Crafting a Supportive Global Economic Environment for SME Innovation

– by Stephen Ezell-

Innovation – the creation of new or improvement of existing products, processes, services, and business or organizational models – drives the modern knowledge and technology-based global economy. For example, the U.S. Department of Commerce finds that between one-third and one-half of the economic growth in the United States since World War II can be directly attributed to technological and scientific innovation. But the knowledge that innovation drives growth is no longer a secret: countries throughout the world increasingly recognize that fostering robust levels of innovation in their enterprises, industries, and societies is vital for robust, long-term economic growth and sustainable improvements to quality of life and standards of living. And, as the Information Technology and Innovation Foundation (ITIF) documented in the book Innovation Economics: The Race for Global Advantage, this recognition has spawned an intense race for global innovation leadership, as evidenced by the fact that scores of nations have created national innovation foundations and/or articulated national innovation strategies.

Yet constructively managing and guiding this global competition among nations for innovation leadership has become perhaps the central economic challenge of our times, for in their efforts to implement innovation-enhancing policies, countries can do so in a number of qualitatively different ways, with some designed to add to the global stock of knowledge and innovation and others designed to merely shift innovation (and the production it engenders) from one country or region to another.

For example, when countries invest in the basic building blocks of innovation – such as by increasing expenditures on scientific research, educational attainment, and digital and physical infrastructure or by putting in place better policies to transfer technologies developed in university or national laboratories to the private sector – they empower the innovation potential of their own economies and enterprises while also generating positive spillover effects that benefit other nations, thus creating a win-win result for themselves and for the entire world. (See Figure 1). In contrast to such “Good” innovation policies, when countries implement zero-sum, mercantilist-inspired “Ugly” policies – such as blocking digital trade, stealing others’ intellectual property, imposing high tariff barriers, or manipulating currency or standards – these can help one country win, but at the expense of all others. Such policies harm truly innovative enterprises and thus degrade the quality of rules-based international economic competition.


There also exists a set of “Bad” innovation policies that countries have implemented – such as import substitution industrialization policies – thinking that such policies will help their innovation economies, but in reality the policies only end up harming both themselves and the rest of the world. For example, for every $1 of tariffs India imposed on inbound information and communication technology (ICT) products – in the interest of spurring creation of an indigenous ICT manufacturing sector – the country suffered a $1.30 economic loss, as the productivity of India’s economy was stunted as all other sectors of Indian enterprise had to use more expensive or less effective ICT equipment. (Such a policy was “Bad” for the global economy because it distorted global trade and harmed the world’s most efficient producers of ICT products). Similarly, today, ITIF estimates that the additional taxes and tariffs Brazil imposes on imported ICT products costs its GDP as much as 2 percentage points annually. Finally, countries can also implement “Self-destructive” innovation policies—which harms themselves while helping others—such as when the immigration policies of countries, such as the United States, make it difficult for high-skill immigrants to enter or stay in a country.

Given how important innovation has become – and how dramatically one nation’s policies to drive innovation affect the rest of the global economy – how 0nations decide, both individually and collectively, to pursue their innovation-based economic growth strategies has tremendous consequences for the health of the global innovation system.

To better understand these dynamics, in January 2016 ITIF released a first-of-its kind study called Contributors and Detractors: Ranking Countries’ Impact on Global Innovation, which assessed 56 countries accounting for over 90 percent of the global economy (including all the leading economies from Asia, Europe, and the Americas) on how their economic, innovation, and trade policies (on a per-capita basis) either contribute to or detract from global innovation. The report scored countries on 27 measures, grouped into 14 “Contributions” indicators – covering research and development (R&D) and technology, human capital, and innovation-incenting tax policies – and 13 “Detractions” indicators – including a range of trade barriers and measures of weak intellectual property protection. This approach allowed for countries to be awarded an “Overall” score as well as a “Contributions” and “Detractions” score.

Finland, Sweden, and the United Kingdom led as the countries whose policies do the most (per-capita) to support global innovation – and the least to detract from it. India, Indonesia, and Argentina ranked weakest overall, fielding an above-average number of policies (such as localization barriers to trade or weak protections for intellectual property) that detract from global innovation while having policies that contributed the least to global innovation. The United States ranked 10th overall in the study and China 44th. Italy ranked 33rd in the study, placing 39th in terms of how constructively its economic, trade, and innovation policies positively contribute to global innovation, although Italy scored better, 25th, in terms of refraining from implementing policies that harm global innovation. In general, the report’s intent is to help countries rank themselves against peer nations on key metrics of innovation policy and to guide them toward only using win-win innovation policies best-positioned to help both the country and the rest of the world.

