issues including research and innovation
(support to business and SMEs) and national programmes divided into large themes such as
competitiveness, environment, transports, etc.

When developing RIS3 strategies, Member States and regions need to take into account/be
involved in the discussions on which types of operational programmes will be presented in the
partnership contract.

43
 Each country and region will, of course, have to make their own analysis of funding needs and
opportunities for their RIS3 strategies. This includes private investments, as one explicit goal of
RIS3, included in the criteria for the conditionality, is to leverage private RTD investments.

If such an analysis has not yet been initiated, RIS3 presents an opportunity to do so and will
enable regions and their innovation actors to identify and articulate funding needs for their
strategies. Figure 5 illustrates these issues.

Figure 5 - Analysis of funding for RIS3

Which Funds?
Synergies with

National Regional ERDF, Other EU Funds,

ESF Ex: Horizon 2020

Types of strategies

Research
Education Rural
Development
Fund
Innovation National competitiveness programme
business Regional programmes
market

44
Step 3 - Elaboration of an overall vision for the future of the region

This step is the development of a shared and compelling Vision on the economic development
potential of the region and the main direction for its international positioning. It is a highly
political step. Its value mainly rests on getting the political endorsement for the subsequent steps,
particularly for the implementation of the strategy.

The main quality of a Vision is its mobilising power: it should attract regional stakeholders
around a common bold project, a dream, which many feel they can contribute to and benefit
from. It will be easier to run this step when a regional 'grand figure' (a politician, an industrialist,
a leading academic, a well-known artist…) pushes the Vision forward on a large scale. Times of
crisis often provide a good opportunity to generate such new Visions, starting from the well-
acknowledged need to escape the crisis. The main difficulty for a Vision is to be ambitious but
still credible: few regions can realistically claim that they want to become the 'most innovative
region of the EU'. Over-ambitious claims might undermine a RIS3 from the start, if the Vision
cannot be taken seriously by regional stakeholders.

At this stage, the purpose is to reach the willingness to act towards the transformation of the
regions and support the regional consensus necessary to perform the other steps.

The 'dream' should be bold and wide enough to accommodate realistic priorities and specific
development paths. The Vision should pinpoint possible paths for the economic renewal and
transformation of the region. It may, for example, present the region as a new technology hub,
based on the high density of technology-driven public and private actors; it may stress its
potential as the central node in a cross-border area and emphasise its connectivity assets; it may
make the link between exceptional natural assets and innovation potential; it may build on the
skill sets of the population as the main driving force for future development, it may use flagship
projects in cultural and creative industries to develop the innovative image of the region, etc.

Finally, the Vision should also include justifications for its relevance in terms of meeting societal
challenges, such as providing more healthy living conditions for its citizens, reducing
outmigration, providing new employment opportunities for specific categories of the population,
combating social divide, etc. These justifications go much beyond the alleged classical benefits
of innovation for job and economic value creation.

The elaboration of the overall vision for the future requires the identification of the combined
place-specific features of a region. In order to help policy-makers and managing authorities to
identify the dominant characteristics of their own administrative regions, it is possible to
construct a three-dimensional box diagram, within which individual administrative regions can
be positioned or situated (see Figure 6). The sides of the box reflect the three priorities of Europe
2020, and each side of the box provides the typology which most concisely captures the major
features associated with each of the individual Europe 2020 challenges.28

28
The regional categories depicted by the sides of the box diagram here with regard to the smart growth, sustainable
growth and inclusive growth dimension of Europe 2020, are exactly the same categories as those used in the

45
For the purposes of this guide, the classification scheme used here is intended to be indicative
rather than definitive and schematic rather than exhaustive, and in particular cases other
classification schemes may be more appropriate.

For the Europe 2020 smart growth typology, the most concise framework is provided by the
OECD (2011) regional innovation typology in which regions are grouped into three broad types,
namely knowledge regions, industrial production zones, and non-Science & Technology-driven
regions, within which there are various sub-categories. These three broad categories reflect the
major observed differences in terms of the relationships between knowledge, innovation and
regional characteristics. EU regions can be classified into one of these broad smart growth
groupings in terms of the role played by knowledge in fostering their local innovation processes.

For the Europe 2020 sustainable growth typology, the classification scheme which most
concisely captures the different combinations of environmental and energy challenges is based
on the relationship between the built environment and the natural environment. At its most
fundamental level, this gives us four types of region, namely regions which in nature are
primarily rural regions, rural near urban regions, urban regions, and urban-coastal regions.29

For the Europe 2020 inclusive growth typology, the classification scheme which most concisely
captures the very different social inclusion issues faced by regions is that which is also adopted
by the ESPON (2010) DEMIFER project. This has two broad types of region, namely regions
facing population decline and population outflows and regions facing population growth and
population inflows. Migration is a highly selective phenomenon and mobility is highly correlated
with skills and income. Population outflow regions generally face a combination of more rapid
population ageing and economic decline, which in turn have significant adverse impacts on both
innovation and environmental issues.

In Figure 6, each individual axis represents one of the three Europe 2020 agenda dimensions.
The combination of the smart growth, sustainable growth and inclusive growth typologies allows
for twenty-four possible tripartite types of place characteristics, each of which is depicted by a
different cell in the three-dimensional box of regions.

results/outcome indicators classification scheme on the use of results/outcome indicators within a reformed
Cohesion Policy adopted by the international panel of experts advising the EU Commissioner for Regional Policy
Johannes Hahn, Directorate General for Regional Policy.
29
This sustainable growth classification scheme of primarily urban, primarily rural near urban, primarily rural and
primarily urban and coastal, closely resembles the OECD (2011b) regional typology based on the dominant built
environment and natural environment features, which uses three types of regions, namely predominantly urban
regions, predominantly intermediate regions, and predominantly rural regions, respectively. The additional category
of urban and coastal region has been used here, as it is very common in Europe.

46
 Figure 6 - Europe 2020 dimensions: integrated regional typologies

Smart growth
typology

Knowledge
region

Industrial
production zone

Non S&T-driven
region Inclusive
growth
typology
Urban-coastal region Population
growth and
Urban region
inflows
Rural near urban region Population
decline and
Rural region outflows

Sustainable
growth
typology

Based on the analyses of regional features and innovation potential, broad scenarios are
developed and proposed for discussion to a wide regional audience (including national
representatives as well as foreign experts at relevant points). It is important at this stage to take a
realistic view of the region’s position in an international perspective. Past and present
experience of OECD regions (OECD 201130) shows that, according to their type (knowledge
hubs, industrial production zones, or non S&T-driven regions), regions will need to adopt
different menus across three families of strategies (Table 3):

x Building on current advantages (science push/technology-led or a mix);

x Supporting socio-economic transformation (reconversion or identification of a new
frontier); and
x Catching up: towards the creation of knowledge-based capabilities.

Another important dimension along which to discuss possible regional transformation scenarios
is the degree of connectivity of the regional innovation system (Table 4). Methods to be used for
30
OECD (2011), Regions and Innovation Policy. OECD Publishing, Paris.

47
preparation and discussion of scenarios belong to the menu of foresight methods. In practice, in
many innovation strategies thematic or 'sector' working groups have been established to discuss
scenarios based on analyses, and many lessons of good practice have been learned through these
experiences (see Innovative Regions in Europe Network 2006).31

These groups were useful to discuss, validate and enrich the analyses underpinning the scenarios.
They also brought in ideas for policy implementation and pilot projects, which are used to refine
the scenarios. They bring in expertise in monitoring and evaluation indicators and practice,
which is useful for the preparation of the policy mix and associated targets. Among the lessons
learned were: the necessity for a clear mandate and timetable for delivery of results; the obvious
need for strong leadership and good connection with decision-making circles; the key point on
including private sector in the debates, which is often very difficult to achieve; the relevance of
cross-group interactions (notably between groups focusing on clusters); and the benefit of
including external expertise and benchmarking.

Table 3 - Innovation strategies for different types of region according to knowledge intensity
of productive fabric

Main strategy
Building on current Supporting socio- Catching-up: Towards
Type of region advantages (science economic the creation of
push/technology-led or transformation knowledge-based
a mix) capabilities
Knowledge hubs
Knowledge and
technology hubs
z } {
Knowledge-intensive
city/capital districts
z } {
Industrial production zones
S&T intensive production
regions
z } {
Skill intensive regions
z z {
Medium-tech
manufacturing and service
} z {
providers
Traditional manufacturing
regions
{ } z
Non-S&T-driven regional systems
Service-led and natural
resource-based regions
} } z
Structural inertia or de-
industrialising regions
} z }
Primary sector intensive
regions
{ } z
Legend: zmain priority; } strategic choice; { low priority.
Source: OECD 2011

31
Innovative Regions in Europe Network (2006), RIS Methodological Guide, Stage 1.

48
Table 4 - Innovation strategies for different types of regions according to internal and external
connectivity

Connecting Sustaining Cluster building Deepening

globally momentum pipelines
Types of regions Peripheral regions Regions with strong Small groupings of Regions dependent
lacking strong local cluster competitive on limited number of
research strengths organisations well- businesses with global production
and international networked with limited local networks/ value
connections policy actors connectivity chains
Key challenge Building a global Building up new Improving local Extending
pipeline regional hinges networking connectivity and
connected to connecting more networks around hub
regional firms — local actors to
building critical growing regional
mass network

Main policy Helping regional Bringing outside Channelling Helping second-tier

option actors take first steps actors in, and innovation support innovators become
in international helping to to stimulate growth market leading and
cooperation collectively shape through regional shaping
future trends clusters
Example of Madeira, Tallinn, Ile-de-France, Skane, Navarra, Piemonte,
regions Tartu, Attica, Baden-Württemberg, Auckland, Nord- Eindhoven, Seattle,
Sardinia Flanders, Toronto Pas-de-Calais North East of
England
33
Source: Regional Innovation Monitor,32 based on Benneworth and Dassen 2011

An element closely intertwined to formulating an effective vision is RIS3 communication. Good

communication of the RIS3 is essential to ensure its endorsement by all stakeholders of the
region, and beyond. Communication is needed all along the process, adapting the content to the
stage reached (adoption of a vision, adoption of policy priorities, endorsement of an action plan,
implementation of key projects, etc.. The implementation of RIS across Europe has delivered the
following lessons regarding the crucial components of a communication strategy, which are also
valid in the RIS3 context (Innovating Regions in Europe Network 2005)34:

1. Definition of goals: the main goal should be to place the RIS project in a national and
European context, to inform and create an attractive image for the identified target group of
the project. But it can also pursue the goal of identifying and extending this target group by
embarking stakeholders that are not yet part of the process. And it may serve the wider
purpose of informing public opinion about the need to support the development of
knowledge-based business in the region;

32
[Link].
33
Benneworth P. and Dassen A. (2011), Strengthening global-regional connectivity in regional innovation
strategies. Report for the OECD.
34
Innovative Regions in Europe Network (2005), RIS Methodological Guide, Stage 0.

49
 2. Identification of the stakeholder groups and their motivation: different target groups have
different needs and should be reached with different tools. Traditional SMEs, high-tech
companies, universities, transfer institutions, business intermediaries, local and regional
authorities, national bodies, the media, etc. have a different understanding and expectations
of an RIS. The goal of the strategy should be to make sure that they all endorse and
contribute to the strategy from their perspective. To this end, appropriate communication
methods and expected results need to be spelled out for each target group;

3. Definition of traditional communication tools: the tools include the use of a logo which
builds and reinforces the regional identity and puts innovation at its core; attractive and
dynamic web pages, including parts in English for wider dissemination; newsletters and
leaflets to complete the information with traditional communication tools; specific
publications on certain aspects of the RIS (key analyses, peer review reports, etc.);
conferences and seminars, including participation in international conferences, which give
the opportunity to diffuse synthetic material on the RIS; and press and TV campaigns. The
content of the communication should include strategic lines and priorities but also
communication and demonstration on flagship projects;

4. Definition of active communication tools: active tools mainly include pro-active activities
such as targeted visits to stakeholders or concerted workshops and seminars. Examples of
active tools are: visiting the sites, marketing of the participants to the project; press
conferences (various with different scenarios); round table discussions; meetings with local
and regional politicians; etc. Conferences and seminars are frequently used: launch
conferences ease the awareness and stimulate the participation of the actors in the exercise,
but it is not easy to decide on the content of the message to be passed on. Conferences in
the middle of the process stimulate the participation of regional actors in the construction
of the strategy and validation of analyses. An end conference is necessary since all
stakeholders in the region are supposed to adhere to the strategy and implement it in their
own area.

50
Step 4 - Identification of priorities

Smart specialisation involves making smart choices. In fact, smart specialisation is all about
facilitating that choice, selecting the right priorities and channelling resources towards those
investments that have the potentially highest impact on the regional economy. The priority
setting for national and/or regional research and innovation strategies for smart specialisation
should consist of the identification of a limited number of innovation- and knowledge-based
development priorities in line with existing or potential sectors for smart specialisation, on the
basis of the elements and steps presented in this guide.

Priorities in RIS3 need to:

x Define concrete and achievable objectives. These objectives should be based on present
and future competitive advantage and potential for excellence, as derived from the analysis
of regional potential for innovation-driven differentiation;
x In addition to technological, sectoral or cross-sectoral priority areas, horizontal priorities
need to be defined. These could involve the diffusion and/or application of Key Enabling
Technologies (see Annex II), aspects related to social innovation, or the financing of the
growth of newly established companies, which is often a bottleneck in many regions that
have prioritised the creation of new technology-based firms but fail to see these firms grow
and create jobs.

As has been explained in previous sections, the selection process needs to be based on
quantitative as well as qualitative information on the different possible domains for a
national/regional smart specialisation. The key criteria for filtering the range of possible priority
areas down to only a few priorities are:

x the existence of key assets and capabilities (incl. specialised skills and labour pools) for
each of the areas proposed and, if possible, an original combination of these (cross-sector;
cross-cluster),
x the diversification potential of these sectors, cross-sectors or domains,
x critical mass and/or critical potential within each sector,
x the international position of the region as a local node in global value chains.

All this relevant information is to be examined by decision/policy-makers in order to select a few

priorities focusing on the existing strengths of the economy but also on emerging opportunities.
A good smart specialisation strategy will catalyse structural change and the emergence of critical
clusters so that agglomeration externalities, economies of scale, economies of scope and local
spillovers can be fully realised in the process of knowledge production and distribution.

A regional economy clearly provides the appropriate dimensional framework for such processes
of decision, strategic implementation, agglomeration of resources and materialisation of
spillovers. However, national economies might also be a good framework, particularly in the
case of small countries.

51
But how to present the prioritised areas? If the areas are presented in a too generic way, such as
eco-innovation, green energy, sustainable mobility or healthcare, most regions will fail to point
out their unique competitive strengths. To be credible, effective and suitable for a concrete action
plan (see next step), the priorities need to be expressed more precisely, such as ICT-based
innovation for active ageing, innovative solutions to reduce city congestion, wood-based
solutions for eco-construction, etc.

Prioritisation always entails risks for those who have to select those few domains that, as a result,
will get privileged access to public funding. Common approaches followed in the past, which
should not be repeated, were:

x spreading the money across the most powerful lobbies with the frequent outcome that there
were too many priorities aimed at preserving the status quo rather than looking at future
opportunities; or
x imitating other regions. In that case, if the choice proved to be a mistake, at least this was a
mistake others have made as well. At the end of the day regions contributed to producing a
system with too many small sites doing the same things and where agglomeration
externalities were dissipated.

These approaches failed to take into account the essential knowledge in this matter, which is
entrepreneurial knowledge. Research and innovation strategies for Smart Specialisation should
address the difficult problem of prioritisation and resource allocation based on the involvement
of all stakeholders in a process of entrepreneurial discovery, which should secure a regionally-
and business-driven, inclusive and open prioritisation process.

There are different methodologies for organising such processes, e.g. surveys, seminars with
participatory leadership methods, crowdsourcing, etc.

Such an open, participatory process, together with reliance on robust evidence based on regional
assets, are the best guarantees to avoid both the risk of capture by interest groups and the risk of
lock-in into traditional activities. Once the priorities are adopted it is important that the strategy
is validated and endorsed by a broad regional constituency (in the form of a representative
Council or Forum, or through top-level events).

52
Step 5 - Definition of coherent policy mix, roadmaps and action plan

Experience with Regional Innovation Strategies throughout Europe has shown that it is good
practice to combine the adoption of strategies with an agreement on an Action Plan and even the
simultaneous launch of pilot projects (IRE 2007).35 Analytical and Strategic phases tend to
remain invisible to many field actors. Strategies that stop before this step run the risk of
remaining unimplemented and/or not credible. Pilot projects, once their success is proven, can be
used as flagships of the RIS3, to demonstrate that they go beyond rhetoric and involve concrete
action.

As priority areas for the region’s transformation are defined in the previous step, a coherent
multi-annual Action Plan should be elaborated by the RIS3 management bodies, including:

x Definition of the broad action lines corresponding to the prioritised areas and the
challenges faced within these areas;
x Definition of delivery mechanisms and projects;
x Definition of the target groups;
x Definition of the actors involved and their responsibilities;
x Definition of measurable targets to assess both results and impacts of the actions;
x Definition of timeframes;
x Identification of the funding sources, targeted to the several groups and projects
(developing and completing Figure 5).

This planning process involves both the incorporation of existing programmes and instruments,
on the basis of evidence on their effectiveness and relevance for the prioritised areas, and
inclusion of new instruments, justified according to their contribution to the overall strategy
goals. There is a wide menu to choose from in order to compose a balanced and appropriate
policy mix. It is useful to use taxonomies, such as those presented in Table 5 and Table 6, to
determine whether these instruments are likely to address, collectively, the strategic goals of the
RIS3.

