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Widespread optimism for European innovative companies

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62% of European companies using the CIR have increased the number of their innovations brought to market, according to the 7th European Innovation Barometer of Alma Consulting Group which has just been released.

The seventh edition of the European Innovation Finance Barometer ofAlma Consulting Group was conducted among 2041 innovative companies, SMEs, ETIs and large groups in 9 European countries: France of course, but also Germany, the United Kingdom, Spain, Portugal, Hungary, Poland, Belgium and the Czech Republic. The purpose of the barometer is to take stock of the use of the various European systems and to determine their impact on innovative European companies as well as on R&D employment and R&D investment.

Problem no. 1 for innovative companies: finding financial levers. In a European context of strong budgetary constraints, the various governments are comparing the expenditure generated and the concrete impacts in terms of R&D. The barometer reveals that this year, the external financing of an innovative project by a European company is based on 66% of public funding (direct and indirect aid) and 34% of private funding (private equity, public equity, bank loans). In 2011, finding the right financial levers will become the main challenge for 45% innovative European companies, ahead of the protection of innovations (29%) or the management of human resources dedicated to innovation (35%). "This is proof that the crisis is crystallizing innovative companies on financing, making them all the more sensitive to any changes in innovation financing mechanisms", explains Abbas Djobo, Director of the Innovation Pole of Alma Consulting Group. All the more so as companies report an allocation of private funds that they consider clearly insufficient: one innovative company in three admits to being dissatisfied with bank credit (34%), "private equity" (35%), and subsidies & repayable advances (32%).

 The EIF is the first financing scheme for European companies. Unsurprisingly and despite its absence in Germany, the CIR remains this year the most used device in Europe with 53% of European companies. The proportion of companies is higher in France with 67% using it. While the CIR remains unavoidable in the United Kingdom, France and Belgium (used by more than 65% of respondents), it appears to be much less used (less than 37%) in Central Europe where the devices are younger (a renovation in 2004 in Hungary, 2005 in the Czech Republic). Germany does not have a CIR, but 65% of the German companies surveyed believe that it would become a key innovation support device. Similarly in Poland, where 96% of companies would like to see it.

The CIR scheme has the best satisfaction rate with regard to the funds allocated, with a score of 77%. More generally, the satisfaction of French, Portuguese and English companies with the scheme is a plebiscite: it reaches 84%. "The view of European companies on the CIR is of course very positive: 1 out of 2 consider it as a key innovation support device, and almost 1 out of 3 consider it a necessity," says Abbas Djobo.

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The CIR boosts R&D investment, R&D employment and innovation. In terms of amounts allocated, 87.8% of the RTCs distributed are less than €500,000. In the field, 62% of the European companies using the CIR have increased the number of their innovations on the market and for 49% their R&D staff. In France, the figures are even more eloquent: in 2010, the French CIR had a greater leverage effect than that of other European countries, particularly on employment, by enabling 64% of the companies to increase their R&D staff and 75% of them increased the number of their innovations on the market.

The CIR is reinvested by the vast majority of companies in R&D, i.e. nearly 56% of them (stable figure at isoperimeter vs. 2010). This concerns 58% of SMEs. A score in France improved once again as 60% are to be reinvested in R&D. We also note that the CIR plays a significant role as an "economic shock absorber" since one company in ten uses it for shorter-term cash flow and job maintenance purposes. On the other side of the panorama of innovation financing mechanisms, aid and subsidies are a necessary lever for any company wishing to initiate research projects in partnership. Because they are partly provided before the project is launched, they enable six out of ten companies to increase both their R&D staff and their research partnerships. "It is not entirely fair to compare head-on the effectiveness of the tax credit on innovation on the one hand and the aid or subsidy on the other. Indeed, these two types of funding are truly complementary and do not intervene at the same time in the R&D project. Moreover, they outline two ways of conducting an innovation development policy, based on a different perception of "strategic time". For the Germans, champions of direct aid, the "strategic time" is before or at the time the R&D project is set up, favouring business initiative. For the French, users of the CIR, "the time of accompaniment" is privileged: the importance is given to the development of R&D", analyses Abbas Djobo.

Nevertheless, innovative companies in Europe remain optimistic. Innovative firms remain relatively optimistic: 73.7% of firms say they are confident about the future. 86.7% have maintained or even increased their R&D budget (including a net increase of 47.5%) over the last 3 years. French companies are perfectly in line with their European neighbours (89.3%). Leading the way, before Germany (+56%), it is Belgium that is experiencing the greatest increase in R&D investment with 69%. However, the Spanish companies have a downside, with +36%. Concerning hiring, 46% companies plan to increase their R&D workforce in the next 12 months, a respectable level, with a leading group in Germany (72%) and France (60%) and a trailing group with Poland, Hungary, Spain and Portugal (30-35%). As for their strategy, 56% of the companies give priority to innovation. Although innovation is preponderant in European countries, it is less prevalent, rising from 70% in 2010 to 56% in 2011 in the list of priorities in favour of quality and the launch of new products. Does this mean that European companies are turning away from innovation? The answer is more nuanced: while it remains a priority for countries such as Germany 79% and France 66%, it is less the case for countries such as the Czech Republic, Poland or Portugal, which rely more on quality and the generation of new products. This is a consequence of both the crisis and the situation of these countries in the innovation chain, which is essentially a subcontracting sector.

Download the full report.

European leader in operational consulting, Alma Consulting Group (2010 turnover: €271 million and 1,700 employees as of 31/12/10) helps large companies, SMEs and public bodies to make savings on their expenses and taxes, control their various costs and obtain financing, aid or subsidies, without ever calling into question the organisation or social achievements. With remuneration exclusively indexed to the results obtained, Alma Consulting Group's experts carry out tax audits (land, urban planning), audits on social costs, non-strategic purchases, environmental costs and accompany companies on R&D financing projects, environmental and energy projects and insurance (social protection and actuarial management of insurance organizations). Founded in 1986 by Marc Eisenberg, Alma Consulting Group is present in 10 countries including France (Spain, United Kingdom, Poland, Belgium, Germany, Portugal, Hungary, Czech Republic and Canada). Alma Consulting Group is approved by the OPQCM (Office Professionnel pour la Qualification des Conseils en Management), certified ISO 9001 new standard for all its activities since December 2003 and member of Syncost, (Professional Union of Operational Consulting Companies in Cost Optimization).

(Source: Alma Consulting Group)

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