This issue matters particularly for the innovation potential of the world’s small-medium sized enterprises (SMEs), for if they are to flourish globally, they (no less than large multinational corporations) need access to global markets at scale across which they can export their products and services to grow their fragile businesses. Another key finding of the Contributors and Detractors report – and ITIF’s research more broadly – is that SMEs face unique innovation challenges which policy makers must be responsive to. For example, helping SMEs find access to the capital they need to scale innovation efforts is of particular concern. To address this, as ITIF has documented, almost a dozen countries – including Austria, Belgium, Canada, Denmark, Germany, the Netherlands, Ireland, and Sweden, among others – have introduced innovation vouchers. Usually ranging in value from €5,000 to €30,000, innovation vouchers enable SMEs to “buy” expertise from universities, national laboratories, or public research institutes regarding preparatory studies, analysis of technology transfer, analysis of the innovation potential of a new technology, or other similar services. Studies in a number of countries have found that innovation vouchers encourage “additionality” in SME innovation, meaning they enable SMEs to undertake innovation efforts that may not otherwise be able to.

As a related policy instrument in the United States, several states have introduced “manufacturing reinvestment accounts,” these are tax-deferred accounts into which SMEs can deposit up to $1 million that can be subsequently withdrawn tax-free for purposes of expenditures toward research and development, workforce training, or investment in improved plant and capital equipment. Likewise, many countries have introduced favorable tax treatment for SMEs, including expanded R&D tax credits, refundable or transferrable R&D tax credits for pre-revenue SMEs, or even tax forgiveness for young SME start-ups in the first three years.

Finally, SMEs often lack the resources larger firms do to identify and to adopt the latest technologies or production practices, particularly when it comes to SME manufacturers. Accordingly, as ITIF documents in International Benchmarking of Countries’ Policies and Programs Supporting SME Manufacturers, manufacturing extension services (also called technology extension services) play an important role in promoting technology adoption by SMEs; supporting technology transfer, diffusion, and commercialization; performing research and development in direct partnership with SMEs, and/or providing access to research labs; and engaging SMEs in collaborative research and development and/or technology specific consortia. Such manufacturing extension programs are increasingly common throughout the developed and developing world, and in many cases the capabilities of such programs are also available to services firms.

With more than 95 percent of firms in Organization for Economic Cooperation and Development (OECD) countries being SMEs and those firms accounting for 60 to 70 percent of OECD employment while generating a disproportionate share of new jobs in OECD economies, it’s vitally important that public policy pay specific attention to supporting SMEs’ innovation potential. However, those efforts will only be successful if they take place in the context of a global economy that permits innovation by all firms to flourish to the maximum possible extent, which is why it’s imperative that the international economic community and its institutions push nations to only use “win-win” innovation policies.

Stephen Ezell is Vice President, Global Innovation Policy at the Information Technology and Innovation Foundation (ITIF), a Washington-DC based technology and economic policy think tank, where he focuses on science, technology, and innovation policy as well as international competitiveness, trade, and manufacturing policy issues. He is the co-author with Dr. Robert Atkinson of Innovation Economics: The Race for Global Advantage (Yale, September 2012) and a co-author of Innovating in a Service-Driven Economy: Insights, Application, and Practice (Palgrave McMillan, November 2015). Mr. Ezell came to ITIF from Peer Insight, an innovation research and consulting firm he co-founded in 2003. He previously worked in the new product development group at NASDAQ. Mr. Ezell holds a B.S. from the School of Foreign Service at Georgetown University, with an Honors Certificate from Georgetown’s Landegger International Business Diplomacy (IBD) program.

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The JEUPISTE Project

“You don’t get harmony when everyone sings the same note”

Doug Floyd


Over the last three years, the JEUPISTE project helped to further promote cooperation in Science, Technology and Innovation (STI) between Europe and Japan. The EU-funded initiative tackles major issues in these fields through analytical, promotional and supporting actions.

The global landscape is evolving rapidly as an increasing amount of research and innovation is being created and conducted in non-European countries. Strengthening connections with international partners and cooperating for mutual benefit became essential for all players to ensure competitiveness and sustainable development both for Europe and Japan.

JEUPISTE (Japan-EU Partnership in Innovation, Science and Technology) followed the successful footsteps of the J-BILAT project, an initiative running from January 2010 to December 2012, to increase awareness on the 7th European Framework Programme in Japan and address relevant challenges regarding Science, Technology and Innovation.

Based on the achievements of the J-BILAT initiative, the JEUPISTE project put EU-Japan partnership building at the core of its strategy. Without losing sight of the main objective of the initiative, the Consortium – composed of ten partners both from Japan and diverse European countries – acted on multiple fronts and focused on key enabling technologies and similar societal challenges for both the regions. ICT, advanced materials, biotechnology and innovation in SMEs have been selected as key enabling technologies for fruitful collaboration among the EU and Japan. Health, demographic change and well-being, secure, clean and efficient energy, and inclusive, innovative and reflective societies were identified as societal challenges.

