A new innovation paradigm: European cohesion policy and the retreat of public science in countries in Europe's scientific periphery

• Author: Marina Dabić,Tugrul U. Daim,Jadranka Švarc
• Published date: 01 September 2020
• Date: 01 September 2020
• DOI: http://doi.org/10.1002/tie.22166

RESEARCH ARTICLE

A new innovation paradigm: European cohesion policy and the

retreat of public science in countries in Europe's scientific

periphery

Jadranka Švarc

1

| Marina Dabi

c

2,3

| Tugrul U. Daim

4,5,6

1

Institute of Social Sciences Ivo Pilar, Zagreb,

Croatia

2

Faculty of Economics and Business,

University of Zagreb, Zagreb, Croatia

3

Management Division, Nottingham Business

School, Nottingham Trent University,

Nottingham, UK

4

Department of Engineering and Technology

Management, Portland State University,

Portland

5

National Research University Higher School

of Economics Moscow, Russian Federation,

Moscow, Russia

6

Chaoyang University of Technology,

Taichung, Taiwan

Correspondence

Marina Dabi

c, Faculty of Economics and

Business, University of Zagreb, J. F. Kennedy

square 6, Zagreb 1000, Croatia.

Email: mdabic@net.efzg.hr, marina.dabic@ntu.

ac.uk

Abstract

This article seeks to undertake a critical assessment of the changing position of public

science in the entrepreneurial ecosystem of the countries on the periphery of Euro-

pean research. These countries are driven by new innovation paradigm based on

entrepreneurship, which are implemented within the European Smart specialization

strategy (S3). This article argues that S3 is widely implemented in the cohesion coun-

tries and, while it provides substantial resources for science, technology, and innova-

tion, it fails to provide sustainability in the public research sector. This has direct

implications for policies concerning innovation and entrepreneurial ecosystems. In

order to prove the thesis, the article provides theoretical argumentation for emer-

gence of a new innovation paradigm, driven by the rise of the entrepreneurial ecosys-

tem, its incorporation into S3, and a consequent retreat of science policy in favor of

entrepreneurial policy. The empirical analysis is focused on the funding trends seen

in the business and public research sectors over the last decade (2008–2017), which

have clearly shown that S3 has not contributed, despite expectations, to an increase

in public expenditure for science. This signifies S3's neglect of public research within

entrepreneurial ecosystems and challenges the ability of S3 to reduce wide dispar-

ities in research and innovation performance across the European Union. This ulti-

mately endangers the innovation potential of the entrepreneurial ecosystem itself.

KEYWORDS

cohesion countries, entrepreneurial ecosystem, entrepreneurship, innovation paradigm, public

science, science periphery, smart specialization

1|INTRODUCTION

One of the great ongoing debates in the area of science, technology,

and innovation (STI) studies is the role of public science and research-

based innovation for the advancement of socio-economic progress

and entrepreneurial ecosystems. Both concepts are subject to radical

evolution and irreversible changes driven by many mutually

supportive processes of deindustrialization and digitalization of the

economy such as lethargic growth in economy, productivity, and

product innovations since 1970 (Gordon, 2016), secular stagnation

(Cowen, 2011), premature deindustrialization (Rodrik, 2016), reducing

the “epistemic base of technique”in service economy (Mokyr, 2003),

to mention some of them. The process of economic restructuring

driven by the collapse of large industrial companies, along with the

DOI: 10.1002/tie.22166

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Thunderbird Int. Bus. Rev.. 2020;62:531–547. wileyonlinelibrary.com/journal/tie 531

rise of new layers of small and medium sized companies (SMEs) with

limited capacities for research and development (R&D), in the 1980s

has additionally questioned the role of science in economic develop-

ment. These processes have led to the (re)discovery of individual

entrepreneurship in Kirznerian terms of opportunity recognition

(Roininen & Ylinenpää, 2009) and the importance of entrepreneurial

capital and economy for national competitiveness, well established by

a group of scholars gathered around the GEDI project (Global Entre-

preneurship and Development Index; Acs, Autio, & Szerb, 2014;

Audretsch, 2007; Audretsch & Thurik, 2000; Thurik, Stam, &

Audretsch, 2013). This perspective has been extended and developed

by the concept of the entrepreneurial ecosystem (EES). The term

“ecosystem”was originally borrowed from the field of biology but,

when incorporated with entrepreneurial perspectives, it quickly

emerged as a promising area of research in entrepreneurship

(Alvedalen & Boschma, 2017; Audretsch, Cunningham, Kuratko, Leh-

mann, & Menter, 2019; Cavallo, Ghezzi, & Balocco, 2019;

Malecki, 2018; Maroufkhani, Wagner, Khairuzzaman, Ismail, 2018;

Mujahid, Mubarik, & Naghavi, 2019; O'Connor, Stam, Sussan, &

Audretsch, 2018; Song, 2019) with an explicit focus on individual

entrepreneurs as the creators of new economic value (Acs, Stam,

Audretsch, & O'Connor, 2017; Autio, Nambisan, Thomas, &

Wright, 2018; Stam, 2015) and fostering change toward innovation

culture Švarc, Lažnjak, & Dabi

c, 2019).

