Innovation in Creative SME’s in Flanders: a case study based analysis
Ysabel Nauwelaerts1,2,3, Frederik Van Assche1,3 and Ilke Van Beveren1,2
1 Lessius University College, Department of Business Studies, Antwerp, Belgium
2 Catholic University of Leuven, LICOS – Centre for Institutions and Economic Performance, Leuven, Belgium
3CONCreaS – Centre for Entrepreneurship in the Creative Sectors, Antwerp, Belgium
(email: , , )
Abstract[*]This chapter analyzes the innovative profile of the Flemish creative ‘design sector’ using data obtained from 51 companies, taking part in an Innovation Diagnostic of their enterprise. Flemish creative companies are typically very small, but highly innovative. Results clearly show that the Flemish creative industry faces a number of specific challenges, mostly related to risk assessment and financing constraints. Moreover, creative entrepreneurs often lack the necessary economic background required to successfully commercialize their innovations and manage their business in an optimal way. Finally, government support appears not to be very well adapted to the need of micro firms (employing less than ten employees) in general and to the requirements of the creative sector specifically.
Keywords Innovation, creative design sector, entrepreneurship, SME, Flemish case studies
1
1. Introduction
In this chapter, the innovative profile of a sample of 51 creative (design) companies in Belgium is analyzed. Since most of the firms active in this industry are small- to medium-sized, we will first briefly introduce the Belgian SME sector in general and discuss the importance of the creative industries within this sector. The companies that participated in the survey are typically very small, but highly innovative. Given the specific nature of the sector, combined with the small size of the firms, the design sector faces several specific challenges. First, it is very hard for these companies to acquire financial backing for their innovation projects and as a result it is virtually impossible to undertake market research prior to the introduction of their innovation(s). This is especially critical, considering that innovation is central to the survival and growth of these companies. The typical creative entrepreneur is entirely dependent on the continuous development of new products, processes, services or ideas in order to retain his competitive edge.
As a consequence, the industry faces specific issues relating to risk assessment and financing constraints when they want to introduce their innovation to the market. Moreover, most entrepreneurs that took part in our study are educated as designers (in fashion, jewelry, product development, web design, etc.) and are as such poorly prepared to undertake the full commercialization process of their innovations. Financing constraints also play an important role here, since most of the respondents lack the necessary financial means to hire a business manager for this part of the innovation process.
Finally, a clear point emerging from this study is that existing government support for innovation does not seem very well adapted to the specific needs of ‘micro firms’ (firms employing less than ten employees) in general and to those of the creative sector specifically. Nevertheless, it should be noted that most of the companies in the sample are highly successful in their respective sub-industries, although perhaps smaller in size than they could be, provided some of the issues mentioned above could be addressed.
This chapter is organized as follows. Section 2 sketches the general profile of the Belgian SME sector and section 3 summarizes the characteristics of the Flemish creative sector. Section 4 analyzes the data, collected from our sample of creative entrepreneurs. Section 5 discusses the case studies and gives an overview of the most salient findings of this study. Finally, section 6 formulates policy recommendations and concludes.
2. Brief Report on the Belgian SME Sector
Although our research focuses on the Flemish creative sector, a more general introduction into the Belgian SME-sector is required.Belgium is a federal state, divided into three communities (Flemish, French and German speaking) and three regions (Flanders, Wallonia and the Brussels Capital Area), each with different governmental responsibilities and organizational structures. While economic policy in general falls under the jurisdiction of the federal government, innovation policy is a defederalized/regionalized matter.
As can be seen in table 1, economic growth in Belgiumhas surpassedthe euro zone average since 2002. The general government deficit (surplus) also tends to be stable, with the exception of 2004, and is consistently lower than the average for the Euro zone. On the other hand, Belgium’s public debt remains high compared to the EU average.