Table 5, Table 6, Table 7, Table 8 and Table 9 present examples of strategies and associated
mixes of action lines and instruments, according to regional types and to the institutional power
of the region: this latter element underlines the necessity to embed national-level policies into the
policy mix, seen from a regional perspective. Each action line and instrument needs to be
accompanied by measurable indicators reflecting results achieved, according to the mission and
objective, but also impacts reached, assessed through evaluations.

35
Innovative Regions in Europe Network (2007), RIS Methodological Guide, Stage 2.

53
 Table 5 - Regional innovation delivery instruments: a taxonomy

Knowledge
Knowledge generation Knowledge diffusion
exploitation
Technology funds, R&D Science Parks Incubators
incentives/supports/grants Technology Transfer Offices Start-ups support
Traditional Support to scientific research and and schemes innovation services
technology centres Technology brokers (business support and
instruments Support to infrastructure Mobility schemes, talent coaching)
development attraction schemes Training and awareness-
Human capital for S&T Innovation awards raising for innovation
Public private partnerships for
Industrial PhDs
innovation Innovation voucher
Support to creativity
Research networks/poles Certifications/accreditations
Innovation benchmarking
Emerging
Competitiveness poles
instruments Competence centres
New generation of scientific and technological parks and clusters
Venture and seed capital
Guarantee schemes for financing for innovation
Experimental Open source-Open science Regional industrial policy;
Cross-border research centres Markets for knowledge Innovation-oriented public
instruments procurement
Source: OECD 2011

Table 6 - Innovation delivery instruments targeting SMEs

Form and focus of innovation support services for SMEs

Target of Reactive tools providing input for Proactive tools focusing on learning to
support innovation innovate
Excellence poles International technology transfer schemes
Global Cross-border technology centres Mobility schemes
Funding for international R&D or Support for global networking of firms
connections innovation projects Cross-border innovation vouchers
Lead market initiatives
Cluster policies
Regional Collective technology or innovation centres Proactive brokers, match-makers
Innovation vouchers
system Support for regional networking of firms
Schemes acting on the culture of innovation
Management advice
Individual Incubators with 'hard' support Incubators with 'soft' support
Traditional 'reactive' technology centres 'Proactive' technology centres
firms Seed and venture capital funds Audits, monitoring of needs
R&D subsidies or tax incentives Innovation coach/ innovation management training
Techno-economic intelligence schemes
Source: OECD 2011, expanding from Asheim et al. (2003)36 and Technopolis (2011)37

36
Asheim B., Isaksen A., Nauwelaers C. and Tötdling F. (2003), Regional innovation policy for small-medium
enterprises, Edward Elgar, Cheltenham, UK and Lyme, US.
37
Technopolis (2011), Review of innovation promotion instruments at regional level, unpublished report for OECD.

54
 Table 7 - 'Building on current advantages': examples of regional strategies and associated policy mixes

Type of Degree of regional STI policy competences

OECD High Medium Low
region by
economic
profile
Knowledge
Strategy: reinforcing excellence in knowledge creation and developing new high-tech industries
and
technology x Co-funding of universities: institutional and x Complement national investments in x Lobby national government for public
hubs competitive research infrastructure investments in large S&T infrastructure
Leading regions in x Funding research and technology centres x Participation in national competitiveness linked to regional advantages
science and x Public-private partnerships for innovation poles/centres programmes (co-funding) x Participation in national competitiveness
technology x Targeted research funds, for private and public x Public-private partnerships to develop poles/centres programmes (limited regional
actors, and for co-operative projects high-tech products funding)
x Participation in national and international x S&T parks, incubators x Attracting FDI of knowledge-intensive
competitive research programmes x Entrepreneurship stimulation packages companies and MNCs (infrastructure, labour
x Research spin-off promotion schemes (e.g. force)
x Global talent attraction in targeted new
regional seed and venture capital funds) sectors x S&T parks and incubators
x Regional high-tech clusters, S&T Parks, x Promotion of participation of public and x Promoting national talent attraction schemes
incubators Knowledge vouchers
private actors in international technology x
x Global talent attraction in targeted new sectors networks x Platforms to define development visions for
x Strategic intelligence exercises (regional high tech niches
foresight)
S&T-
Strategy: strengthening synergy between S&T developments and production activities
intensive
production x Investments in scientific or technology niches, x Incentives for regionally-relevant public x Support to regional actors in international
complementary to national science hubs research public-private knowledge partnerships
regions Entrepreneurship support (networks of
Industrial x Technology transfer instruments (university x x Support to internationalisation of business
technology transfer offices, technology brokers at individuals, training courses, brokerage clusters
production
research centres) with business angels, specialised seed x Promotion of innovation in services
regions including
x Talent attraction (from country and abroad), capital funds, etc.)
second-tier hubs x Technology parks and incubators
in knowledge- research grants for young graduates x Infrastructure for business creation
x Innovation vouchers in selected
intensive x Cluster policies, linked to S&T infrastructure (incubators) and S&T parks
specialisations
countries investments x Support for firms to hire qualified
x Place-branding activities
x Competence centres and competitiveness poles graduates
relevant for regional industry
x Entrepreneurship and spin-off support (business
plans competitions, regional venture capital
funds)
Source: OECD 2011

55
56
Table 8 - 'Supporting socio-economic transformation': examples of regional strategies and associated policy mixes

Type of OECD Degree of regional STI policy competences

region by High Medium Low
economic
profile
Medium-tech
Strategy: modernising productive activities towards value-added niches: 'Innovation ecosystem strategy'
manufacturing
and service x Supporting science-industry linkages (personnel x Technology platforms (linking technical x Concentration of regional action on
exchange and placement schemes, technology schools and SMEs) non-traded sectors
providers advisory services, technology diffusion) x Technology transfer centres in relevant x Support innovation in service or
Industrial production x Regional agencies for innovation promotion, sectors, co-funded by national government cultural industries
regions with relatively combining technology transfer with other services
high knowledge x Regional advisory network, networks x Small-scale cluster support with an
x Promote innovation start-ups (business angel fostering synergies and complementarity orientation towards connection to
absorptive capacities
networks, mentoring schemes, regional seed and between national agencies in the region and global networks
venture capital funds) regional agencies x Innovation vouchers, targeting
x Densification and internationalisation of regional x Innovation vouchers for SMEs 'innovation beginners'
production clusters x Support for young graduate recruitment in
x Regional public procurement oriented towards firms
innovation

Structural
Strategy: stimulating knowledge absorption and entrepreneurial dynamism
inertia or de-
industrialising x Local knowledge centres, branches of national x Supply-chain management initiatives to
x Develop latent demand for innovation
knowledge hubs (focus on diffusion) reduce fragmentation
regions (innovation vouchers, placement of
Non-S&T-driven x Education and training activities in firms x Innovation-oriented public procurement students in SMEs )
regions with x Supporting connection to international production x Redefinition of programmes for regional
technical schools x Orient polytechnics centres to new
persistent networks
qualifications
development traps x Regional fora to identify growth prospects in value- x Innovation awareness-raising,
entrepreneurship promotion events x Training for low-skilled and
added niches
unemployed people
x Innovation and entrepreneurship culture promotion
x Support to clusters with innovation
potential
x Supporting inclusion of regions into
international production networks
Source: OECD 2011
 Table 9 - 'Catching up': examples of regional strategies and associated policy mixes

Type of Region institutional power

OECD High Medium Low
region by
economic
profile
Primary
Strategy: upgrading and retaining human capital, creating critical masses and increasing quality of connectivity
sector
intensive x Regional agencies for business development
x Innovation support programmes (innovation intermediary, business development
x Training and lifelong learning courses (public offer, incentives support (branch of national agencies), connection with trade and export agencies
regions for firms), students exchange programmes and talent attraction
Rural areas in x Attracting national investments in vocational and tertiary education
schemes
lagging countries, x Promoting national training, lifelong learning schemes for companies and
x Regional incentives for skills upgrading programmes in
specialised in individuals
companies
primary sector x Engaging regional stakeholders in external production networks
x Incentives for hiring qualified personnel in companies
activities x Creation of knowledge centres in traditional fields (agriculture, x Securing national infrastructure investments to enhance connectivity
tourism…), branches of national research organisations
x Innovation support programmes for incremental innovations
(innovation intermediary, business development support)
x Linkages of business support organisations (chambers of
commerce, etc.) to wider networks
x Financing experimental innovative projects in traditional
sectors
x Connection of regional actors in national and international
production networks

Source: OECD 2011

57
 Developing a RIS3 involves a degree of risk-taking, since there is always some
uncertainty in the choice of priorities, both in the events that can change the
region’s growth trajectory and the best way to implement actions in support of
regional smart specialisation. Hence experimentation is justified, and even
recommended, for testing new approaches or obtaining more information and
certainty on the prospects of the priorities selected for the RIS3.

This can take the form of pilot projects to be launched during the RIS3 design
process. These pilot projects should be selected according to two main criteria:
their relevance with respect to the RIS3 priorities, and their expected impacts in
the short- or medium-term (projects with longer-term impacts are valuable but
would not feed the demonstration purpose of pilot projects).

Pilot projects serve the following functions:

• Feed the strategy with new information on regional innovation potential

(they participate in the 'entrepreneurial discovery process');
• Provide a signal to underline the fact that the strategy is going to be
concretely implemented rather than remaining a concept, contributing to the
communication of the RIS3 as a whole;
• Test new or unconventional policy support approaches on a small scale
before possible extension, limiting risk.

Even more than for conventional projects and actions, pilot projects need to be
monitored and evaluated, in order to found the decision to continue or discontinue
the projects on reliable evidence. Exit strategies and intermediary milestones
involving go/no-go decisions need to be built into the pilot projects.

If such learning mechanisms are properly introduced in pilot projects, they can
provide a model for performance-based funding mechanisms, which are
notoriously difficult to impose on existing programmes or actions maintained over
time without such a provision.

58
Step 6 - Integration of monitoring and evaluation
mechanisms

Monitoring and evaluation

Establishing monitoring indicators and planning evaluations are important

elements of the RIS3 design process both at the level of strategy and the different
components of the Action Plan.

Smart Specialisation Strategies build on different components aiming at one or a

few overall objectives. The monitoring system of these strategies may encompass
3 types of indicators:

• Context indicators scoring the region against the average score of its
Member State or other similar regions. These indicators are usually attached
to the overall objectives of the strategy
• Result indicators selected for each component of the strategy contributing to
the overall strategic goals, e.g. important actions funded by the Structural
Funds. These indicators allow verifying whether these actions are successful
or not, i.e. whether they lead to the expected change for which purpose they
were designed.
• Output indicators measuring the progress of the actions undertaken in order
to achieve the expected results.

Monitoring differs from evaluation in two main respects. Monitoring aims to

verify that activities are planned, funds are correctly used and spent on delivering
planned outputs and that result indicators evolve in the desired direction.
Evaluation, however, aims to assess effects of the actions undertaken (i.e. their
contribution to the observed changes as measured by the result indicators) and to
understand why and how the effects are being achieved. It should also take
account of unintended results and analyse the mechanisms leading to the results.

Monitoring is normally carried out by actors responsible for implementation,

while evaluation should be carried out by independent experts, guided closely by
those responsible for the policy. Monitoring and evaluation complement each
other. Monitoring provides part of the empirical basis for evaluation, while
evaluation may raise the need for improved monitoring indicators (to capture new
elements, e.g. the depth of partnerships involved in collective actions).

Both monitoring and evaluation need to be anchored in a clear intervention logic:

the strategy and each of its component should clearly articulate what is the
intended change, and how the expected outputs will lead to the intended results. A
frequent problem in evaluation occurs when strategies and programmes have been
established without a clear statement on intended results and the underlying
intervention logic.

59
 Targets for result indicators (both in terms of short-term or medium/long-term
results) need to be incorporated into each action and the strategy as a whole from
the very beginning. These targets can be qualitative or quantitative but they must
be clear. As they measure a change, these indicators should also have a baseline
(the situation before the start of the action). Reflecting on baselines and how the
action will change their value is an important element to define a sound
intervention logic.

There is no single standardised approach for developing a monitoring and

evaluation system for a RIS3, since it needs to be tailored to a specific region. In
general, result indicators for a RIS3 should measure a change or an evolution of
the regional productive structure towards activities that (a) are globally
competitive and (b) have a greater potential for value added. When results are
long-term, the programmer may use intermediate result indicators to measure the
progress towards the objective. For example, a programme supporting research
activities may use the number of patents as an intermediate indicator, while the
programme objective is, for example, to increase the production of innovative
products.

These indicators should be linked to the programme activities. The sources for
their baseline and achievement value could be the monitoring system, official data
bases, ad hoc surveys, peer reviews, and more rarely, regional or national
statistics. If the programmers use the latter, they should be aware that these
statistics also cover non-beneficiaries and are influenced by factors other than the
programme. Similarly, the value of result indicators may be influenced by other
factors such as an evolution in the economic context, especially where the
indicator is not sufficiently close to the policy. In all case, an impact evaluation
should be planned to assess the actual contribution of the supported action to the
change in the statistics or the indicator value.

Outputs and results should be identified and evaluated according to programme

objectives. According to intervention logic, the results may be short-term and
medium/long-term (see Table 10 below).

60
Table 10 - Examples of programme objectives, outputs and expected results and
possible related indicators38

Objectives Expected results

Programme
Outputs Short-term results Medium/long-term results
aims
Increase Awareness Improved business
awareness of a campaign, visits to Adoption of performance; continuing
set of new fairs, advisory technologies awareness and adoption of
technologies services related technologies
Improved technical Improved innovation
Improve the
Training sessions, competencies of staff, performance, increased
skill basis of a
staff exchanges increase effectiveness technological absorptive
set of industries
of in-house R&D capacity
Improved skill,
Student placements, New products and services
Increase technical competence
academic-industry based on innovation,
science- and knowledge base,
cooperation projects increased quality of
industry links change of behaviours,
or networks production
increase in prototypes
Increase of Research subsidies Increase in research
Improved innovation
research to enterprises or expenditure in firms,
performance, enhanced
activity in a universities/research increase in patents or
reputation
region centres publications
Stimulate the Finance and
Long-term growth and
start-up of new information for
Creation of new high- sustained development of
technology- future
tech companies new high-tech industrial
based entrepreneurs,
sectors
companies incubation
Increase rate of productivity
Number of new
in regional SMEs
Number of visits, enterprises created in
Increased share of turnover
placements, the region, number of
based on innovation,
projects, incubated enterprises having
Possible increased export share, new
start-ups, and adopted a new
indicators (1) products on the market,
amount of funding technology, number
growth of employment in
for future of staff reporting new
knowledge-intensive sectors,
entrepreneurs etc. working behaviours,
R&D expenditure per
etc.
worker, etc.
(1) Indicators should be selected to reflect the programme's objectives and intervention logic.

38
For further guidance, please look at Inforegio website:
- Monitoring and evaluation of European Cohesion policy – ERDF and Cohesion fund, Concepts
and recommendations, Guidance document.
- Evaluation of Innovation Activities: Guidance on methods and practices
[Link]

61
 Peer review of RIS3

Many EU regions have been developing and implementing innovation strategies

over recent decades. These regions should be able to revise their strategies and
include useful elements suggested by the concept of smart specialisation. Other
EU regions have only very short expertise (if any) in developing their regional
innovation strategies and will need to draft their own RIS3 from scratch.

The following questions cover the main features that these strategies should
contain (see Annex III for further information):

1. Is the strategy based on an appropriate stakeholder involvement? How

does it support the entrepreneurial discovery process of testing possible
new areas?
2. Is the strategy evidence-based? How have areas of strength and future
activity been identified?
3. Does the strategy set innovation and knowledge-based development
priorities? How have potential areas of future activity been identified?
How does it support the upgrading of existing activities?
4. Does the strategy identify appropriate actions? How good is the policy
mix?
5. Is the strategy outward-looking and how does it promote critical
mass/potential?
6. Does the strategy produce synergies between different policies and
funding sources? How does it align/leverage EU/national/regional policies
to support upgrading in the identified areas of current and potential future
strength?
7. Does the strategy set achievable goals, measure progress? How does it
support a process of policy learning and adaptation?

Formulating and implementing a national/regional research and innovation

strategy for smart specialisation is a continuous process. As the economic
circumstances are quickly evolving within and outside the region, there is a need
to regularly adapt and update the RIS3. This element closes the policy design
cycle: through the use of information and insights gathered during the
implementation of the strategy, pilot projects and others, learning activities (inside
and outside the region), new events that have occurred after formal adoption of
the RIS3 and by incorporating this into a new version of the RIS3. The challenge
associated with this step is to ensure sufficient stability to the prioritisation
process, while allowing for this adaptability.

62
 Box 6 - Distinctive features of smart specialisation for (peer) review
and update of the RIS3

Being place-based

The concept of smart specialisation emphasises the need to develop and

implement innovation strategies that take into proper account regional features,
such as economic structure, existing areas of excellence, clusters, traditions, R&D
competences, presence of research institutions, extension of the inter-regional and
inter-national network of scientific and technical collaborations. For this reason,
the major aspects related to the current and projected structure of the regional
economy should be investigated in the preliminary, self-assessment phase and
receive sufficient attention thereafter. Additional elements of interest with a view
to a RIS3 are distribution by size and the innovativeness of firms in the regional
economy, such as the proportion of small, innovative firms or large, R&D-
intensive companies. Attention should be devoted also to the width and strength
of the industrial base, uncovering specific risk factors, such as the existence of a
number of industries in need of modernisation or the dependence of the regional
economy on a limited number of industries.

