Beyond product innovation; improving innovation policy support for SMEs in traditional industries

Innovation support measures in the EU are mostly designed to support product innovation in RD intensive sectors. To increase the still considerable contribution to regional employment and competitiveness from SMEs in traditional manufacturing industries a broader innovation policy mix is more appropriate. This paper draws data from a survey of more than 300 SMEs from seven regions within the European Union, as well as case studies, to address the question How can innovation policy interventions be improved to support SMEs in traditional manufacturing industries more effectively We claim that innovation support should be sensitive to the way SMEs in traditional manufacturing sectors innovate and grow. We find that product innovation and support used for product innovation is less likely to generate growth, than support used for process innovation. Also support used for marketing innovations and organizational innovations are of particular importance - together with internationalization, design and cooperation. The increasingly selective application procedures applied are not the most efficient to generate impact, since those who are supported and those who are supported more frequently, are the ones who are most likely to take the same innovative steps anyhow, irrespective of policy support.Keywords Innovation, SMEs, traditional sectors, low-tech, policy evaluation, manufacturing, process innovation