Table 1: Belgium's Macro-Economic Performance
2000 / 2001 / 2002 / 2003 / 2004 / 2005 / 2006Real GDP growth (%)
Belgium / 3.7 / 0.8 / 1.5 / 1.0 / 3.0 / 1.7 / 2.8
Euro zone / 3.8 / 1.9 / 0.9 / 0.8 / 2.0 / 1.5 / 2.8
Net capacity (+) or net financing needs (-) of governments (% of GSD)
Belgium / 0.1 / 0.6 / 0 / 0 / 0 / -2.3 / 0.4
Euro zone / 0.1 / -1.8 / -2.5 / -3.1 / -2.8 / -2.5 / -1.5
Gross government debt – public authorities (Maastricht definition in % of GDP)
Belgium / 107.8 / 106.5 / 103.4 / 98.6 / 94.2 / 92.2 / 88.2
Euro zone / 68.7 / 68.3 / 68.1 / 69.3 / 69.7 / 70.5 / 68.8
Source: based on Eurostat data (2008)
In what follows, we will briefly characterize the Belgian SME environment, using data obtained from Eurostat. In the figures and tables below, all data are summarized by size class using the European SME definition[†].
Historically, Belgium has always perceived itself as an SME oriented economy. This claim is confirmed in table 2, which shows that in 2005; 99.77 percent of all Belgian firms were micro, small or medium-sized. In fact, as column 1 in table 2 shows, more than 92 percent of all enterprises are micro companies, employing less than ten employees. Within a European context, the Belgian profile is comparable to that of the Euro zone[‡]. On average, every Euro zone member has more than 99.50 percentSMEs. Compared to Belgium, only Italy, Sweden, Portugal and Spain have a slightly higher SME-ratio.
Table 2: Number of Enterprises Broken Down by Size Classes, Belgium, 1999 - 2005
(absolute figures and percentages) (1)
Micro / Small / Medium / Subtotal
1999 / 341,963 / 25,047 / 3,644 / 370,654 / 748 / 371,402
92.07% / 6.74% / 0.98% / 99.80% / 0.20% / 100%
2000 (2) / 210,957 / 17,618 / 3,136 / 231,711 / 656 / 232,367
90.79% / 7.58% / 1.35% / 99.72% / 0.28% / 100%
2001 / 348,639 / 26,188 / 3,935 / 378,762 / 797 / 379,559
91.85% / 6.90% / 1.04% / 99.79% / 0.21% / 100%
2002 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2003 / 353,134 / 25,813 / 3,766 / 382,713 / 781 / 383,493
92.08% / 6.73% / 0.98% / 99.80% / 0.20% / 100%
2004 / 364,712 / 25,559 / 3,717 / 393,988 / 784 / 394,771
92.39% / 6.47% / 0.94% / 99.80% / 0.20% / 100%
2005 / 365,613 / 25,622 / 3,804 / 395,039 / 796 / 395,960
92.34% / 6.47% / 0.96% / 99.77% / 0.20% / 100%
EU-15 / 13,029,160 / 1,108,193 / 160,859 / 14,298,212 / 31,376 / 14,329,588
2004 (3) / 90.93% / 7.73% / 1.12% / 99.78% / 0.22% / 100%
EU-27 / 17,460,421 / 1,319,465 / 208,846 / 18,988,732 / 40,787 / 19,012,297
2004 (4) / 91.84% / 6.94% / 1.10% / 99.88% / 0.21% / 100%
Source: based on Eurostat data (2008)
(1) Nace D, E, F, G, H, I, K; (2) Nace D, E, F, H, I, K; (3) excl. Greece and Luxemburg, (4) expected.
In 2005, total employment in Belgium amounted to about 2.4 million (full-time equivalent) individuals of which 67.22 percentwas employed within an SME. Table 3 shows that in recent years the share of micro enterprises increases while the overall amount of SME enterprises stabilizes; even decreases slightly in 2005.
Between 1999 and 2005 overall employment in Belgium grew with about 4.4 percent. Most of this increase was realized by SMEs, which documented a growth rate of 5.86 percent, compared to 0.59 percent for large enterprises. This growth can be explained by recent governmental start-up campaigns and specific public financing policies.