Achieving critical mass

Smart specialisation involves making choices, leading to priority setting and

channelling resources towards investments with a potentially higher impact on the
regional economy. The distinctive elements that can guide review, monitoring and
assessment for RIS3 should thus include the existence of clearly identified
priorities for regional innovation policy. The EU dimensions should also be
incorporated in a RIS3 from its very origins. When setting regional priorities,
priorities at EU level should have been taken into account. Those policies and
funding instruments that are targeted to a specific topic, should mainly aim at one
of the societal challenges (climate change, population ageing…)

Putting in place an entrepreneurial process of discovery

The existence of an entrepreneurial process of discovery of new specialisation

domains is a central tenet of the concept of smart specialisation. Nevertheless, its
translation to practical use proves quite difficult, because of the lack of easily
observable characteristics and indicators associated with it. For the purposes of
peer review and monitoring, one should take into account that a regional
innovation strategy may encompass several forms of innovation (including non-
technological innovation, service innovation, and social innovation). Particular
attention should hence be devoted to the regular exploration and consideration of
emerging opportunities. If such a process of discovery is found missing or
wanting, the factors that could lead to its establishment should be identified.
Finally, the existence of policies and instruments to favour the diffusion of the
output of innovation can also contribute to the creation of a lively and
entrepreneurial innovation system.

63
 Being outward-oriented

The outward-orientation of a process is not just reflected in the international

nature of the peer review process. It is also about constantly comparing the
position of a region with actual and potential competitors in the country, in other
EU countries and even beyond. This broader perspective must be incorporated in
the peer review, monitoring and assessment of a RIS3 and its results. This means,
for instance, verifying that market opportunities and the comparative advantage of
the region with respect to other EU and non-EU regions have been and are
regularly assessed. It should also be ascertained whether sufficient efforts have
been made to avoid replication, and to enhance synergies with projects under way
in other EU regions. Support schemes should be subjected to international
comparison and benchmarking. Finally, the existence of relevant constraints to the
free circulation of knowledge and related elements should be inspected:
international R&D&i partnerships should be able to operate without
administrative obstacles, and the cross-border mobility of research and innovation
personnel should be facilitated.

Being future-oriented

The future-orientation of a process does not involve trying to make a bet on the
next 'hot' technology. It is instead about incorporating in the strategy the fact that
what seems fixed and well-established in the short term might evolve quickly,
sometimes in unexpected directions. This implies considering scenarios for the
possible evolution of the regional competitive position with respect to other
regions in the country, in other EU countries and even beyond. This long-term
perspective must be incorporated in the peer review, monitoring and assessment
of a RIS3 and its results. This implies, for instance, verifying that the vulnerability
and capacity of adaptation of the regional innovation system have been and are
regularly assessed. Mechanisms should be in place to detect activities facing
increasing competition and to devote special attention to these, by evaluating
possibilities for the 'upgrading' and 're-tooling' of existing sectors. Finally, the
existence of relevant constraints to the redeployment of physical, human and
intellectual capital should be inspected: the mobility of resources from declining
lines of business, firms and sectors to expanding ones should be facilitated.

64
 ANNEX II: DELIVERY INSTRUMENTS AND
HORIZONTAL APPROACHES

As developed in the previous sections of this guide, the RIS3 concept relies on
policy and economic rationale. The implementation of the concept requires a set
of delivery instruments (described in Step 5) and horizontal approaches. These are
introduced here based on a typology which tries to group typical projects that are
financed or are to be financed by the ERDF and other Structural Funds. These
cover a wide range of fields of action, such as:

• Clusters,
• Innovation friendly business environments for SMEs,
• Research infrastructures, centres of competence and science parks,
• Universities-enterprise cooperation,
• Digital agenda,
• Key enabling technologies,
• Cultural and creative industries,
• Internationalisation,
• Financial engineering instruments,
• Innovative public procurement,
• Green growth,
• Social innovation.

This is not new to EU policies. Indeed, for many years, the European Commission
has developed schemes, regulations, analyses and funded initiatives in all of the
topics listed above.

In order to help regional stakeholders to capture the critical lessons and

knowledge about those delivery instruments, a summary of EU staff experience in
managing them is given here in a standardised form, i.e. why the instrument is
perceived as important for economic growth, what are the challenges and barriers,
how the next programming period will still support them and where to obtain
more detailed information about each one.

The following sheets are to be considered as the 'branches' of the smart

specialisation 'tree', whose 'trunk' is represented by this guide. The 'trunk' feeds
and nurtures the 'branches' but the latter form self-standing elements of the whole
policy array of tools made available to policy-makers, who can ultimately
combine them following their strategic vision and building up their own policy
mix for responding to their needs and expectations. The roots are the several
economic schools that provide the economic and policy rationale to this concept.

These branches are to be supported by a 'family' of guides on each topic that are
available or being developed and are enumerated in each sheet.

65
 Figure 7 gives a synthetic overview of the interactions between the 'trunk' and the
'branches' across smart specialisation-related policy, conceptual and
methodological issues, as presented in the introduction.

Figure 7 - The 'trunk and branches' structure

Internationalisation
Policy
delivery Entrepreneurship and incubation
instruments
Connecting universities

PP s Social Innovation Clusters

ee
n OP
Gr r al
ut Cultural and creative industries
ne
2
Green growth Digital agenda
CO
Financial engineering Research infrastructures
Skills Key enabling technologies
SME support Innovation PP
-----------------------------------------------------------------------------------------------------------------------------
Methodological support Smart specialisation GUIDE Innovation Union self-assessment tool
Regional Innovation Monitor
CP Regulations 2013-20
policy (COM) “The contribution of Regional Policy to smart Growth”
OECD 2011 “Regions and Innovation Policy”
IRE-RIS Guide
rationale (COM) “The contribution of Regional Policy to Sustainable Growth” Directory “No-Nonsense” to build S
Innovation Union Flagship
3

Diagnostic Systèmes d’Innovation (Praguer)

Economic Policy Experimentation

RIS-RITTs 1994-2004
rationale “Knowledge for Growth” Competitive Advantage – M-Porter
FWP evaluation Innovation systems Industrial districts
Endogenous growth “Innovative milieux” Evolutionary economics 31
Economic geography

66
Clusters and smart specialisation

Why should clusters be part of smart specialisation?

Due to their inherent capacity to support cooperation between different innovation

actors in a region, clusters are powerful instruments for fostering industrial
competitiveness, innovation and regional growth. Currently, they are used by
policy makers worldwide as building blocks for implementing different policies
such as research & innovation, industrial and regional policies.

Smart specialisation requires that regional governments have a clear vision and
are committed, and at the same time, have people who will take up and realise
such strategies on the ground. Clusters offer a huge potential for implementing
smart specialisation strategies by providing and mobilising the necessary
resources for that purpose. Their knowledge, networks and dynamism are the right
ingredients available at local level, allowing regions to create more value,
reaching higher levels of excellence and thriving in the global economy.

Clusters can be used at both the design and implementation phase of smart
specialisation strategies. In the design phase, they can be used to identify the
industrial strengths and assets in a region, contribute to set strategic priorities and
make the right political decisions. For this purpose, cluster mapping and
benchmarking are valuable tools that can be used to identify regional
specialisation patterns and compare economic activities, including agriculture, and
strengths with other regions in the EU.

In the implementation phase, clusters can be used as efficient platforms that can
focus on and quickly contribute to smart specialisation’s objectives. In particular,
by fostering cross-sectoral cooperation, clusters can contribute to implementing
thematic-based strategies addressing new society challenges, and creating new
competitive advantages in a region.

Barriers and challenges

The use of clusters for smart specialisation may imply important political
decisions regarding the development of new cluster initiatives or the use of
existing ones. New cluster initiatives can be launched, provided that they are
crucial for implementing the regional governments’ visions and that will therefore
be strongly supported in the future. Otherwise, new cluster initiatives should be
avoided. Fragmentation and proliferation of cluster initiatives often leads to
dispersion of forces and financial resources as well as to less cooperation and
fewer synergies between them.

Policy makers can streamline existing cluster initiatives towards the goals and
objectives of smart specialisation. In parallel, linkages between different
initiatives should be strengthened to enable clusters to become less vulnerable to
future market changes and be better prepared to shape new markets. The support

67
 of such cross-linkages often requires a new mindset and courageous political
decisions which may not be an easy task in some regions.

Identification of regional strengths is not a trivial task and requires reliable

historical statistical data and in-depth analysis. Cluster mapping and
benchmarking activities are powerful tools for starting the assessment of regional
specialisation patterns and comparing statistical findings among regions. The
European Cluster Observatory39 can be useful for identifying regional
competences and providing benchmarking possibilities across the EU. It should be
stressed that statistical data at the same level of granularity are not always
available across the EU and, therefore, additional efforts should be made by some
regions to complement existing data sets by more detailed quantitative and
qualitative information.

Furthermore, smart specialisation strategies should look at optimal cluster-specific

framework conditions such as access to research and testing facilities, educational
and skills development issues, cooperation with local incubators and efficient
cluster management, which, all together, will allow clusters fully exploit their
potential in the context of smart specialisation.

How to act?

The following list of actions describes a 3x3 approach on how to use clusters for
designing and implementing smart specialisation strategies. Although not
exhaustive, it represents a starting point and can be completed and customised
according to the specificities, experience, and priorities of each region.

Using cluster mapping to identify regional competences and assets:

•
Identify specialisation patterns in the region through cluster mapping
analysis, in particular, by using the European Cluster Observatory tool40;
• Perform benchmarking activities to better understand the position of the
region in a particular sector in comparison to other EU regions. The
European Cluster Observatory tool offers such benchmarking opportunities;
• Collect, if necessary, more detailed statistical data and perform qualitative-
based surveys to better understand the dynamics of regional clusters to be
used for implementing smart specialisation strategies.
•
Support clusters to meet the objectives of smart specialisation:

• Launch, if necessary, new cluster initiatives or strengthen existing ones, and

ensure appropriate budgetary provisions by streamlining regional, national
and EU funding support including the European Regional Development
Fund, Research and Innovation funds (FP7, and the future Horizon 2020),
the Rural Development fund (EAFRD) and funding possibilities provided
under the Knowledge Innovation Communities of the European Institute of
Innovation and Technology;

39
[Link]
40
The European Cluster Observatory provides a unique cluster mapping and benchmarking
methodology that is currently applied to more than 35 manufacturing and service sectors in 32 EU
and EU-associated countries:

68
 • Support existing clusters to work more closely with research infrastructures,
incubators41 and science parks and other knowledge institutions as well as
integrate large scale demonstrators for promoting Key Enabling
Technologies and better involving user communities;
• Promote cluster management excellence by using the European Cluster
Excellence initiative42 to develop competent clusters that are able to sustain
regional growth in the long run.

Strengthen local and international cluster cooperation, in particular for

addressing emerging industries:

• Streamline funding resources to support joint projects between clusters

working in different industries with a view to creating new competitive
advantages under the smart specialisation strategy;
• Identify and create optimal cluster-specific conditions to facilitate the
emergence of new industries through clusters in the context of the smart
specialisation strategy;
• Promote internationalisation, including trans-national cooperation, in
particular by making use of the European Cluster Collaboration Platform.43

41
The Smart Guide to Innovation-Based Incubators, publishes in 2010, provides guidance on this
issue and is available at the website of the Platform
42
The European Cluster Excellence initiative aims at promoting cluster management excellence
through training and benchmarking activities: to [Link]
43
The European Cluster Collaboration Platform aims at promoting cluster cooperation within the
EU and abroad on the basis of a number of business agreements signed with international partner
organisations in Japan, India, Brazil and South Korea: [Link].

69
 Innovation friendly business environments for SMEs

Why should an innovation-friendly business environment be part of smart

specialisation?

SMEs are at the centre of the creation of jobs and growth at regional level.
Furthermore, SMEs are key players in introducing new products/services into the
market place and offering innovative solutions to the grand challenges.
Entrepreneurship is necessary to make sure that innovation ideas are turned into
sustained growth and quality jobs.

Therefore, it is important to provide, at regional level, the right mix of financial

and non-financial support to assist entrepreneurs to create new firms and existing
enterprises to innovate and develop. The support should aim to increase the
innovation capacity of SMEs, enabling them to develop, access and absorb new
knowledge and thereby grow and compete on increasingly global markets.

Regional policy makers also have to understand the different forms of innovation
such as non-technology services, cross-sector technology integration, system and
business model innovation, which are today as important as the technology
breakthrough innovation for SMEs. It is relevant for the regional authorities to
adapt their offer of support services to the demand of the different types of
enterprises: manufacturing, service-oriented, high-tech or social. In this context,
analysis and benchmarking of regional policies can be an important starting point
towards the development of regional strategies.44

SMEs, and especially micro-enterprises, are heavily dependent on their regional

environment where proximity plays a key role for innovation, in particular
regarding the spread and absorption of tacit knowledge. SMEs need policy
support in tapping into the necessary outside resources, principally access to
knowledge in the form of advice through innovation support services and tailored
counselling, technology or qualified human capital, to face up to the new forms of
competition that are developing in the global economy. SMEs are thus at the core
of Cohesion Policy.

For the period 2007-2013, the Community Strategic Guidelines on Cohesion

emphasise the key role of SMEs, notably when it comes to increasing and
improving their investment in R&D, facilitating innovation and promoting
entrepreneurship. Cohesion Policy in fact provides the largest financial
Community support to SMEs through financial engineering instruments such as
JEREMIE.45 For the period 2014-2020, the Commission has proposed an even
stronger focus on enhancing the competitiveness of SMEs in the context of
Cohesion Policy.

44
See for example the Regional Innovation Monitor initiative at: [Link]
45
[Link]

70
Moreover, the Cohesion Policy support often provides the initial platform for an
increased number of SMEs to access the FP7 or the CIP, and will indeed continue
to do so for the forthcoming successors of these programmes.

Barriers and challenges

Most SMEs face problems such as accessing finance, covering the whole life
cycle from idea to market, finding their first clients, either in national or
international markets, and accessing risk capital.

All these barriers can be overcome if regional authorities are able to provide an
integrated approach to addressing the needs of SMEs, covering all phases of
enterprise creation and development, and a link to European activities that support
SMEs in setting up or joining cross-border knowledge networks and
collaborations and in realising European research and innovation projects.

The EU provides finance for small firms in different forms: grants, loans, and in
some cases, guarantees. In addition, the EU funds specific projects. The European
Small Business Portal provides information on possible funding opportunities for
SMEs.46

How to act?

Member States have committed to implement the Small Business Act for Europe
(SBA) which is a framework for building a more friendly business environment in
Europe. Regional authorities should focus on the content of the SBA and ensure
its implementation at regional level as well. The SBA is based on ten principles
aiming at tackling the obstacles that hamper the potential of SMEs to grow and
create jobs.

Besides this, EU policies and instruments are providing support for:

• supporting entrepreneurship spirit and enterprise creation and development;

• enhancing innovation support for existing SMEs;
• building capacities in innovation agencies and SMEs by spreading
information on new tools to support innovation in SMEs or testing new
ways to access high added-value support services: vouchers, innovative
procurement, market replication, proof of concept, lead markets,47 Key
Enabling Technologies (KETs), and also the Europe Innova48 and ProInno
Europe49 initiatives;
• supporting R&D activities by SMEs50;
• facilitating access to risk capital;
46
[Link]
47
See for example the Lead Market Initiative of DG Enterprise and Industry at:
[Link]
48
[Link]
49
[Link]
50
See for example [Link]

71
 • enhancing skills;
• providing market opportunities via market replication projects, for which
SMEs constitute the main target group;
• ICT value chain actions IPR help desk IP Portal, SME Chine IPR help desk;
• Erasmus for young entrepreneurs;
• e-skills actions;
• ICT value chain action;
• interconnecting SMEs through the Enterprise Europe Network and in
particular via brokerage events, platforms, survey mechanisms, Internal
Market information, etc.

SME participation in the 7th Framework Programme for Research, Technological

Development and Demonstration Activities (FP7) has been strongly encouraged:
mainly research-performing SMEs are addressed in the 10 themes of the
'Cooperation' programme with a budgetary target of 15% for SMEs, equivalent to
some EUR 5 billion. SMEs and SME-associations in need of outsourcing research
to research providers are supported through the programme 'Research for the
Benefit of SMEs' in the 'Capacities' strand with an overall budget of EUR 1.3
billion. The Industry-Academia partnerships in the 'People' Programme promote
cooperation between academia and industry, including SMEs, through staff
secondments and temporary hosting of experienced researchers.

The last calls for proposals under FP7 will be published in summer 2012. The
forthcoming Horizon 2020 Framework Programme for Research and Innovation
(2013-2020) will have a dedicated SME strategy covering the whole innovation
cycle. It will address highly innovative SMEs showing a strong ambition to
develop, grow and internationalise, regardless of whether they are high-tech and
research-driven or non-research conducting, social or service companies.