An intensive and systemic activity of collection of relevant data, analysis and an accurate monitoring process on EU-Japan STI cooperation with a special attention to the priorities covered under the project, has been carried out to identify relevant areas where cooperation potential between EU and Japan can be further exploited. The project has managed to establish a steady flow of information between the EU and Japan to support stakeholders involved in policy dialogues in defining priorities for the creation and implementation of joint strategic agendas for research, development and innovation. Three major outputs resulted from this activity: an inventory of STI Programmes and Analysis of the EU-Japan Cooperation, providing an overview of the current level of cooperation and ongoing STI programmes between the European Union and Japan; a report assessing the participation of Japanese organizations in the Seventh Framework Programme for Research and Technological Development and a study analyzing EU-Japan Co-Publications outputs (more information at this link).

JEUPISTE considerably increased Japan’s access to available tools and resources for cooperation with Europe and vice versa. The project paved the way for a greater participation of the R&D community to EU and Japan’s respective programmes. On the one hand, various opportunities were presented by prominent organizations in the Japanese R&D landscape such as the Japan Science and Technology Agency and the Japan Society for the Promotion of Science counting on their vast collaborative ties with important institutions worldwide: Postdoctoral Fellowships for Overseas Researchers, Invitation Fellowship Programs for Research in Japan or international exchange initiatives offer a fertile ground for cooperation between the regions. On the other hand, opportunities for Japanese participation to Horizon 2020 were showcased by National Contact Points and success stories of Japanese participation to FP7 emphasized the benefits of a closer collaboration between the EU and Japan. Initiatives such as EURAXESS – Researchers in Motion have been presented providing access to relevant information and support services to researchers willing to develop their career in Europe, and topics, deadlines and budgets related to EU-Japan Joint calls in the new Horizon 2020 Work Programme have been outlined (a complete list of the events organized and relevant presentations is available at this link).

Through coordinated networking and twinning actions, the JEUPISTE project facilitated the establishment of public-private partnerships, joint technology initiatives and academia-industry collaboration. The multi-disciplinary topic of “Smart Cities in a broader term” was selected as the focus of three innovation workshops, that were the occasion to further share experiences and brainstorm with high-level representatives both from European and Japanese organisations and lay the foundations for future business collaborations.

A further opportunity for European and Japanese stakeholders is the professional assistance offered by the JEUPISTE help desk, providing advice on a wide range of areas from Japanese research funding programmes that can be used in the context of EU-Japan cooperation to relevant H2020 topics and types of action for cooperation with Japan and recommendations on integrating a Japanese partner in a H2020 research project. In collaboration with the National Contact Point and the Enterprise Europe Network in Japan, the help-desk also facilitates partner search through a dedicated tool aiming at bringing together organisations for the submission of joint project proposals.

Since the launch of the initiative coordinated by the EU-Japan Centre for Industrial Cooperation, INSME (Partner of the JEUPISTE Project) offered its active contribution by facilitating partnership building and by disseminating the added-value of EU-Japan collaboration to a multi-stakeholder audience.

By focusing on science, technology and innovation, initiatives such as the JEUPISTE project can contribute to the competitiveness of a country. Supporting policies, increasing the attractiveness of human resources and linking the S&T communities with private sector competences are fundamental steps to take to find a way out of a sluggish economy.

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IPR Strategies for the South-East Asian Knowledge Market

– by Helika Jurgenson –

Closed doorMany European SMEs may be under the impression that they do not conduct R&D in South-East Asia, because they do not have a research facility there. The likelihood is however that in reality, a high proportion of them engage in activities which fall under at least one of the terms: research or development. An example of R&D activity might include an SME entering into a contract with a local company to use their engineers to develop a prototype into a commercial product. The future of R&D looks promising in South-East Asia, as the rapidly growing market becomes more accessible to franchisors around the world and as the legal environment is showing promising signs of improvement. As an example, the number of foreign franchises in Indonesia has been growing around 13% on a yearly bases since 2012. Nevertheless, it is still vital to have an IP protection strategy when conducting R&D activities in South-East Asia.

Protecting IP with registrations

SMEs can protect their valuable R&D through patents, design patents, industrial designs, trade secrets and trade mark registration. SMEs should keep in mind that patents acquired in Europe do not give automatic protection in South-East Asian countries and therefore, if a European SME is planning to create any new intellectual property in South-East Asia, it is highly recommended to apply for invention patents or design patents in the South-East Asian country, that you seek to do business in. Early protection is the key. The average time for getting a certification varies between 3-8 years for invention patent and between 12 months to 3 years for design patents depending on the country of reference.

Patent registration and design registration generally function under the ‘first-to-file’ principle, meaning that the first person to file for registration in a particular South-East Asian country will own that right once the registration is granted, irrespective of ‘first use’. Therefore, an SME should register its patents and relevant IP even before entering their destination markets. Registration in advance is extremely important, because a registration certificate is the only method to establish rights over patents, designs and trade marks. A registration certificate also enables a company to license and assign certain IP rights, and to enforce IP rights in a more straightforward procedure.

