kom (2018) 0441 - Ingen titel

Europaudvalget 2018
KOM (2018) 0441
Offentligt

EUROPEAN

COMMISSION

Brussels, 7.6.2018

SWD(2018) 320 final

PART 2/2

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF

THE COUNCIL

establishing the Programme for single market, competitiveness of enterprises, including

small and medium-sized enterprises, and European statistics and repealing Regulations

(EU) No 99/2013, (EU) No 1287/2013, (EU) No 254/2014, (EU) No 258/2014, (EU) No

652/2014 and (EU) No 2017/826

{COM(2018) 441 final} - {SEC(2018) 294 final}

kom (2018) 0441 - Ingen titel

Annex 15: Programme specific annex on

COSME

1.1.

NTRODUCTION

: P

OLITICAL AND LEGAL CONTEXT

Scope and context

This is the impact assessment for the successor to COSME - the EU programme for the

competitiveness of enterprises, in particular SMEs - for the post-2020 Multi-Annual

Financial Framework. It builds on the results of the evaluations performed on the

individual parts of the COSME programme as well as on the interim evaluation of the

programme. It satisfies the requirements of the Financial Regulation in respect of

preparing an ex-ante evaluation. The COSME programme could be adopted as a stand-

alone programme or as one of the pillars of the Single Market Programme.

The COSME programme (2014-2020) addresses the market failures affecting SMEs and

promotes entrepreneurship and the creation and growth of companies. COSME is a small

EU programme, with a budget of €2.3 billion for the period 2014-2020,

with a high

impact, due to its leverage effect, flexibility and visibility among beneficiaries, Member

States and the European Parliament.

COSME contributes to addressing current trends and new challenges, and could bring

important results to any of the 5 scenarios presented in the reflection paper on EU

finances. Its EU added value lies in addressing jobs and growth through an extended

network of intermediaries that allows COSME to be present across the EU and beyond.

COSME contributes to reducing economic divergences between Member States by

offering financial instruments and business support through the intermediaries to all

kinds of SMEs. As pointed out in the White Paper on the Future of Europe, there is also

scope to strengthen industrial and cluster cooperation towards the emergence of

European "Silicon Valleys" (scenarios 3-5).

The Council called in its conclusions on the renewed EU Industrial policy strategy for the

"further development of the European cluster policy, with the aim of linking-up and

scaling-up regional clusters into cross-European world class clusters, based on smart

specialisation principles, in order to support the emergence of new value chains across

Europe".

In its draft report on the next MFF

the European Parliament states its support to a

renewed and budgetary reinforced COSME programme in order to support SMEs.

http://www.consilium.europa.eu/en/press/press-releases/2018/03/12/eu-industrial-policy-strategy-council-adopts-

conclusions/

These conclusions echoed that of stakeholders expressed for instance during the 2018 EU

Industry day and the 2017 GROWyour REGIOn conference, see https://ec.europa.eu/growth/content/300-

participants-co-create-inspiring-future-cluster-initiatives-grow-your-region-conference_en.

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2F%2FEP%2F%2FNONSGML%2BCOMPARL%2BPE-

615.478%2B01%2BDOC%2BPDF%2BV0%2F%2FEN

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The Committee of the Regions, in its opinion on the future of the COSME programme

calls for a renewed and strengthened successor programme. In particular, easing access to

finance for the broadest possible range of SMEs, extending and upgrading EEN,

promoting entrepreneurship and continue the mentoring scheme for new entrepreneurs

(formerly Erasmus for Young Entrepreneurs) are identified as priority areas.

The EESC has in several occasions supported the continuation and the further

development of the COSME programme, including in a recent opinion on "Think Small

First"

[Table 1: Synergies with other MFF related proposals - to be developed with other services]

Proposed programmes for the

new MFF

European Regional Development

Fund

European Social Fund

European Agricultural Fund for

Rural Development

European Maritime and

Fisheries Fund

Links to future COSME+

The future European Regional Development Fund (ERDF) will

dedicate an important part of its budget to support and develop the

business environment ecosystems. The collaborative approach as

applied under the thematic Smart Specialisation Platform for

Industrial Modernisation, where both regional RIS3 partnerships of

Managing Authorities of Structural Funds and cluster partnerships

supported under COSME is foreseen to be strengthened, notably

during the implementation of the Joint Cluster Initiatives.

The EEN has a strong regional presence, often using ERDF funded

infrastructures and complementing the ERDF supported SME

advisory, incubation, scale-up, technology transfer etc. services and

funding. It also supports the cooperation with initiatives financed

by European Territorial Cooperation programmes under the ERDF

(like for example the inter-regional cooperation and mutual learning

projects involving SMEs and SME support bodies).

The Green paper on Entrepreneurship in Europe called on to better

foster entrepreneurial interest and talent amongst different groups

(including the young, women and immigrants) by making people

more aware of self-employment as an attractive career option, and

by providing them with the necessary education and skills to turn

their ambitions into successful ventures. In line with the needs the

mentoring scheme for new entrepreneurs will enable people with

skills technical as well as personal to create business as well as new

jobs. This complements the European Social Fund support. Also the

EAFRD and the EMFF provide support to SMEs in their respective

sectors.

InvestEU Fund

The SME loan guarantee facility is expected to be implemented

under the SME Window of the InvestEU Fund.

SME participation in the Framework Programmes continues to be a

priority both for their participation in collaboration projects and by

specific actions like the SME Instrument and the future EIC.

Enterprise Europe Network helps SMEs participate in the FP and

provides key account management services to the beneficiaries of

the SME Instrument. The EEN plans to continue playing an

important role with tailored support to SME in FP9. The Scaling-up

instrument can leverage the commercialisation of innovative

Framework Programme (FP) 9

http://cor.europa.eu/en/activities/opinions/pages/opinion-factsheet.aspx?OpinionNumber=CDR%203215/2017

https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/sme-think-small-first

255

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solutions from FP9 and help to bring them to a larger group of

SMEs, including through the Joint Cluster Initiatives.

Digital Europe Programme

Cooperation is ongoing in the framework of the Start-up initiative

with the EEN. The Scaling-up instrument has the potential to make

a contribution to the uptake of digitialisation amongst SMEs and a

related Joint Cluster Initiative for digital industries, if chosen, could

also link cluster partnerships to other initiatives and key actors of

the Digital Europe Programme, which could also support the

implementation of Scaling-up instrument.

SMEs are key stakeholders and contributors to climate action

activities. As one of its activities, the Enterprise Europe Network

and Joint Cluster Initiatives encourages SME to become more

resource efficient, e.g. through the implementation of the Scaling-

up instrument. The Network operated sector group on renewable

energy, environment and sustainable construction to help them

build partnerships in the EU and abroad and make use of the

European Resource Efficiency Knowledge centre (EREK). The

Scaling-up Instrument will support the uptake of low-carbon and

resource-efficient solutions and could be specifically be supported

through the Programme for the Environment and Climate Action,

including Energy Efficiency. The clusters participating in the

partnerships of the Joint Cluster Initiatives can facilitate the

recruitment of relevant SMEs for joint international business

projects, as done for instance in the EU's Low-Carbon Business

Actions in Brazil and Mexico supported through the EU Foreign

Partnership Instrument.

