Fractors that favour the
innovation of organizations

The competitiveness of companies in a globalized environment accentuates the need to systematically generate scientific and technological knowledge and tools that consolidate it into new products and services. In this way, it contributes to social welfare and sustained economic growth, promoting variety through innovation.

However, as we have seen in the clients of Euro-Funding, the term innovation encompasses a multiplicity of processes referring to this knowledge and tools, all of them with a high degree of uncertainty and associated risk, but also offers a series of opportunities that are essential for the good economic performance of companies.

Experience has shown, on a recurring basis, that companies that have not been able to adapt to the variations in market demand have been plunged into failure. This consideration highlights the complexity of managing change in order to acquire knowledge and create competitive advantages on an international scale.

The transfer of new ideas to the market implies an intensive interaction of the organization with multiple agents of the socio-political and economic spheres that surround it, and with the structures of the market, reason why it must focus from a proactive search and a systematic analysis of the environment. The first step in tackling this challenge is to identify the factors that encourage innovation, the characteristics of which will give rise to different types of action by companies, as a result of alignment with their strategic objectives.

In this context, we can distinguish two types of factors, internal and external to the company.

Internal factors are associated with the strategy and business culture adopted to conceive new products and/or services that add value to those of the competition and that derive from good management of time and available resources.

While it is true that the number of elements may vary according to the perspective from which it is analysed, the two that have had the greatest diffusion and acceptance are:

• The creative and collaborative capacity of the work team. Innovation is the result of the creativity and interactions of professionals whose initiative, training and interpersonal skills reinforce the capacity for collective learning and the recognition of opportunities for the development and use of new technologies. Analysis from various points of view, overcoming resistance to change and continuous feedback enriches the innovative process to produce results with higher success rates and shorter execution times, as demanded by the current market. It is therefore essential to assimilate these skills in the business culture and bet on the incorporation of team buildingy brainstorming activities, as an example.
• Cooperation with other organizations. The diffusion of the open innovation paradigm has led many companies to review their business models with the aim of extracting the greatest possible value from their interactions with other companies, universities and public research bodies. The creation of business networks and cooperation at a global level guarantees the exchange of knowledge for the performance of core business activities, reduces associated costs and risks and opens up new possibilities for the commercial exploitation of improved or revolutionary products and services. However, the intervention of so many external agents entails an added organizational difficulty, which makes it necessary to implement processes of planning and control of technological innovation that help adapt the knowledge generated to market changes in a continuous and structured manner.

On the other hand, the external factors that affect the degree of innovation of organizations are conditioned by the economic and political context in which they operate. Some of the factors that most affect the business decision to undertake new projects are:

• Support for innovative public procurement. Public entities use this mechanism to promote innovative markets through Public Procurement of Innovative Technology (CPTI) and Pre-commercial Public Procurement (CPP) bids. The demand impulse through the first modality includes the purchase of a good or service that does not exist at the time of purchase but is feasible to develop within a reasonable period of time, while the second modality focuses on the contracting of R&D services in which the buyer shares with the companies both the risks and the benefits resulting from the execution of innovative solutions.
• Access to R&D financing tools. The General State Administration has several types of tools to promote innovative projects in the private sphere, among which the following stand out: Deductions in Corporation Tax, Subsidies in the Social Security quota and public aid in the form of subsidies and credits.

Corporation Tax Deductions and Research Staff Allowances have the advantage of not being economically limited to the number of projects developed within the framework of the company, nor of being governed by terms of competitive competition. In addition, the activities that can be financed (industrial design, technological diagnosis, initial demonstration, etc.) are not restricted to specific topics such as subsidies, but rather to the strategic objectives of the company to increase its internal know-how and improve its competitive position. It should be added that the Spanish system of tax deductions for R+D+i is one of the most favourable in the world, reaching up to 42% of direct expenses. In the case of bonuses, 40% is established in company contributions to Social Security contributions for research personnel.

As indicated above, subsidies and credits present another type of R&D financing instrument that respond to the strategic frame of reference for the country as a whole under the name of “State Plan for Scientific and Technical Research and Innovation”. With the aim of contributing to the consolidation of the Spanish innovative fabric in order to respond to current social and economic priorities, the aid included in this plan has a limited budget and is channelled through various bodies with national and regional regulatory powers, by means of programmes and calls for competitive competition. Specifically, for the period 2017-2020, the guidelines for the following state programs have been defined:

o State programme for the promotion of talent and its employability in R&D.

o State Programme for the generation of knowledge and the scientific and technological strengthening of the R&D system.

o State Programme for business leadership in R&D&I.

o State R+D+i Programme oriented towards the challenges of society.

Government actions in R&D&I are subject to frequent changes as a result of the dynamic nature of the markets. Added to this is the fact that financing tools require detailed and specific diagnoses to determine the conditions of access to them. It is evident, therefore, that companies need to reserve a certain amount of resources to the surveillance of political-financial structures for the continuous identification of opportunities to monetize their most valuable assets through research, development and innovation activities.

In view of these two aspects of innovation, it can be concluded that an organisation’s competitive advantages are generated on the basis of good R&D management and optimum use of the public instruments supporting it.

At Euro-Funding we support companies in the search for and attainment of public funding for R&D with the aim of maximising our clients’ possibilities in the face of these incentives and their subsequent justification.