Regional organisations can boost the involvement of regional actors in FP7 and
Horizon 2020 and enhance the impact of their participation through actions such
as:

• awareness-raising, information and advice to access FP7 and its successor,

• creation of sectoral or cross-sectoral interest groups,
• promotion of local academia-industry cooperation and their cross-border
networking,
• aid for international partner search,
• grants for exploring project feasibility and validation of project ideas,
• provision of training to potential project managers,
• provision of mentoring and coaching to EU project partners (from the
conception
phase, through implementation and management to commercialisation of
project
results) as part of the regional innovation support services,
• use of financial engineering instruments to promote commercialisation of
promising
EU research and innovation results by regional actors,

72
 • support to ERA-Nets51 involving regional partners can be an interesting
learning tool for them.

Useful links and further information

• Enterprise Europe Network52;

• Support services based on direct customised assistance:

o the IPR Helpdesk provides information on intellectual property

issues related to FP753;
o the Business Innovation Centres (BIC) provide innovation related
business services on a commercial basis;
o the China SME IPR Helpdesk provides free information, first-line
advice and training support to European SMEs to protect and
enforce their IPR in China.54

• KETs55;
• SME TechWeb providing targeted and regularly updated information on EU
research and innovation activities for SMEs56;
• Participant Portal containing information regarding calls for proposal under
FP7 and providing the entry point for electronic administration of EU-
funded research and innovation projects57;
• National Contact Points for SMEs (NCP SME)58;
• Rapport project, financed under FP7, aiming to develop a reference guide of
good practices for strengthening the exchange and transfer of knowledge
between research organisations and various kinds of SMEs and a blueprint
paper on new emerging forms of SME support in the context of open
innovation and public-private partnerships (including benchmarks).59 For the
2014-2020 programming period, the European Commission has proposed
establishing a Programme for the Competitiveness of Enterprises and Small
and Medium-sized Enterprises (COSME).60 The programme aims to achieve
the following general objectives:

o strengthen the competitiveness and sustainability of the Union's

enterprises, including the tourism sector,
o encourage an entrepreneurial culture and promote the creation and
growth of SMEs.

Activities funded through the Programme will aim to:

51
[Link]
52
[Link]
53
[Link]
54
[Link]
55
[Link]
56
[Link]
57
[Link]
58
[Link]
59
[Link]
60
[Link]

73
 o improve the framework conditions for the competitiveness and
sustainability of Union enterprises,
o promote entrepreneurship including specific target groups,
o improve access to finance for SMEs in the form of equity and debt,
o improve access to markets inside the Union and globally.

74
Research infrastructures, centres of competence and
science parks

Why should research infrastructures be part of smart specialisation?

Research infrastructures (RIs) are a driving force behind innovation. The term
'research infrastructures' refers to facilities, resources, systems and related services
that are used by research communities to conduct top-level research in their
respective fields. This definition covers: major scientific equipment or sets of
instruments; knowledge based-resources such as collections, archives or
structured scientific information; ICT-based e-Infrastructures (networks,
computing resources, software and data repositories) for research and education;
and any other entity of a unique nature essential to achieving or enabling
excellence in research. Research infrastructures may be 'single-sited' or
'distributed' (a network of resources).

There are at least 300 such Research Infrastructures, which have strong
international visibility, attracting world class researchers. They represent an
aggregate European investment of more than EUR 100 billion. Some 50,000
researchers a year use them to produce 3,000 to 6,000 high-impact research papers
annually, as well as a chain of patents, spin-off companies and industrial
contracts.

Their know-how helps European industry develop new pharmaceuticals and high-
performance materials, monitor the earth’s oceans and air, and track the changing
social attitudes and behaviour of our fellow-citizens. They help provide the
answers we will need to solve our grand societal challenges: energy supply,
climate change and healthcare for all. They propel collaboration across borders
and disciplines, promote mobility of people and ideas, and enhance quality in
education. The resulting innovation ecosystem spurs new ideas, solutions and
innovations of benefit to the European economy and society, as well as science.

Consequently, the development of regional Research Infrastructures (in particular

Regional Partner Facilities and Cross Border Facilities) should create a
particularly important way of capacity-building, should help to concentrate
regional human capital (e.g. training and attracting international researchers and
technicians) and thus stimulate turning science and innovation into a key
instrument of regional development, in terms of socio-economic return. The
concept of regional Research Infrastructure includes:

• Regional Partner Facilities (RPF)61 which are facilities associated with pan-
European single site or distributed Research Infrastructures, and

61
A Regional Partner Facility (RPF) to a research Infrastructure of pan-European interest must
itself be a facility of national or regional importance in terms of socio-economic return, training
and attracting researchers and technicians. The quality of the facility including the level of its
scientific service, management and open access policy must meet the same standards required for
pan-European Research Infrastructures. Recognition as a RPF should be the responsibility of the

75
 • Cross Border Facilities (CBF) which are independent regional or national
facilities with cross-border dimension, open to international use.

Research Infrastructures are often integrated in a wider eco-system encompassing

science parks, incubators, sectoral excellence centres, living labs, prototyping
centres, intellectual property right (IPR) centres, technology transfer offices, etc.
which often facilitate the commercialisation of research results into market
applications.

Science parks provide the advanced infrastructure on which research-intensive

enterprises rely, besides the location factor, often in close proximity to a
university. They provide the necessary infrastructure for research, such as
advanced ICTs, and are also expected to create proper conditions for informal
exchanges between firms, creating a specific social milieu.

They can also provide complementary services and support to local firms. Spin-
offs and SMEs can find wider support services that allow them to better focus on
their core business and on research for the development of innovations in science
parks. They are usually associated with strong networking effects and high levels
of social capital. They also provide visibility and hence attraction to wider local
strategies aimed at the creation of conditions for high-tech industries to prosper.

Sectoral excellence centres can be split into two categories: sectoral centres
targeting specific industries (providing a range of specialised services, directly to
firms) and cross-sector centres concerned with generic issues (such as product
development and work in partnership).

Business and Innovation Centres (BICs) are support organisations for innovative
small and medium-sized businesses (SMEs) and entrepreneurs. The BICs are
recognised by the European commission through a quality certification exam,
which enables them to obtain the European 'EC BIC' label.

Operating in the public interest, they are set up by the principal economic
operators in an area or region in order to offer a range of integrated guidance and
support services for projects carried out by innovative SMEs, thereby contributing
to regional and local development.62 The BICs are grouped together within the
European BIC Network (EBN). Lessons from the 'Living Labs': by engaging user
groups or at least by looking on innovations from the perspectives of user groups,
the strengths and weaknesses of the eco-innovation system could be identified and
addressed.

Barriers and challenges

First, there is still a lack of a consistent strategy of Europe’s regions and MS for
setting their own priorities and developing their own roadmaps. Nevertheless a
dynamics is in place, stimulated by the European Strategy Forum for Research

pan-European Research Infrastructure itself (or the members of a to-be ERIC) based on regular
peer-review.
62
The Smart Guide to Innovation-Based Incubators (IBI). European Union - Regional Policy,
February 2010.

76
Infrastructures (ESFRI) and EC work, which should not be hindered by the lack of
a European consolidated vision in the near future.

Member States, which constitute the convergence and outermost regions, do not
often have ambitions to host the site and/or to coordinate a large multidisciplinary
infrastructure. They are involved almost exclusively through participation in the
construction and exploitation of the new infrastructures localised in the EU15 MS,
and/or setting-up components of distributed infrastructures, again coordinated by
the EU15 MS.

As a consequence, the distribution of research infrastructure facilities in Europe is

still as disproportionate as ten years ago. Except the Extreme Light Infrastructure
(ELI; [Link] the Svalbard Integrated Arctic
Earth Observing System63 and the European Carbon Dioxide and Storage
Laboratory,64 all other 45 projects included in the ESFRI Roadmap are either
localised or coordinated by the EU15 Member States.

Regions have to ensure that their research infrastructures are managed by

professionals and that they are able to provide high added-value, financial and
non-financial support services to SMEs, and avoid duplication of investment in
infrastructures similar to those already in place nearby.

How to act?

The EU landscape for research infrastructures is undergoing dynamic changes.

But this welcomed trend is yet to bring improvement and better balance in
distribution. This will require specific actions towards the pooling of the existing
national/regional resources augmented by the available EU funding. Furthermore,
both streams of such funding should be better focussed on activities which
contribute to the full utilisation of intellectual potential across the EU regions.

Regions should envisage improving their framework conditions and access to

finance for research and innovation, so as to ensure that innovative ideas can be
turned into products and services that create growth and jobs.

The contribution of the stakeholders at regional and national level needs therefore
to be enhanced. Regional and local authorities should work in partnership and
take measures that would create a 'stairway to excellence' for research and
innovation infrastructures and businesses within their areas of responsibility.
Investments in existing and new RIs should combine in the most efficient and
effective way the instruments and funds available (e.g. taking into account the
needs of the industrial users, i.e. large amounts — not lab scale —, faster results,
and standards for quality control).

63
(SIOS; [Link]
[Link]/servlet/Satellite?c=Page&pagename=sios/Hovedsidemal&cid=1234130481072)
64
ECCSEL; [Link]

77
 This need for synergies has been stressed by key EU institutions, namely: the
Council,65 the Parliament66 and the Commission.67 In this context, the
Commission has produced the 'Practical Guide to EU funding opportunities for
Research and Innovation'68 and is exploring how far the Regional Policy can
provide financial support for the construction of RIs foreseen in the ESFRI
roadmap.69

Member States should set visible targets and sustainable support for operational
costs and involvement of priority ESFRI projects or regional RIs, and they should
also complete the process of development of national roadmaps for RIs.

The authorities establishing National Roadmaps for Research Infrastructures (in

connection with the EU ESFRI Roadmap) should work together with the
authorities involved in designing and delivering national and regional strategies
for smart specialisation, in particular for improving access to industrial users and
in the context of industrial clusters.

ERDF provides financial support to create and run research infrastructures:

R&TD infrastructure (including physical plant, instrumentation and high-speed
computer networks linking research centres) and centres of competence in a
specific technology, technology transfer.

In its proposal for the 2014-2020 Framework Programme for Research and
Innovation (Horizon 2020),70 the Commission suggests funding projects aimed at
reinforcing European research infrastructure policy and international cooperation.

65
Conclusions of 17 May 2010
66
EP Resolution [EP:A7-0138/2010, P7_TA(2010)0189; May 2010]
67
COM (2010)553 and SEC(2010)1183, 06.10.2010
68
SEC (2010)1183, item 3.2.
69
COM (2010)553, item 4 and SEC (2010) 1183, item 3.3.1.
70
[Link]

78
Universities

Why should universities be part of smart specialisation?

In the framework of the Education, Research and Innovation triangle, the so-
called knowledge triangle, universities71 have a crucial role to play in creating
knowledge and translating it into innovative products and services, in cooperation
with research centres and businesses. Successful mobilisation of the resources of
universities can have a strong positive effect on the achievement of
comprehensive regional strategies.

Universities dealing with economics, public policy and administration, as well as

those dealing with specific policy areas (such as industry, health, agriculture,
environment and culture) can provide public authorities and private sectors with
strategic advice, as well as experts to work directly on regional development
priorities. Universities are a critical 'asset' of the region, mainly in the less
developed regions where private sector may be weak or relatively small, with low
levels of research and development activity.

There is a range of mechanisms by which universities can contribute to regional

innovation systems. Universities can, for instance, stimulate the entrepreneurial
spirit of their staff and students, provide advice and services to SMEs, and
participate in schemes promoting the training and placement of high level
graduates in innovative businesses. They can also host incubators for spin-offs in
science and technology parks and provide valuable input to innovative clusters
and networks. These mechanisms can be delivered as stand-alone projects or
within wider strategies. The latter is the ideal and will ensure maximum impact
but is difficult to achieve as there are many barriers to overcome and there are few
good practice examples to draw on. Furthermore, Universities and Businesses
should directly cooperate in curricula design and curricula delivery to ensure that
graduates have the right skills and transversal competences. By having businesses
cooperating with the educational side of Universities, talent attraction and
retention would be enhanced in the region. Universities can also play an important
role in the field of vocational training.

Barriers and challenges

Improving the contribution of universities to regional growth by implementing

such mechanisms requires the interconnection of the partners in the innovation
systems. 'Disconnections' may occur between the partners and the barriers to
overcome are of a different nature. They can be internal to the university and
involve the capacity to ‘reach out’ to the wider region (i.e. supply side). For
instance, universities are usually focused on teaching and research (driven by
academic outputs) and are part of national academic systems that are not targeted

71
The term 'university' includes all higher education institutions, in line with the Commission's
Communication on the modernisation agenda for universities [COM (2006) 208].

79
 to respond to regional needs. As a result, some universities are viewed as being
'in' the region but not 'of' the region where they are located.

These barriers can also be linked to the capacity and willingness of the public and
private sector actors in the region to 'reach in' to the university to seek expertise
and knowledge that can contribute to regional growth and development (i.e.
demand side). Successful partnerships involve 'boundary spanners' providing
leadership within and across the partners and enabling a mutual understanding of
the drivers affecting all the partners. Universities will appreciate the opportunities
that their regions present for their activities as 'living laboratories' opened to
international linkages; their private and public partners will benefit from their
expertise for translating knowledge into innovation.

How to act?

Universities and other knowledge institutions should be closely linked to the

process of designing national/regional innovation strategies for smart
specialisation. They are needed to develop several steps of these strategies and
they can also act as intermediary bodies for the implementation of several delivery
instruments that are described in this guide.

For the next programming period, the investment's priorities proposed under the
Cohesion Policy cover these aspects with an emphasis on connecting universities
to regional growth and developing stronger partnerships within the knowledge
triangle. To obtain further information on these processes, see the practical guide
'Connecting universities to regional growth' that presents processes and delivery
mechanisms for building capacity and incentives for universities and their
regional partners to work together. Based on examples, it explores the following
issues:

• establishing a regional higher education partnership to better understand the

regional situation and to overcome the barriers, with a possible technical
assistance budget,
• ensuring mechanisms allowing universities and business in the region to
cooperate in curricula design and in jointly delivering education in an
innovative way, fostering graduates with regional relevant competences and
with transversal skills including entrepreneurial attitude,
• mapping the regional higher education system in terms of their degree-
awarding ability, research activities and possible cooperation with regional
partners,
• assessing the connectivity of the universities to the regional public and
private sectors to move towards a situation where universities are key
players,
• selecting, designing and evaluating interventions that strengthen the
connectivity of universities in the region to the region, by moving from
simple to complex projects.

In the future programming period 2014-2020, support under the European

Agricultural Fund for Rural Development (EAFRD) could be provided to
Universities in the following areas:

80
 • Knowledge transfer and information actions for the provision of vocational
training and skills acquisition actions, demonstration activities and
information actions. These should be provided for persons engaged in the
agriculture, food and forestry sectors, land managers and other economic
actors which are SMEs operating in rural areas;
• Advisory services for the improvement of the economic and environmental
performance as well as the climate-friendliness and resilience of the farms,
forest enterprises and rural SMEs, and/or relevant investments;
• Studies and investments associated with the maintenance, restoration and
upgrading of the cultural and natural heritage of villages and rural
landscapes, including related socio-economic aspects;
• Co-operation among different actors in the Union, agriculture, food chain,
forestry sector and among other actors (including Universities) that
contribute to achieving the objectives and priorities of rural development
policies (e.g. pilot projects; new products, processes and technologies;
public-private partnerships; etc.) This also covers support for clusters and
networks, and for Operational groups under the European Innovation
Partnership where universities could also take part.

References

The European Commission promotes several support tools at European level.

These may serve either as models, adaptable to different regions (considering each
region's specific features), or as a direct support to regional actors or the
administration itself:

• EU Guide 'Connecting universities to regional growth': Available on the

website of the Smart Specialisation Platform,72
• University Business Forum: A platform to promote cooperation between
HEI and businesses at European level,73
• Marie Curie – Initial Training Networks – Industrial doctorates: A pilot
action promoting industrial PhD schemes,74
• Knowledge Alliances: Between higher education and businesses in
educational issues,75
• Erasmus for all: The Union Programme for Education, Training, Youth and
Sport for the programming period 2014-2020.76

72
[Link]
73
[Link]
74
[Link]
75
Further information can be found in the UB Forum link above.
76
[Link]

81
 Digital Agenda for Europe

Why should the Digital Agenda be part of smart specialisation?

Information and communication technologies (ICT) are a powerful driver for

economic growth, innovation and increased productivity. Data from the 2010
Digital Competitiveness report77 reveals that while representing 5% of GDP, ICT
drives 20% of overall productivity growth and that the ICT industry has a 25%
share in total business R&D. The Europe 2020 strategy has recognised the
enormous potential of ICT and made the Digital Agenda for Europe78 (DAE) one
of its seven flagships. Its aim is to deliver smart, sustainable and inclusive
economic growth through the realisation of the digital single market and the
exploitation of the potential for innovation of fast and ultra fast internet and
interoperable services and applications.

DAE has set ambitious targets for high speed internet infrastructure across the
Union (by 2020: 100% coverage of EU households at 30 Mbps minimum + 50%
take-up [subscriptions] at 100 Mbps minimum) and for wide deployment and
more effective use of digital technologies, applications and services.

Successful delivery of this Agenda will enable Europe to deliver a better quality
of life through, for example, better health care (eHealth Action Plan, Active and
Healthy Ageing Partnership), social inclusion and education (eInclusion, eSkills,
eLearning), a more effective public administration (eGovernment Action plan,
eProcurement, eJustice) and dialogue between citizens and decision-makers
(eParticipation), safer and more efficient transport solutions (Intelligent Transport
Systems, eCall), a cleaner environment and more efficient energy networks (smart
grids, smart metering), inter-modal and sustainable cities (smart cities), new
media opportunities and easier access to cultural contents (eBooks, online
platforms for music and movies, digitisation and access to Europe's cultural
heritage79). The deployment of a culture of open data and secured online access,
the harnessing of a true digital single market (eCommerce), together with an
affordable high speed internet infrastructure, are essential components of these
ambitious goals.