Table 3: Employment Broken Down by Size Classes, Belgium, 1996 - 2005
(absolute figures and percentages) (1)
Micro / Small / Medium / Subtotal
1996 (2) / 661,464 / 456,743 / 319,010 / 1,437,217 / 718,336 / 2,155,553
30.69% / 21.19% / 14.8% / 66.68% / 33.32% / 100%
1997 (2) / 630,092 / 463,962 / 331,155 / 1,425,209 / 729,369 / 2,154,578
29.24% / 21.53% / 15.37% / 66.15% / 33.85% / 100%
1998 (2) / 654,206 / 476,508 / 337,533 / 1,468,247 / 751,891 / 2,220,138
29.47% / 21.46% / 15.2% / 66.13% / 33.87% / 100%
1999 (2) / 665,173 / 490,124 / 355,624 / 1,510,921 / 775,370 / 2,286,291
29.09% / 21.44% / 15.55% / 66.09% / 33.91% / 100%
2000 (2) / 670,405 / 507,552 / 377,019 / 1,554,976 / 837,367 / 2,392,343
28.02% / 21.22% / 15.76% / 65% / 35% / 100%
2001 / 681,265 / 514,812 / 392,775 / 1,588,852 / 826,810 / 2,415,662
28.2% / 21.31% / 16.26% / 65.77% / 34.23% / 100%
2002 / n.a / n.a / n.a / n.a / n.a / n.a
n.a / n.a / n.a / n.a / n.a / n.a
2003 / 685,707 / 513,433 / 375,943 / 1,575,083 / 787,160 / 2,362,245
29.03% / 21.73% / 15.91% / 66.68% / 33.32% / 100%
2004 / 704,257 / 508,409 / 368,378 / 1,581,044 / 798,577 / 2,379,621
29.6% / 21.37% / 15.48% / 66.44% / 33.56% / 100%
2005 (3) / 715,702 / 509,633 / 374,119 / 1,599,454 / 779,923 / 2,379,377
30.08% / 21.42% / 15.72% / 67.22% / 32.78% / 100.00%
EU-15 / 28,327,485 / 21,240,545 / 15,981,463 / 65,549,493 / 33,290,353 / 98,839,846
2004 (4) / 28,66 / 21,49 / 16,17 / 66,32 / 33,68 / 100
EU-27 / 36,870,700 / 25,432,300 / 20,800,800 / 83,103,800 / 40,741,800 / 123,914,000
2004 (5) / 29.76% / 20.52% / 16.79% / 67.07% / 32.88% / 100%
Source: based on Eurostat data (2008)
(1) Nace D, E, F, G, H, I, K; (2) Nace D, E, F, H, I, K; (3) Nace D, F, G, H, I, K; (4) excl. Greece and Luxemburg, (5) expected.
Although SMEsclearly contribute significantly to total employment generation in Belgium, their share in value added is somewhat lower. Although large companies account for only 0.20 percent of all companies in Belgium and 32.78 percent of overall employment, their share in value added amounts to 41.29 percent.Nevertheless, SMEs represent in total a not unimportant share of 58 percentin the total Belgian value added. The share of micro and medium companies seems to decrease, while small and large companies increase their added value share slightly. The Belgian SME subtotal nevertheless stays in line with the averages for the EU-15.
Table 4: Added Value Broken Down by Size Classes, Belgium, 1996-2005
(volume * € 1.000.000 and percentages) (1)
Micro / Small / Medium / Subtotal
1996 (2) / 18,841.30 / 20,348.00 / 17,027.00 / 56,216.30 / 40,310.80 / 96,527.10
19.52% / 21.08% / 17.64% / 58.24% / 41.76% / 100%
1997 (2) / 17,806.40 / 20,189.90 / 17,757.70 / 55,754.00 / 40,360.90 / 96,114.90
18.,53% / 21.,01% / 18.48% / 58.01% / 41,99% / 100%
1998 (2) / 18,650.30 / 20,846.10 / 18,476,90 / 57,973.30 / 42,746.80 / 100,720.10
18.52% / 20.70% / 18,34% / 57.56% / 42.44% / 100%
1999 (2) / 20,349.50 / 22,386.50 / 20,118.00 / 62,854.00 / 44,443.20 / 107,297.20
18.97% / 20.86% / 18.75% / 58.58% / 41.42% / 100%
2000 (2) / 23,220.20 / 23,966.50 / 22,372.20 / 69,558.90 / 52,504.20 / 122,063.10
19.02% / 19.,63% / 18.33% / 56.99% / 43,01% / 100%
2001 / 24,484.90 / 24,783.70 / 24,208.10 / 73,476.70 / 52,416.90 / 125,893.60
19.45% / 19.69% / 19.23% / 58.36% / 41.64% / 100%
2002 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2003 / 25,570.8 / 27,304.6 / 25,173.7 / 78,049.1 / 54,492.2 / 132,541.5
19,29% / 20.60% / 18.99% / 58.89% / 41,11% / 100%
2004 / 26,159.0 / 27,579.8 / 26,134.4 / 79,873.2 / 58,951.5 / 138,824.8
18.84% / 19.87% / 18.83% / 57.54% / 42.46% / 100%
2005 (3) / 26,525.6 / 28,449.2 / 25,898.4 / 80,873.2 / 56,885.5 / 137,758.9
19.26% / 20.65% / 18.80% / 58.71% / 41.29% / 100%
EU-15 / 951,237 / 898,900 / 828,799 / 2,678,352 / 1,990,430 / 4,668,206
2004 (4) / 20.38% / 19.26% / 17.75% / 57.37% / 42.64% / 100%
EU-27 / 1,027,773 / 952,213 / 952,213 / 2,880,108 / 2,151,447 / 5,023,820
2004 (5) / 20.46% / 18.95% / 17.92% / 57.33% / 42.82% / 100%
Source: based on Eurostat data (2008)
(1)Nace D, E, F, G, H, I, K; (2) Nace D, E, F, H, I, K; (3) Nace D, F, G, H, I, K; (4) excl. Greece and Luxemburg, (5) expected.