IP strategies: how to valorize R&D related IP in South-East Asia

R&D could be valorized through the use of IP rights by the company, by assigning IP rights to others or through licensing or franchising. Managing IP rights gives SMEs the advantage of obtaining profits or funds gained from the IP assets created and owned in South-East Asia. At the same time it may require an extensive management system and can be costly both in terms of annual maintenance fees and validity rights for innovation patents and design patents. Additionally, SMEs would also have to monitor their IP assets in order to detect infringements early.

Assigning IP rights to a local company will allow European SMEs to increase their profits and reduce the need for constant monitoring of their IP rights and potential infringements. On the other hand, SMEs will no longer continuously benefit from their IP rights but will receive a lump sum payment for the sale.

Opting for licensing or franchising will allow European SMEs to quickly expand their business, enjoy the steady flow of periodical income from IP rights as royalties and take advantage of the local resources and knowledge. Similarly to managing IP, franchising requires regular monitoring of the use of the IP assets, which might be time and resource consuming.

Legal environment for enforcing IP rights

The legal environment for IP protection has improved in recent decade in South-East Asia.  Most South-East Asian nations have relatively recently acceded to major international IP treaties like the WTO Trade Related Aspects of International Property Rights (TRIPS) Agreement, Paris Convention or Madrid Agreement. In recent years, Thailand, Vietnam and Indonesia have undertaken a vast program of reforms regarding major IP laws. In particular, these nations have modernized laws regarding trade secrets, patents, trade marks, technology transfer and unfair competition, which are particularly relevant when SMEs try to protect their R&D related IP.

Nevertheless, problems still remain, for example Vietnam still lacks specialized laws dealing with different R&D related issues. Vietnamese franchise regulations are still rather symbolic, impractical and inefficient. What it means for SMEs operating in Vietnam is that they should make sure they have strong non-disclosure agreements and confidentiality agreements in place to protect their R&D related IP assets during their development.

Future trends and takeaways for the R&D sector in South-East Asia

Market experts predict that crowdsourcing (making tasks available for anyone in the ‘crowd’ to complete) relating to R&D is becoming a popular trend in Vietnam and throughout the major South-East Asian countries. This will of course include several IP-related risks for businesses, including the question of IP ownership and infringement claims from the members of the crowd who were not successful in selling their solution to the crowdsourcing SME. Companies considering crowdsourcing should put sound IP strategies in place that include creating barriers between their IP and the crowdsourced responses and documenting all actions to protect themselves from possible infringement claims. This is especially important considering that current Vietnamese IP laws are not fully prepared to deal with disputes relating to IP issues in crowdsourcing.

However, deeper international integration is expected to improve the legal environment as better legal instruments, capable of dealing with the changes in ways businesses approach their R&D, will become available. Full implementation of the Trans-Pacific Partnership Agreement (TTP) will, for example, reform franchising regulations, making the enforcement of licensing agreements more predictable.

Meanwhile, SMEs engaged in R&D activities in South-East Asia should keep in mind that acquiring legal protection for their IP assets as soon as possible, understanding the business partner and the market and seeking local expertise in relation to IP issues is the key to successful business endeavors in South-East Asia.

Picture of Helika Jurgenson
Helika Jurgenson is a project executive for two European Union funded projects China IPR SME Helpdesk and South-East Asia IPR SME Helpdesk. She is currently responsible for publications, outreach and organizing webinars.

South_East AsiaThe South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email ( and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.
The South-East Asia IPR SME Helpdesk is co-funded by the European Union.
To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at
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Patents for SMEs

– by Rajendra Prasad-

Light BulbIntellectual property in general and patents, in particular, have come to be realised as an important part of business strategy all over the world now. Patents are by nature competitive instruments – they keep your competitors away from practicing your invention. Much like chess pieces, your patents can be used to force your competitors to change their products, their market strategy, and more. This, however, assumes that you have already protected competitively the valuable space that your competitors might have used.

This is all too well known to the corporate sector and the multi-national corporations who play this game, known as ‘Competitive Intelligence’ conscientiously. We need to, however, focus our attention on small businesses, generally referred to as SMEs in many countries. SMEs in India are often looked at along with micro enterprises and the Government overviews the entire registered as well as unregistered sectors which together contribute more than 7% of the Indian GDP equivalent to more than 37.33% of the total manufacturing output. The total number of SMEs together with micro units as well as medium scale enterprises stand at ~36 million as per the last census for which data was collected up to 2009 as per the Annual Report of Ministry of Micro, Small and Medium Enterprises (MSMEs), Govt. of India available on the website of the ministry. MSMEs in India is focusing on to make the country’s MSME sector aware of Intellectual Property Rights (IPR) – an area in which they are lagging far behind their global peers. It has been recognised that the MSME sector shows ignorance and lack of awareness about IPR activities. In addition, the kind of negative knowledge and suspension about the value of IPR spread among these small and micro enterprises makes the work of promotional and governmental agencies more challenging.