Whether your region is struggling to provide medical and social care in times of
austerity or trying to create the conditions to attract new investment, the smart
specialisation strategy builds on or constitutes the first step towards local/regional
'digital agenda'. It provides a better understanding and the best leverages for the
potential of digital technologies and services to meet today's challenges and
prepare for tomorrow's opportunities. The long-term competitiveness and
innovation potential of regional and rural areas and the ability to achieve the
fundamental objectives of both regional and rural policies depend on the good
planning of these investments. This is as much a socio-economic as a cultural and
political challenge which management authorities of EU funds cannot afford to
miss.

77
See Digital Competitiveness Report 2010: [Link]
agenda/documents/[Link]
78
[Link]
79
[Link]

82
The reviewing of the initial Digital Agenda Communication will redefine and
update priorities based on the current financial conditions and will remove actions
which have already been complete or become obsolete.

Barriers and challenges

Europe is facing an investment challenge in the financing of high speed internet

infrastructure because the benefits for society as a whole appear to be much
greater than the private incentives to invest in faster internet network
infrastructures. The large amount of investment required to achieve ubiquitous
coverage80 requires a combined effort from a large number of investors from the
private and public domains, the adoption of open and long-term investment
models81 and the use of a range of financial tools including grants and financial
engineering.

Similar barriers exist for the wide deployment and more effective use of digital
applications and services spurring innovation, increased competitiveness and
economic growth. For instance, copyright rules are nationally based and therefore
prevent the full harnessing of the digital single market. In addition, there are
weaknesses in the European research and innovation system which considerably
complicate the discovery or exploitation of knowledge and, in many cases,
ultimately prevent the entry of innovations into the market place. This requires
improving the framework conditions for the uptake of innovation, leveraging
financing and investments in innovation and improved coordination and
coherence between funding for research and innovation at European, national and
regional level in Europe.

The Digital Agenda for Europe82 is committed to overcoming this challenge and
to making every European digital, irrespective of geographic location or social
and economic condition. The EU's Cohesion and Rural Development Policies may
contribute to this EU pledge by joining forces with Horizon 202083 — the future
Framework Programme for Research and Innovation — as well as the Connecting
Europe Facility84 in supporting open, affordable and good quality high speed
networks in areas of market failure, as well as ensuring investment in digital
service infrastructures (trans-European high speed backbone connections for
public administrations, cross-border delivery of eGovernment services, enabling
access to public sector information and multilingual services, online safety and
security, intelligent energy networks and smart energy services). To best harness
EU funding from these various financial instruments, one of the key challenges
for management authorities is therefore to select investment models and strategic
priorities that will foster the above efforts.

80
Estimated by the EC between EUR 180 and 270 billion.
81
See EU Broadband good practice site: [Link]
82
DAE: [Link]
83
Horizon 2020: [Link]
84
CEF: [Link]
[Link]?item_id=7430&language=default.

83
 Summarising, for the period 2014-2020 and according to the Commission
legislative proposals, EU financial support for digital growth measures may come
from:

• Cohesion policy: measures aiming at enhancing access to the use and quality
of ICT.85 ICT measures can also be financed as support measures within any
of the other 10 objectives, particularly research and innovation, promoting
the competitiveness of SMEs and the shift to a low carbon economy;
• Rural Development: measures aiming at enhancing accessibility to the use
and quality of information and communication technologies (ICT) in rural
areas86;
• Connecting Europe Facility87: measures aiming at the removal of
bottlenecks which hinder the completion of the Digital Single Market:
broadband and NGA networks and Digital Service Infrastructures including
core service platforms and generic services.
• Horizon 2020: (see proposal88).

How to act?

Moving from a classic ICT sector approach to a comprehensive

local/regional/national 'digital agenda' within the Smart Specialisation Strategy is
a key success factor for passing the 'ex-ante conditionality' test. This démarche
should build on at least two pillars:

1) Network infrastructure: mapping existing and planned assets, identifying the

needs for reaching ambitious population coverage and take-up targets of next
generation networks (over 30 Mbps), assessing the most suitable investment
models,89 etc. This may take the form of a stand-alone 'Broadband Plan' (most
Member States have one at national level) or be presented as a dedicated chapter
within the RIS3 document.

2) Harnessing digital growth: identifying the needs for the supply of innovative
eServices (eHealth, eGovernment, etc.) and stimulating demand for new
applications (cloud computing, eBusiness) and ICT usage (eCommerce for SMEs
and consumers, smart energy networks and low energy lighting, ICT R&D, etc.).
This may be integrated within all the relevant (sector-based) initiatives being
developed in the RIS3. Alternatively, it may also be presented as a dedicated
digital growth chapter within the RIS3.

Digital growth chapter

85
Ref: Article 9 of General Regulation:
[Link]
ion/general/general_proposal_en.pdf
86
Ref: EAFRD support for Rural Development: [Link]
2013/legal-proposals/com627/627_en.pdf
87
Ref. CEF: [Link]
statements/pdf/20111019_3_en.pdf
88
Horizon 2020: [Link]
89
[Link]
Notably the Guide to Broadband investment:
[Link]
pdf

84
The development of a chapter for digital growth within the smart specialisation
strategy will enable regions to identify the priorities for ICT investment which are
pertinent to your territory. The Digital Agenda for Europe can be taken as a
model. Box 7 provides further information about ICT measures in RIS3. The
identification of these priorities will involve a SWOT analysis based on the DAE
scoreboard's90 indicators and targets, which reflects the main areas of action up to
2020.

The DAE scoreboard provides data and an annual assessment of the performance
at EU and Member State level. Regions are requested to make a SWOT analysis
taking the DAE score board as a reference grid against which to assess the
performance with a view to identifying gaps requiring regional actions in the
domain of ICT. The S3 platform, in combination with relevant Commission
Services can provide specific assistance to regions which identify ICT as one of
its main policy objectives for the 2014-2020 period.

A critical success factor, complementing the effort of the S3 platform, is the use
of EU technical assistance to support ICT competence centres enabling regional
and rural actors to absorb expertise to plan and implement ICT-based innovation.

Box 7 - ICT measures in RIS3

Within the national/regional strategies for smart specialisation, ICT measures

could:

a)feature as horizontal measures such as application-driven research and user-

driven innovation and, adoption of ICT including ICT-based solutions in all
kinds of fields (healthcare, healthy and active aging, e-accessibility, assisted
living, e-government, access to public information, resource efficiency, smart
grids, intelligent transport, safety, e-commerce, manufacturing, design, public
services, e-education, e-inclusion, e-skills, entrepreneurship, digital literacy, e-
content, creativity, culture, living labs, smart buildings and neighbourhoods,
smart cities, trust, security, etc);

b)have a sectoral focus targeting ICT industrial and technological leadership in

R&D&i fields such as Key Enabling Technologies (KETs), or promoting
specialisations in specific market segments or niches (such as micro- or
nanoelectronics, photonics, embedded systems, smart integrated systems and
complex systems engineering, next generation computing and future Internet,
eInfrastructures; content technologies and information management; robotics,
cognitive systems, advanced interfaces and smart spaces: mobile apps and social
networks apps, etc.);

90
DAE Scoreboard : [Link]
agenda/scoreboard/index_en.htm

85
 c)include measures in support of the regional capacity to plan, manage and
implement ICT measures (e.g., networking); to establish accelerators and
mentoring facilities for start-ups; to support web entrepreneur camps, good
practices exchange, peer review, studies, regular mapping of infrastructure,
monitoring and benchmarking, development, expertise; to set up innovative
investment models; to exploit pre-commercial procurement and other related
innovative procurement activities including reinforcing cross border and
international collaboration in preparing the digital growth actions.

Plan for high speed Internet Infrastructure (Next Generation Networks)

The Guide to Broadband Investment, presenting the various models for

management authorities wishing to invest in high speed infrastructure, provides a
useful tool kit. Provided that these investments respect the relevant regulation
(telecom framework, State aid guidelines, etc.) they can benefit from a wide range
of EU funding instruments from the Connecting Europe Facility (CEF) and from
cohesion (in less developed regions) or rural development policies.

The European Broadband Portal91 (EBP) is an initiative of the DG Information

Society and Media supporting the exchange of good practice in the planning and
the deployment of broadband and high speed internet infrastructure. The EBP
provides assistance to regions to work through the different stages of the Guide to
Broadband Investment as well as specific assistance through a range of training
modules, workshops and training events.

The EBP will also continue to work on the guide on broadband investment models
with the provision of additional models and with the evaluation of the impact of
the models on the development of the information society in regions and areas
with a view to achieving Cohesion and Rural development objectives.

Finally, to assist regions in the development of their RIS3, the S3 platform will
also develop services dedicated to broadband roll-out.

Regions are reminded to closely coordinate their plans with the actions included
in the national plans for high speed internet (national broadband plans) with a
view to exploiting synergies and avoiding duplication of efforts.

Rural development policy will support the development of fast and ultra-fast
broadband including its creation, improvement and expansion, passive broadband
infrastructure and provision of access to broadband and public e-government
solutions. This may include small and large scale projects.

For support under the Connecting Europe Facility see the guidelines for trans-
European telecommunications networks.92

91
EBP: [Link]
92
CEF guidelines: [Link]
statements/pdf/20111019_3_en.pdf

86
Key enabling technologies

Why should Key Enabling Technologies be part of smart specialisation?

The Commission defined micro/nanoelectronics, photonics, nanotechnology,

industrial biotechnology, advanced materials and advanced manufacturing
systems as the six Key Enabling Technologies of Europe. KETs are knowledge-
intensive and associated with high R&D intensity, rapid innovation cycles, high
capital expenditure and highly-skilled employment. They enable process, goods
and service innovation throughout the economy and are of systemic relevance.
They are multidisciplinary, cutting across many technology areas with a trend
towards convergence and integration. KETs can assist technology leaders in other
fields to capitalise on their research efforts.93

Key Enabling Technologies (KETs) have been singled out by the European
Commission in the proposal for the new Cohesion Policy as one of the investment
priorities of the European Regional Development Fund (ERDF) as a relevant
investment for the smart growth of regions.94

KETs are seen as the route to new and better products and processes, capable of
generating economic growth and employment and strengthening the
competitiveness of the EU economy. They bear enormous market potential. In the
coming four years, the growth rates of each of these technologies range between
6%-15%. The overall global market volume will most likely increase from USD
840 billion to USD 1300 billion. Even more important are their spill-over effects
on industry users from various industrial value chains, including suppliers and
downstream sectors. KETs can spur innovation, increase productivity, give rise to
new applications and help tackle societal challenges.

The particularity of a KET-related innovation policy is that it engages actors along

different industrial value chains across the EU, including technology developers
(universities, research and technology organisations), start-ups, SMEs and
manufacturers. Consequently, a KET-focused innovation policy allows most
industrial sectors and any region to become involved and benefit from the EU's
overall KET approach, whatever its specialisation and focus areas. The
Commission is in the process of aligning and coordinating EU policies in favour
of a coherent strategy on KETs, which will open up great opportunities for
regions. Regions should indeed analyse those opportunities, either as an emerging
sector, or as a means to modernise traditional sectors.

Barriers and challenges

93
(COM(2009) 512)
94
See Article 5 (1) (c) ERDF: 'supporting technological and applied research, pilot lines, early
product validation actions, advanced manufacturing capabilities and first production in Key
Enabling Technologies and diffusion of general purpose technologies'.

87
 The key challenge for regions will be to identify their respective economic niches
and competitive advantages in KET development and deployment activities.
Regions should be aware of key guiding principles, such as: what are the
industrial needs with regard to technologies? Who are the main actors and
potential customers of these activities? Is there a business case in terms of market
exploitation?
For this, solid economic data is necessary. The Commission is in the process of
setting up an EU Monitoring Mechanism, which will provide information on the
supply and demand of KETs in the EU and third countries. This will help regions
in their smart specialisation strategies with regard to KETs. Pending the
availability of the EU Monitoring Mechanism on KETs, regions can already use
existing information available through the Nano-Observatory95 and the Regional
Innovation Scoreboard.96 Further, synergies should be obtained by linking
regional activities to EU programmes, such as those sponsored under the research
and innovation programme (Horizon 2020). Regions should therefore closely
follow the EU's activities in order to maximise the impact of their own activities
on KETs.

Quick reference guide

It is important for regions, in their smart specialisation strategies, to follow an

economic assessment, which would allow the identification of niche markets and
regional competitive advantages.

An EU Monitoring Mechanism on KETs should become operational as of 2013. A

first pilot shall be available by the end of 2012. This mechanism will provide EU-
wide and international market data on the demand and supply of KETs, which will
help regions (and Member States) to identify their competitive advantages more
easily.

Furthermore, KETs will take up a prominent role in the upcoming revision of the
EU's research & innovation framework programme (Horizon 2020). It is
important to note that due to another change to the Common provisions
regulation,97 regions will be able to more easily combine different EU instruments
in order to support their local economic ecosystems, including technology
developers, start-ups, SMEs and anchor companies. In the future, several EU
funding tools can be combined for the financing of one operation, given that the
expenditure is not double-financed and general state aid principles are followed.

In addition, the Commission plans to cooperate more closely with the European
Investment Bank in order to provide loan guarantees to productive investments.
Overall, a coherent financial framework will be put in place in order to support all
development and innovation stages of KET-related processes.

95
[Link]
96
[Link]
97
Art. 55 (8) Proposal for a Regulation of The European Parliament and of the Council laying
down common provisions on the European Regional Development Fund, the European Social
Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the
European Maritime and Fisheries Fund covered by the Common Strategic Framework and laying
down general provisions on the European Regional Development Fund, the European Social Fund
and the Cohesion Fund and repealing Regulation (EC) No. 1083/2006.

88
References

• Policy Recommendations of the High-Level Expert Group on KETs

(2011).98
• Commission Communication on KETs (2009).99
• Horizon 2020: in the framework of this programme, the Commission will
support future and emerging technologies, as well as an integrated approach
to Key Enabling Technologies.100

Cultural and creative industries

•
Why should cultural and creative industries be part of smart specialisation?

In many cities and regions, including rural areas across Europe, investments in
cultural and creative industries (CCIs) already have a significant impact on smart,
sustainable and inclusive growth. Indeed, these industries have a multiple role to
play in unlocking the creative and innovative potential of a region, as they:

• are vital for the emergence of new economic activities and the creation of
new and sustainable job opportunities101;
• have the potential to increase the quality of life in urban and rural areas and
to make Europe and its regions more attractive places in which to invest and
work;
• contribute to the social integration of marginalised groups of the population
and have wide-ranging social impacts, in particular in terms of social
regeneration or social cohesion;
• are catalysts for structural change and diversification in many industrial
zones and rural areas with the potential to rejuvenate economies, stimulate
innovation and contribute to growth;
• constitute a powerful magnet for tourism, generate a creative buzz, attract
talent and contribute to changing the public image of regions and cities;
• have potential in generating social demand, engaging the public and
addressing social concerns in rapidly growing markets, such as those
relating to energy, recycling and bio-technology, aging and health.

Moreover, culture and creativity also promote growth and qualified jobs, as CCIs
contribute to and have a strong and positive influence on ICT, research, education
and can increase the attractiveness of regions in terms of human resources and

98
[Link]
99

[Link]
7_en.pdf
100
[Link]
101
According to recent estimates, CCIs are one of Europe's most dynamic sectors and account for
up to 4.5% of the total EU GDP and some 3.8% of its workforce, 'Building a Digital Economy:
The importance of saving jobs in the EU's creative industries,' TERA Consultants, March 2010.
See also the emphasis on the creative industries in the European Competitiveness Report 2010,
Commission staff working document, COM (2010)614.

89
 investments. These positive impacts are highlighted in different EU policy
documents and studies.102

Barriers and challenges

The cultural and creative sectors are faced with a rapidly changing context
characterised in particular by digitisation and globalisation, offering great
opportunities for the sectors but making it necessary for them to develop new
skills, upgrade their equipment, develop new production and distribution methods
and adapt their business models accordingly. European cultural and creative
sectors are furthermore inherently fragmented along national and linguistic lines,
which make it difficult for them to operate transnationally within and outside the
EU and can lead to missed business opportunities. Moreover, cultural and creative
sectors face difficulties in accessing the resources they need to finance their
activities and adapt to the digital shift and globalisation. This is in particular due
to the intangible nature of many of their assets, the prototype profile of their
activities, their lack of investment-readiness, as well as the insufficient investor-
readiness of financial institutions to support them.

However, in many regions, cultural and creative sectors constitute a major asset
for the economy, and building on this asset should be considered in
national/regional research and innovation strategies for smart specialisation. The
challenge is to further integrate CCIs in this context, promoting the emergence of
'creative ecosystems' throughout the EU, i.e. via the development of a creative
environment that promotes traditional cultural assets (cultural heritage, touristic
destinations, dynamic cultural institutions and services), stimulates the
development of creative businesses, and supports spill-over effects into the local
existing industries and fuel development.

How to act?

The European Regional Development Fund and the European Agricultural Fund
for Rural Development can support such strategies. Member States and regions
are invited to finance their cultural and creative industries through investment
priorities103 closely linked to the objectives of the EU 2020 Strategy.