Table 5 shows that Belgian enterprises are among the most productive in Europe; with average value added per employee amounting to 58.34 thousand euros in 2004, compared to 47.23 for the EU-15. Only Denmark, Finland and Ireland have a higher overall gross added value per person employed. Within each class size the Belgian productivity figures are above the EU-15 averages. Between 1999 and 2005, overall productivity of Belgian companies grew by 28.39 percent, and this figure was even higher for micro, medium and large companies at 30.35; 28.73 and 28.00 percent respectively. Only small companies couldn’t follow this trend, their productivity grew with only 27.08 percentover the same period.
Table 5: Apparent Labor Productivity, Belgium, 1996-2005
(Gross value added per person employed * € 1000) (1)
Micro / Small / Medium / Subtotal
1996 (2) / 28.48 / 44.55 / 53.37 / 39.11 / 56.12 / 44.78
1997 (2) / 28.26 / 43.52 / 53.62 / 39.12 / 55.34 / 44.61
1998 (2) / 28.51 / 43.75 / 54.74 / 39.48 / 56.85 / 45.37
1999 (2) / 30.59 / 45.68 / 56.57 / 41.60 / 57.32 / 46.93
2000 (2) / 34.64 / 47.22 / 59.34 / 44.73 / 62.70 / 51.02
2001 / 35.94 / 48.14 / 61.63 / 46.25 / 63.40 / 52.12
2002 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2003 / 37.29 / 53.18 / 66.96 / 49.55 / 69.23 / 56.11
2004 / 37.14 / 54.25 / 70.94 / 50.52 / 73.82 / 58.34
2005 (3) / 37.06 / 55.82 / 69.23 / 50.56 / 72.94 / 57.90
EU-15
2004 (4) / 33.58 / 42.32 / 51.86 / 40.86 / 59.79 / 47.23
EU-27
2004 (5) / 27.88 / 37.44 / 45.78 / 34.66 / 52.81 / 40.54
Source: based on Eurostat data (2008)
(1)Nace D, E, F, G, H, I, K; (2) Nace D, E, F, H, I, K; (3) Nace D, F, G, H, I, K; (4) excl. Greece and Luxemburg, (5) expected.
The sales showa similar evolution as the added value figures. Total turnoverin Belgiumexpanded by 56.81 percent between 1996 and 2004. Medium and large companies managed to boost their business figure with 74.45 and 76.62 percent respectively, while micro and small companies achieved growth rates of 38.18 and 37.11 percent respectivelyover the same period. Large companies employ slightly less than a third of the Belgian labor force, but the average turnover per employee is almost twice as high as the turnover per person employed for the average SME.
Compared to the EU-15 average, Belgian SME companies employ almost the same percentage of the total labor force but they employed and achieve a significantly higher share of the overall turnover in 2004.