No wonder, therefore, this sector has attracted a great deal of attention of policy makers at the highest level in recent years including a few National Task Forces to examine the issues related to credit availability, marketing, skill enhancement, and training. These high level exercises have paved the way forward for enhanced interaction between the Centre and State Governments to adopt policies, programmes and best practice to provide further growth to employment, productivity and competitiveness through MSMEs. Many well known industrial associations, state governments across the country have taken active steps to establish ‘Patent Facilitation Centres’ in different parts of the country. These centres seem to be registering steady growth in number of patent applications being facilitated for interested parties having made certain innovations. However, the numbers of patent applications filed by SMEs in India still defy the overall potential looking at the gigantic scale at which small and micro scale industry in organised and unorganised sectors are spread throughout the country in diverse fields.

Unlike in many countries, the Indian SMEs are defined as small, medium or micro scale units based on the investment in plant and machinery instead of on the basis of number of employees. Thus, for someone who is not familiar with the structure of small enterprises in India, it might be difficult to visualise the type of industrial units we are talking about. To help visualise the segment under reference, we may consider the data on ‘Emerging SMEs of India’ in auto-components sector provided on the website of Dun & Bradstreet Information Services. It covers a data of about 370 companies, of which 160 enterprises qualify to be called as SMEs having investment in plant and machinery of less than Rs. 50 mn as per the definition of the Govt of India. Of these, 130 units have on an average of less than 45 employees and among them with as many as around 10 and the remaining 30 around 100. The remaining 210 are said to be medium scale enterprises having 100 – 500 employees each and a few of them 1000 or more.

The Indian auto component industry is one of the fastest growing industries in India and has a distinct global competitive advantage in terms of cost and quality. From being essentially a domestic market supplier, it is poised to become a global auto parts supplier as many auto majors are known to outsource their requirement of Original Equipment Manufacturer (OEM’s) from India.

In the context of patents and other forms of ‘intellectual property’, the general scenario of patents and IP with regard to small businesses in India continues to be sluggish in spite of robust growth in some sectors, such as that in auto components sector. Besides, auto components, there are number of other areas in which SMEs have set their foothold to meet the domestic demand but cannot gain international competitiveness for various reasons. These industries have grown and thrived into large clusters in many towns, sometimes as result of proactive Government promotional measures. Some of the well known industrial clusters are shown in the following tables.


Policy makers in India as elsewhere are keen to see their SME sector taking more and more interest in IP matters. Establishing IP Facilitation Centres and providing financial incentives for the needy is only a part of the solution. What is really needed is to incite the interest of industry to innovate, to find needed technical solutions and develop newer products and processes that would enhance their global competitiveness. The moot question is how do we do that?

The answer to the above question comes from the patent data itself. Fortunately, the patent data and information all over the world is so well organised that we can collect all useful information from published patent documents at will for any sector very easily. Patent searching is commonly employed by corporate sector to develop newer products without infringing on claims of others to maintain their competitive edge. SMEs can, however, search and use the information contained in patents in public domain to gauge their standing in global competition and to see how well they can differentiate the uniqueness of their products from their competitors elsewhere. And, of course, the data thus collected in a given field across various jurisdictions and timescale provide a great learning to SMEs. While many SMEs may be short of skills and resources to do these exercises by themselves, yet well endowed industrial associations and Government agencies can very well undertake these tasks. These agencies may target enhancing the competitiveness of an entire industrial cluster by generating patent landscape reports of relevant sectors and create awareness about the findings among the members of relevant SME sectors. With growing interest, further patent landscape reports could be generated in narrow specialization. The new knowledge would then help the SMEs with appropriate skills and experience to embark on inventing newer and better products than before.

As an example, we can resort to ‘Cooperative Patent Classification’ which is in vogue now. For example, the relevant class for ‘Hand shears and scissors’ happens to be B26B13/00 with which we can search the patent documents from any public databases of patents freely accessible on the internet, e.g., that of USPTO, Europe etc. Searching through this classification, we can find a number of sub-classes of the main class categorised into specific narrow fields as shown above. Depending on the interest in narrow or broad areas of field, we can access various patent documents and download on our computer. The patent collection can then also be analysed in various different ways besides looking at technical features of specific patents of interest. For example, when a collection of some 300 odd patents is obtained, the same can be sorted and a geographic spread of patent activity in this field can be seen as shown in the figure.

In conclusion, there is no other better way to get the ignorant industry in SME sector interested in making inventions is by bringing out the hidden treasure in the patent data itself.


image006Dr Rajendra Prasad is CEO of Merit India Consultants Pvt Ltd. and founder of web-platform Technology-Patent.Com to offer full range of services in patent searching, drafting, filing and prosecution in addition to valuation of patents and commercialization of technologies. He has a Ph.D. in Chemistry from Banaras Hindu University and also completed M.Sc. (Technological Economics) (equivalent to MBA) from University of Stirling, United Kingdom. He holds a certificate in IPR Management from Indian Law Institute, New Delhi and is designated as Scientific Advisor to Controller of Patents & Trade Marks.