The needs of the economy and European industry should be taken

into account in EU external policies, instruments and actions, in

particular regarding the financial arm of EU economic diplomacy.

Supporting access to finance for European business

internationalisation will help to make concrete steps towards

important external policy objectives such as climate change,

circular economy, sustainable development goals and migration. It

will also create jobs and growth in Europe, improbe business

competitiveness and access to fast growing markets outside Europe.

As the internationalisation of European businesses need both

investment inside and outside Europe, the financial instrument

under the external policy of MFF will be complementary to the

Invest EU financial instruments. Facilitating cooperation with

SMEs from Neighbouring Countries will be part of several

COSME+ actions. As an example for EEN and the mentoring

scheme for new entrepreneurs intermediary organisations are

present in nearly all Neighbouring Countries. The clusters

participating in the partnerships of the Joint Cluster Initiatives can

facilitate the recruitment of relevant SMEs for joint international

business projects, as done for instance in the EU's Low-Carbon

Business Actions in Brazil and Mexico supported through the EU

Foreign Partnership Instrument.

Programme for the Environment

and Climate Action, including

Energy Efficiency

External instrument, including a

prominent Neighbourhood

Window

1.2.

Lessons learned from previous programmes

1.2.1. COSME Interim Evaluation

The interim evaluation of COSME gives an overview of the programme implementation

and

positive results achieved

during the first three years of the programming period.

The programme implementation is on track to reach the objectives set out in the legal

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basis by the end of 2020. COSME actions have been judged as highly relevant in

addressing the challenges related to fostering economic growth and creating employment

opportunities and as strongly aligned to the evolving needs of SMEs.

The strength of the programme lies in particular in the use of intermediaries who have a

direct and longstanding contact with SMEs for the implementation of the programme.

COSME exploits the proximity of these intermediaries to SMEs and facilitates the

integration of services provided by COSME with services provided by these

intermediaries in their national and regional contexts. This allows for the provision of

customised SME support tailored to the needs and challenges of specific sectors, such as

tourism, textiles, creative industries etc. and to reach a high multiplier effect of actions.

COSME has thus a

good level of European added-value.

The European dimension

constitutes the very essence of the design of COSME actions. Moreover, COSME actions

have helped to enhance national, regional and local level measures for SME support and

the teaming up of actors across EU value chains to boost internationalisation and

industrial modernisation.

The feed-back from beneficiaries is generally positive with a

substantial majority reporting a good cost-benefit ratio for their participation.

The interim evaluation also sets out a number of

proposals on how to further improve

the performance of the programme:

First, as stipulated by the COSME regulation, some 80% of the budget is used for

promoting SMEs' access to finance and access to markets. The remaining 20% is

allocated between a number of smaller actions with a limited budget and with a low cost-

benefit ratio regarding the implementation. EASME (Executive Agency for SMEs)

implements 35% of the overall programme budget, with two flagship COSME actions

(Enterprise Europe Network and the mentoring scheme for new entrepreneurs) as well as

a host of smaller projects. The fragmentation of actions and

limitations in terms of

budget

(as flagged out for the the mentoring scheme and cluster measures) hampers the

effective implementation

. Therefore, without losing the flexibility to react quickly to

emerging policy needs, there is scope for simplification and

cutting down the number

of small, one-off actions

and devote the resources towards the key areas of intervention

whereby a sustained effort and economies of scale will yield the highest efficiency and

the biggest impact at EU level.

This also confirms earlier evaluations such as the results of the 2014 evaluation of the European Cluster Initiatives

managed by DG ENTR (2014) by Technopolis. European Commission (2014) Evaluation

–

Cluster

initiatives managed by DG Enterprise and Industry, final report ENTR/172/PP/2012

–

LOT 4: managed by

Technopolis Group in a consortium with EY and VVA, http://bookshop.europa.eu/en/cluster-initiatives-

managed-by-dg-enterprise-and-industry-pbNB0114004/

For example, 16 FTE in EASME implemented 91 contracts with a budget of 58 million for the EEN in 2017

compared to 36 FTEs who implement 47 actions divided into 80 contracts for a budget of 45 million.

To improve the business environment of SMEs and their competitiveness, COSME also supports the implementation

of the Commission's policy priorities through an SME-angle. For example, some actions translate the Better Regulation

agenda or the Blueprint for Skills initiative into concrete actions with a specific focus on industrial sectors and SMEs.

The network of national SME Envoys supports the implementation of the Commission's flagship initiatives, such as

digitalisation or the Single Market Strategy in the Member States by the exchange of good practices. These actions

might consist in grants or procurement for raising awareness, disseminating knowledge and good practices and

involving stakeholders in the field of SME policy or sectors, including public authorities. Moreover, COSME supports

the emergence of competitive industries with market potential, by helping SMEs to go international, take up new

business models, capacities and skills and integrate into new value chains through cluster partnering.

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The Interim Evaluation support study concluded on the following options: " The

Commission might want to consider the following possibilities to strengthen the relative

cost-effectiveness of COSME: 1) deploying its existing resources in a more focused /

strategic manner; 2) entering new strategic partnerships with other EU programmes or

Directorate Generals which could increase or however sustain the range of activities

despite the limited budget, for example by strategically sharing the responsibility for

interventions in specific areas; and 3) increasing its overall budget …."

Second, while COSME is successful in fostering economic growth and the creation of

employment opportunities, there is scope for strengthening its responsiveness to EU

objectives related to EU global competitiveness and sustainable and inclusive growth.

COSME's main instruments are designed to address all SMEs, independently of their

sector and industrial specialisations. They only indirectly address challenges such as

climate change, gender mainstreaming or youth unemployment.

Third, while there are no major overlaps with other policy initiatives, there is scope for

creating further synergies with other EU, national and regional actions. For instance,

COSME’s distinct use of intermediaries and its focus e.g. on improvement of skills,

capacities, networking and entrepreneurship are complementary to Horizon2020 and the

future FP’s focus on break-through

technological innovation that could further help to

spread its results and reach a larger number of SMEs and not only the most innovative

enterprises. Similarly, low-carbon and resource-efficient solutions developed under LIFE

and solutions developed under other programmes could be better brought to SMEs. In

addition, there are opportunities for more complementarities for SME internationalisation

actions, notably supported through clusters, currently limited due to its relative low

budget. Similarly, complementarities can be enhanced with the European Regional

Development Fund in addressing SMEs and in strengthening the linkages between the

industrial, innovation and regional orientation, e.g. by supporting the strategic partnering

of clusters and other SME intermediaries in an aligned manner and complementing the

ERDF funded SME support services and investments.. The current approach already

tested for industrial modernisation and smart specialisation actions under COSME could

be a model. This targets actors engaged in strategic inter-regional collaboration linked to

the Thematic Smart Specialisation Platform for Industrial Modernisation.

Fourth, in relation to monitoring the evaluation points out to a lack of centralised data

about implementation and indicators are mostly based on outputs rather than on long

term effects.