Table 6: Turnover Broken Down by Size Classes, Belgium, 1996-2005
(volume * € 1.000.000 and percentages) (1)
Micro / Small / Medium / Subtotal
1996 (2) / 110,157.2 / 106,129.0 / 77,490.9 / 293,777.1 / 140,083.3 / 433,860.4
25.39% / 24.46% / 17.86% / 67.71% / 32.29% / 100%
1997 (2) / 109,390.9 / 106,601.6 / 83,047.1 / 299,039.6 / 144,268.4 / 443,308.0
24.68% / 24.05% / 18.73% / 67.46% / 32.54% / 100%
1998 (2) / 114,754.8 / 109,060.1 / 90,838.3 / 314,653.2 / 157,015.5 / 471,668.7
24.33% / 23.12% / 19.26% / 66.71% / 33.29% / 100%
1999 (2) / 121,779.8 / 114,491.9 / 96,810.2 / 333,081.9 / 167,276.1 / 500,358.0
24.34% / 22.88% / 19.35% / 66.57% / 33.43% / 100%
2000 (2) / 140,167.0 / 126,812.0 / 110,490.9 / 377,469.9 / 212,551.7 / 590,021.6
23.76% / 21.49% / 18.73% / 63.98% / 36.02% / 100%
2001 / 143,886.3 / 127,643.9 / 124,422.9 / 395,953.1 / 221,161.1 / 617,114.2
23.32% / 20.68% / 20.16% / 64.16% / 35.84% / 100%
2002 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2003 / 142,973.50 / 134,165.20 / 129,258.60 / 406,397.30 / 221,800.80 / 628,198.10
22.76% / 21.36% / 20.58% / 64.69% / 35.31% / 100%
2004 / 152,217.90 / 145,517.50 / 135,184.20 / 432,919.60 / 247,419.20 / 680,338.80
22.37% / 21.39% / 19.87% / 63.63% / 36.37% / 100%
2005 (3) / 157,645.00 / 150,893.20 / 138,930.10 / 447,468.30 / 252,630.40 / 696,055.80
22.65% / 21.68% / 19.96% / 64.29% / 36.29% / 100%
EU-15 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2004 (4) / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
EU-27 / 3,646,407,636 / 3,735,291,302 / 3,724,841,203 / 11,106,540,140 / 8,075,359,065 / 19,172,514,850
2004 (5) / 19.02% / 19.48% / 19.43% / 57.93% / 42.12% / 100%
Source: based on Eurostat data (2008)
(1)Nace D, E, F, G, H, I, K; (2) Nace D, E, F, H, I, K; (3) Nace D, F, G, H, I, K; (4) excl. Greece and Luxemburg, (5) expected
When looking at the annual investments, two distinct evolutions are noticeable. Between 1998 and 2001 investments rose by 25.81 percent, while investments diminished by 14,62 percent between 2001 and 2005. A regression analysis shows that employment and investments are positively related for medium and large sized companies (i.e. net investments), while for micro and small companies it probably only implies replacement investments (Heirman, 2007). The SME sector still accounts for a high share (82,33percent) in total investments made by Belgian firms.
Table 7: Investments Broken Down by Size Classes, Belgium, 1998-2005
(volume * € 1.000.000 and percentages) (1)
Micro / Small / Medium / Subtotal
1998 / 5,879.50 / 2,930.80 / 2,475.30 / 11,285.60 / 3,656.70 / 14,942.30
39.35% / 19.61% / 16.57% / 75.53% / 24.47% / 100.00%
1999 / 6,127.50 / 3,212.30 / 3,309.00 / 12,648.80 / 4,092.60 / 16,741.40
36.60% / 19.19% / 19.77% / 75.55% / 24.45% / 100.00%
2000 / 6,363.80 / 3,561.00 / 3,430.00 / 13,354.80 / 4,722.10 / 18,076.90
35.20% / 19.70% / 18.97% / 73.88% / 26.12% / 100.00%
2001 / 7,398.60 / 3,386.80 / 3,679.40 / 14,464.80 / 4,333.70 / 18,798.50
39.36% / 18.02% / 19.57% / 76.95% / 23.05% / 100.00%
2002 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2003 / 6,798.90 / 3,280.40 / 2,717.60 / 12,796.90 / 2,579.80 / 15,376.70
44.22% / 21.33% / 17.67% / 83.22% / 16.78% / 100.00%
2004 / 6,473.90 / 3,966.30 / 3,109.20 / 13,549.40 / 2,500.90 / 16,050.30
40.34% / 24.71% / 19.37% / 84.42% / 15.58% / 100.00%
2005 / 8,125.70 / 4,752.30 / 3,285.50 / 16,163.50 / 3,467.70 / 19,631.40
41.39% / 24.21% / 16.74% / 82.33% / 17.66% / 100.00%
EU-15 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2004 (4) / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
EU-27 / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
2004 (5) / n.a. / n.a. / n.a. / n.a. / n.a. / n.a.