He superannuated as Advisor & Head of International Affairs from India’s largest public funded research agency, CSIR. Starting as a bench scientist, he rose to be part of senior management at the CSIR headquarters before being designated as Head of International Affairs. He has also been Principal Scientific officer in DSIR, Ministry of Science & Technology and Advisor & Technology Projects Manager in the British Council for some years. He has also served as Consultant to World Bank to advise the Government of Mozambique on measures to strengthen science, technology and innovation.

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Why the World needs Women Entrepreneurs

– by Stella Mally –

Women entrepreneurship matters

MarblesAccording to the dictionary an “entrepreneur” is a person who sets up a business or businesses, taking on financial risks in the hope of profit.

By reading this definition we would think that for the entrepreneurial condition it doesn’t matter if this person is a man or a woman. And in fact there is a common rationale. But still there is the need for talking about “women entrepreneurship” as specificity, because the preconditions might be different depending on the person’s gender.

Women entrepreneurship needs to be addressed separately for two main reasons, clearly identified by the OECD in its work about entrepreneurship promotion. The first reason is that, despite lower participation rates in entrepreneurship than men, women entrepreneurs are an important untapped source of economic growth. They create new jobs for themselves and others. And by being different they also provide society with different solutions to management, organisation and business problems as well as to the exploitation of entrepreneurial opportunities. But this added value is not very much promoted (few awareness of the role of women entrepreneurs in the economy).

The second reason is that the topic of women entrepreneurship has been largely neglected both in society in general and in the social sciences. Women generally choose to start and manage firms in industries (primarily retail, education and other service industries) which are often perceived as being less important to economic development and growth than high technology and manufacturing. Furthermore and in part motivated by the above, mainstream research, policies and programmes often do not take into account the specific needs of women entrepreneurs. Women are faced with specific obstacles that have to be overcome in order to give them access to the same opportunities as men.

If we further analyze this market failure discriminating against women’s possibility to become entrepreneurs and their possibility to become successful entrepreneurs we find 5 main obstacles:

  • Lack of experience. All stages in entrepreneurship for both men and women depend on previous education and work experiences and the related ability to discover and exploit opportunities. While this ability might be high among educated and skilled women, the incentives for doing so seem to be small as highly educated women usually choose other career options than entrepreneurship, especially at the beginning of their careers. The majority of unskilled or less skilled women entrepreneurs lack the ability to prepare their companies for survival and growth.
  • Lack of role models. Role models are directly related to the number of emerging entrepreneurs and their influence is gender related (generally our choices tend to be more influenced by persons of the same sex). By having less women entrepreneurs than men there are automatically less successful women entrepreneurs than men and therefore less close and impacting role models for aspiring women entrepreneurs.
  • Lack of capital. Women’s position in society has led to a lack of financial assets which are a prerequisite for starting a firm. Family commitments (limitations to work on a full time basis and to engage in a career) and an existing gender pay gap increase women’s obstacles in generating incomes. Women’s legal position and rights to property are also directly influencing their entrepreneurial possibilities. And if women have less (or no) access to capital they will also opt for opportunities with less growth potential. Furthermore, most investors will only invest if the entrepreneur can match the investment with their own resources (or collaterals). Finally, also gender stereotypes (women are not viewed as entrepreneurs) and women entrepreneurs’ choice about the industry in which they are going to operate might influence financial institutions in their decision of credit availability.
  • Lack of time. Very related to the mentioned domestic and childcare responsibilities it is stated that women do not have enough free time to develop their entrepreneurial skills or to develop an existing business. Less time for meeting potential supporters/investors, accessing specific training or seeking for better customers or suppliers are clear burdens for women’s entrepreneurial development.
  • Lack of relevant networks. Women are less present in professional networks that can guarantee them access to critical resources (also finance), support and information. Networks also strengthen the sense of self-confidence.

A natural solution for changing this situation is therefore a mixture of different policies and a change of attitudes. Affordable child care and equal treatment in the work place have to be guaranteed so to eliminate the labour force participation barrier. Women’s entrepreneurial dimension has to be further studied so to provide tailored solutions to specific needs and the impact of existing policies has to be duly evaluated. Women entrepreneur and businesswomen networks, preferably incorporated within major and gender neutral business support organisations, have to be promoted as nascent businesses need support to flourish. And also it is crucial to educate society about the value of women’s entrepreneurship: informing women themselves about the potential benefits of entrepreneurship (starting with young women) and informing the market of the value and importance of women entrepreneurship.

According to the IFC it is estimated that globally there are at about 9.34 formal million women-owned SMEs, which is approximately one third of all formal SMEs. The Global Entrepreneurship Monitor states that there are some 126m women operating new businesses. Yet we face a huge equality gap as mentioned before. In only six economies (Vietnam, Philippines, Thailand, Malaysia, Peru and Indonesia) women show equal or higher entrepreneurship rates than men. In the EU, even though there are more women than men, female entrepreneurs represent only a third of the self-employed.