1.2.2. Access to finance

The Loan Guarantee Facility (LGF) for SMEs has been thoroughly assessed by the

European Court of Auditors in the context of a performance audit, which comprised also

the InnovFin SME Guarantee Facility of Horizon 2020

and in the context of the

COSME interim-evaluation

European Court of Auditors (2017),

EU-funded loan guarantee instruments,

Special Report Number 20

http://ec.europa.eu/DocsRoom/documents/28084

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

Observations made by the European Court of Auditors

The LGF has achieved the positive results intended, but needs some better targeting of

beneficiaries and more coordination with national schemes. The Court concluded that

"the main aim of the Loan Guarantee Facility [….] has been to foster growth.

Econometric evidence shows that the loan guarantees delivered what they were designed

to do. They helped beneficiary companies grow more in terms of total assets, sales,

employee numbers and productivity".

However, the Court also concluded that a future facility should better target viable

businesses lacking access to finance and a better coordination should occur between

central EU guarantee facilities and those established at national level.



Conclusions from COSME interim evaluation

The interim-evaluation

concluded that the COSME LGF has been successfully set-up

and is fully on track to delivering on the targets set in terms of SMEs to be financed and

volume of financing to be made available.

The evaluation confirms that the "COSME

actions fully respond to the SMEs’ current needs to access finance".

The interim-evaluation has concluded after fully eliminating the dead-weight effect that

for each €1 million invested into the LGF (effects fully attributable to the Loan

Guarantee Facility):



additional employment of 491 will be created;

additional €22 million in turnover will occur in treated SMEs;

470 SMEs will be supported.

While acknowledging – based on the available evidence – the strength of the COSME

financial instruments to deliver a financial support to the SMEs that most needed it, the

evaluators identified several areas for improvement:



Better links between financial instruments and other parts of the future SME

programme

Better co-ordination between financial instruments and national EU schemes

Discontinuation of the €150

000 threshold which has a negative impact on the

efficient delivery of the guarantee facility and created significant administrative

burden

The interim evaluation recommends that a future EU loan guarantee facility should help

to ensure "a more level playing field for SMEs […] in those countries where, according

to current studies, the needs among SMEs are highest."

As regards the existing Equity

Facility for Growth, the interim-evaluation concluded that the facility is effective.

Nevertheless, it has been recommended to reduce the number of financial products and to

align the Equity Facility for Growth with the equity facilities established under EFSI.

In response to the assessments made, the following changes are proposed:

ECA Special report No 20/2017:

https://www.eca.europa.eu/Lists/ECADocuments/SR17_20/SR_SMEG_EN.pdf

Technopolis (2017): "Interim Evaluation of the COSME Programme

–

Final Report"

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To improve the internal coherence of different parts of the programme, better linkages

will be established by further strengthening the existing cooperation with the

Enterprise Europe Network

(use the Enterprise Europe Network as a stronger

signposting element);

- A

better upstream co-ordination between financial instruments for SMEs established

by Member States and those established under the SME window of the InvestEU Fund

will be sought by using the existing SME Envoys Network

as an information

exchange forum;

To reduce administrative burden for SMEs and financial intermediaries and to

improve the impact of the SME guarantee facility, the €150,000 threshold will be

eliminated.

1.2.3. The Enterprise Europe Network

The COSME interim evaluation indicated that there is a clear market failure for SMEs

regarding information, funding, accessing new markets and networking. The Network

has been directly relevant to these failures via information and advisory services. The

Impact Evaluation of the Network (2008-2014)

concluded that the average net effect

for SMEs participating in the Network was 3.1% increased annual growth. This result

was confirmed in the COSME interim evaluation where SMEs present an overall growth

rate that is nearly 6.5 percentage points higher than a comparison group.

The 625+ Network organisations help about 250.000 SMEs per year to increase their

competitiveness and innovativeness in the Single Market and beyond by offering

integrated services and helping them to internationalize their business outside the home

country. Network organisations provide information on funding opportunities made

available by the various EU programmes such as COSME financial instruments,

Horizon2020 SME Instrument and Structural Funds.

The SMEs themselves indicated that the more and longer they worked with the services

of the Network, the more satisfied they became with the impact on their business. They

indicated that the partnering services were the most important to them (leading to 2.500

signed agreements between SMEs every year), while the services related to providing

feedback were the least important. Moreover, in the interviews the Network organisations

indicated that their services matched the needs of companies and SMEs very well. They

argued that the core role of the Network is to help companies grow and find new

partners, and that the Network services are adequate in doing so, which is further

reflected in the high rates of satisfaction where 86% of SME clients surveyed are

satisfied with the Network’s services and 93% would recommend its services to others.

The figure elo gi es Net ork

overcome barriers.

ers’ ie s o the e te t to

hi h Net ork ser i es help SMEs to

https://een.ec.europa.eu/

http://ec.europa.eu/growth/smes/business-friendly-environment/small-business-act/sme-envoys_en

https://publications.europa.eu/en/publication-detail/-/publication/d4cf03ed-972c-11e5-983e-01aa75ed71a1/language-

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Source: COSME Interim Evaluation (Technopolis, based on survey data)

European Business Organisations recognize the key role that the Network plays for

SMEs to internationalise, grow and innovate. "Eurochambres" states that the added

value of the Network is clear, as it allows a scale and quality of services that would not

be possible at national level. They stress that the focus of the services offered by the

Network should remain on access to markets, particularly within the Single Market.

International expansion in third countries should be coherent with trade policy objectives.

They also suggest simplifying the reporting and administrative requirements for Network

organisations. "BusinessEurope" states that the Network should remain a key instrument

for the internationalization of SMEs, based on an enhanced portfolio of services meeting

companies evolving needs, and focus on areas where it can bring added value compared

to national initiatives.

1.2.4. The mentoring scheme for new entrepreneurs (formerly Erasmus for

Young Entrepreneurs, EYE)

The mentoring scheme has been established as pilot project in 2008, followed up by

preparatory action and fully running under CIP and since 2014 incorporated under

COSME.

The COSME interim evaluation identified that, the mentoring scheme has a high level of

relevance to the needs of the respective target groups, with no major gaps identified.

As part of the evaluation, a large numbers of Host and New Entrepreneurs who had

participated in the mentoring scheme during the 2014-2016 period were surveyed. These

(potential) entrepreneurs were asked to assess the extent to which a series of barriers to

entrepreneurship were present in their country today. Their responses provide widespread

confirmation of the existence of market and systemic failures in this area. The large

majority (jointly, 92%+) agreed that entrepreneurs face obstacles to setting up

businesses, that new businesses struggle to survive and grow, and that there is a lack of

effective policy support related to entrepreneurship. There was also a widespread (though

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less strongly held) belief that there is a lack of entrepreneurial culture, weak

entrepreneurial spirit, and low levels of entrepreneurial firm creation in Member States.

Figure below shows that more than 90% of these survey respondents agreed that COSME

–

through its largest entrepreneurship action, the mentoring scheme - helped to address

all these areas to some extent, and particularly the lack of entrepreneurial culture and

spirit.