Source: based on data from Eurostat (2008)
(1)Nace G, H, I, K.
The general performance indicators summarized above present a general overview of the Belgian SME sector. In what follows, we will briefly describe, in a similar fashion, the innovation activities of Belgian enterprises in somewhat more detail.
As a first innovation indicator we’ve compared the Belgian overall R&D expenditure expressed as a percentage of GDP with the European figures. Table 8 shows that relative R&D expenditure in Belgium is comparable to the EU average, although it has been somewhat below this average since 2003. A decrease in innovative efforts or investments might have important consequences for Belgium’s current productivity advantage over its neighbors, which might be eroded over time in the absence of sufficient innovative stimuli.
Table 8: Total R&D Expenditure, Belgium, 2000-2006 (percentage of GDP)
2000 / 2001 / 2002 / 2003 / 2004 / 2005 / 2006 (1)Belgium / 1.97 / 2.08 / 1.94 / 1.88 / 1.87 / 1.84 / 1.83
EU-15 (2) / 1.92 / 1.93 / 1.94 / 1.93 / 1.90 / 1.91 / 1.91
EU-27 (2) / 1.86 / 1.87 / 1.88 / 1.87 / 1.83 / 1.84 / 1.84
Source: based on data from Eurostat (2008)(1) expected, (2) estimation by Eurostat.
Table 10 shows intramural R&D expenditures, broken down by size classes and sources of funding. It’s immediately noticeable that large companies fund their R&D activities mostly with private equity. Alternative research funding tends to spread its sources over all size classes. Some recent governmental campaigns have led to a significant shift in public research funding.
From 2002 to 2004 total annual intramural R&D expenditure rose by 3 percent. When divided into size classes these expenditures differ quite significantly. Whereas large companies invested just 4 percent more, SMEexpenditures on intramural R&D rose 4 times faster, even 8 times faster for small companies. Micro companies reduced their annual R&D investments by a third during this same period.
On the other hand, when related to annual turnover, small enterprises have the highest average R&D to sales ratio.The smaller the enterprise, the more flexible they are in investing in R&D, with the exception of micros who probably invest only in a less strategic and more ad hoc way (tables 9 and 10). As we will see below, small firms’ innovation management tends to be more ad hoc in nature, causing these firms to underestimate their innovative effort in accounting terms. For instance, time spent by an owner-manager on innovative activities is often not taken into account in reported R&D efforts.
Table 9: Enterprises with Innovation Activities Broken Down by Size Classes, Belgium 2004
(% total number of enterprises)
Small / 46.55 / 49.73 / 49.00
Medium / 65.97 / 51.51 / 67.42
SME (2) / 50.03 / 50.89 / 58.30
Large / 83.01 / 93.83 / 92.42
Total / 51.30 / 72.65 / 77.19
Source: Heiman (2007) base don Eurostat (2006)
(1) NACE C, D, E, G51, I, J, K72, K742 and K743; (2) micro enterprises not included.