102
In particular in the 2010 Commission Communication 'Regional policy contributing to smart
growth':
[Link]
553_en.pdf;
the 2010 Commission Green Paper 'Unlocking the potential of cultural and creative industries':
[Link] the 2011 analysis of
the contributions to the public consultation launched by the Green Paper:
[Link] as well as in the 2010
Study on the Contribution of Culture to Local and Regional Development – Evidence from the
Structural Funds: [Link]
regional-development_en.htm
and the 2011 Study on the Entrepreneurial Dimension of the Cultural and Creative Industries:
[Link]
industries_en.htm
103
Such as 'Promoting centres of competence', 'Promoting clusters', 'Developing ICT products and
services,; 'Promoting entrepreneurship', 'Developing new business models for SMEs', 'Improving
the urban environment', 'Developing Business incubators, 'Supporting the physical and economic
regeneration of urban and rural areas and communities', etc.

90
A group of experts from Member States currently working on the 'strategic use of
EU support programmes, including structural funds, to foster the potential of
culture for local and regional development and the spill-over effects of CCIs on
the wider economy', will provide in early 2012 a policy handbook identifying
good practices in this field that might prove very useful for managing authorities,
regional authorities and cultural sector operators. On this basis, a joint EU-wide
awareness-raising initiative might be launched in 2012 by the Commission and
the Member States.

Over the years 2012-2015, the European Creative Industries Alliance104 will
support the CCIs via concrete actions related to better business support, better
access to finance and better cluster excellence & cooperation. Furthermore, the
Alliance will gather European, national and regional policy makers in a Policy
Learning Platform with the aim of raising the general awareness of the CCIs, to
draw practical knowledge from the concrete actions and to share and exchange
this better practice among Member States. The Alliance and its Policy Learning
Platform might prove another useful forum for managers of European Structural
Funds and regional and local authorities.

So far, the exchange of experience has shown that the following set of
recommendations might pave the way for using CCIs to design and implement a
targeted implementation strategy focused on the delivery of the Europe 2020
objectives. Although not exhaustive, it represents a starting point and can be
completed and customised according to the specificities, experience and priorities
of each region.

Map regional assets (this mapping should take into account the level of
development of CCIs in the region concerned):

• Identify specialisation patterns in the region through a CCI mapping analysis

(mapping should comprise quantitative as well as qualitative analysis). The
European Cluster Observatory can provide assistance in this type of
mapping exercise105;
• Identify optimal CCI-specific conditions and develop a positive creative
climate to enhance the attractiveness of the city or the region (creative
ecosystem);
• Identify lead organisations and dynamic individuals who are potential
partners in development projects and possible structures for coordinating
action. In this respect, the Europe Enterprise Network could provide
assistance in organising matching events or assist in coordinative actions106;
• Collect, if possible, statistical data and perform qualitative-based surveys to
better understand the dynamics of CCIs to be used for implementing smart
specialisation strategies;

104
[Link]
105
European Cluster Observatory, [Link]
106
Enterprise Europe Network, [Link]

91
 • Perform benchmarking activities to better understand the positioning of the
region in the sector of CCIs in comparison to other EU regions.

Involve all cultural, administrative and political actors in the decision-making

process (inclusive approach):

• Develop partnerships between national and regional authorities in charge of

different public policies such as economic development, employment,
higher education and culture. Successful CCI strategies most often depend
on excellent internal and external networks and communication channels
involving different levels of administration and representatives from several
CCI sectors;
• Set up platforms, networks as well as clusters in order to support building of
partnerships with representatives from the private sector and allow the
creation of valuable synergies for the regional economic development;
• Promote transnational cooperation to exchange experience on the level of
both CCI SMEs and the authorities in charge of developing local creative
strategies as a way to facilitate knowledge and capacity transfer and
accelerate the learning path.

Strategic and inclusive approach to investments and the use of financial

resources:

• Streamline regional, national and EU funding support to cover the different

needs of the cultural and creative sectors. Synergies need to be developed in
the use of the Structural Funds, including the European Regional
Development Fund, the Creative Europe framework programme (2014-
2020),107 the Business Competitiveness and SME Programme (2014-2020),
Horizon 2020 – the Framework Programme for Research and Innovation
(2014-2020), tools and instruments developed and tested under the
European Creative Industries Alliance, national and/or regional programmes
for the CCIs, and other possible sources of funding;
• Develop innovative financial instruments such as equity funds or guarantee
funds to co-finance investments in the cultural and creative sectors, in
conjunction with the financial instrument that is proposed under the Creative
Europe framework programme108 as a way to give leverage to private
investment in this field;
• Further exploit links between the CCIs and other important policy areas for
cohesion and/or rural development policies, in particular urban and rural
regeneration, territorial cooperation, cultural heritage and tourism;
• Promote investments in the protection, promotion and development of
cultural heritage.109 Other investments could include: the development and
use of new information technologies (for example to promote the
digitisation of cultural heritage), strengthening of entrepreneurship in CCIs,
the support to urban regeneration in which the cultural component (notably
cultural infrastructure) traditionally plays a key role, the development of

107
Add reference when programme is adopted on 23 November.
108
Innovative financial instruments for CCIs are also tested under the European Creative
Industries Alliance.
109
Included under the Cohesion policy as part of the thematic objective for protecting the
environment. In Rural development policy, a specific action targeting cultural heritage is foreseen.

92
ICT-based cultural products, applications and services, the support to new
business models for CCI SMEs, etc. Balance between hard
(structures/infrastructures: creative hubs and clusters, networks, incubators
and connected infrastructures) and soft (human capital addressing skills and
training issues) investment should equally be encouraged.

93
 Internationalisation

Why should internationalisation be part of smart specialisation?

Internationalisation is a crucial component of a S³ for at least three reasons:

• The world is flat and all elements of an enterprise value chain can be located
anywhere in the world through FDI or outsourcing;
• The eco-system of Member States and Regions can be challenged by the
eco-system of emerging countries. Today, even high added-value elements
of the enterprise value chain (i.e. R&D&i, support services, access to
finance, design) can be produced outside OECD countries. Regions have
thus to benchmark themselves with any other regions to assess where the
real or believed competitive advantages are challenged in order to
permanently increase their values;
• Internationalisation is becoming a more and more sophisticated context. It is
much more than export and FDI. It is indeed also strategic alliances, joint
research, co-development, outsourcing, relocation, mergers and acquisitions,
licensing IPR, soft landing, technology showcase.

Barriers and challenges

Internationalisation is about market and technology intelligence aiming at

assessing whether the smart specialisation strategy is able to resist global
competition or take advantage of global competition opportunities (often niche
markets).

Many reports are showing that lots of SMEs do not use the full potential of either
the internal or the external market. Some of these reports indeed show that while
25% of EU-based SMEs are involved in export to the Internal Market, in the last
three years only 13% of EU SMEs were internationally active outside the EU
through trade or any other forms of cooperation with foreign partners.

According to a Finnish survey entitled 'International R&D in high growth SMEs –

Implications to innovation policy',110 public authorities can help the
internationalisation process of technological companies by supplying them with
support services in the six areas below:

• knowledge of international market and technology demand,

• strategy development for international R&D activities,
• identification and selection of partners,
• identification, selection and acquisition of technology,
• skilled personnel,
• funding for international core, close-to-market and supporting R&D.

In some cases bold regional outsourcing or offshoring support policies should be

deployed in order to help SMEs acquire components — including knowledge —
at affordable prices, thereby enabling them to remain competitive and hence

110
Gaia Group, [Link]

94
ensure their long term survival. These days, there are definitely one or more good
reasons to compare the expertise available in-house in all departments —
research, innovation, production, marketing/sales — with that available around
the world. A detailed segmentation of regional business needs reveals the
advantages they could derive from an internationalisation strategy.

Figure 8 below illustrates this concept.

Figure 8 - Matrix of business functions and international services

Business International
functions services

Research Joint research

Access to equipment
Establishment (FDI)

Innovation Joint development

Proof of technological concept
Proof of economic concept
Licensing and transfer of intellectual
property

Production Outsourcing
Offshoring
Subcontracting
Establishment (FDI)

Marketing Market testing

Distribution Economic intelligence

Finance IPO
Mergers and acquisitions

How to act?

The European Commission recently published different relevant papers:

95
 • Small Business, Big World – A New Partnership To Help SMEs Seize
Global Opportunities, November 2011111;
• Opportunities for the Internationalisation of SMEs, August 2011;
• The EEN Network can help SMEs find sustainable partners to implement
their internationalisation strategies;
• For the 2014-2020 programming period, the European Commission has
proposed establishing a Programme for the Competitiveness of Enterprises
and Small and Medium-sized enterprises (COSME). One of the activities
funded through the Programme will target the improvement of access to
markets inside the Union and globally.112

111
[Link]
112
[Link]

96
Financial engineering instruments

Why should financial engineering instruments be part of smart

specialisation?

For more than ten years, the EU budget has been using financial instruments such
as loans, guarantees and equity investment for SMEs. In the 2007-2013 financial
framework a new generation of financial instruments was put in place in
cooperation with the EIB Group. In the area of structural funds, financial
instruments have been set up to support enterprises, urban development, energy
efficiency and renewable energies through revolving funds. Financial instruments
have been set up to support farmers, rural micro- and tourism businesses through
the Rural Development Fund.

The Europe 2020 Strategy envisages an increased use of financial instruments as

part of an approach to pull together EU and national public and private funding in
order to pursue the Strategy's objectives of smart, sustainable and inclusive
growth. In this context, on 6 October 2011, the European Commission adopted a
draft legislative package which will frame Cohesion Policy for the period 2014-
2020 and provides a common framework for all EU policies in shared
management, including rural development policy and maritime policy. This
proposal emphasises that the role of innovative financial instruments, by
extending their scope and by rendering their implementation frameworks more
flexible and effective, encouraging their use as a more efficient alternative of
support or in a complementary way with traditional grants. The proposal
represents a more solid legal and operational framework that provides clear and
simplified rules concerning key implementation matters such as the financial
management of EU contributions or the combination of financial instruments with
grants.

Subject to feasibility, financial instruments can be applied to the full bandwidth of

policy objectives reflected in programmes, in order to deliver investments in
projects which demonstrate appropriate repayment capacity in situations of
market imperfection. They can be deployed by Member States and managing
authorities either as tailor-made instruments or on the basis of pre-defined models
for national or regional instruments which allow for efficient roll-out of
operations, in line with standard terms and conditions proposed by the
Commission. Managing authorities may also contribute to financial instruments
set up at EU level with resources, which will be ring-fenced for investments in
line with the programmes concerned, for example, a guarantee facility is being
launched to incentivise financial intermediaries to extend loans to SMEs in the
cultural and creative sectors (CCS) under the new Creative Europe Programme.

Barriers and challenges

Given the relative newness of many of the financial instruments, dissemination of

information and exchange of experiences and good practices among Member
States, regions and financial intermediaries implementing the financial

97
 instruments will remain essential for the ongoing implementation in the present
programming period. But in addition, given the increased role of financial
instruments as stated in the cohesion policy post-2013, further focus will need to
be put on the promotion allowing new potential users to become familiar with this
innovative way of financing and contribute to a smooth and rapid implementation
of these instruments.

Quick reference guide

This section provides a quick reference guide of the existing financial instruments
in the 2007-2013 Financial Framework implemented under shared management
by the European Commission. It also briefly describes the joint initiatives with the
European Investment Bank (EIB), the European Investment Fund (EIF) and the
Council of Europe Development Bank (CEB) which promoted the implementation
of financial instruments with resources provided to Member States through
Regional Policy (European Regional Development Fund) and the EU Rural
Development Policy (European Agricultural Fund for Rural Development).

EU level risk capital/equity instruments: CIP/GIF, Marguerite

• CIP – High Growth and Innovative SME Facility (GIF). Innovative financial
instruments form part of the Entrepreneurship and Innovation Programme
(EIP), one of the three specific programmes under the CIP. Their overall
objective is the improvement of access to finance for start-up and growth of
SMEs in order to support the investments of such companies in innovation
activities, including eco-innovation. The High Growth and Innovative SME
Facility (GIF), with a budget of EUR 500 million, aims to increase the
supply of risk capital/equity for innovative SMEs in their early stages
(GIF1) and in the expansion phase (GIF2). It is operated by the EIF on
behalf of the Commission (representing the EU).113 Policy DG in charge:
DG ENTR, with participation of DG ECFIN for the design of the
instruments;
• The Marguerite Fund. The 2020 European Fund for Energy, Climate
Change and Infrastructure (the Marguerite Fund) is a pan-European equity
fund for infrastructure investments in the transport, energy and renewable
sectors. The Fund was established as a regulated, specialised investment
vehicle under Luxembourg law. The Commission, representing the EU, has
a seat on the Supervisory Board responsible for setting the overall strategy
of the Fund, but is not involved in the day-to-day management of the Fund
or in individual investment decisions, as this is the responsibility of the
Management Board and Investment Committee of the Fund.114 Policy DG in
charge: DG ECFIN, with participation of DG MOVE and DG ENER.

EU level debt instruments (guarantees/risk sharing): CIP-SMEG, RSFF, LGTT

• Risk Sharing Finance Facility (RSFF). The Risk-Sharing Finance

Facility (RSFF) aims to improve access to debt financing for promoters of
research and innovation investments by sharing the underlying risks between
the EU and the EIB. Together, the European Commission and the EIB are
113
[Link]
114
[Link]

98
 providing up to EUR 2 billion (up to EUR 1 billion each) to support loans or
guarantees supporting the priorities of the Seventh Framework Programme
for RTD (FP7). These contributions will translate into up to EUR 10 billion
worth of additional financing available to innovative companies and the
research community. RSFF financing is available for promoters and entities
of all sizes and forms, including corporations, midcaps, small and medium-
sized enterprises, special-purpose companies, public-private partnerships
and joint ventures, research institutes, universities, science and technology
parks, and research infrastructures (covering suppliers, the infrastructures
themselves, and enterprises commercialising their results and services). A
new RSFF facility to provide loans and leases to SMEs and smaller mid-
sized firms, the Risk-Sharing Instrument (RSI), was launched at the end of
2011. It was operated by the EIF on behalf of the EIB and provides
guarantees to financial intermediaries against loan defaults. The
Commission intends to scale up and expand the RSFF under the proposed
Horizon 2020 Framework Programme for Research and Innovation (2014-
2020).115 Policy DG in charge: DG RTD, with participation of DGs ENER,
INFSO, MOVE, ECFIN and BUDG;
• CIP – SME Guarantee Facility (SMEG). The SME Guarantee Facility
(SMEG), with a budget of EUR 500 million, provides counter-guarantees to
national guarantee schemes as well as direct guarantees to financial
intermediaries in order to increase and enhance the supply of debt finance to
SMEs. SMEG is operated by the European Investment Fund (EIF) on behalf
of the Commission (representing the EU).116 Policy DG in charge: DG
ENTR, with participation of DG ECFIN for the design of the instruments;
• Loan Guarantee Instrument for TEN-T projects (LGTT). The Loan
Guarantee Instrument for TEN-T projects aims at facilitating larger
participation of the private sector in the financing of Trans-European
Transport Network infrastructure (TEN-T). Attracting private sector funding
in core European transport projects can be challenging due to the relatively
high levels of revenue volatility in the projects' early operating stages. The
Loan Guarantee Instrument for TEN-T projects partially covers this revenue
risk and consequently improves the financial viability of such TEN-T
projects.117 Policy DG in charge: DG ECFIN and DG MOVE for the initial
design of the instrument;
• MEDIA Production Guarantee Fund. The MEDIA Production Guarantee
Fund was set up in 2010 in the framework of the MEDIA 2007 Programme.
The fund is used to guarantee 50%-55% of the loans granted by local banks
to film producers in order to reduce their risk and increase their lending
activities in favour of the sector. It amounts to EUR 8 million over the
period 2010-2013. The fund is being managed on behalf of the Commission
by two different financial institutions.118 Policy DG in charge: DG EAC.

115
[Link]
[Link]
116
[Link]
117
[Link]
118
IFCIC in France and Audiovisual SGR in Spain.
[Link]

99
 Instruments combining equity and debt support

• European Progress Microfinance Facility. The European Progress

Microfinance Facility, set up in 2010, consists of two parts: 1) a guarantee
instrument to providers of micro-credit (i.e. loans of up to EUR 25,000, in
particular to vulnerable groups in risk of social exclusion, for the purpose of
setting up small commercial operations); and 2) the European Progress
Microfinance Fund, which offers loans and equity participations to micro-
credit providers. The European Progress Microfinance Fund has the EU
(represented by the Commission) and the EIB as investors, while the EIF act
as a management company.119 Policy DG in charge: DG EMPL, with
participation of DG ECFIN for the design of the instruments;
• European Energy Efficiency Fund. The European Energy Efficiency Fund,
which was set up in 2011 is a structured finance vehicle set up under
Luxembourg law to invest either directly in smaller scale energy efficiency
and renewable energy projects of local authorities and energy service
companies (ESCOs), or invest in such projects indirectly via financial
institutions.120 Policy DG in charge: DG ENERGY.