EYE programme addressing the failures

Host entrepreneurs (n=198-201)

Lack of entrepreneurial culture & weak entrepreneurial spirit

Entrepreneurs face obstacles to setting up businesses

New businesses struggle to survive and grow

Low levels of entrepreneurial firm creation

Lack of effective policy support in relation to entrepreneurship

Lack of entrepreneurial culture and weak entrepreneurial spirit

Low levels of entrepreneurial firm creation

Entrepreneurs face obstacles when setting up businesses

New businesses struggle to survive and grow

Lack of effective policy support in relation to entrepreneurship

To a great extent

28%

24%

10%

30%

28%

25%

24%

42%

53%

56%

61%

60%

44%

62%

58%

60%

57%

20%

30%

40%

Not at all

50%

60%

52%

17%

16%

15%

17%

49%

10%

14%

16%

19%

70%

80%

90%

100%

New entrepreneurs (n=503-508)

To some extent

Source: Technopolis, based on survey data.

Further 99% of mid term evaluation respondents believe that it is important that the

mentoring scheme for new entrepreneurs continues.

The COSME evaluation further argues that the mentoring scheme has been particularly

effective in reaching its knowledge- and skills-related objectives and has laid the ground

for important outcomes in terms of business relationships and internationalization, both

for the New and Host Entrepreneurs. Also in this case, however, the scale of the activities

(in total about 2,000 new entrepreneurs) poses limits to the importance of this action line

within the overall programme portfolio.

1.2.5. IPR SME Helpdesks

The evaluation of the IPR SME helpdesks reveals that the action is very relevant and that

results indicate it could reach its objective on the medium and long term. Evidence shows

that it has been well designed to make EU SMEs aware about their Intellectual Property

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Rights (IPR) in third countries' markets and contributes to the overall objective of the

COSME programme.

In April 2017 the activity had registered 3154 helpline users. With 1347 registered

helpline users against 1000 targeted, China performs well. The Latin-America also with

1217 registered against 800 targeted. Due to the belated implementation of its helpline,

the South-East HD reached only 590 users against 1000 targeted.

After three years of experience under the COSME programme, the action has been

showing effectiveness and should now focus the resources to gain in efficiency. To that

effect it is needed to improve quality of the services, tackle the problems of insufficient

promotion of activities and improve partnering services. There is no need for additional

means in order to achieve more impacts, however the use of the current ones could be

optimised. The fact that intermediaries act as multipliers, can be seen as an efficiency

lever, provided the visibility increases concurrently thanks to more promotion efforts.

The strategy to reach the critical mass of SMEs needs to be improved. The reporting

mechanism for KPIs is burdensome and not sufficiently quality oriented and the

measurement of indicators should be improved. The evaluation concludes on the need for

continued funding for the three regions and considers extending this type of service to

India.

On coherence, a better cooperation with the Cluster Internationalisation actions will be a

priority for the future. The interaction between the three helpdesks should be maintained,

as well as with other COSME initiatives (mainly the EEN) and other EU and national

initiatives.

The action adds value at EU level by developing and broadening its expertise to all EU

SMEs. In order that any SME in any EU MS have access to an equivalent quality of IPR

service, it is of specific value to be able to offer them an IPR one-stop-shop to

accompany them in their globalisation projects.

1.2.6. SME policy

The SME Performance Review

aims at informing policy-makers. It is perceived as an

important building block for evidence-based policy-making; most national

representatives that were interviewed state that it provides reliable statistical data and

analysis on EU SMEs and SME policies. It is effectively used to monitor the

implementation of the SME policy as well as the related SME elements of the EU2020

strategy. The SME Performance Review also feeds into the European Semester, which

provides a framework for the coordination of economic policies across the European

Union.

The SME Envoys Network

consists of 29 Envoys (one per country and an EU SME

Envoy), and meets four times a year. Together with the SME Assembly, the SME Envoy

Network forms the governance structure of the SME policy. For instance, since 2013 the

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Envoys report annually on the state of the SMEs and the implementation of the Small

Business Act to the Competitiveness Council.

Overall, stakeholders are satisfied with the results. The Envoys perceive the network as a

highly valuable EU-level forum where ideas and practices are exchanged. The SME

Performance Review as well as the factsheets are used by the national representatives and

are considered to be of high quality. Many events are organised throughout Europe

during the SME Week, and the SME Assembly gathers stakeholders from all MS. The

main outreach tool, Business Planet, is broadcasted on Euronews. There is a general

perception that the activities organised at the EU-level contribute to a convergence of

SME policies across COSME countries.

1.2.7. Competitiveness of sectors

For the Tourism programme, the consulted stakeholders and beneficiaries indicated as

direct results the creation of new strategic partnerships across borders and more visibility

in international markets of touristic destinations in the EU. While few SMEs were

directly involved (100), the involvement of professional associations and local, regional

and national public tourism agencies created the basis for potentially strong multiplier

effects.

The key objective of the Tourism programme is to strengthen the competitiveness of the

EU Tourism sector and enhance the capacity of SMEs in the sector to expand their

frontiers, both from a service/product offer and geographical point of view. The Tourism

programme is geared towards the involvement of actors along the value chain. Based on

the data available, the programme directly involved about 100 companies, active in the

tourism sector, and an additional 50 private enterprises active in other sectors. The

remaining 200 organisations were mainly business associations (mainly active in

tourism), public agencies, user organisations, and professional service providers (eg

marketing specialists).

1.2.8. Cluster initiatives

The "Clusters

Go International"

action shows a particularly strong alignment with the

need of the clusters to internationalise their activities, both within Europe and beyond. It

concluded that the actions show good potential to lead to an

improved strategic position

in global value chains

and an

enhanced access to potential inward investors

as survey

respondents and interviewees alike highlighted that the activities are based on a strategic

analysis, while flagging out the

limited budget

as a hurdle for their internationalisation

activities that was reported by 90% of the clusters as an important bottleneck. Moreover,

it judged a

positive coherence

in relation to the complementarities and synergies created

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with other COSME activities geared towards internationalisation and indicated that the

emerging markets of the main EU trade partners are covered through the action.

The interim evaluation revealed that the Cluster Go International action reached 3,800

SMEs per € 1 million invested and it

flagged out that the clusters involved can also play

a major role to facilitate the recruitment of the most relevant European SMEs across

regional industrial ecosystems to enter into joint business projects with partners in third

countries

for other related actions, such as as the

EU’s Low-Carbon

Business Actions

in Brazil and Mexico, supported through the EU Foreign Partnership Instrument

At the time of the COSME interim evaluation in October 2017, the Clusters Go

International action involved 25 European Strategic Cluster Partnerships (ESCPs),

launched under the "Clusters

Go International

action representing 145 cluster

organisations across 23 European countries and more than 17,000 European SMEs. Only

15 out of the 25 selected ESCPs were funded, though, due to budget constraints; the

other 10 partnerships were awarded the ESCP label and encouraged to continue their

partnerships on a voluntary basis, without COSME funding. The 15 co-funded

partnerships account for approximately 95 clusters reaching out to over 10,300 European

SMEs. Consequently, the interim evaluation concluded that the Clusters Go International

action

succeeded in involving a high number of clusters, some even at a voluntary

level,

testifying the

high interest in this action

in the EU cluster community. Moreover,

it reported that projects show

overall good progress

in reaching the outputs expected,

such as partnership agreements.