Table 10: Intramural R&D Expenditure Broken Down by Size Classes, Belgium, 2002-2006
(volume * € 1.000.000 and percentages)
Micro / Small / Medium / Subtotal
Private funding / 98.145 / 286.441 / 518.661 / 903.247 / 2,013.516 / 2,916.763
3.36% / 9.82% / 17.78% / 30.97% / 69.03% / 100%
Public funding / 16.330 / 48.028 / 41.159 / 105.517 / 91.222 / 196.739
8.30% / 24.41% / 20.92% / 53.63% / 46.37% / 100%
Funding through / 0,181 / 0,171 / 0,019 / 0,371 / 0,070 / 0,441
higher education / 41.04% / 38.71% / 4.40% / 84.15% / 15.85% / 100%
Private not for profit / 0.071 / 0.229 / 0.076 / 0.376 / 0.101 / 0.478
Funding / 14.92% / 47.93% / 15.91% / 78.76% / 21.24% / 100%
Foreign funding / 19.330 / 72.203 / 206.325 / 297.859 / 250.067 / 547.926
3.53% / 13.18% / 37.66% / 54.36% / 45.64% / 100%
Total / 134.058 / 407.071 / 766.241 / 1,307.370 / 2,354.977 / 3,662.347
3.66% / 11.12% / 20.92% / 35.70% / 64.30% / 100%
2003 / SMEs / Large enterprises / Total
Micro / Small / Medium / Subtotal
Private funding / 97.609 / 314.296 / 543.259 / 955.164 / 1,992.150 / 2,947.314
3.31% / 10.66% / 18.43% / 32.41% / 67.59% / 100%
Public funding / 17.869 / 51.527 / 40.120 / 109.516 / 84.516 / 194.032
9.21% / 26.56% / 20.68% / 56.44% / 43.56% / 100%
Funding through / 0.179 / 0.165 / 0.022 / 0.366 / 0.072 / 0.438
higher education / 40.90% / 37.66% / 5.09% / 83.66% / 16.34% / 100%
Private not for profit / 0.072 / 0.220 / 0.045 / 0.337 / 0.086 / 0.423
funding / 17.11% / 51.96% / 10.63% / 79.70% / 20.30% / 100%
Foreign funding / 20.765 / 74.429 / 210.131 / 305.324 / 160.362 / 465.686
4.46% / 15.98% / 45.12% / 65.56% / 34.44% / 100%
Total / 136.494 / 440.637 / 793.577 / 1,370.708 / 2,237.185 / 3,607.892
3.78% / 12.21% / 22.00% / 37.99% / 62.01% / 100%
2004 / SMEs / Large enterprises / Total
Micro / Small / Medium / Subtotal
Private funding / 65.446 / 360.621 / 603.494 / 1,029.560 / 2,051.959 / 3,081.519
2.12% / 11.70% / 19.58% / 33.41% / 66.59% / 100%
Public funding / 16.224 / 76.513 / 45.890 / 138.627 / 84.126 / 222.753
7.28% / 34.35% / 20.60% / 62.23% / 37.77% / 100%
Funding through / 0.512 / 0.000 / 0.352 / 0.864 / 0.201 / 1.066
higher education / 48.05% / 0.00% / 33.05% / 81.10% / 18.90% / 100%
Private not for profit / 0.077 / 0.000 / 0.195 / 0.273 / 0.014 / 0.287
funding / 26.91% / 0.00% / 68.14% / 95.06% / 4.87% / 100%
Foreign funding / 7.962 / 72.590 / 205.701 / 286.254 / 139.935 / 426.189
1.87% / 17.03% / 48.27% / 67.17% / 32.83% / 100%
Total / 90.222 / 509.724 / 855.633 / 1,455.579 / 2,276.235 / 3,731.814
2.42% / 13.66% / 22.93% / 39.00% / 61.00% / 100%
2005 / SMEs / Large enterprises / Total
Micro / Small / Medium / Subtotal
Private funding / 62.826 / 374.804 / 639.774 / 1,077.403 / 2,046.987 / 3,124.389
2.01% / 12.00% / 20.48% / 34.48% / 65.52% / 100%
Public funding / 19.917 / 84.604 / 47.732 / 152.253 / 81.769 / 234.022
8.51% / 36.15% / 20.40% / 65.06% / 34.94% / 100%
Funding through / 0.516 / 0.000 / 0.358 / 0.875 / 0.219 / 1.094
higher education / 47.20% / 0.00% / 32.77% / 79.97% / 20.03% / 100%
Private not for profit / 0.079 / 0.000 / 0.203 / 0.282 / 0.015 / 0.298
funding / 26.47% / 0.00% / 68.28% / 94.76% / 5.17% / 100%
Foreign funding / 8.925 / 77.109 / 200.854 / 286.888 / 128.934 / 415.822
2.15% / 18.54% / 48.30% / 68.99% / 31.01% / 100%
Total / 92.263 / 536.517 / 888.920 / 1,517.700 / 2,257.924 / 3,775.624
2.44% / 14.21% / 23.54% / 40.20% / 59.80% / 100%
2006 (expected) / SMEs / Large enterprises / Total
Micro / Small / Medium / Subtotal
Private funding / 67.646 / 392.415 / 674.109 / 1,134.170 / 2,113.070 / 3,247.240
2.08% / 12.08% / 20.76% / 34.93% / 65.07% / 100%
Public funding / 21.529 / 92.688 / 51.796 / 166.012 / 88.922 / 254.934
8.44% / 36.36% / 20.32% / 65.12% / 34.88% / 100%
Funding through / 0.530 / 0.000 / 0.364 / 0.894 / 0.225 / 1.118
higher education / 47.37% / 0.00% / 32.54% / 79.91% / 20.09% / 100%
Private not for profit / 0.083 / 0.000 / 0.206 / 0.288 / 0.016 / 0.305
funding / 27.10% / 0.00% / 67.43% / 94.53% / 5.39% / 100%
Foreign funding / 9.893 / 77.702 / 210.221 / 297.816 / 132.982 / 430.798
2.30% / 18.04% / 48.80% / 69.13% / 30.87% / 100%
Total / 99.680 / 562.805 / 936.696 / 1,599.181 / 2,335.215 / 3,934.396
2.53% / 14.30% / 23.81% / 40.65% / 59.35% / 100%
2006 (expected) / SMEs / Large enterprises / Total
Micro / Small / Medium / Subtotal
