Interview: promotion of SMEs, innovation skills, globalisation

Interview with German State Secretary Matthias Machnig

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© Michael Voigt

CORNET talked to the State Secretary Matthias Machnig of the German Federal Ministry for Economic Affairs and Energy about the internationalisation of SMEs and how the economy can benefit from national funding for cross-border co-operation. Mr. Machnig is responsible for the Directorates-General for Industrial Policy, External Economic Policy, Digital and Innovation Policy and Small and Medium-sized Enterprise Policy.

Small and medium-sized enterprises (SMEs) are facing particular challenges in the international race to innovate. In order to compete against large companies, SMEs must partner up with research institutions that put the focus of their research and development on the needs of these smaller companies and provide results that can subsequently be developed into products and services. However, SMEs are usually not able to finance this research by themselves. The German Federal Ministry for Economic Affairs and Energy supports SMEs by providing dedicated funding through partners such as the German Federation of Industrial Research Associations (AiF). The Ministry is funding both the ‘Industrial Collective Research (IGF)’ programme, which is being conducted by the AiF, and the international ‘Collective Research Networking (CORNET)’ programme.

In CORNET, nine countries and regions are cooperating on the basis of national/regional funding mechanisms to initiate cross-border projects for collective research. The network was first established as an ERA-NET in 2005 and was supported by the European Commission within the 6th and 7th European Research Framework Programme. Unlike many other former ERA-NETS, CORNET has since (2011) managed to become independent. International collective research is growing rapidly. CORNET was able to expand its initial main network of seven European partners beyond the borders of Europe when Peru and Canada’s largest province Québec joined at the beginning of 2016. This positive trend is made possible by the constant long-term support of the Federal Ministry for Economic Affairs and Energy. The Ministry has been financing the coordination of the network since 2011 and is actively participating in its expansion.

Mr. Machnig, the Federal Ministry for Economic Affairs and Energy started funding the coordination of CORNET after the support from the European Commission came to an end. What were the reasons behind the decision to keep the network going?

World trade will almost quadruple by 2030. More SMEs should therefore see globalisation as an opportunity. However, we need to support them to stimulate their growth. They have fewer financial resources and personnel and less time than larger, internationally active companies. Our SME policy must also encourage growth beyond Germany’s borders. In CORNET, we strengthen technological capabilities of SMEs and promote technological developments in the relevant sectors by giving them access to practical research results. Even back when the European Commission was still participating, we were already using CORNET as an effective and efficient tool to establish long-term partnerships with the European network partners. We therefore saw it as an important task to continue supporting CORNET and to help it become independent. And this is now paying off. Since 2011, CORNET has been a stable and large network for transnational research projects focusing on SMEs. Its success has also sparked the interest of other countries and regions outside of the European Union.

Working together with the Federal Ministry for Economic Affairs and Energy, CORNET has significantly driven forward its expansion in 2015 and 2016. As it expands beyond the borders of the European Union, the co-operation is becoming much more multicultural. We are also facing different time zones, requiring us to plan much more precisely. Where do you see the biggest challenges in working on international projects?

Thanks to the many possibilities of digital communication, we have plenty of ways to deal with any issues that arise from being in different regions and time zones. Successfully communicating in a project can, of course, be influenced by cultural specifics. Here, it is important to be open to various approaches. These days, intercultural teams are common and can even lead to better results. In my opinion, the benefits of an international exchange of expertise and resources heavily outweigh any of these potential issues.

What advantages for SMEs do you see in CORNET regarding the key aspects of innovation skills and globalisation?

In CORNET, SMEs can profit from the knowledge and skill of international experts. They are able to help shape the research according to their interests in an open and pre-competitive process. We are promoting the development of SMEs’ innovations skills by giving them access to international research that meets their needs without putting a financial burden on them. What sets CORNET apart is its use of national budgets. Every participating country or region must help fund the projects and provide specific expertise to make sure that the projects succeed. So we need to select the participants carefully. In CORNET, we offer effective and efficient tools to help Germany’s SMEs enter the international market and to promote their competitiveness.

What value do you think internationalisation and the willingness for international exchange can have for Germany’s SMEs?

Germany’s SMEs form the backbone of the German economy. Alongside the many SMEs, the start-ups, skilled craft firms and self-employed persons, Germany particularly benefits from its larger SMEs, above all in industry. International industrial research drives innovation.

What advice would you give SMEs or research associations that shy away from the challenges of an international and co-operative research project?

In order to stay competitive, SMEs need research institutions that focus their research and development work on the needs of the companies. We are talking about projects with results that can be quickly and efficiently transferred and marketed. Firstly, CORNET helps SMEs gain innovation skills to push ahead the development of their companies. Secondly, the projects allow them to become familiar with the benefits of international co-operation without taking on financial risks. These conditions ensure low risks, making it worthwhile to explore new paths.