Outputs of the Cluster Internationalisation programme

Main outputs of the Clusters Go International action (n=42)

European Strategic Cluster Partnership Agreement

International partnership agreements or MoUs

Roadmap for the internationalisation strategy

implementation

Common branding and marketing strategy

Common internationalisation strategy

Common communication strategy

To a great extent

60%

49%

44%

40%

35%

49%

44%

31%

14%

12%

20%

To some extent

40%

Not at all

60%

80%

100%

Source: Technopolis Group, based on survey data (2017), Interim Evaluation of the COSME Programme

The horizontal actions of the European Cluster Collaboration Platform and the European Observaotory for Clusters

and Industrial Change also provide support within the umbrella of cluster initiatives.

In Mexico, at least 50% of European participants were informed about the LCBA project through cluster

organisations. 90% of those clusters were members of the European Cluster Collaboration Platform (ECCP)

http://www.lowcarbonbrazil.com/index, http://www.lowcarbon.mx/

Each ESCP-4i developed a series of joint actions for their members (i.e. business missions, cooperation agreements,

gateway services, export consortia, etc.) strengthening European SMEs access to specific third markets and putting in

motion a long-term cooperation agenda with strategic partners in third countries.

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The overall achievements of the 1

generation of European Strategic Cluster Partnerships

(ESCPs) for going international 2016-2017 prove their success in supporting SME

internationalisation. Over a 24 months period, they involved 2000 SMEs in activities

targeting international third-markets generating 85 concrete business cooperation cases

with international partners. 370 Cluster-to-Cluster events and 3010 Business-to-Business

events have been conducted, whilst 39 Memoranda of Understanding and 45

collaboration projects implemented between EU clusters and international peer

organisations. The interest in the action remained high for 2018-2019 with 23 new

partnerships having been established since.

The interim evaluation highlighted the Cluster Go International program (with its

fostering of European partnerships among clusters in order jointly to develop and

implement internationalisation strategies) amongst those COSME action lines with a

very high EU added value,

where the scale and depth of support goes well beyond the

support that can be offered to European SMEs through national or regional initiatives.

It also concludes the action is very relevant to the overall need of SMEs in building trust

in finding suitable partners. It points out though that it does not address the barrier of

high costs that come with building trust in finding suitable partners. As a result, it

concludes that a

potential upgrade of the programme could therefore include other

types of support,

such as demonstration projects, feasibility studies and knowledge-

acquisition activities.

The results of the COSME interim evaluation also echoed those of a separate evaluation

of cluster initiatives from 2014

, which concluded for instance that the European cluster

initiatives

"generated added value through structuring cluster cooperation

contributing to the emergence of European meta-clusters"

and have reached out to a

wide range of clusters, while flagging out that they

lacked the financial means to

involve SME sufficiently.

Given the highlighted limitation in terms of budget, a possible merging with other small

actions (such as the Cluster Excellence Programme) and the newly launched European

Strategic Cluster Partnerships for smart specialisation investments (under the heading of

industrial modernisation) as well with other larger actions under other programmes (such

as INNOSUP-1 cluster projects under Horizon2020) needs to be carefully considered.

The intermediate results of the cluster projects for new industrial value chains

(INNOSUP-1) shows how clusters can be used to effectively channel direct support to

SMEs for cross-sectoral and cross-regional collaboration and innovation support, which

https://www.clustercollaboration.eu/eu-cluster-partnerships/escp-4i/first-generation/achievements

and

https://www.clustercollaboration.eu/news/clusters-go-international-partnering-event-2018-sharing-

experiences-boost

The European cluster initiatives are designed to complement and support efforts taken at regional and national level,

with a particular focus on supporting strategic interregional partnering.

Technopolis, EY & Danish Technologica Institute (2014) Evaluation - Cluster initiatives managed by DG Enterprise

and Industry, ENTR/172/PP/2012

–

LOT4, available at https://publications.europa.eu/en/publication-detail/-

/publication/c1ad8410-9bae-49df-b1f1-69b36071cf30/language-en

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appropriateness was rated by the survey results presented in the interim evaluation of

Horizon2020.

Nearly 80% of respondents rate this innovation action as very

appropriate or appropriate, thus being amongst the

top ten rated actions for

appropriateness to develop better innovation support to SMEs

in the EU out of the

30 actions.

SWD (2017)221 final, Interim Evaluation of Horizon2020, Annex 2. See

https://ec.europa.eu/research/evaluations/pdf/archive/h2020_evaluations/swd(2017)221-interim_evaluation-

h2020.pdf

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The preliminary impact monitoring further revealed that the six ongoing INNOSUP-1-

2015 projects that started in 2016/2017

reached out to over 2800 SMEs

(e.g. through

matchmaking events, call for ideas/collaboration projects etc.) and that already

449

SMEs are supported directly

(e.g. through innovation vouchers). Overall, the initiative

is on track to support directly over 2000 SMEs by 2020 to take-up and adapt solutions

across sectors and regions.

The lessons learned from the cluster initiatives and consultations with stakeholders such

as during the 2017 GROWyourREGIOn conference

and at the EU Industry Day

revealed the following main conclusions:

•

Cluster initiatives shifted its focus from supporting clusters to using clusters for

creating growth opportunities for SMEs and investments

High need to support SMEs in their internationalisation activities and overcome

sectoral and regional silos, e.g. by focussing on value chains & related industries

High need for more strategic connections across eco-systems and stronger link to

smart specialisation, for which the right mix of partners is needed

Missing funding pipeline to make strategic partnerships sustainable across

industrial specialisations

1.2.9. e-skills

The

e-Skills

action line entailed three actions:



The ‘e-skills for jobs’ action, an awareness campaign (a budget of €2m)

An action for the ‘Development and implementation of a European Framework

for ICT

professions’, ie an action mainly focused on framework development and

coordination (€500k), and

The action ‘Promotion of e-leadership skills in Europe’, an action geared to the

development, validation and dissemination of a new, comprehensive policy

agenda

on leadership skills for digital and KETs (€500k).



All actions funded reached the outputs expected. Stakeholders interviewed were positive

especially in their assessment of the effectiveness reached by the ‘e-skills for jobs’

awareness campaign. In 2016, it covered 21 different countries where events were

organised and many stakeholders and high-level policy-makers were involved, including

members of the European Parliament. Stakeholders and survey respondents unanimously

indicated the effective engagement of various stakeholders such as education and training

organisations, employees and entrepreneurs as the most important factor in driving

https://ec.europa.eu/growth/content/300-participants-co-create-inspiring-future-cluster-

initiatives-grow-your-region-conference_en

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progress towards an enhanced awareness and especially an enhanced availability of

digital skills.