Although entrepreneurs are the key drivers of economic competi-

tiveness and growth, as they transform scientific achievements into

innovation, the current trend demonstrating the dominance of entre-

preneurship over science is shifting the focus of STI policies from sci-

entific research to business ventures, transforming national

innovation systems into national entrepreneurship systems (Acs

et al., 2014) and entrepreneurial ecosystems (Audretsch et al., 2019;

Malecki, 2018; Song, 2019). The terms “entrepreneurship system”and

“entrepreneurial ecosystem”are often used interchangeably

(Alvedalen & Boschma, 2017, p. 889), giving impetus to an innovation

paradigm based on entrepreneurship (Autio, Kenney, Mustar, Siegel, &

Wright, 2014; Stam, 2015; Thurik et al., 2013). An illustrative example

of this new innovation paradigm is the prevalence of innovation

regarding changes in business models in digital economy, as opposed

to “technology-push”innovation, which translates scientific knowl-

edge and research advances into commercial applications (Autio

et al., 2018, p. 78).

This change in innovation paradigm and STI policy is much more

prominent in those European countries with weak scientific poten-

tials, which receive substantial support for R&D from the EU Struc-

tural and Investment Funds (ESI Funds) as part of the EU Cohesion

policy, which seeks to reduce regional European disparities in eco-

nomic and social development. Some scholarly observations question

the potential of the current trend of the European STI policies, formu-

lated through the Smart specialization strategy (S3), to strengthen

public science and its economic outcomes by strengthening local

entrepreneurs and entrepreneur-led regional projects (Archibugi,

Filippetti, & Frenz, 2018; Bonaccorsi, 2016; Muscio, Reid, & Rivera

Leon, 2015).

The aim of this article is to undertake a critical assessment of the

new innovation paradigm, embraced conceptually by the S3 and

funded by the ESI Funds for countries with weak research capacities,

in the hope of answering the following questions: Is there a tendency

to replace science policy with entrepreneurial policy and scientific

research with business innovation? Is public support for entrepreneur-

ship and SMEs made at the expense of public science?

Within this context, the main goals of this article are twofold.

First, this research aims to demonstrate the ways in which this new

innovation paradigm, based on entrepreneurship, has emerged and

how it is reflected on the European STI policy embodied in the S3

through the Entrepreneurs discovery process (EDP). EDP is essential

component of S3 focused on strengthening regional development and

entrepreneurship and seeks for those scientific research which serve

innovation needs of local entrepreneurs and business ventures;

Second, this research aims to show that ESI Funds, although they

bring many benefits to the research systems of EU peripheral coun-

tries, supports mainly research in the business sector for its relation to

EDP and tends to replace, under the budget austerity policy, national

funds for public science, leading eventually to the neglect of national

research capacities and to the retreat of public science policy.

This research contributes to theories and practices pertaining

to STI and entrepreneurship policies. From a theoretical point of

view, the research builds several arguments. First, it documents the

emergence of the new innovation paradigm, with entrepreneurship

as the outcome of the current intersection of STI and entrepre-

neurship policy. Second, it provides a novel insight into the rela-

tionship between science, innovation, entrepreneurship policy, and

S3 as a part of the European cohesion policy, explaining the ways

in which the new innovation paradigm and the concept of the EES

is incorporated into S3. Third, the article critically evaluates the

neglected position of public science within S3 in countries in

Europe's scientific periphery, which appeared as an unintended

consequence of the excessive interference of science, innovation,

and entrepreneurship policies. This is supported by empirical data

on the decline in funding trends for the public research sectors

over the last decade (2008–2017) in the EU.

The above findings have direct policy implications. First, the iden-

tified neglect of public science in research-weak countries suggests a

need for careful re-consideration of the national public science policy

with regards to S3 in order to: (a) reinforce/enforce the role that

national polices play in fostering high-quality research and scientific

excellence; (b) provide adequate national resources for this purpose,

aside from EU funds; and (c) consider the consequences of the uncriti-

cal Europeanization of STI policy. Second, it aims to draw the atten-

tion of policy makers to the fact that national and European research

funding both have different focal points and should act in a comple-

mentary rather than substitutive way.

Overall, this research contributes to ongoing debates about the

role of science, innovation, and entrepreneurship in current STI

polices, with the main message being that the incorporation of public

science under the wide umbrella of S3 may result in divergence rather

than convergence in the innovation potential of EU countries. This

532 ŠVARC ET AL.