Structural Funds

• In the present programming period (2007-2013), under the principle of

shared management, Structural Fund resources can be used for establishing
financial engineering instruments, which can be invested either in the form
of equity, loans, guarantees or other forms of repayable investments in
enterprises, mainly SMEs, public private partnerships, urban development
projects; or in legal or natural persons carrying out specific investment
activities in energy efficiency and renewable energies. Cohesion policy does
not finance individual projects directly at the EU level, instead it funds
multi-annual national or regional operational programmes aligned with EU
objectives and priorities and managed by national or regional authorities. EU
Structural Funds are implemented within the framework of shared
management and the legislation defines a clear division of responsibilities
between Member States and the Commission;
• JEREMIE: Joint European Resources for Micro to Medium Enterprises is an
initiative of the European Commission's Directorate General for Regional
Policy (DG REGIO) developed together with the European Investment Fund
in order to promote the use of financial engineering instruments to improve
access to finance for SMEs via Structural Funds interventions.121 Policy DG
in charge: DG REGIO;
• JESSICA: Joint European Support for Sustainable Investment in City Areas
is a joint initiative of the European Commission's Directorate General for
Regional Policy (DG REGIO) developed in co-operation with the EIB and
the CEB which is aimed at supporting sustainable urban development and
regeneration through financial engineering mechanisms.122

European Agricultural Fund for Rural Development (EAFRD)

119
[Link]
120
[Link]
121
[Link]
122
[Link]

100
In the current programming period (2007-2013), similar to the Structural Funds
and under the principle of shared management, the EAFRD contributes to support
financial engineering actions such as loan funds, guarantee funds and venture
capital funds. These funds, the setting-up of which depends on the choice of the
Member States and on their needs, invest in agricultural and food processing
enterprises, rural non-agricultural micro- and tourism businesses, or in legal or
natural persons carrying out specific investment activities in rural areas, in
accordance with the relevant rural development programmes. As in the case of the
Cohesion policy, the EU rural development policy does not finance individual
projects directly at EU level, instead it funds multi-annual national or regional
rural development programmes aligned with EU rural development objectives and
priorities, and managed by national or regional authorities.123 Policy DG in
charge: DG AGRI.

EIB Group's own resources

The European Investment Bank is the long-term financing institution of the

European Union and its mission is to help implement the EU's policy objectives
by financing sound business projects. Within this context the priority objectives
for the EIB’s lending activities set out in the Bank's operational plan are
Economic and Social Cohesion and Convergence i.e. supporting the economically
less developed regions of Europe, implementing the knowledge-based economy,
developing Trans-European Networks (TENs), supporting small and medium-
sized enterprises (SMEs), protecting and improving the environment and
promoting sustainable communities, and supporting the establishment of a
sustainable, competitive and secure energy supply. The EIB has two main
financing facilities:

• Individual loans: provided to viable and sound projects and programmes

costing more than EUR 25 million which are in line with EIB lending
objectives;
• Intermediated loans: credit lines to banks and financial institutions to help
them to provide finance to small and medium-sized enterprises with eligible
investment programmes or projects costing less than EUR 25 million.
Micro-finance has also been provided by the EIB in some countries.

The European Investment Fund provides financial intermediaries an integrated

risk finance product range of SME finance initiatives, complementing the
products offered by the EIB with which the EIF forms the EIB Group. The EIF
aims at satisfying existing and future market needs by designing innovative
financial products such as equity products and debt products, portfolio guarantees
& credit enhancement and microfinance.

For the 2014-2020 programming period, the European Commission has proposed
the establishment of a Programme for the Competitiveness of Enterprises and
Small and Medium-sized enterprises (COSME). One of the activities funded

123
[Link]

101
 through the Programme aims to improve access to finance for SMEs in the form
of equity and debt.124

124
[Link]

102
Innovative public procurement

Why should innovative public procurement be part of smart specialisation?

Most of the existing research and innovation support schemes in the Member
States and regions consist mainly in providing support in the form of finance,
infrastructure or services for R&D or other activities and capacities that aim to
produce innovations. The introduction of these innovative products or services
into the market is, however, a problem that is barely addressed, or only at the end
of the innovation support process.

Yet, customers are what innovative firms need most in order to be successful.
Lead customers provide credibility for innovative products, and are vital for
validating and further improving innovations. Having customers is also a major
incentive for private investors to support innovative firms.

A comprehensive innovation support strategy thus needs to include support for

identifying potential customers or fostering market opportunities (e.g. by
stimulating private or public demand for eco-innovations). Starting with demand
issues provides more chances for successful innovation than starting with R&D
grants, as it allows the design of the innovation process to more precisely match
the market opportunity and to obtain faster market take-up of the innovation.

Some of the most successful innovation support schemes — such as the US Small
Business Innovation Research scheme (SBIR)125 — take public sector demand for
innovative, affordable and high-quality solutions as a starting point. They then
either procure R&D services to develop innovative solutions with pre-commercial
public procurement,126 or directly engage a public procurement of innovation127 if
the necessary technologies/solutions are available but not yet in the market. The
US public sector procurement of R&D&i is therefore about 20 times bigger than
in the EU, and the firms benefiting from this seem to have an exceptionally good
access to private venture capital for their further growth.

Also in Europe public procurement holds an enormous — so far largely unused —

potential for providing demand pull for innovation and market opportunities for
innovative firms, as the purchasing power of public authorities in the EU
represents around 19% of the EU’s GDP, equivalent to EUR 2.3 trillion a year.128
Part of this budget stems from the ERDF.

Using public procurement as an element of a national/regional research and

innovation strategy for smart specialisation offers multiple advantages, such as:

125
[Link]
126
[Link]
127
[Link]
proc_en.htm
128
[Link]

103
 • Better match to new needs in providing more and better public services and
infrastructures to citizens and firms than off-the-shelve products could offer,
• Cost-savings for public budgets in the medium- and long-term thanks to
more efficient energy or resource solutions (e.g. functional requirements),
• Higher impact of innovation investments thanks to a comprehensive strategy
that combines R&D investments (e.g. in eco-innovation) with purchasing
innovations (e.g. of energy efficient and low carbon buildings or transport),
• Higher mobilisation effect on private investors/venture capital, thanks to the
faster market access and return-on-investment for innovative firms.

Barriers and challenges

The main reasons why still too few public procurers in the EU buy innovations
and why the procurement of innovation is still hardly used as an innovation
support tool are:

• Lack of or wrong incentives for public procurers: Procurers tend to favour

low cost, low risk, and off-the-shelf solutions once the (political) decision on
what to buy and at which price has been made, even when there are longer-
term benefits to public service providers in testing and procuring new
technologies and solutions;
• Lack of knowledge of public procurers on what new technologies and
innovations are available in the internal market or are possible and what
could be the medium to long-term benefits and cost savings;
• Lack of capabilities of public procurers to manage procurement procedures
involving market consultations, competitive dialogues, cost-benefit
evaluations, life-cycle costing assessments, etc.;
• Fragmentation in demand and lack of critical mass: In general, individual
procurements are mostly too small for companies to make investments in
innovations worthwhile. There are hardly any mechanisms to allow the
pooling of risk and resources across countries and different administrations;
• Difficulties for innovative SMEs to become involved in public procurement
as direct suppliers, as shown by the EC study on SMEs access to public
procurement.129 This hampers the access of public authorities to the
innovative potential of SMEs, in particular high-tech SMEs who play a key
role in creating innovative solutions;
• No strategy that links public procurement with other public policy
objectives: for example, the administrations in charge of health and care
services, environment, mobility, energy, housing, waste and water
management do not perceive themselves as having any role to play
regarding support for innovative firms. On the other hand, administrations in
charge of research, innovation and business support do not include in their
strategies the question of what innovative solutions the public sector would
need to procure. In addition, the two sides of the administration do not
jointly develop their strategies.

How to act?

129
[Link]

104
The ERDF permits the strategic combination of investments in R&D&i capacity-
building with demand-side measures in a unique manner. This is particularly true
for public procurement, as the partnership contracts and strategic reference
frameworks include different strands of administration (e.g. environment,
transport, industry, innovation) and allow the development of strategies that cover
entire countries (and even beyond).

Therefore, the European Commission recommends:

• The development of smart specialisation strategies to include the issues of

market-up-take and public procurement needs among the starting points for
identifying the fields of specialisation. Funding, for instance, the
development of energy-efficient technologies becomes more credible and
has more impact, if the public sector buys them as a lead customer for
applying and testing them in practice;
• Encouraging procurers to purchase innovative solutions by rewarding them
and by decreasing the potential innovation costs and financial risks through
ERDF co-funding;
• The recognition of the procurement phase as strategic in public policy
cycles, by associating procurement departments at an early stage in the
definition of a project and of regional innovation strategies for smart growth;
• Supporting transparency for the procurers, to get to know the market better
and to stimulate innovation; and for businesses (in particular SMEs) to better
understand and anticipate the requirements of contracting authorities;
• Supporting a change in procurement practices towards more demanding
requirements/specifications to pull innovations to the market (e.g. related to
green public procurement and life-cycle-costing) in order to encourage the
procurer to become an 'intelligent' customer.130 This can be achieved
through better preparatory work and capacity-building in procurement
offices both as regards the identification of state-of-the-art
technologies/solutions in the market and the capacity to manage complex
procurement procedures.

Concrete actions to develop

• To support the capacity-building of procurement departments through

training, exchanges of civil servants/procurement officers and exchanges
and promotion of good practices amongst peers131 (e.g. awarding prizes for
the best innovation procurement or methodology132), and developing
guidance,133 including sector orientation such as for the health,134

130
[Link]
131
[Link]
132
[Link]
133

[Link]
134
[Link]

105
 construction,135 energy efficiency136 or protective textile sectors,137 by
building procurer groups and networks138;
• To support procurers to better engage with the market139 by involving
innovation agencies,140 chambers of commerce, cluster
organisations/sectoral platforms, SME support organisations (e.g. Enterprise
Europe Network141) and other bodies that can assist in developing
demanding specifications;
• To invite and guide procurers to join forces with others, in order to attain
critical mass, making it interesting for firms to develop innovative solutions
for a bid and in order to pool capacities (legal, procedural, knowledge of
market, technologies and performance levels, administrative budgets for the
procurement processes, etc.);
• To financially support the procurement of innovative solutions (goods &
services), through targeted and limited grants to contracting authorities.

Where to get inspiration

• The Procurement Forum from various procurement of innovation fields

provides access to a community of procurers with experience in the field of
innovation142;
• Trans-national networks between Public Procurement for innovation were
set up with the support of the CIP programme to facilitate the sharing of
good practices and the joint market and technology screening and
development of specifications around selected topics: sustainable
construction of hospitals,143 protective textiles for fire brigades144 and
sustainable construction.145 Many of their methodological findings are of a
general nature and can inspire innovative procurement initiatives in other
fields;
• Several on-going projects dedicated to support networks of European
procurers engaged in pre-commercial procurement are running under the
Seventh Framework Programme (FP7)146;
• European Commission actions to support the development of Green Public
Procurement that are boosting the procurement of innovation and eco-
innovative solutions147;

135
[Link]
network/files/Resource_Centre/Reports/Innovation_in_construction_procurement_-
_Preliminary_report.pdf
136
[Link]
137
[Link]
138
[Link]
1
139
[Link]
3_report_on_impacts_on_the_market.pdf
140
[Link]
141
[Link]
142
[Link]
143
[Link]
144
[Link]
145
[Link]
146
[Link]
147
[Link]

106
 • The Enterprise Europe Network also developed 3 networks of members
dedicated to facilitating the meeting between innovative SMEs and public
buyers of innovation148;
• Member States (UK,149 NL,150 FI,151 SE, BE, AT, FR, IT, SP…) and
Regions (Flanders,152 Észak-Alföld,153 Helsinki Metropolitan Area,154
Greater London155…) are implementing schemes for enhancing public
procurement of innovation and pre-commercial procurement;
• Several European studies are supporting the policy support to procurement
of innovative solutions (e.g. Public Procurement of Innovation: Towards a
European Scheme156);
• Information on EU level policy development for procurement of innovative
solutions.157

148
[Link] [Link]
[Link]
149
[Link]
150
[Link]
151
[Link]
152
[Link]
153
[Link]
154
[Link]
155
[Link]
156
[Link]
157
[Link]

107
 Green growth

Why should green growth be part of smart specialisation?

In a resource-constrained planet, Europe needs to accelerate its transition towards

a climate resilient and greener economy to boost its competitiveness and be able
to sustain its growth.

This is why sustainable growth is one of the priorities of Europe 2020, which
stresses the need for a transition to a green, low-carbon, resource-efficient
economy as a new paradigm for sustainable growth. Innovation is essential to
succeed in decoupling growth from natural capital utilisation and is therefore the
key to enabling sustainable and smart growth to go hand in hand. Innovation
strategies for smart specialisation will need to foster green growth. This will result
in an EU economy that is more competitive in a world of high energy prices and
tough resource constraints and competition. In this framework, public decision-
makers and stakeholders in Europe’s regions and cities, which are responsible for
designing, implementing and monitoring these strategies, play a crucial role.

Not only do they often set the framework, but local and regional authorities are
also usually responsible for implementing policies, programmes, legislation and
public investments in key areas for sustainable growth and innovation such as
energy, environment, transport, land-use, education or social services. The
coordination of different policies and different levels of government is always a
challenge, but it is critical in accelerating the transition towards a greener
economy and getting the actors of innovation and environment working together.
Moreover, regions have to reflect on how to benefit from the fast-emerging green
eco-innovation sector.

How to act?

In the current programming period, ensuring innovation for sustainable growth

requires improved coordination between different operational and rural
development programmes in the areas of innovation, competitiveness,
environment and energy. This requires integrated and cross-cutting approaches
that combine innovation and sustainability into joint policies and programmes.

Managing authorities need to work together and make sure to involve relevant
actors, such as environmental or energy agencies as well as NGOs and other
representatives of civil society. Public and private sector decision-makers need to
integrate sustainable development principles into their day-to-day decision
making process. Sustainability must be integrated throughout the strategies for
growth and in the project life-cycle, taking into account the impacts on the
environment from design to delivery and end-of-life.

As part of their innovation strategies for smart specialisation, public authorities at

regional and local level also need to design interventions that help to overcome
specific market failures in this area, as well as improving the supply of green
innovation, technologies and solutions. Among the core measures that should be
encouraged are:

108
 • Commissioning a strategic analysis and approach on the region's own
characteristics, assets, challenges and opportunities as regards its
environment, natural assets, renewable energy potential and climate impacts
in the studies that will serve as a basis for the identification of the priorities
to be established regarding smart specialisation;
• Increasing the support for new entrepreneurial firms that aim to deliver more
radical eco-innovations and challenge existing firms and business models, or
that deploy new environmental technologies;
• Improving access to finance, knowledge, and know-how and skills
development in order for SMEs to boost their resource efficiency and
develop new products and services that are more environmentally-friendly;
• Enhancing international and interregional co-operation on innovation for
sustainable growth.

It is also necessary to go beyond the creation and supply of new technologies and
innovations and strengthen the diffusion and take-up of innovations for
sustainable growth. Such policies include:

• Reinforcement of markets for green innovation: local and regional

authorities need to deploy more Green Public Procurement,158 possibly in
synergy with Innovative Public Procurement, as a key lever to boost
innovation and sustainable development;
• Promoting changes in consumer behaviour and social innovation: consumer
policy, education and information as well as labelling;
• Taking an exemplary role, for instance in engaging the administration in
EMAS certifications159 or state-of-the-art renovation of public buildings for
improved energy efficiency160;
• Other instruments such as fiscal or pricing mechanisms can, in certain cases,
also be in the hands of regional authorities.

For the next programming period, the contribution of key areas of sustainable
growth is ensured. Environment, climate change and energy are specifically
included in the draft new regulatory package, covering all shared managed funds,
through thematic objectives, investment priorities, and also as a cross-cutting
principle. The proposed regulations include concrete ex-ante conditionality
requesting MS to comply with EU's waste, water, climate and energy legislation
to ensure efficient use of the funds in those areas. Furthermore, ERDF resources
are earmarked for thematic priority ‘supporting the shift towards a low-carbon
economy in all sectors; in particular, at least 20% in more developed and
transition regions and at least 6% in less developed regions. Ring fencing of a 5%
minimum share on Sustainable Urban Development will also contribute to address
environmental, energy & climate challenges in cities

158
[Link]
159
[Link]
160
[Link]

109
 Challenges in specific areas

Sustainable energy

For the period 2014-2020, the Commission has proposed a significant

concentration of cohesion policy efforts on renewable energy and energy
efficiency. For example, the more developed regions and those regions that did
not yet complete their catch-up process would have to spend 20% of their ERDF
allocations on this topic, and the less developed regions 6%. Rural development
policy has also reinforced its contribution for the energy investments.

Yet, achieving the EU's 20-20-20 objectives on greenhouse gas emissions, energy
efficiency and renewables will require further innovations and a revolutionised
energy system. In addition to this large scale roll-out of already established
solutions, research and innovation will thus be critical to make new, cleaner, more
efficient energy sources commercially attractive at the scale needed. The Strategic
Energy Technology Plan (SET-Plan)161 provides a long-term agenda to address
the key innovation bottlenecks. Thus, in assessing their position and assets in the
context of the development and the subsequent implementation of their innovation
strategies for smart specialisation, regions are invited to make full use of the
knowledge developed in the framework of the SET-Plan.

Eco-innovations

The forthcoming EU Eco-Innovation Action Plan underscores that eco-

innovations are central to addressing the challenges of resource scarcity, air, water
and soil pollution or water efficiency. Eco-innovations also create major
opportunities for growth and jobs and increase European competitiveness within
the global market, which is estimated to grow to a trillion EUR market after
2015.162 Already 45% of companies have introduced some type of eco-innovation.
It has been estimated that around 4% of eco-innovations led to more than a 40%
reduction of material use per unit of output,163 highlighting the great future
potential.