The good news is that now there are a variety of documented successful approaches to promote women’s equal opportunities in business and increasing examples of women entrepreneurs that have created highly successful firms. Several women-owned enterprises are well-positioned to enhance national prosperity and to contribute to economic growth and a better future. Especially, because women usually reinvest a much higher part of their earnings in their families and communities than men (in emerging markets, women reinvest 90% of their earnings in their families and communities), spreading wealth and creating a positive impact on future development.

A 2009 report already noted: “gender equality fuels growth, by bringing women into the labor force and by raising women entrepreneurs the overall level of human capital, productivity and wages.” In fact, the former World Bank Group President Robert Zoellick has famously described gender equality as “smart economics.”

A vital push is needed to make women’s enterprises an unstoppable force for positive transformation.

SMally (2)

Stella Mally is a lawyer and gender expert, currently working as project coordinator at the Association of Organisations of Mediterranean Businesswomen (AFAEMME) where she is especially involved in promoting entrepreneurship among young women.

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The European Startup Monitor (ESM): the Growing Influence of Young Enterprises on the European Economy

– by Lisa Schreier –

Entrepreneurship is a key driver of economic growth and employment and Europe today more than ever needs new talented entrepreneurs to start businesses, create new jobs and develop skills. Young enterprises generally have to find ways of surviving in a tough environment, as education usually does not support the brightest minds willing to begin their career in a start-up, given the difficulty in raising funds or the bureaucratic and administrative burden particularly at an early-stage. Understanding the opportunities and challenges related to the creation of new enterprises as well enabling a conducive environment to make the start-up ecosystem prosper is vital for Europe to unleash its innovation potential.

The European Startup Monitor (ESM), initiated by the German Startups Association, creates transparency for the European startup ecosystem and underlines the growing influence of these young enterprises on the European economy.

For the first time, the ESM supplies valid data from all EU-countries and Israel. The ESM represents over 2,300 startups with more than 31,000 employees. It provides a comprehensive long-needed overview of important characteristics, potentials and challenges in the European startup landscape. Günther Oettinger, the European Commissioner for Digital Economy and Society, stresses: “The European Startup Monitor will allow for a systematic overview of where innovation and growth happens in the digital economy, and how policies should be shaped to help.” The ESM has been published with the support of KPMG, Telefónica und Google.

Profile of founders and employees


On average, European startups are 2.5 years old. One of the most surprising findings of the study is the low proportion of female founders, amounting only to 14.7%.

image004A further interesting finding is the internationality of both founders and employees: 11.9% of the founders are from countries other than the location of their startup. Almost one third of employees come from abroad. The country with the highest share of both international founders and international employees is the United Kingdom.

Markets and Internationalization

image009European Startups are operating in an international environment. 21.2% have entered other European markets while further 29.8% have entered international markets. 8 out of 10 startups plan a further internationalization in the next 12 months.

Financing sources: European founders depend on own savings, family & friends

The study finds that the major capital source is own savings of the founders (69.1 %), followed by support from family and friends (25.1 %). Only as third source of capital, founders rely on governmental funding programs and subsidies (21.9 %). To generate fast growth, venture capital and other forms of private investments should be supported by a suitable political framework.

Startups as job engines

image012_modOn average, startups create 12.9 jobs after 2.5 years (including founders). Germany leads the way with 17.4 jobs, followed by the United Kingdom (14.1 jobs) and France (11.5 jobs). These figures prove the significant impact, which European startups have developed on the European labor market.

Expectations on politics


The ESM has identified three main expectations of startup founders with regard to policy-makers: First, they wish for more financial support; second, they wish for an improvement of political regulations and a reduction in bureaucratic constraints; and third, founders wish for better social and advisory support.

For further information and all findings of the study please visit

LisaLisa is Head of Research and International Strategy at the German Startups Association. She has graduated from ESCP-Europe with a Master of Science in European Management. She has lived, worked and studied in Berlin, Cambridge and New York and has long term experience in the consulting and governmental sectors. Her areas of expertise are international relations, intercultural competence and business strategy. For the German Startups Association, Lisa is working on European relations, creating a network for European startups to share experiences and contacts. Lisa is further in charge of the European Startup Network. As a network manager, she regularly visits other European startup representatives, startup related events and the European Commission in Brussels.

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Fundamentals for Being a Modern-Day Gladiator 101: Having a Shield in the Global Marketing Arena

– by Mr. Onur Emul –

FireAs the main objective of companies is to create revenues, the initial key factor for their success is, without any doubt, commercialisation. The capability of commercialising new products is a main challenge for companies since successful commercialisation requires multi-faceted cooperation between different skill sets: R&D, manufacturing, marketing, contractual law, HR supervision and – for sure – intellectual property management.

Whether you commercialise your product on your own or you would like to build up partnerships, for example via licensing, there are vital points to consider for protecting your intellectual assets during the commercialisation process.

Independently of the pathway which you choose for commercialisation (or maybe a combination of pathways, which normally is the real life case), the first rule remains the same: Keep your intellectual property (IP) to yourself until you securely protect it!