1.2.1. EU-Japan Centre for Industrial Cooperation

The EU-Japan Centre for industrial cooperation (co-financed and co-managed by the EU and the

Japanese sides) was effective in fostering industrial cooperation, including trade cooperation

between the EU and Japan, providing policy analysis (Policy seminar, EU-Japan

business round

table, Minerva fellowship programme), providing services to business (e.g. get ready for Japan,

Kaizen webinars, Vulcanus in Japan and in the EU), providing SME support (e.g. on tax and

public procurement),

organising information events and knowledge-sharing opportunities,

as well as networking activities with the objective of facilitating and fostering the

cooperation between European and Japanese companies and clusters. Actions for

increasing its impact and potential synergies with other actions will be further

considered.

1.2.2. Consultations

The consultations in the context of the interim evaluation of the COSME programme

included:

121 bilateral interviews with stakeholders for the four programme specific objectives

(access to finance, access to markets, favourable environment and entrepreneurship);

eight qualitative consultations targeting two specific objectives (access to finance

and favourable environment) and mostly including open ended questions;

seven quantitative consultations targeting five specific COSME measures (loan

guarantee facility, Enterprise Europe Network, Clusters for International, Tourism

calls and the mentoring scheme for new entrepreneurs) mostly including closed

ended questions;

an open public consultation

Intermediaries and beneficiary SMEs were approached for the qualitative and

quantitative consultations. In total, 4,100 responses were received. The public

consultation received 195 responses and 14 position papers.

Overall, the respondents to the open public consultation recognised that COSME is

successful in implementing its objectives (access to finance, access to market, improve

the business environment and promote entrepreneurship).

In order to increase the socio-economic impacts of COSME, it would be important to

increase the budget of the financial instruments (75% of respondents), to provide more

https://ec.europa.eu/info/consultations/interim-evaluation-programme-competitiveness-enterprises-and-small-and-

medium-sized-enterprises-cosme-2014-2020_en

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business advisory services (73% of respondents), to expand entrepreneurship mobility

schemes (58% of respondents) and to substantially expand actions to support the uptake

of new technologies, skills and new business models (73% of respondents).

73% of the contributors also considered the increase of synergies and coordination with

other EU/national/regional programmes to be important.

All the position papers advocated for a continuation of the programme under the new

MFF and most them called for its strengthening. They insisted that an SME driven

programme focusing on SMEs needs and characteristics is necessary due to the

importance of SMEs in the EU economy. This programme could target all SMEs and

would be based on an integrated business support approach that covers the entire life-

cycle of an SME and delivers tangible benefits for entrepreneurs with a strong focus on

simplification.

Results of open public consultation on next MFF

–

Cluster R&D, SMEs and single

market

A public consultation on EU funds in the area of investment, research & innovation,

SMEs and single market was conducted from 10 January to 9 March. While only 8.3% of

respondents had experience with the COSME programme, around 25% declared that

their replies refer to the EU support for SME and entrepreneurship (1.034 respondents).

Around 77% of them think that the SME and entrepreneurship support provided by the

EU has a good or large added value compared to what Member States can achieve at

national, regional and/or local level. Foster research and innovation (61%), support

education, skills and training (47%) and support industrial development (43%) are among

the better-addressed challenges by the current SME and entrepreneurship support. They

consider that ensure a clean and healthy environment, facilitate digital transition of

economy and facilitate SME access to finance are a slightly less well addressed (from

36% to 32%).

Concerning the obstacles preventing the current EU SME and entrepreneurship

funds/programmes to achieve their objectivs, the selected respondents believe that the

complex procedures (75%), the lack of flexibility (58%), the insufficient synergies with

other EU programmes(56%) and the difficulty to combine EU and other public support

are the main difficulties. The lack of EU standards, the inadequate IT capabilities and the

insufficient critical mass are considered less important.

SME stakeholders25 generally supported COSME and its continuation in the next

MFF. As SMEs have a central role in the European economy their competitiveness and

development should be at the heart of the EU support strategy. The stakeholders

Position papers received in the latest Commission consultations by stakeholders (Business Organisation such as

BusinessEurope or Eurochambres, sectoral business organisations, national and regional administrations

etc.). The consultations focused on: EU funds in the area of investment, research & innovation, SMEs and

single market; COSME interim evaluation,; Start-up and scale-up Initiative

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identified as key elements of the future SME support the financial instruments, EEN and

the mentoring scheme for new entrepreneurs. They proved to be valuable in the current

programme and should be therefore continued and strengthen in the next MFF. The new

programme should also have simplified rules, building on the example of Horizon 2020,

and ensure better synergies with other EU programmes.

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THE OBJECTIVES

2.1.

Challenges for the programmes of the next MFF

2.1.1.

Key features of COSME 2014-2020

COSME supports the creation and growth of small and medium sized enterprises. With a

€ 2.3 billion budget for the 2014-2020, COSME contributes to the Commission’s top

political priority to create more growth and jobs and filling the gap in investment in the

EU. The COSME programme has a regulation that sets four objectives:



At least 60% of the programme, that is 1.4 billion, is devoted to ease

access to

finance

for SMEs, both through guarantees and equity. Due to the high leverage

effect, COSME is expected to help up to 330.000 SMEs by mobilising around

€20

billion in guaranteed loans and up to nearly 4 billion for equity finance.

Second, COSME supports SMEs in

access to markets

and internationalisation. The

Enterprise Europe Network with contact points in more than 60 countries

through

In Japan our contact point is the EU-Japan Centre for industrial cooperation



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its more than 600 local contact points. Since 2016, the EEN is implementing, in

addition to its normal activities, also the start-up and scale-up initiative, a priority of

the Single Market Strategy.



Third, COSME contributes to the creation of a

favourable environment for

enterprises

such as clusters and

support their competitiveness.

This includes

several activities such as the platform for better regulation or several actions relating

to SME policy.

Fourth, COSME

promotes entrepreneurship, particularly

with the mentoring

scheme for new entrepreneurs, where participants acquire a business experience in a

successful SME in another country.



COSME 2014-2020

Access to Finance (financial instruments)

Enterprise Europe Network

EU-Japan Centre

IPR SME helpdesks

Other actions and support measures

Access to Markets (subtotal)

Modernisation of Industry

Sector's competitiveness

Clusters

SME Policy

Better Regulation

Other actions and Support Measures

Business Environment and

Competitiveness (subtotal)

The mentoring scheme for new

entrepreneurs

Other actions and Support Measures

Entrepreneurship (subtotal)

Management and Administration

EASME

Programme Administration (subtotal)

Total

No i al i

1440

375

504

238

2357

illio €

Baseline post 2020

(-15%)

1224

319

15.3

77.35

428.4

40.8

32.3

5.1

39.1

202.3

55.25

21.25

76.5

21.25

72.25

2003.45

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2.1.2. Challenges for COSME

The conditions for starting-up a business in the EU (in terms of cost and time to create a

company) has progressed in the last ten years. However, the situation is uneven across

Member States. Furthermore the administrative burden to operate a business, such as

obtaining permits and licenses, remains high. In addition, there is a lack of

entrepreneurial spirit and a large heterogeneity of entrepreneurship support services.