They must be promoted not only through technologies, but also through business
processes and organisational change. In particular a closed-loop economy that
aims to reduce, in absolute terms, input, waste and the release of harmful
substances along the value chain and foster re-use, recycling and resource
substitution should be further reinforced.

This needs new business models, industrial symbiosis, product service systems,
product design, full life cycle and cradle-to-cradle approaches. Managing
authorities are encouraged to put eco-innovations at the core of their innovation

161
[Link]
162
European Parliament 'Policy Department Economic and Scientific Policy, Eco-innovation -
putting the EU on the path to a resource and energy efficient economy, Study and briefing notes',
March 2009.
163
Eco-innovation Observatory 'The Eco-Innovation Challenge - Pathways to a resource-efficient
Europe - Annual Report 2010', May 2011.

110
strategies as a cross-cutting requirement in all sectors, liaising with the area-
specific stakeholders in the field of energy, water and other natural resource
management. The aim is to embed eco-innovations from the outset in the design
and development of the strategies and programmes for innovation and tap into its
opportunities.

Nature

Eventually, the challenges that regions face in terms of adaptation to climate

change and the preservation and management of their natural assets ask for
innovative approaches for regions to fully benefit from the underlying
opportunities. Nature and its resources need to be fully integrated in the regional
approaches to sustainable growth and the national/regional innovation strategies
for smart specialisation.

First, the sustainable management of a region's natural assets needs research and
innovation to further build knowledge and practical outcomes in terms of
improved preservation and management instruments, practices and applications.
Second, a region's natural assets can be the very start of innovation activities and
the development of new technologies or solutions, for instance in the case of
renewable energy sources but also the expansion of the bio-economy.

Therefore, innovative methods need to be taken into account to monitor and

manage nature in broad partnerships that include the business community, the
agriculture and forestry sector, civil society and municipalities. Action is also very
much needed in the realm of social innovation, to engage communities positively
in the preservation of the local natural resources and assets.

111
 Social innovation

Why should social innovation be part of smart specialisation?

Social innovation is important for regional development, as it can create new

business opportunities, provide new perspectives to citizens, and help the
modernisation of the public sector. It can also be a vehicle for making policies
more responsive to social change and to encourage and support innovative social
enterprises. Social innovations are innovations that are social in both their ends
and their means. Specifically, we define social innovations as new ideas
(products, services and models) that simultaneously meet social needs (more
effectively than alternatives) and create new social relationships or collaborations.
In other words, they are innovations that are both good for society and enhance
society’s capacity to act.164

Social innovation is about developing new forms of organisation and interaction

to respond to social/societal issues. They address a social demand or need (e.g.
elder care), contribute to addressing a societal challenge (ageing society) and,
through their process dimension (e.g. the active engagement of the elderly, new
services) they contribute to re-shaping society in the direction of participation,
empowerment, co-creation and learning.

For these reasons social innovations offer a way of tackling societal challenges
when the market and public sector do not respond effectively to the social needs.
They also contribute positively to diminishing the innovation divide by involving
end-users (including disadvantaged groups) and stakeholders into innovation
processes, promoting inclusive growth. Therefore, they are a relevant rationale to
have in mind while designing innovation strategies for smart specialisation.

Social innovators can come from all walks of life. Social innovations can be
developed by private, public and third sectors, and should involve households and
citizens, i.e. the quadruple helix, and can be implemented at national, regional and
local level.

Barriers and challenges

Social innovation is a relatively new concept for which a theoretical framework is

being developed. There is a risk of it being hampered by insufficient knowledge,
limited support of grass roots, social enterprise and social entrepreneurship
activities, poor diffusion and little scale-up of good practices, and poor methods of
impact evaluation. The context for developing social innovations is very different
across European countries' welfare regimes (i.e. the relative role of state, market,
family).

Social innovation challenges traditional structures, forms of organisation and

power relations, which are difficult and slow to change. New forms of engaging
with employees, end-users or citizens, NGOs and local communities can be
powerful tools for innovation, making better use of their innovation potential, for

164
Social Innovation Exchange and Young Foundation 2010 Study on social innovation for BEPA.

112
example through co-creation, workplace innovation or quadruple helix models
(including civil society), however, they require a considerable mentality change.

Access to finance can also constitute a barrier. For example, social enterprises
may not have as easy an access to finance from banks as other enterprises.
Projects need to be encouraged to get out of grant logic and become self-
sustainable. Financial engineering tools can offer alternatives whose potential has
not been exploited well enough in the social (innovation) sector.

But social innovation can create new business opportunities, e.g. in growth sectors
like health and education. It can also play an important role in the modernisation
and transformation of the public sector and public services, through cooperation
with social enterprises, NGOs and civil society, and needs therefore to be
exploited.

How to act?

Member States and the EC are investing in social innovation activities. Examples
can be found in urban regeneration, community-led local development,
microfinance, (e-)health and ageing, workplace innovation, co-creation, service
innovation and social and/or green public procurement.

It is important to link business, the public sector, the social economy and civil
society. To make an impact, regional and managing authorities must use the
expertise of public organisations such as innovation agencies, social/work
agencies and regional development agencies, but also NGOs, volunteering
organisations, religious organisations, etc. should not be left untapped.

New cooperation structures and partnerships can be set up, incubation facilities
can be provided for social enterprises and citizens' initiatives as well as measures
to stimulate the development and scaling-up of social enterprises aiming at the
creation of social value. Public sector is central in the delivery of many services of
social and economic value. In this regard, it has a pivotal role in answering
(together with private stakeholders and the civil society) today's major societal
challenges such as demographic ageing, increased demand for healthcare services,
risk of poverty and social exclusion, the need for better and more transparent
governance, and a more sustainable resource management.

Public sector innovation may involve notably, new or improved services (e.g.
healthcare at home), organisational innovation, system innovation (e.g. new
patterns of co-operation and interaction) and conceptual innovation (e.g. a change
in the outlook of actors). This can lead to increased efficiency and the delivery of
new and better quality services that respond not only to the users' evolving needs
and expectations but also to budget constraints.

Directorate General (DG) Regional Policy is publishing a guide on social

innovation for the EU's regions. It will contain guidance on how to design
regional strategies that include social innovation as a potential for growth and
change.

113
 The categories for the Regiostars awards for 2013 (organised by DG Regional
policy) include a category for social innovation.165

Micro-finance has proven to be a good tool to support social innovation

enterprises. In this respect, the European Commission has launched the JASMINE
scheme. JASMINE, the Joint Action to Support Micro-finance Institutions in
Europe. JASMINE is a joint initiative of the Commission and the EIB group to
support non-bank micro-credit providers in the EU. JASMINE seeks to help non-
bank micro-credit providers to improve their governance, information systems,
risk management and strategic planning with a view to obtaining a better access to
the private capital markets, to expand and become sustainable.166

The European Social Fund (ESF) has made significant investments in social
innovations, ranging from supporting local partnership and enhancing the
capacity-building and networking of local stakeholders to implementing active
labour market policies. For the next programming period, social innovation is
treated in a horizontal way in the ESF regulation. DG Employment, Social Affairs
and Inclusion will also directly fund social experimentation projects through
PROGRESS and the Programme for Social Change and Innovation to reform
social policy. Furthermore, they have published a methodological guide on social
experimentation for policy makers167 and will set up further information initiatives
(databases, conferences) and a high-level expert group on social experimentation.

DG Internal Market has launched the Social Business Initiative (SBI), as part of a
'Responsible Business package', including also a communication on CSR and
directives on accounting and transparency.168 The aim of the SBI is to make
access to the market and to finance easier for social enterprises. Co-initiators of
the SBI are DG Enterprise and DG Employment, Social Affairs and Inclusion.
Early December, the Commission proposed the Regulation on European Social
Entrepreneurship Funds.169

DG Enterprise has mobilised CIP funds for social innovation. CIP funds will
create a social innovation prize, exploit the development of incubators for social
enterprises, and organise a conference on workplace innovation in cooperation
with the Flemish government. They are also coordinating the Social Innovation
Europe Initiative, with an online hub for social innovators170 and two studies to be
published soon, one on financing social innovation and one on measuring and
evaluating social innovation.

165

[Link]
166
1.1. [Link]
167
[Link]
download on the right of the page.
168
Press release on the package:
[Link]
nguage=en&guiLanguage=en; SBI texts (communication + working document + FAQ):
[Link]
169

[Link]
170
[Link]

114
The Seventh Framework Programme FP7 has launched various calls for proposal
related to social innovation under the 'Social sciences and humanities' strand.
HORIZON 2020 will also include social innovation.171

The Digital Agenda also includes scope for social innovation, through e-health
and ageing and e-government, for example. DG Information Society and Media is
applying the concept of user-driven innovation in Living Labs and in a number of
European Cities supported by CIP ICT-PSP funds. The implication of users and of
citizens in the whole process from conception and development down to
validation and dissemination is expected to bring societal innovation in many
sectors such as e-health, ageing, and local government.

171
[Link]

115
 ANNEX III: REGIONAL RESEARCH AND
INNOVATION STRATEGIES FOR SMART
SPECIALISATION: GUIDANCE FOR EXPERT
ASSESSMENT
1. Is the strategy based on appropriate stakeholder involvement? How does it
support the entrepreneurial discovery process of testing possible new areas?

1.1 Has the strategy been developed through a broadly-based process of direct
stakeholder involvement, including mainly regional government/regional
agencies, entrepreneurs, knowledge providers but also other/new stakeholders
with the potential for innovative contributions, through measures such as surveys,
consultations, dedicated working groups, workshops, etc.?

1.2 Has this process been adequately described or referred to in the submitted
document?

1.3 Is there an identified leader of the RIS3 process? If yes, who is it? Does the
strategy identify the leading entrepreneurs involved in the process?

1.4 Is the priority-setting in the strategy based on an identification of market

opportunities/economic potential informed by an entrepreneurial search/discovery
process, i.e. by a process foreseen to identify and test specific entrepreneurial
opportunities?172

2. Is the strategy evidence-based? How have areas of strength and future

activity been identified?

2.1 Does the strategy include/build on a sound analysis of the country's/region's

existing situation with regard to scientific/technological and economic
specialisations or refer to such an analysis/related studies?

2.2 Is it based on a sound assessment of the competitive assets of the region,

including an analysis of its strengths, weaknesses and bottlenecks?

2.3 Besides a SWOT analysis, what other quantitative and qualitative

information/methods have informed the strategy (e.g. cluster analysis, value chain
analysis, peer review, foresight)?

2.4 Does the document propose a vision for the region? Is this vision clearly
described, credible and realistic?

172
In this context entrepreneurial search or discovery is to be understood broadly, as a
combinatorial process that is not confined to the private sector but is a synthesis and integration
of dispersed and fragmented global and local knowledge (technological, business and societal)
to inform S3 choices and identify opportunities for the region to expand/ into new domains.

116
3. Does the strategy set innovation and knowledge-based development
priorities? How have potential areas of future activity been identified? How
does it support the upgrading of existing activities?

3.1 Does the strategy outline a limited set of innovation and knowledge-based173
development priorities?
3.2 Are these priorities sufficiently specific in identifying existing/potential niches
for smart specialisation and related upgrading of existing activities or potential
future activities?

3.3 Do the thematic priorities chosen in the strategy reflect the description and
analysis of the regional economic structure, competences and skills?

3.4 Does the strategy take into account considerations for achieving critical mass
and/or critical potential in the priority areas selected?

4. Does the strategy identify appropriate actions? How good is the policy
mix?

4.1 Does the strategy include action lines and/or realistic roadmaps in line with
the objectives? Are these sufficient to reach the objectives?

4.2 Does the strategy indicate which bodies are responsible for the
implementation of these action lines/roadmaps?

4.3. How does the strategy support/facilitate:

• cross-clustering and the identification of innovation opportunities at the

interface between different disciplines/industries/clusters?
• entrepreneurship and the innovation capabilities of SMEs, for instance by
facilitating the diffusion and adoption of technologies, incl. Key Enabling
Technologies?174
• the improvement of demand-side conditions and, in particular, public
procurement as a driver for innovation?

Are there sector-specific support services/schemes foreseen?

4.4 Does the document outline measures to stimulate private R&D&i investments,
for instance through public-private partnerships? Does it demonstrate/aim at
financial commitment of the private sector with the strategy?

4.5. Does the strategy identify budgetary sources, and does it present indicative
budget allocations?

173
Incl. non-technological and service-sector innovation
174
The six KETs are: nanotechnology, micro-nanoelectronics, advanced materials, photonics,
industrial biotechnology and advanced manufacturing systems.

117
 4.6 Does it include a sufficiently balanced mix of soft innovation support services
and financial instruments? Does it foresee an appropriate mix of grants, loans and
financial engineering (venture capital)?

5. Is the strategy outward looking and how does it promote critical

mass/potential?

5.1 Does the strategy take into account the competitive position of the
country/region with regard to other countries/regions in the EU and beyond, as
well as its position within global value chains?

5.2 Does it foster the internationalisation of SMEs and does it stimulate regional
clusters/initiatives to make connections within international/global value chains?
5.3. Does it foster strategic cooperation with other regions (please note whether
the regions foresee the allocation of mainstream Structural Funds within their
Operational Programmes and/or cooperation through INTERREG)?

5.4 Are sufficient efforts being made with regard to avoiding imitation,
duplication and fragmentation, in particular with regard to what is happening in
neighbouring regions?

6. Does the strategy produce synergies between different policies and funding
sources? How does it align/leverage EU/national/regional policies to support
upgrading in the identified areas of current and potential future strength?

6.1 Is the strategy and its priority-setting complementary to national-level

priorities, e.g. is it in line with the National Reform Programme?, and is it in
synergy with national research/education policies?

6.2 Is the strategy based on inter-departmental/inter-ministerial/inter-agency

coordination and cooperation covering relevant policies, in particular between
research/science policies and, economic development policies, but also with
regard to other relevant policies such as education, employment and rural
development policies? Does it assess/take into account the existing level of policy
coordination within the region?

6.3 Does the strategy include a clear reflection/proposal on how to exploit

synergies between different European, national and regional funding sources, in
particular between ERDF and Horizon 2020 but also with other key programmes
such as ESF, EAFRD and COSME?

6.4 Does it consider both upstream and downstream actions to and from Horizon
2020, financed by Cohesion Policy?175 How does the strategy link to relevant
European (ESFRI) as well as smaller national and regional partnering facilities?

175
Upstream actions aim at preparing regional R&I players/teams to participate in Horizon 2020.
This may involve enhancing R&I infrastructures, the modernisation of universities and research
organisations as well as developing technology auditing, international partner search and
information campaigns to stimulate and facilitate participation in Horizon 2020. Downstream
actions aim to diffuse R&I results from Horizon 2020 swiftly into the market. These might include
pilot plants and demonstration sites, proof of concept and early stage financing incubation
facilities, applied research, specific industrial and technology transfer capabilities and cluster
support.

118
7. Does the strategy set achievable goals and measure progress? How does it
support a process of policy learning and adaptation? How is it to be
communicated?

7.1 Does the document identify concrete, achievable goals? Does it identify
output and result indicators and a realistic timeline for these goals?

7.2 Does the region have a sound governance and monitoring system in place to
implement, monitor and evaluate the regional innovation strategy? Does this
support a process of continuous policy learning and adaptation? If not, are actions
foreseen to build up capabilities for that?

7.3 How is the strategy to be communicated to stakeholders and the general

public? What are the mechanisms for ensuring support for the strategy from
critical groups and the active participation of such groups in its implementation?
8. What are the conclusions and which advice can be given to improve the
strategy?

8.1 If the strategy is based on an earlier strategic exercise/innovation strategy, has

it been appropriately reviewed and updated? What is done/going to be done
differently as a consequence of the strategy and process compared to the
previous/existing economic strategy?

8.2 Can the strategy be regarded as a regional research and innovation strategy for
smart specialisation? What are its strong aspects? What are its weaker parts?

8.3 What needs to be changed/improved? Feel free to add any other comment you
may have that could help the region to improve its RIS3 process and strategy.

119
 European Commission

����������������������������������������������������������������������������

Luxembourg: Publications Office of the European Union

2012 — 121 pp. — 21 × 29.7 cm

ISBN : 978-92-79-25094-1
doi:10.2776/65746

HOW TO OBTAIN EU PUBLICATIONS

Free publications:
• via EU Bookshop ([Link]
• at the European Union’s representations or delegations. You can obtain their contact details
on the Internet ([Link] or by sending a fax
to +352 2929-42758.
Priced publications:
Europe Direct is a service to help you find answers
to your questions about the European Union. • via EU Bookshop ([Link]
Priced subscriptions (e.g. annual series of the Official Journal of the European Union and
Freephone number (*): reports of cases before the Court of Justice
00 800 6 7 8 9 10 11 of the European Union):
(*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls • via one of the sales agents of the Publications Office of the European Union
may be billed. ([Link]

More information on the European Union is available on the Internet ([Link]

Cataloguing data can be found at the end of this publication.

Luxembourg: Publications Office of the European Union, 2012

ISBN : 978-92-79-25094-1
doi:10.2776/65746

© European Union, 2012

Reproduction is authorised provided the source is acknowledged.

Luxembourgxembourg

PRINTED ON ELEMENTAL CHLORINE-FREE BLEACHED PAPER (ECF)

 KN-32-12-216-EN-C

KN-32-12-216-EN-C
Guide to Research and Innovation
Strategies for Smart Specialisations
(RIS 3)

MayMay
2012
2012 May 2012
Regional
Regional doi:10.2776/65746
doi:10.2776/65746 Regional
PolicyPolicy Policy