Now, let us get a bit deeper into the main commercialisation pathways and summarise the IP measures to undertake in a simple way:

1. Commercialisation by the owner: Although it may sound conservative, this model is very useful when you have enough capabilities to carry on exploitation/marketing actions or when you are hesitating about building up business partnerships based on your IP. The success of this model relies heavily on you and on your measures to keep your intellectual assets as a secret. Disclosing your intellectual assets (in particular inventions and designs) without taking any protection steps may ruin your business plans, as you may no longer protect your inventions or designs as patents or industrial designs once you disclose them to the public. What is more, trade marks and domain names are generally protected according to first-to-file basis. Therefore, any disclosure of your trade mark or domain name ideas may lead to an “intellectual theft” and you may lose your rights to register your brand or design, when the trade mark or design is already registered in the name of others.

“Keeping your IP as a secret” does not necessarily mean keeping them in password-protected zones or in hard stainless steel cases. Making sure that all confidentiality measures are taken – generally through staff or confidentiality contracts – and reminding all parties involved in the creation and development of IP about their responsibilities on confidentiality issues have utmost importance in keeping the IP secret.

Apart from the confidentiality issues, if you are commercialising your IP on your own, it means that you are also fully responsible for the IP protection. Taking steps to protect your IP assets is not only necessary for their proper management, but also for getting full benefit from those assets.

When speaking about protection, it is also worthwhile to make note of one essential point regarding trade secrets and know-how. As trade secrets (yes, they are literally “secrets”) and know-how are not protected by IP titles as other IP rights such as trade marks, patents or designs, you can only benefit from the competitive advantage of these intellectual assets as long as you keep them as a secret. Therefore, secrecy measures for such IP should be handled very carefully.

Companies also need to consider another essential step before commercialisation of any IP: Freedom to operate analysis (known as FTO). Such analysis helps to evaluate whether your IP can be exploited commercially without infringing third party rights. This means that such an analysis secures your business from encountering possible infringement allegations, when you put the product or service on the market by yourself.

2. Assignments: An IP assignment is a transfer of ownership of an IP Right from one party (the assignor) to another party (the assignee). This route can be an option especially when the owner of the IP does not have enough capabilities (financial, HR, marketing, etc) to market the developed intellectual asset and/or when he would like to realise an immediate cash flow from an IP asset, which he does not plan to exploit with its own resources.
From the IP perspective, for assignments, it is vital to sign non-disclosure agreements (NDAs) with the potential assignees already at the pre-agreement stages – even if these negotiations do not lead to any agreement. It is indeed generally the case that the prospective assignees need access to confidential information during the negotiation phase.

Besides, from the legal point of view, a well-drafted assignment contract is also very important in such a process, therefore having a professional guidance from an IP attorney or lawyer is highly recommended.

3. Licensing: A licence is a contract under which the holder of an intellectual property (licensor) grants permission for the use of its intellectual property to another party (licensee) within a certain time limit in a defined territory. It is in fact a very efficient commercialisation strategy, as it creates a win-win situation for both parties.

First of all, licensing provides significant benefits for market accessibility. The licensors can rely on their licensees’ experiences and capabilities for specific markets and both licensors and licensees can create revenues through the licensed intellectual assets. Furthermore, while on one hand licensing keeps the licensors away from investing marketing and distribution activities (as these activities will be under the responsibility of the licensees), on the other hand it also takes away the need for licensees to invest in R&D, as there is already a developed product to commercialise.

However, in order to take the full advantage of licensing, there are some very important measures to be taken. As in assignments, licensing also requires a well prepared negotiation phase. As a matter of fact, this phase is even tougher than it is for assignments, because contrary to assignments, licensing is a long-lasting business relationship that entails continuous care of the intellectual assets that remain the property of the licensor during the licensing period. Therefore, both NDAs and licensing agreement clauses should be drafted in a way that secures the IP in a most effective way.

As previously pointed out, although there are certainly other commercialisation routes such as franchising, creating joint ventures or spin-offs, the main principle behind all these routes stays the same: keeping your IP safe. Because you have invested time, money and – more importantly than that – intellectual efforts to develop your intellectual assets, they deserve to be safeguarded.

However, there must be one final thing to be underlined: today, we must admit that the success of commercialisation activities generally depends more on marketing capabilities than on the product itself. In the global marketing arena you, being a modern-time gladiator, certainly need a sharp sword, which is your product, to win the battle. But at the same time you must know how to use it, which depends on your capabilities. After all, the above IP measures provide you with a strong shield to protect you from the attacks of others and to make you more courageous when you are battling. So, if you are ready, it is time to put on your shield!

The European IPR Helpdesk has published a comprehensive guide on “Commercialising Intellectual Property”, where all forms of commercialisation routes are discussed, highlighting the IP elements to be taken into account. You can find the guide here.


Mr. Onur Emul is the IP Advisor in the Intellectual Property Institute of Luxembourg (IPIL) for the European IPR Helpdesk, a service initiative funded by the European Commission offering information, individual support and training in the field of IP through different services – free of charge. Visit for more information.

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