Newly created companies and smaller firms still face difficulties in accessing finance.

They are not able to reap sufficiently the opportunities offered by the Single Market and

by markets beyond the EU. This means that the full growth potential of SMEs remains

unlocked as they are not sufficiently integrated in industrial value chains with the EU and

globally. They face also difficulties in taking up the benefits of innovation, creativity,

new business models and resource-efficient solutions; they do less business on-line than

bigger firms and have difficulties in finding the right skills. While SMEs are essential to

generate jobs and growth, their contributions are limited by these barriers. It is the

objective of COSME to address these difficulties for scaling-up by providing adapted

financial instruments, generating business opportunities in the single market and beyond,

stimulating cooperation between Member States to reduce the administrative burden,

promoting entrepreneurship, supporting the modernisation of industry and creation of

favourable business eco-systems such as clusters

as well as linkages between them so

that SMEs can flourish and scale-up.

the specific case of the outermost regions' SMEs, the difficulties they encounter are

particularly significant because their regional markets are small, depend heavily on

exchanges with Europe and face high competition from neighbouring third countries. As

outlined in the Commission's communication "A stronger and renewed strategic

partnership with the EU's outermost regions

, it will be important to further enhance the

capacity of the outermost regions' businesses to operate: their specific concerns should be

considered in the future programme (the successor of COSME) to help enhance their

competiveness in international markets and reap the benefits of globalisation.

See, for instance, the 2016 European Cluster Panorama of the European Cluster Observatory (available at

https://ec.europa.eu/growth/content/european-cluster-panorama-2016-published-0_en) & Smart Guide to Cluster Policy

(available at http://ec.europa.eu/DocsRoom/documents/16903/attachments/1/translations/en/renditions/native) that

show that fast-growing enterprises (so-called gazelles) based in strong clusters employ 35 employees on average

compared to 24 outside of strong clusters and that clusters overall account for 39% of European jobs and 55% of

European wages. Moreover, various academic articles such as Delgado, M., Porter, M.E. & Stern, S. (2012) Clusters,

Convergence and Economic Performance show that clusters offer a favourable regional eco-systems for innovation and

entrepreneurship in which companies are more innovative, conduct more market research, cooperate more and register

more international trademarks and patents than companies that do not operate in a cluster. It also shows that regions

with strong clusters have positive spill-over effects on neighbouring regions and related clusters. SMEs active in

clusters are thus more likely to master complexity and benefit from growth opportunities in clusters of related

emerging industries.

COM(2017)623

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Figure 1: Most important problems faced by firms in EU28, April-September 2016

Other, 9%

Access to

finance, 9%

Finding

customers, 25%

Regulation, 12%

Costs of

production or

labour, 12%

Availability of

skilled staff or

experienced

managers, 20%

Competition,

13%

Source: European Commission, (2016): Survey on the access to finance of enterprises (SAFE),

Analytical Report 2016

2.1.3. Challenges for Access to finance

The COSME Loan Guarantee Facility (LGF) is being successfully implemented in terms

of geographic scope and in terms of reaching the right beneficiaries, i.e. SMEs which

have problems in accessing finance. It is geared towards supporting any type of SME

higher risk financing transaction. From a technical point of view, this is being achieved

by offering portfolio guarantees free of charge to financial intermediaries across the

participating countries. In return for such free of charge guarantees, financial

intermediaries must commit to build portfolios of new financing transactions which

constitute higher risk financing or to significantly increase the volumes of existing higher

risk SME financing products.

The Loan Guarantee Facility has been effective in reaching those SMEs which

experience particular difficulties in obtaining finance, namely start-ups (defined as

businesses in their first five years of existence), which account for almost 50% of all

financing transactions supported (as of 09/2017). Furthermore 91% of all supported

enterprises are micro enterprises. The facility is also successful in supporting SMEs in a

wide range of sectors. Over 12% of support has gone to knowledge-intensive services so

far. But support has also gone to SMEs in the more traditional sectors such as wholesale,

retail and construction and manufacturing as indicated below.

The average transaction size stands at €35,500. This is significantly lower than the

average transaction size under the SME Guarantee Facility of the Competitiveness and

Innovation Programme (the predecessor facility), where the average transaction size was

approximately €65,000. The low average transaction size under COSME is most likely

due to the €150,000

threshold introduced under the COSME LGF, above which financial

intermediaries must by means of a checklist demonstrate that an SME is in principle not

able to comply with any of the more than 10 different innovation criteria established

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under the InnovFin SME guarantee facility of Horizon 2020.

This application of the

checklist has been criticised during the mid-term evaluation as to onerous and

cumbersome (significant administrative burden) for financial intermediaries and SMEs

and has been mentioned as blocking an efficient implementation of the facility.

The key challenge to the implementation of an SME guarantee facility under the next

Multiannual Financial Framework period will be to operate under the following market

conditions:

Significantly differing access to finance conditions across Member States require

a flexible design of the guarantee facility:

Following the financial crisis a

significant number of policy interventions coupled with positive economic

developments have led to an improvement in the availability of bank finance, and the

conditions for access to finance have on average recovered

. However as regards

volume of lending, pre-crisis levels have not been reached yet. Plus we observe

significant differences in the access to finance situation for SMEs across Member

States in terms of availability of finance, risk appetite of the commercial sector,

conditions of finance (interest rates charged and collateral required) and product

diversification. SMEs, however, rely on local providers of finance and are unable to

overcome the national access to finance barriers.

2. Differing degrees of public support activities in the Member States and

significantly differing market gaps require a facility which is more responsive to

those Member States which require most support, rather than relying on a roll-

out purely based on demand; Member States alone will not be able to

sufficiently address the market gaps:

The estimated market gap in EU 27 over the

7-year period (2011

–

2017) for new SME financing

has come down from €42 billion

in 2014 to less than €30 billion in 2017.

However, this is the EU27-wide market gap

after a significant amount of guarantee and loan support measures in the order of

magnitude of €110 billion per annum are provided at a) national level (approximately

€90 billion), b) under ESIF (mainly ERDF) (approximately €10 billion) and through

EU central financial instruments (approximately €13 billion). Had the support at any

of these three levels been lower, it can be assumed that the size of the market gap

would have been higher. Going forward it is expected that Member States with strong

budgetary positions may maintain or even increase the financial support for access to

finance for SMEs. However, Member States with strained are in weaker financial

positions and also have inadequate capacities to operate support schemes, will have to

continue to rely on financial instruments established under EU programmes under

shared management and those established at central EU level.