Total EU-15 / 99.680 / 562.805 / 936.696 / 1,599.181 / 2,335.215 / 3,934.396
2.53% / 14.30% / 23.81% / 40.65% / 59.35% / 100%
Source: based on data from Federaal Wetenschapsbeleid (2008) and Eurostat (2008)
From the performance indicators presented in this section, it is clear that Belgium has an SME oriented economy. The number of enterprises and the employment figures are somewhat higher than the overall EU-15 averages. When divided into different size classes, the differences with respect to the EU-15 average become more noticeable. For example, only Mediterranean countrieshave more micro enterprises than Belgium. In terms of turnover and added value, the Belgian SME share nevertheless seems to be decreasing as a result of a significantly lower productivity. Within a European context, these parameters still remain slightly higher than average, with only Denmark, Finland and Irelandshowing even higher productivity per employee (on average).
3. The Flemish Creative Sector
The object of this study is to assess the innovative profile of the Flemish creative or design sectors. In the context of this chapterwe will assume that both terms are referring to the same sector, although in international publications the term creative sectors is used as a broader label that can refer to almost all economic sectors that imply creativity in their product portfolio, processes or services.
The Bureau of European Design Associations (BEDA)[§] describes design as a broadly transferable process that gives physical shape to people’s needs and desires for the future using the designer’s creativity and intuition, often assisted by more formal external research, generating future vision. According to BEDA, design is a process that leads to an actual marketable product (BEDA, 2001).The Flemish Ministry of Economydefines design as:… a holistic dealing with matters, that besides the (re-)styling of products, extends to the application of innovative and alternative materials, ergonomics, engineering, ecology and ethics, psychology, culture and last but not least management(ESOMAR[**], 2004).
Quantifying this sector is quite difficult. There is no specific Nace[††]-code for design companies.In fact, we’ve even noticed that often Flemish creative entrepreneurs and enterprises are registered with an incorrect nace-code (i.e. because of altered, broadened or shifted activities or simply non-availability of a suitable activity code).Similarly and partly as a consequence of this classification problem, European surveys lack common comparable statistics. Nevertheless BEDA estimates that the 410.000 European designers generate a consolidatedannual turnover of € 35 billion. (BEDA; 2006).
The lack of reliable data is surprising, especially sinceboth academics and decision makers agree that creativity and the design of new products, processes and services are important success factors in present-day business. In 2007 Flanders Design presented the results of a survey about the use of design in a representative sample of 400 production and 100 services companies. Figure 1 shows that 47 percent of both production and services companies integrate design aspects in their business strategy from time to time. Some 11-12 percent considers design as a strategic value (Flanders Design, 2007).
Source: Flanders Design (2007)
Figure 1: The Use of Design in 400 Production and 100 Services Companies in Flanders, 2007
Although half of the companies indicate not to implement design as such, close to all of them apply activities that can be considered as design activities (branding, corporate styling, patent applications,…). Profitability is higher for frequent implementers of design than for those who implement design rarely ( Design, 2007). Companies in the creative industries tend to have a significantly different business profile. They innovate more often, pay more attention to strategic and marketing issues, and seem to be more advanced in their use of human resources practices (de Jong, et al., 2007).
In international literature the creative industries are ever more identified as a principal accelerator of the economy. On the one hand they contribute to overall knowledge generation, while on the other hand the creative industries as such contribute to employment and the total added value of their region.