BUILDING BLOCK 4: Knowledge, innovation and production capabilities of companies

The Flemish economy has a solid, strongly export-oriented industrial base, with a lot of SMEs situated between one-man businesses and large enterprises, and a very diverse innovation level. It is important that all of these enterprises can survive in a rapidly evolving context. The race to knowledge and innovation economies is being conducted on a global scale (Atkinson and Ezell, 2012)[1].

1. Encourage ambitious entrepreneurship and high growth companies

“Entrepreneurship plays an important role in applying this knowledge, and in creating new value in general. To create value, individuals must not only perceive opportunities, but also realize them. This goes beyond individuals merely wanting to be their own boss. To realize opportunities for substantial change in society, ambitious entrepreneurs are needed.” (VRWI, 2012)[2]. In the VARIO-Advisory Report ‘To the Top group of Knowledge- and Innovation-Driven Regions" (March 2020), ambitious entrepreneurship was previously identified as a weakness for Flanders.

High-growth enterprises and ambitious entrepreneurship are an important policy theme (VARIO-Advisory Report 4 Innovative High Growth Enterprises with impact, 2018)[3]. Most jobs are created by a limited number of high-growth enterprises, while employment remains stable at the vast majority of companies. High-growth enterprises are also crucial to a vibrant and dynamic economy; they tend to be young and not necessarily small, are not more common in high-tech sectors..… A publication of JRC[4] says the following about high-growth enterprises: “The economic importance of high growth enterprises (HGEs) lies in their impact on job creation, industrial renewal and the leverage effect they can have on sectoral productivity or regional competitiveness. Research has shown that growth-oriented entrepreneurship has stronger effects on economic growth than other types of entrepreneurship.

  • INDICATOR 10: Share of young enterprises with high growth ambitions

2. Ensure an increase in the number of innovative enterprises

Given the increasing importance of innovation for the competitiveness of Flemish enterprises, stimulating innovation in Flemish companies is a major concern. To make and keep Flanders a dynamic and innovative top region, it is necessary that the conversion of knowledge into products and services runs smoothly and that the innovation power of Flemish enterprises is sufficiently strong. An important objective is therefore to achieve a higher innovative strength of the Flemish economy.

If Flanders were to succeed in this, the total number of innovative enterprises would have to increase. After all, the number of innovative enterprises is a measure for the transfer and application (commercialization) of knowledge in/by companies.

  • INDICATOR 11: Share of innovating companies

3. Involve SMEs into the innovation pool

The Flemish entrepreneurial landscape largely consists of SMEs. A bottleneck in Flanders, cited in the Soete II-report[5], is the low absorption capacity of Flemish companies, especially SMEs. Absorption capacity is the ability of a company to convert external information that is new to the company into (innovative) products, processes and services. In order to make Flanders a top knowledge and innovation region, it is therefore very important to also involve SMEs in the innovation pool.

  • INDICATOR 12: Share of in-house innovative SMEs

[1] Robert D. Atkinson, Stephen J. Ezell ‘Innovation Economics: The Race for Global Advantage’ Yale University Press (2012)

[2] VRWI-studiereeks 23 ‘Ambitious Entrepreneurship: A review of the state of the art (2012)

[3] VARIO-advisory report 4 ‘Innovative High-growth Firms with impact (2018);

[4] High growth enterprises, demographics, finance & policy measures, JRC, (2020)

[5] ‘Soete II’-report: Expert group for the screening of the Flemish innovation instruments (April 2012)