3. Simplification of central EU guarantee support schemes for SMEs needed:

set out in the Reflection Paper on the Future of EU Finances

, there is a

'need to

ensure policy coherence among EU instruments to ensure that they all support EU

objectives and facilitate reforms in Member States. For instance, in the area of SME

http://www.eif.org/what_we_do/guarantees/single_eu_debt_instrument/innovfin-guarantee-facility/

Survey on the Access to Finance of Enterprises in the euro area April to September 2017, section 3.1:

https://www.ecb.europa.eu/pub/pdf/other/ecb.accesstofinancesmallmediumsizedenterprises201711.en.pdf?

beb1832df4af9efa945a5a1f7b99eeb7

Using the Upper bound method used in the ex-ante assessment for the SME initiative

https://ec.europa.eu/commission/sites/beta-political/files/reflection-paper-eu-finances_en.pdf

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financing the same beneficiaries may be eligible to receive support through several

instruments covered under different programmes (COSME, Horizon 2020 and EFSI)

or implemented by Member States through cohesion policy. This overlapping product

offer has caused some confusion for financial intermediaries as to which scheme to

apply. Rules and conditions applying in the same policy area should be aligned.'

4. Fintech companies as potential challengers to banks as the main providers of

SME debt finance:

The financing of SMEs in Europe through the banking sector has

a long tradition. However, the banking market is undergoing significant structural

changes. The number of financial institutions is continuously reducing and new

players (fintech) are emerging which are ready to challenge the traditional banking

sector.

'There

is no doubt that the landscape has changed for banks. […..], the digital

revolution is lowering cost, distance, time and barriers to entry, creating space for

new fintech players to enter the market'

. Despite the fact that fintech is a nascent

industry, it is likely to have an impact on the SME financing markets in the next 10

years. While many banks are investing heavily in technology, industry experts have

gone as far as to state that

'Banks may face their “Kodak moment” unless they

embrace disruptive technologies. However, since banks are profiting from business-

as-usual, there is little incentive for them to innovate and cannibalize their own

business'

2.1.4. Access to markets and global value chains

One of the main challenges to be addressed in the new MFF is the lack of SMEs' capacity

to develop their activities outside their home country, especially in the Single Market but

also in markets outside the EU. The main problems identified are (1) finding customers

and business partners outside their home country, (2) spotting international business

opportunities and (3) getting information on other markets. In this respect, the provision

of information services will continue to be a challenge.

European industry faces increasing competition from abroad across the whole value

chain, and it must internationalise further to face it. Hence, supporting the

internationalisation of European business is a crucial element in the strategy to widen and

deepen internationalisation of the EU economy as a whole.

Putting in place support for structures that help EU businesses penetrate foreign markets

is an important dimension of this internationalisation strategy, in particular for SMEs but

also for all types of business which need advice and services on key aspects such as IP,

standardisation, regulatory environment, public procurement, etc.

To this end, EU business support structures in third countries have an important role to

play in synergies with the EEN vision for the future that are developed, in particular the

EEN members (BCC) in third countries. Already now the EU SME Centre in China, the

http://www.smefinanceforum.org/post/banks-and-fintech-companies-come-together-to-discuss-vision-2030-for-

small-business-finance

http://www.smefinanceforum.org/post/banks-and-fintech-companies-come-together-to-discuss-vision-2030-for-

small-business-finance

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ELAN-biz project in Latin America and the EU-Japan Centre for Industrial Cooperation

are also playing this role.

Hence the need for EU support in third country to help business to establish presence and

access local markets. EU support should be complementary to that of MS and should

focus on areas with the highest added value.

SMEs' expectations are changing towards a more tailored approach of information

provisioning and specialised advice addressing specific needs. Synergies and efficiency

gains will be realised by further integrating the mentoring scheme for new entrepreneurs

in the Network’s activities, creating a one-stop-shop

service for SMEs. The Enterprise

Europe Network intends to link-up and use existing and new information sources such as

the Single Digital Gateway to address the information asymmetry challenge.

The Network intends to continue and further develop its synergies with other Community

programmes such as Horizon 2020 with the services provided to SME beneficiaries of

the EIC, encouraging and promoting the participation of SMEs in Horizon2020, and the

support and cooperation with initiatives financed by EU regional funding (like for

example the macro-regional cooperation projects involving SMEs). The identification of

business partners abroad will continue to be a major challenge as SMEs that fail to

innovate or internationalize run the risk of losing ground to competitors, losing key staff,

or simply operating inefficiently; this also includes the need to co-operate along their

value and supply chains. The Network also intends to continue its cooperation with EU

financed Business Centres abroad, based on the good practices and lessons learnt with

the business centre in Beijing who became a Network node in 2015.

The Network will have to continue building on existing strengths and evolve structures

and services to help SMEs survive, innovate and grow in an increasingly competitive

world and address the challenge of shortcoming managerial capacities of SMEs to

increase their competiveness in the Single Market and abroad. It requires the Network to

further develop the client centric approach where tailor made advisory services will be

provided with Network consortia working together to support the client to innovate, grow

and internationalise.

The survey of entrepreneurs participating in the mentoring scheme (part of the mid-term

review of COSME) confirmed the existence of market and systemic failures in the area

of entrepreneurship. These include obstacles setting up businesses, difficult Framework

conditions that result in new businesses struggling to survive and grow. Furthermore,

there is a lack of effective policy support related to entrepreneurship.

There is also a widespread belief that there is a lack of entrepreneurial culture, weak

entrepreneurial spirit, and low levels of entrepreneurial firm creation in Member States.

With regards to further implementation of the mentoring scheme the main challenges are:

the demand for expansion of the programme (increased number of participants)

confronted with reduced resources available as well as future geographical extension

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together with further efficiency gains. Some efficiency gains were reached thanks to the

introduction of a Framework Partnership grant procedure intended for experienced

mentoring scheme intermediary organisations in 2016. In the post-2020 period, further

synergies and efficiency gains will be realised by further integrating the mentoring

scheme into the portfolio of EEN activities. This would create a one-stop-shop for

entrepreneurs and enterprises supporting them from the start-up phase, to scaling-up and

internationalisation.

2.1.5. Challenges for business environment and industrial modernisation

Doing business remains cumbersome in large parts of the EU and barriers to scaling-up

persist. Furthermore, the administrative burden to operate a business, such as obtaining

licenses or permits, remains high.

SMEs face difficulties in taking up the benefits of innovation, creativity, new business

models and resource-efficient solutions. They also do less business on-line than bigger

firms and have difficulties in finding the right skills. While SMEs are essential to

generate jobs and growth, their contributions is limited by these barriers. Supporting the

modernisation of industry and creation of favourable business eco-systems, such as

clusters

, as well as linkages between them is thus crucial for helping SMEs to flourish

and scale-up.

Various reports and studies have shown that insufficient investments in industrial

modernisation and the fragmentation of business eco-systems and clusters are hampering

future EU competitiveness and create an innovation divide. It is therefore crucial to

complement the excellence-based focus of R&D support to develop breakthrough

innovation under the FP with support for bringing solutions to mainstream SMEs across

the EU that facilitates their adoption and redeployment in different sectors and regions

and takes industrial specialisations into account.

The heavy decrease in the number of SMEs introducing product and process innovation

(by 18.2%) between 2010 and 2016 reported by the 2017 European Innovation

Scoreboard illustrates this problem. SMEs account for only one-fifth of EU business

R&D expenditures. On top, the Scoreboard also shows that innovative SMEs only

marginally collaborate more with others (0.5%) and that employment in fast-growing

firms based in innovative sectors has declined by 5.4%.