Exploring the prerequisites for long-term survival of internationalising and innovative SMEs

The case of the Swedish life-science industry

Authored by: Sara Melén Hånell , Emilia Rovira Nordman , Daniel Tolstoy

The Routledge Companion to European Business

Print publication date:  July  2018
Online publication date:  July  2018

Print ISBN: 9781138226586
eBook ISBN: 9781315397306
Adobe ISBN:


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Europe’s innovation performance needs to be enhanced to master the challenges ahead in a fast-changing global climate (European Commission 2013). There is a specific need to support innovative firms because Europe is suffering from poor productivity performance (Timmer et al. 2010) and its innovation performance has also declined over recent years in comparison to other geographical regions such as the United States and parts of Asia (European Commission 2011). In addition, taken as a share of GDP, venture capital investments in the United States are four times higher than in the European Union (EU) (European Commission 2011). Moreover, the European Commission considers that European investments tend to be spread too thinly as European venture capital funds invest in twice as many companies as their counterparts in the United States (European Commission 2011). If European companies are to remain competitive in the global economy, scholarly literature argues that public policies should focus on creating an environment that promotes innovation, especially for internationalising firms (Nordman and Tolstoy 2016). Increasing the possibilities for innovation is also placed high on the agenda for Europe’s leaders and the members of the European Parliament, via the Horizon 2020 initiative which aims to secure Europe’s competitiveness. New policies that are being implemented are geared towards increasing the international competitiveness of innovative firms, for example by creating internal markets for venture capital which may enable firms to bring products to international markets sooner (European Commission 2013). One group of firms that often encompasses the innovative features that lay the foundation for export success is international small and medium-sized enterprises (SMEs). This group is defined in this study in accordance with the European Commission definition as enterprises with fewer than 250 employees, with a turnover not exceeding 50 million euros and/or an annual balance sheet total not exceeding 43 million euros (European Commission 2003; Suder 2011). SMEs are particularly important for the growth of the EU region, because they encompass the vast majority of the total number of exporting firms and represent a third of the total export value (Cernat et al. 2014). The EU’s dependence on successful innovative and internationalising SMEs is also strong in comparison to other regions of the world. For example, the share of SMEs in US manufacturing activity – and total US exports – is smaller than the share of SMEs in EU manufacturing activity and exports (United States International Trade Commission 2010). Exporting SMEs are often characterised by higher levels of productivity (Adlung and Soprana 2017) and job-creation than other SMEs (European Commission 2010).

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