SME Innovation Potential Focus Area

SMEs have the potential to drive innovation and the shift to a sustainable economy. But this potential remains underutilized in Germany. In fact, many SMEs here have even reduced their focus on innovation. This could change if companies were to invest more in their knowledge capital, strengthen their innovation cultures and network with others. However, the government must also develop a new policy framework in this area.

Armando García Schmidt

Senior Expert

Julia Scheerer

Senior Project Manager

Dr. Christian Schilcher

Project Manager

Dr. Alexandra Schmied

Senior Project Manager

Vanessa Tofing

Project Assistant

Our mission

Corporate innovation is more than just a business challenge. Particularly in times of crisis, economic and societal sustainability depends on companies being willing and able to change, and on their ability to stimulate transformation – even beyond the economic sphere – through their innovation.

Innovation is therefore the key to creating a climate-neutral and resource-conserving economic system. By contrast, weak innovation activity hinders economic growth and societal change, increases dependencies, and inhibits socio-ecological transformation. Not every innovation brings positive societal change, but without innovation, societal change risks coming to a standstill.

It is therefore worrying that innovative capability and activity have steadily declined, particularly among German SMEs. According to the

KfW

, Germany’s state-owned investment bank, only 22% of German SMEs can today be regarded as innovators, just half the level seen 15 years ago. Innovative German companies are now clustered in seven milieus.

Our approach

We aim to help German SMEs identify their innovation potential and do more with it. We also hope to encourage economic policymakers at all levels to focus more strongly on the innovation potential of SMEs. Our activities in this area take place on two levels:

Drawing on our concept of “innovative milieus,” we monitor the innovative strength of German companies. In doing so, we systematically examine the five internal factors that determine their innovation potential: innovation culture, the organizational structure of innovation processes, innovation competency, and internal and external networking.
Using our research findings as a basis, we develop recommendations for companies and policymakers, and discuss these options with them. We also bring together young leaders from the business, politics, research and media communities to discuss and share their experiences with transformation, for example through our “Voices of Economic Transformation” forum.