Open innovation and public policy in the EU with implications for SMEs

Industrial innovation processes are becoming more open. The large, vertically integrated Research and Development laboratory systems of the 20th century are giving way to more vertically disintegrated networks of innovation that connect numerous companies into ecosystems. Since innovation policy ultimately rests on the activities and initiatives of the private sector, it is vital that policy follows this evolution. Previous innovation policies relied on large companies to act as the engines of innovation in the EU. While large companies remain quite relevant to innovation within the EU, they themselves report that their processes involve many more small and medium-sized enterprises (SMEs) and other contributors outside their own walls. Therefore, innovation policy must also move outside the walls of these large companies and consider the roles of human capital, competition policy, financing, intellectual property (IP), and public data in promoting an environment of open innovation that is equally beneficial to SMEs. In this chapter, we combine new research and analysis on open innovation with focused interviews of major participants in the European innovation system. The result is a series of recommendations for public policies that could, if implemented, improve the climate for open innovation to take place in the European Union - and thereby improve the competitiveness of the European economy overall. Taken together, these recommendations comprise an informal "charter" for EU open innovation policy.